Commons Sitting of 8 May 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ECONOMIC AFFAIRS

    Hunt Committee's Report
    Mr. Speaker: Dr. Gray—Question No. 1.
    Mr. Hall-Davis: On a point of order. Mr. Speaker. May I draw your attention to the fact that copies of the Hunt Report are not available in the Vote Office? Would it be in order if Members fortunate enough to have a copy with them would indicate this to colleagues, so that others may refer to it if necessary?
    Mr. Speaker: That is a helpful suggestion by the hon. Gentleman. I have just been made aware of this difficulty. We endeavoured to obtain all the copies we could of documents that were useful for today. This may be part of the general problem that we have.
    Mr. Higgins rose—
    Mr. Speaker: Order. I hope that we shall not pursue this.
    Mr. Higgins: May I point out also that another document referred to in Questions, "The Task Ahead", is not available in the Vote Office? Would it be possible for Ministers in framing their replies not to refer to specific paragraphs without pointing out to the House what their content is?
    Mr. Speaker: Those are very helpful suggestions by both hon. Gentlemen.
    Dr. Grayasked the Secretary of State for Economic Affairs if he will make a statement of Government policy on the recommendations contained in the Hunt Committee Report.
    Mr. Blakerasked the Secretary of State for Economic Affairs when he expects to announce the Government's decisions on the recommendations of the Hunt Committee Report; and if he will make a statement.
    Mr. J. H. Osbornasked the Secretary of State for Economic Affairs (1) what over-all changes he proposes in regional development policy in the light of the recommendations of the Hunt Committee;
    (2) what changes in the distribution of aid to the development areas and the intermediate or grey areas, respectively, Her Majesty's Government propose to make following the Report of the Hunt Committee.
    Mr. Waddingtonasked the Secretary of State for Economic Affairs what action the Government propose to take in the light of the Report of the Hunt Committee.
    Mr. Bostonasked the Secretary of State for Economic Affairs if he will now give an exact date for the publication of the Hunt Committee Report.
    The Secretary of State for Economic Affairs (Mr. Peter Shore): I have nothing to add to my statement on the Hunt Report on 24th April.—[Vol. 782, c. 668–72.]
    Dr. Gray: Now that my right hon. Friend has had the opportunity of considering the anti-agriculture bias of the Report and the complacency with which it treats the flight of agricultural workers from the country to towns, and in consideration of the fact that agriculture is our largest industry and contributes so much to import saving, will he think again and make a fresh statement?
    Mr. Shore: I am aware of the long-term and continuing movement of people from the land into the towns and cities. This trend was taken into account by the Hunt Committee in the evidence it received and the conclusions it reached. I have nothing further to add on this matter.
    Mr. Blaker: Does the right hon. Gentleman recall that the Committee recommended that there should be a comprehensive review of the impact of existing

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    development area policies? Is it not rather regrettable that he is not prepared to accept this recommendation, especially as there seems to be no evidence of what value for money the Government are receiving from their policies? Should not that be investigated?
    Mr. Shore: We have not yet had sufficient experience of the effects of development area measures on the problems in the development areas. There has not been time. I do not want to embark on a premature review.
    Mr. Osborn: Is it not a fact that although the Report has been welcomed by the Yorkshire and Humberside Region and other regional bodies the Minister's statement has come as a complete disappointment to them? What negotiations are taking place with the regional boards on the impact of his statement, and what progress is being made on delineating the various areas of the development areas that have been outlined already?
    Mr. Shore: It would be wrong to say that the Government's statement was greeted with disappointment in that region. The truth is that as is perhaps inevitable, there has been a somewhat mixed reception in different parts of the country according to whether or not they benefited by the Government's statement or thought that they would have benefited more by the Hunt Committee's Report. As to the follow-up action, I have already seen and discussed with the economic planning council chairmen both my statement and the Hunt Committee's Report. I am now embarking on a more serious and more prolonged consultation with each council.
    Mr. Speaker: Order. Long answers mean fewer Questions.
    Mr. Waddington: Is the Minister aware that there is certainly no great rejoicing in North-East Lancashire as a result of his reactions to the Report? Is he aware that £20 million spread between seven different problem areas is peanuts when considering the very special problems of North-East Lancashire as a result of the run-down of the textile industry, as forecast by the Textile Council's Report, and the probable impact of the new town?
    Mr. Shore: The reaction in North-East Lancashire has been much more favourable than the hon. Gentleman indicated. It is wrong to measure the assistance that the Government can give to different regions and sub-regions simply in terms of financial aid to industry.
    Mr. Boston: Does my right hon. Friend accept that there are certain parts of the South-East which need an extra boost because they do not enjoy the prosperity of the region as a whole? Will he confirm that he will be giving continuing attention to the development needs of these areas, especially the new town development schemes where these are agreed?
    Mr. Shore: I assure my hon. Friend that, although the South-East Region is certainly prosperous judged as a whole, we are aware that there are different conditions within it. We shall be watching the situation and doing our best to assist each part to be as prosperous as the rest of the area.
    Sir K. Joseph: In the light of the Government's regrettable rejection of the Hunt recommendations for a comprehensive inquiry into the effectiveness of development area policy, will the right hon. Gentleman at least undertake to publish the results of the Government's own inquiries into the investment grants system?
    Mr. Shore: I will consider that suggestion. As the right hon. Gentleman knows, the Government have initiated a number of inquiries into the response of firms to development area incentives and I will discuss this matter further with my colleagues.
    Mr. George Jeger: I am glad that my right hon. Friend recognises that the attitude of Yorkshire and Humberside towards the Hunt Report is very mixed, but will he give special consideration to one item omitted from the Report—the plight of the smaller shipyard areas in the non-development areas which are certainly grey in colour and black in tendency?
    Mr. Shore: I am willing to look at any evidence that my hon. Friend would like to put to me but what we are concerned with here is aid to areas rather than aid to particular industries.

    Public and Private Consumption
    Mr. Ridleyasked the Secretary of State for Economic Affairs what has been the percentage growth in public consumption and private consumption, respectively, between 1964 and the latest convenient date.
    The Under-Secretary of State for Economic Affairs (Mr. Alan Williams): Between 1964 and 1968, public consumption in real terms grew by 2·8 per cent. a year and private consumption by 1·9 per cent. a year.
    Mr. Ridley: Is the hon. Gentleman aware that these figures explain why the public are a little apprehensive about the phrase in "The Task Ahead" which blames private consumption for all our economic troubles?
    Mr. Williams: The hon. Gentleman should be aware that during the 12 months following devaluation, comparing the last quarter of 1967 with the last quarter of 1968, whereas private consumption rose by 1 per cent. public consumption fell by 1·2 per cent.

    Industrial Output (Import Content)
    Mr. Blakerasked the Secretary of State for Economic Affairs what progress has been made with his study based on input/output analysis of the import content of the output of various industries.
    Mr. Alan Williams: The import content of industrial output and export levels are matters of considerable concern both to my own Department and to the sponsoring Departments. The application of input/output analysis in this field is one stage in the continuing programme of work on input/output techniques being developed by my Department.
    Mr. Blaker: I am not clear from that reply whether the Department is making such a study. Is the hon. Gentleman aware that, if it is, it will find that the import content of the output of the service industries is considerably less than that of the manufacturing industries? Will he, therefore, press ahead with such a study?
    Mr. Williams: Unfortunately, to some extent, the Opposition have responsibility
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    for the fact that the input/output tables have not been as up to date as they might have been, because when the 1958 census was taken the then Government omitted questions which would have given us the necessary information.

    Regional Special Assistance (Hunt Committee's Report)
    Mr. Hall-Davisasked the Secretary of State for Economic Affairs (1) if he will give the estimated cost in a full year of special assistance recommended by the Hunt Committee to regions which do not at present have development area status;
    (2) what estimate he has made of the cost of implementing the proposals contained in the Report of the Hunt Committee.
    Mr. Shore: The Committee did not give a figure of the total cost of its recommendations. It found it impossible to cost its proposal for growth zones and said that even where estimation is feasible the element of uncertainty is so great that the estimates must be subject to very wide margins of error.
    Mr. Hall-Davis: As the Hunt Committee recommended that a fundamental study should be made of the whole development area structure of aid, would it not be helpful to such a serious study if the right hon. Gentleman were to carry out a costing and make it available? In relation to special areas, if the right hon. Gentleman did not make his decision to reject the Hunt Committee's recommendation to view the North-West structure as a whole on a cost basis, on what did he base his decision?
    Mr. Shore: In my statement of 24th April I made clear the criteria which had led us to our selection of particular intermediate areas. If the hon. Gentleman will study those criteria, I think he will find the answer to his supplementary question.
    Mr. Mapp: To deal with the regrettably modified and rather half-muted policy of my right hon. Friend in regard to the Hunt Committee, what is the total cost he has in mind to be drawn from the rest of the development areas?
    Mr. Shore: In my statement I said that our estimate was for an additional expenditure in the intermediate areas of

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    £20 million a year and that this sum would have to be made available from other areas.
    Sir Frank Pearson: When is the £20 million likely to become available?
    Mr. Shore: I ask the hon. Gentleman to wait until I make a statement on the matter.
    Dr. Winstanley: Since it took the Government only hours to reject the Hunt Report, which took upwards of a year to compile, how does the right hon. Gentleman justify occupying all these important and distinguished persons with so fruitless a task?
    Mr. Shore: The hon. Gentleman knows perfectly well that we received the Hunt Report some eight weeks before it was published, and publication took time because of the admirable maps which the Report contains. I reject the suggestion that the Report was not properly studied by the Government. It was intensively studied, and as a result I was able to announce the conclusions I did.
    Mr. Arthur Davidson: Is my right hon. Friend aware that, contrary to what has been said in certain quarters, North-East Lancashire comes better out of the Government's proposals than it would have done had the Government accepted the Hunt Report in tote? Will he press ahead with his consultations with the North-West Economic Planning Council so that areas within North-East Lancashire which are to be helped can be defined as soon as possible?
    Mr. Shore: I am pressing ahead with this very urgently indeed. As I told the House on 24th April, I have in mind a timetable which will enable me to make a further statement shortly after the Whitsun Recess.

    Employment Activity
    Mr. Gwynfor Evansasked the Secretary of State for Economic Affairs what is the current employment activity rate in Wales and England, respectively.
    The Minister of State, Department of Economic Affairs (Mr. T. W. Urwin): As the information asked for is most conveniently shown in the form of a table, I have arranged for this table to be circulated in the OFFICIAL REPORT.
    Mr. Gwynfor Evans: How does the hon. Gentleman explain the fact that, although unemployment in Wales runs constantly at about twice the English level despite heavy migration from Wales, there is a growing and appalling gap in activity rates as between Wales and England?
    Mr. Urwin: One of the reasons for the lower activity rate in Wales is that there is a relatively high ratio there of self-employment in retailing, small family farms and service trades. Second, in industrial employment Wales has a relatively high dependence on coal mining and iron and steel making. Third, the general ratio of female employment is relatively low and this makes a larger differential between male and female activity rates in Wales compared with England.
    Mr. Fred Evans: Is my hon. Friend aware that the Welsh people are well aware that without massive Government efforts the situation would be catastrophic and that it does no service to Wales when hon. Members try to draw distinctions which are false and based on pure political propaganda?
    Mr. Urwin: I thank my hon. Friend for his comment. Government investment in Wales in the last completed year was £60 million, excluding grants for training.
    The following is the information:

    Employee Activity Rates Mid-1968

    Per cent.

    Wales

    England

    Males

    65·6

    74·9

    Females

    30·1

    40·5

    Total

    47·1

    56·9

    NOTES:
    1. These provisional estimates are based on mid-1968 employment statistics and mid-1968 population estimates projected from the 1966 sample census of population. Mid-year 1966, 1967 and 1968 activity rate estimates will be published later this year.
    2. These estimates are not precisely comparable with those given in reply to the hon. Member's Question of 12th March, 1969, since these were based on the 1961 Census of Population.—[Vol. 782, c. 309.]

    Welsh Economic Prospects
    Mr. Gwynfor Evansasked the Secretary of State for Economic Affairs in view of the estimate in "The Task

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    Ahead" that the reduction of regional disparities will be least in Wales, what plans he has to improve the Welsh economic prospects.
    Mr. Urwin: In his statement on the Hunt Report on 24th April, my right hon. Friend announced the Government's decision to include South-East Wales as one of the intermediate areas to benefit from measures of assistance.—[Vol. 782, c. 668–72.]
    Mr. Gwynfor Evans: Is the hon. Gentleman aware that the only English regions comparable with Wales in this invidious situation is the North-East but that although the situation in Wales is actually far worse than in the North-East of England, about twice as much money has been spent on incentives to industry to go to the North-East as has been spent in Wales for the same purpose?
    Mr. Urwin: I do not accept what the hon. Gentleman has said. I remind him that, in addition to the amount of money to which I have just referred as being invested last year, Government effort to diversify industry in Wales to get away from Welsh dependence on declining industries has resulted in over 100 new firms going there since 1964 and in the expansion of over 600. Even more interesting is that expansion in manufacturing industry was two and a half times greater in Wales in 1968 than in Britain as a whole.
    Mr. Roy Hughes: With regard to the Welsh economic prospects, does my hon. Friend appreciate that his right hon. Friend's announcement on 24th April concerning the grey areas was well received in those affected parts of South-East Wales? Will he now give the House an assurance that he will take early steps to implement these proposals?
    Mr. Urwin: It has been the intention of Government, both before and after the Hunt Committee's Report, to effect a far better distribution of economic development and growth, and we shall continue with this policy.

    Employment, Development Areas (Hunt Committee's Report)
    Mr. Danceasked the Secretary of State for Economic Affairs what is his
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    estimate of the effect of the level of employment in development areas of implementing the recommendations of the Hunt Committee.
    Mr. Shore: The amount of mobile industry is limited and the Hunt recommendations, particularly those for relaxation of the i.d.c. control, would entail a larger diversion of new employment opportunities from the development areas than we consider tolerable.
    Mr. Dance: Will the right hon. Gentleman devote some completely new thought to the Report of the Hunt Committee? Will he give us an assurance that any assistance given to the intermediate areas will not be to the detriment of the development areas, which have their own problems, in particular the high cost of commuting? Is he aware that people living in those development areas must have employment on their doorstep?
    Mr. Shore: As I went out of my way to emphasise when I made my statement on the Hunt Report, I am determined to maintain a large, indeed massive, preference in terms of financial assistance for the development areas, because I accept that their problems are considerably greater. It is a consequence of my determination to maintain this policy that I have not felt able to accept the proposal of the Hunt Committee to relax i.d.c. policy in other, more prosperous, areas of the country.

    Humberside Survey
    Mr. Wallasked the Secretary of State for Economic Affairs if he will now make a statement on the Humberside Survey.
    Mr. Shore: As explained in my statement to the House on 30th April, the Government accept the Report's recommendation that a Humber Bridge should be completed by 1976, and we are currently consulting the Yorkshire and Humberside Council and the local planning councils about the report and its recommendations as a whole.—[Vol. 782, c. 1437–9.]
    Mr. Wall: As the Government's decision to build the Humberside bridge involves a date when they are unlikely to be able to implement the decision, may I ask him today, when Labour is likely

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    to lose control of Kingston upon Hull, when the motorways to that city will be completed?
    Mr. Shore: That is a very different question and I can only ask the hon. Gentleman to put it down for Answer by my right hon. Friend the Minister of Transport.
    Sir C. Osborne: Since Lindsey County Council is utterly opposed to the building of this bridge until the main trunk road from Grimsby to Immingham has been completed—it has a much more important priority—will the right hon. Gentleman listen to what the Lindsey County Council has said? [Interruption.] This is not a matter to laugh about.
    Mr. Shore: The hon. Gentleman's emotion may also be connected with the fact that there is an election today in the area of which he is speaking. With respect to the Lindsey County Council and its views, it is likely to be the case that the economic planning council set up for that region, which has studied this matter intensively, will be able to give us better advice.

    South-East (Development Policies)
    Mr. Bostonasked the Secretary of State for Economic Affairs what steps have been taken on development policies for the South-East since the publication of the Government's review of the South-East Economic Planning Council's Report, "A Strategy for the South-East."
    Mr. Urwin: As my right hon. Friend said in reply to my hon. Friend's Question on 20th February last, the Council's long-term strategy proposals for the region are being tested and followed up by the Joint Planning Study.—[Vol. 778, c. 138.]
    Mr. Boston: Does my hon. Friend accept that these proposals are very welcome? Can he say what further consideration is being given to the "corridors of growth" proposals? Would he accept that his Department's endorsement of the proposals for the development of Sheppey are very welcome? Will he ensure that his Department will add what impetus it can to help maintain the momentum of this and other overspill schemes?
    Mr. Urwin: I am glad to give my hon. Friend the assurance for which he asks.
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    We will certainly expedite as quickly as possible the studies to which he refers. I would also remind him that, as we said in the Government's reply, talks about the expansions of Sheppey have been held by Kent County Council with the Greater London Council and Queenborough in Sheppey Borough Council; a financial study is to be made before decisions are taken about the size of any scheme.
    Sir T. Beamish: Is the hon. Gentleman aware that in many important areas spending is largely at a standstill in the South-East as a result of wholly unjustified delays since the Government came to power?
    Mr. Urwin: That is wholly untrue. The Government have done a great deal in this period. Since the first study of the planning council was published in 1967, they recognised that further studies would have to be undertaken. This is why we set up the South-East joint planning study to follow up this work. That study will be completed early next year.

    Edinburgh (Hunt Committees' Report)
    Mr. Gordon Campbellasked the Secretary of State for Economic Affairs what action he plans to take concerning the Edinburgh area in the light of the report of the Hunt Committee.
    Mr. Shore: I have nothing to add to my statement on 24th April.—[Vol. 782, c. 668–72.]
    Mr. Campbell: Can the Government indicate where the boundary defining the Leith area will be? Will the Secretary of State visit Edinburgh to inform himself of the extraordinary anomaly and the distortions which are being caused by the present curious deliniation?
    Mr. Shore: The hon. Gentleman knows perfectly well that I have already said that we shall be consulting the Scottish Planning Council about the boundaries of the new intermediate area.
    Earl of Dalkeith: Is the generosity of the right hon. Gentleman confined to helping only those areas who do not vote Conservative?
    Mr. Shore: If the hon Gentleman studied the unemployment figures for the Edinburgh area he would realise that

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    although there has been some deterioration in the whole of the Edinburgh area in the last two years, the deterioration is much more marked in the Leith area. It is on this basis that we have said that Leith should be included in the intermediate area.
    Mr. William Hamilton: Is my right hon. Friend aware that the official policy of the Opposition is a policy of growth points? Does he realise that this would mean a considerable diminution in the development area status of Scotland? Will he try to get out of the Opposition what growth points they mean to put into effect in Scotland?
    Mr. Shore: There are very many questions about development area and regional policy which I should like to ask the Opposition—both back benchers and the Front Benchers. Doubtless an opportunity will be found to debate these matters.

    Economic Planning
    Mr. Bruce-Gardyneasked the Secretary of State for Economic Affairs what revisions he intends to make to his economic planning document in the light of the Budget.
    Mr. Shore: None, Sir.
    Mr. Bruce-Gardyne: That is the most extraordinary Answer. Does the right hon. Gentleman not realise that the Chancellor appears already to have shed his target as announced in "The Task Ahead" of a basic balance of £500 million a year? Is not the Chancellor intending to rely instead on his ability to blackmail the Government's overseas creditors into postponing repayment of our debt? Why is the right hon. Gentleman being more royalist than royal?
    Mr. Shore: My right hon. Friend made clear that he was working for a substantial and continuing surplus on the balance of payments. I quoted his words deliberately because they occur in the Economic Assessment for 1972, and were restated by my right hon. Friend in his Budget speech.
    Mr. Higgins: The right hon. Gentleman may say that he is doing that, but could he tell us any measures in the Budget which actually lead to an improvement in the balance of payments?
    Mr. Shore: The basic strategy that we have pursued since devaluation has been to transfer the production resources from home consumption into the balance of payments. This policy—
    Sir Knox Cunningham: Was disastrous.
    Mr. Shore: —was reinforced by the Budget of 1968, together with the November, 1968, measures, and my right hon. Friend's proposals were wholly consistent with the continuation of that strategy.
    Mr. Peyton: If the right hon. Gentleman really maintains that this document does not need any alteration now, is it not true that the only reason for that is that it is just as useless and meaningless and flaccid as himself and his colleagues?
    Mr. Shore: The hon. Gentleman is rather stronger on insults than he is on intelligence. The only conclusion I can draw from his remarks is that he has read neither the Economic Assessment nor my right hon. Friend's Budget speech.

    "The Task Ahead"
    Mr. Martenasked the Secretary of State for Economic Affairs whether, in the light of the first four months' trading figures for 1969, he now proposes to make any alterations in the economic assessment of the balance of payments mentioned in Chapter 3 of "The Task Ahead".
    Mr. Alan Williams: No, Sir.
    Mr. Marten: But are the Government still hopeful of getting a trade surplus of £300 million this year? If so, does the Minister share the Prime Minister's view that if we are to solve our economic problems the Industrial Relations Bill must be passed this Session, otherwise Parliament will have to be dissolved? Does the hon. Gentleman agree with the Prime Minister?
    Mr. Williams: Naturally I agree with the Prime Minister in these matters. Equally, I stand by what my right hon. Friend the Chancellor of the Exchequer said about the balance of payments surplus.
    Mr. Barnettasked the Secretary of State for Economic Affairs what consultations he had with outside bodies about

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    the underlying capacity of British industry before publication of "The Task Ahead."
    Mr. Alan Williams: There were full discusions on the draft document in the National Economic Development Council, and we also drew on the information which is always available from the regular contracts between Government Departments and industry.
    Mr. Barnett: As the report makes it clear that there is insufficient evidence on which to base a forecast of the underlying level of productivity, would my hon. Friend accept that 2·9 per cent. is far too low to be acceptable? Would he consider looking at other competitor countries to see how much growth they have managed to get in underlying productivity, make comparisons and present a fresh report to the House?
    Mr. Williams: We have attempted reasonably to project forward the experiences of the past and to take into account changes which are expected in the working population and in the structure of the working population. After we have had our consultations, we shall possibly come to the House with an amended document, if an amendment is needed.
    Mr. Barnettasked the Secretary of State for Economic Affairs to what extent the change in target for balance of payments as set out in the Budget Statement on 15th April affects the forecasts in the document "The Task Ahead."
    Mr. Shore: There has been no change. As was stated clearly both in "The Task Ahead" and in my right hon. Friend the Chancellor of the Exchequer's Budget Statement, we need a substantial and continuing payments surplus.
    Mr. Barnett: But in "The Task Ahead" my right hon. Friend refers to the figure of £500 million a year. Thank God the Chancellor of the Exchequer has got away from that. Would my right hon. Friend accept that with the re-phasing of the debts which we are negotiating, it should be possible, if we can get away from that neurosis, to achieve a much higher level of growth than has been possible in the past?
    Mr. Shore: I have no comment to make on the information which my hon. Friend believes he has. However, I would put
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    this simple point to him: if there were any rephasing of debts, it would not relieve us of the basic requirement and need to repay those debts; therefore, a very strong surplus is required.
    Mr. Patrick Jenkin: Is it not the case that the Labour Party's Finance Committee has been given more information about the intentions of the Chancellor of the Exchequer than the House of Commons? Has the Chancellor of the Exchequer, as the hon. Member for Heywood and Royton (Mr. Barnett) said, abandoned the target of a £500 million surplus a year?
    Mr. Shore: I have already answered that question. If the hon. Gentleman wants a further answer, he must table a Question to the Chancellor of the Exchequer.

    Regional Employment Premium
    Mr. Ridleyasked the Secretary of State for Economic Affairs if he will now take steps to abolish the Regional Employment Premium.
    Mr. Shore: No, Sir.
    Mr. Ridley: But is the right hon. Gentleman aware that since the Government came into office they have spent £580 mililon on regional policy, with the net result that there are 51,000 fewer jobs in the development districts? This is not value for money. What does the right hon. Gentleman propose to do to give the taxpayer value for money?
    Mr. Shore: That is a very curious conclusion to draw from the policy which we are pursuing in the development areas. As I informed the House not long ago, the important thing is that over the last four years the rate of i.d.c. approvals in development areas has been substantially greater than in the previous four years, and but for that improvement there would have been a serious deterioration in employment in the development areas.
    Mr. Blenkinsop: We very much welcome my right hon. Friend's clear reply, but is he aware that there is serious anxiety in the area because of the campaign waged by right hon. and hon. Members opposite, particularly by those representing constituencies in the South, to damage the aid given in areas like the North-East?
    Mr. Shore: I am sure that the campaign which hon. Members opposite have launched against development area policy can only have a very unsettling effect upon the decisions of industry which we wish to encourage to move into these areas.

    Scotland (Hunt Committee's Report)
    Mr. Eadieasked the Secretary of State for Economic Affairs, if he will consult the Secretary of State for Scotland on joint policy on the recommendations of the Hunt Committee.
    Mr. Shore: I have done so and I shall continue to keep in close touch with my right hon. Friend about further action on this report.
    Mr. Eadie: Is my right hon. Friend aware that when non-development area boundaries are drawn on the basis of labour exchange areas confusion is created in development areas? This anomaly arises in my constituency. Although I know that the matter has been discussed by the Hunt Committee, have the Government given any consideration to how this anomaly can be ended?
    Mr. Shore: There are genuine difficulties in deciding the boundaries of any area—whether they should be based on local authority boundaries, employment exchange boundaries, or travel-to-work boundaries. There is no perfect answer to my hon. Friend's question.
    Mr. Stodart: Would the right hon. Gentleman ensure that these consultations are carried out in St. Andrew's House in Edinburgh? Will he note that the action which he took the other day, which has reduced a tiny island in what is already a vast ocean of development area, has made the position of what is left even more indefensible?
    Mr. Shore: I do not accept that. On the first point, the hon. Gentleman must be aware that the Chairman of the Scottish Planning Council is my right hon. Friend the Secretary of State for Scotland.

    Matlock and Wirksworth (Hunt Committee's Report)
    Mr. Scott-Hopkinsasked the Secretary of State for Economic Affairs if he will now include the areas of Matlock and
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    Wirksworth in those areas to receive additional help following the Report of the Hunt Committee.
    Mr. Urwin: As my right hon. Friend said in his statement on 24th April, the precise boundaries of the new intermediate areas will be announced after the Whitsun Recess, when we have received the views of the regional economic planning councils.—[Vol. 782, c. 668–72.]
    Mr. Scott-Hopkins: Would the hon. Gentleman bear in mind that in this area the traditional industry of stone quarrying is declining and will decline even faster in the near future? Will he review the criteria laid down by my right hon. Friend on which areas should or should not be designated in future?
    Mr. Urwin: That point will be borne in mind. Discussions and consultations with the planning councils are currently taking place, and we shall be in a position to make a statement after the Whitsun Recess.

    Development Area Aid Cuts (Hunt Committee's Report)
    Mr. Scott-Hopkinsasked the Secretary of State for Economic Affairs if he will give details of the proposed cuts in Government aid to development areas amounting to £20 million arising out of Her Majesty's Government's decisions following the Report of the Hunt Committee.
    Mr. R. W. Elliottasked the Secretary of State for Economic Affairs if he will ensure that the decisions of Her Majesty's Government, following the report of the Hunt Committee, to give £20 million in aid to certain areas will lead to cuts in aid only to those development areas where the unemployment level has fallen.
    Mr. Shore: A statement will be made shortly about the form of the savings to offset the cost of assisting intermediate areas.
    Mr. Scott-Hopkins: Surely the Secretary of State should be in a position to tell the House how this will be paid for and what part of the existing money paid to development areas will be cut? It is impossible to formulate any arguments or to have a reasonable discussion unless we know exactly how this will be done.
    Mr. Shore: A statement will shortly be made on this matter.
    Mr. Elliott: Does the right hon. Gentleman appreciate the continuing high level of unemployment in the North-East of England? There is grave concern there lest there should be cuts in the aid being given to the region. Would he accept that many of us believe that available aid should be given where it is most needed as between and within development areas?
    Mr. Shore: I am aware of that. I am most concerned that the necessary savings in development area expenditure should take a form which entails the minimum loss and damage to the development areas.
    Mr. Bagier: While appreciating the Government's long-term planning objectives, particularly in the grey areas, and the fact that had they been carried out in the development districts 10 years ago the problem would not have been so bad today, may I ask my right hon. Friend to examine very carefully how he will achieve the £20 million saving in the development districts and bear in mind, in particular, the serious unemployment in the North-East?
    Mr. Shore: I am considering the matter very carefully. My hon. Friend made a very important point. One of our motives in declaring new intermediate areas is to make sure that problem areas of today are not allowed, through neglect, to become development areas of tomorrow.
    Mr. Higgins: Is not the right hon. Gentleman's initial answer another example of the Government announcing benefits without saying where the money will come from? Will he not follow the precedent created by the Chancellor in his Budget Statement lest this tendency should grow from an unfortunate lapse into a nasty habit?
    Mr. Shore: As the hon. Gentleman knows, the statement I made was a preliminary statement, and I am consulting the economic planning councils about the frontiers of the intermediate areas. I have already made clear to the House that I will make a statement on where the finance is to be found certainly not later
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    than the time when I announce the conclusions of our consultation with the regional economic planning councils.

    Intermediate Grey Areas (Hunt Committee's Report)
    Dr. Grayasked the Secretary of State for Economic Affairs whether he will periodically review the selection of intermediate grey areas made by the Government on the recommendation of the Hunt Committee; and if he will make a statement.
    Mr. Shore: I intend to keep regional policy under close review, including the position of intermediate areas.
    Dr. Gray: Will my hon. Friend bear in mind that the average wages in Norfolk are lower than on Humberside and lower than they are throughout the whole country? As an interim measure before he undertakes the review, will he implement the recommendations of the East Anglian Planning Council on industrial development particularly in the Yarmouth and Lowestoft area?
    Mr. Shore: I will certainly consider all relevant factors in the review which we shall be undertaking, and in the continuing review which we are making of development area and intermediate area problems.
    Sir H. Legge-Bourke: Will the right hon. Gentleman bear in mind that the Hunt Committee's Report has been a grave disappointment to those areas lying in between the four city centres visualised in the East Anglian Planning Council's Report? In the light of this, will the right hon. Gentleman give an assurance that if a local authority can come to an agreement with the Greater London Council about taking overspill from London he will not stand in its way?
    Mr. Shore: That is a hypothetical question about future overspill arrangements. As I have made clear—and this is a matter of great importance to East Anglia—we will ensure that the outflow of industry from London into overspill towns and new towns will not be allowed to fall below the pace of physical development of those overspill towns and new towns.

    Economic Activity (Beckenham)
    Mr. Goodhartasked the Secretary of State for Economic Affairs what plans he has for increasing the level of economic activity in Beckenham during the next 12 months.
    Mr. Urwin: There are no specific plans for Beckenham.
    Mr. Goodhart: As my constituents during the past 12 months have had to cope with record increases in prices and taxes, will the Minister give an assurance that they will not have to cope with record increases in National Insurance contributions?
    Mr. Urwin: I would ask the hon. Gentleman to table a Question on that point.

    Sheffield (Hunt Committee's Report)
    Mr. Hooleyasked the Secretary of State for Economic Affairs whether Sheffield will be included as part of the intermediate area of the Yorkshire coalfield recommended for special assistance by the Hunt Committee.
    Mr. Urwin: My right hon. Friend is consulting the economic planning councils about the precise boundaries of the areas to receive special assistance, and he will make a further statement after the Whitsun Recess.
    Mr. Hooley: Does not my hon. Friend agree that the Sheffield-Rotherham conurbation would provide a natural focus for extra industrial development and activity to provide labour and jobs for the South Yorkshire coalfield?
    Mr. Urwin: We are extremely aware of the problems of the area referred to by my hon. Friend and full attention is being given to the point which he raises.
    Mr. Ashton: Will my hon. Friend take note that the Yorkshire coalfield does not finish on the boundaries of Yorkshire but extends well into Nottinghamshire and that there are three pits in Worksop which are part of the Yorkshire coalfield?
    Mr. Urwin: There is a difficult geographical problem here, and the planning
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    councils' views will be very valuable to us in arriving at a final decision.
    Mr. Scott-Hopkins: Is not it quite clear from the questions asked this afternoon that the criteria upon which the grey areas have been granted assistance are unsatisfactory? Will the Minister recommend to his right hon. Friend that he should review the whole of this exercise as it is so unsatisfactory?
    Mr. Urwin: My answer to the last part of the question is absolutely negative. We have no intention of doing that. As to the decisions, I am certain that those areas which are being designated as grey areas will not adopt the attitude which the hon. Gentleman has adopted.

  POST OFFICE

    Mail (Delivery)
    Mr. Dudley Smithasked the Postmaster-General when he estimates he will be able to guarantee the next-day delivery of letters bearing a 5d. stamp and marked First Class, which are posted before the final collection time, to destinations of less than 100 miles way.
    The Postmaster-General (Mr. John Stonehouse): Overall 94 per cent. next-day delivery is being achieved against an estimated maximum possible performance of 95 per cent. The percentage achievement for destinations within 100 miles is even higher.
    Mr. Dudley Smith: Nevertheless, is the right hon. Gentleman aware that many people are convinced from personal experience that the alleged first-class service is inferior to and less reliable than the old 4d. service, and will he resist any pressure which may be brought to bear on him by the Prime Minister or his Cabinet colleagues on the question of implementing the new report on the two-tier system which would make the postal service even slower than it is now?
    Mr. Stonehouse: I am not aware of that, and it is, in fact, not correct according to all the statistics and the reports we have received on performance. On the development of the two-tier system, we have made public an internal report and we are awaiting reports back on that.

  UNITED STATES OF AMERICA (PRIME MINISTER'S VISIT)
  Mr. Martenasked the Prime Minister when he will next officially visit the United States of America.
  The Prime Minister (Mr. Harold Wilson): I have nothing at present to add to what I said in reply to an almost identical Question from the hon. Gentleman on 13th March.—[Vol. 779, c. 1556–7.]
  Mr. Marten: When the Prime Minister eventually goes, which I assume will be after the Whitsun visit of my right hon. Friend, will he make a particular point of comparing American trades union legislation with the Cabinet proposals, which he is about to put forward before Whitsun, and which he described on Sunday as the greatest advance in legislation this century?
  The Prime Minister: Yes, Sir; we have considered the American legislation and we have nothing to learn from American legislation in respect of what the Government have decided to put before the House. In reply to the earlier part of the question about the timing, the hon. Gentleman may be interested to know that I was originally invited to go to Washington in the latter part of February but, instead, the European visit of the President took place. During his visit we agreed that I would go in April or May, and, at my own suggestion, this has been deferred until later in the summer because four of my senior colleagues have been in Washington since the President's visit.
  Mr. Molloy: Will my right hon. Friend agree that there is something to be learnt from American legislation? It has helped to increase the number of days lost through strike action. That is a lesson which we in this country might learn.
  The Prime Minister: My hon. Friend is entitled to learn all the lessons he wishes from American legislation. We have based our proposals on the facts and the problems that have to be dealt with in this country.
  Mr. Heath: As the Prime Minister will not be visiting the President in the near future, will he tell the House whether he has had any communication with him about four-Power talks on the Israeli Arab conflict, what proposals Her
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  Majesty's Government are putting forward to help bring about a settlement in the United Nations and whether any progress has been made?
  The Prime Minister: We are in continuous touch with the President and his Administration on this question. The right hon. Gentleman will know of the talks which are going on almost from day to day between our representatives at the United Nations. He would not, any more than I would not, underrate the difficulties they have to face, but they are continuing to discuss every aspect of this question in the frankest possible way. [Interruption.] The Middle East crisis is not a laughing matter, even for the hon. Gentleman. The four Powers are discussing this in a real attempt to try to narrow the differences so that they can provide a solution that will give backing to Mr. Jarring in the job which he has been given to carry out the resolution which Her Majesty's Government introduced in the Security Council.
  Mr. Heath: The Prime Minister will appreciate that it has been difficult to obtain any information from Foreign Office Ministers, even about the approach of the Government to this problem. Will he discuss with the Foreign Secretary whether at some reasonable date before the House rises it may be possible to say what is the approach?
  The Prime Minister: I will certainly do that. The approach of the Government was stated by my right hon. Friend the Foreign Secretary in the last foreign affairs debate. We have sometimes heard, not least from the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home), the advantages of secret diplomacy in these matters, and, in view of the serious difficulties that have to be settled between the four Powers, there is a strong case for not making too many public pronouncements. I will discuss with my right hon. Friend whether more can be said.

  IMPORT SUBSTITUTION (MINISTERIAL RESPONSIBILITY)
  Mr. Peter Millsasked the Prime Minister whether he will designate a Minister with special responsibility to promote import substitution, particularly by increasing home food production.
  Mr. Joplingasked the Prime Minister whether he is satisfied with the co-ordination between the Ministry of Agriculture, Fisheries and Food, the Board of Trade and the Treasury in implementing Her Majesty's Government's policies designed to maximise the gains to the balance of payments from increased domestic food production; and if he will make a statement.
  The Prime Minister: My right hon. Friends already work closely together on these matters.
  Mr. Mills: In view of the almost complete failure of present policies to deal with this problem, is not it time that the highest priority was given to import substitution, and will not the Prime Minister agree that agriculture is willing and ready to help?
  The Prime Minister: Yes, this is very much our view. Indeed the question of import substitution raised in this Question goes far beyond agriculture. If there is one disappointment about the economic events of the past year, it has been that, whatever our exporting increases, industrial import substitution has not yet gone as far as it should having regard to the devaluation advantage. On agriculture, this matter was debated by the House recently.
  Mr. Jopling: Did not the Prime Minister read the Report of the Select Committee on Agriculture which said that there are considerable differences of attitude and opinion between the Government Departments concerned? Will not he for once acknowledge his failure and lost opportunity and do something about it?
  The Prime Minister: I did read that Report. I also read the valuable Report of the E.D.C. on agriculture. The hon. Gentleman will be glad to know that the N.E.D.C. at its meeting in April, which I was unable to attend, had a full discussion on import substitution. At its next meeting it will continue that, and it will also have a further report on the agricultural expansion programme. If the hon. Gentleman is suggesting, as was suggested in the House recently, that we shall get more agricultural production by still larger Government expenditure than was proposed in the Price Review, then hon. Gentlemen opposite had better
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  reconcile that with their pledges to cut Government expenditure.
  Mr. Hazell: Would not the Prime Minister agree that in accepting expansion to the extent of an additional £160 million produced from our own soil, the Government have, in fact, accepted the intentions of the Report of the Select Committee and that that objective is to be achieved over the next three or four years?
  The Prime Minister: Yes, my hon. Friend is right, and he himself has played a large part in these matters. The next step will be the general meeting of N.E.D.C., where these matters will be considered further.
  Mr. Stodart: Is the Prime Minister unaware that it is possible to get increased expansion without any additional Government expenditure? Is he not aware that one-sixth of all our imports is of food which we could grow in this country? The Chancellor said the other day that import substitution has hardly begun. Is this not indefensible?
  The Prime Minister: I have just referred to our disappointment about import substitution. I am aware of the other facts and figures put forward by the hon. Gentleman, and these were central to the report of the Select Committee and the E.D.C. But import substitution in this case has to be paid for either by increased subsidies involving Government expenditure, which hon. Gentlemen opposite are pledged to reduce, or by the Conservative proposals about levies which will be paid to an unacceptable degree by the consumer and which the National Farmers' Union itself totally rejects.
  Hon. Members: Rubbish.
  Mr. Heath: As the Prime Minister has now firmly rejected any additional Government expenditure to agriculture to produce expansion, has firmly rejected our proposals for bringing it about without further expenditure through the levy system, but is still firmly committed to large import savings, how will he do it?
  The Prime Minister: By the method described by my right hon. Friend in the debate, by what we have said in acceptance of the propositions of the E.D.C. for agriculture, which will be

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  further discussed. If the right hon. Gentleman insists on greater public expenditure on agriculture, how does he reconcile that with all his other promises?

  PRIME MINISTER OF NORTHERN IRELAND (VISIT TO LONDON)
  Mr. Roseasked the Prime Minister whether he will arrange a further meeting with the Prime Minister of Northern Ireland.
  The Prime Minister: The Prime Minister of Northern Ireland has accepted my invitation to a meeting in London on 21st May.
  Mr. Rose: Would my right hon. Friend impress on the new Prime Minister the need for immediate implemention of electoral and other reform? Would he also stress that ultimate power is vested in Westminster? Perhaps as a quid pro quo would he suggest the possibility of Government aid from this country for a crash programme of economic development for the depressed areas in Northern Ireland?
  The Prime Minister: I do not want to say anything which will make this important meeting more difficult in advance of the meeting. It will be very clear to all who are familiar with Northern Ireland's problems in the last few months, not least to my hon. Friend who has taken a great interest in them, that everyone in a position of authority in Northern Ireland will be only too well aware of what my right hon. Friend and I said to Captain O'Neill and his colleagues when they came over last time. We are not in any sense varying what we said to them. That will be the position from here on. Furthermore, they are fully aware of the need for urgency in this matter. I do not want to go further than that today.
  Mr. Heath: Would the Prime Minister accept that we on this side of the House fully support the reforms which the Government of Northern Ireland are pledged to carry through—[HON. MEMBERS: "Oh."] Indeed, in the same way as the Prime Minister and his colleagues and, I think, the whole House have pledged. Will he therefore agree that the thing
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  now to do is to give the Northern Ireland Government the opportunity to get on with the job?
  The Prime Minister: Yes, I welcome the fact that the right hon. Gentleman has supported the programme of reform. The programme of reform was proposed to the Northern Ireland Government by Her Majesty's Government, and I am very glad that it was accepted by Captain O'Neill. We all know the heavy price he had to pay for the fact that he recognised what needed to be done. It is now important that this programme should continue. I do not think anyone wants to make it any more difficult in advance of the meeting.

  HOUSE OF LORDS (REFORM)
  Mr. William Hamiltonasked the Prime Minister if he will now introduce new legislation to remove the delaying powers of the House of Lords in respect of legislation and statutory instruments.
  The Prime Minister: I would refer my hon. Friend to my reply to his supplementary question following my statement on 17th April.—[Vol. 781, c. 1338–44.]
  Mr. Hamilton: Is my right hon. Friend aware that his answer was not very forthcoming? Will he undertake to introduce a short, simple Bill to destroy the powers of the other place, a Measure which would command universal support on this side of the House?
  The Prime Minister: As in my previous statement, may I say that perhaps if it had not been for the delaying power of my hon. Friend, this legislation would now be on the Statute Book.
  Mr. Sandys: May we assume that in future the Government will not introduce any new legislation, on this or any other subject, without obtaining the approval of the right hon. Member for Sowerby (Mr. Houghton)?
  The Prime Minister: The right hon. Gentleman, whose frustrations in all matters within his own party are well known, must not assume that my right hon. Friend the Member for Sowerby (Mr. Houghton) exercises in relation to this Front Bench what the right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) exercises in relation to that Front Bench.

  COUNCIL OF EUROPE (GREECE)
  Mr. John Fraserasked the Prime Minister what consultations he proposes to arrange with the Heads of Government of the Council of Europe countries about the resolution passed by the Council on Greece's membership.
  Mr. Ormeasked the Prime Minister if he will make a statement regarding the British Government vote on the membership of Greece in the Council of Ministers of the Council of Europe.
  The Prime Minister: I have nothing to add to the statement which my right hon. Friend the Foreign and Commonwealth Secretary made in the House yesterday.—[Vol. 783, c. 458–64.]
  Mr. Fraser: The Prime Minister will appreciate that it would be too early now to hold any consultations with Heads of Government, but when opportunity arises within the next few months to meet other Heads of European Governments, will he ask them to do as much as this Government in persuading the Greek Government to return to democracy before the end of the year?
  The Prime Minister: In any meeting of Heads of Government this is certainly a question that would come up. The right way forward is the one which was proposed by my right hon. Friend the Foreign and Commonwealth Secretary yesterday when he made a statement about the consultations between the Committee of Ministers of the Council of Europe. This is the right way forward—to leave it to the Foreign Secretary.

  RHODESIA
  Mr. Biggs-Davisonasked the Prime Minister whether he will make a statement on his recent exchanges with the Prime Minister of Rhodesia.
  The Prime Minister: On the exchanges with Mr. Smith I have nothing to add to the reply I gave to a Question by the hon. Member for Louth (Sir C. Osborne) on 29th April.
  But hon. Members will have seen Press reports of the speech made by Mr. Smith last night opening his campaign on the
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  referendum for his so-called constitution, aimed at the permanent division of Rhodesia on a racial basis, in which he is reported as saying that it would "sound the death-knell of the principle of majority rule".—[Vol. 782, c. 1152–4.]
  Mr. Biggs-Davison: Is not this drifting apart of Britain and Rhodesia something which we all regret? Is it not in great measure a failure of the Prime Minister—
  Mr. Faulds: Absolute balls.
  Mr. Biggs-Davison:—to respond to the request repeatedly made from this side of the House to try again, after the failure of his "Fearless" efforts, before the referendum became imminent? Was he not aware that Prime Ministers—[HON. MEMBERS: "Speech."]—even in Rhodesia are under pressure, and what has the Prime Minister done with the proposals which were sent to him from Salisbury weeks ago?
  The Prime Minister: In the first place he is not the Prime Minister—
  Sir Knox Cunningham: Nor will the right hon. Gentleman be for long.
  The Prime Minister: In the second place, the hon. Member referred to drifting apart. Last night's speech certainly looked more like a slamming of the door than a drifting apart. The hon. Gentleman will be aware of the lengths to which we went with the "Fearless" proposals. Many hon. Members may think that we went too far, but no hon. Member thought that they went too short of what was required. That was clear from our previous debates. If they were not picked up, we can only draw our own conclusions. Now the hon. Gentleman, who has been the self-appointed spokesman of the régime in the House, can tell the House whether he supports Mr. Smith's speech of last night.
  Mr. Winnick: May I ask my right hon. Friend, first, whether the "Fearless" offer will now be completely withdrawn? Second, would he not agree that, in view of the remarks made yesterday in Salisbury, or elsewhere in Rhodesia, there can be no honourable settlement between Her Majesty's Government and the Rhodesian Front?
  The Prime Minister: I did not quite hear, because of the noise against which

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  my hon. Friend was speaking, whether he suggested that the "Fearless" proposals should be withdrawn or redrawn.
  Mr. Winnick: Withdrawn.
  The Prime Minister: No, Sir. The position of the "Fearless" proposals remains exactly as it did after the end of the Commonwealth Prime Ministers' Conference. Those proposals remain as the British Government's view and the view of most hon. Members in this House of the kind of solution which can one day be picked up. Certainly it is clear from the speech about which we read in the Press this morning that Mr. Smith has now surrendered to the extremists of the Rhodesian Front. This is a tragedy. I think that Mr. Smith had the opportunity of an honourable solution for Rhodesia, and we went to very great lengths, not only on board H.M.S. "Fearless", not only in the visit of my right hon. Friend, but subsequently, in repeatedly offering proposals but always getting the reply that they would not have this or that. Not at any point have we heard what they will accept.
  Sir Harmar Nicholls: Is the Prime Minister aware that his instant interpretation of last night's speech gives the impression that he enjoys the situation? Does he not think in the circumstances, bearing in mind all that is involved, that he ought to have some inquiries made to make sure that he has got the real atmosphere of events in Rhodesia?
  The Prime Minister: I have accurate reports. Far from enjoying the situation, after four years' effort on my part to get the six principles accepted in Rhodesia, which were substantially laid down by the previous Government and applied by us, certainly I do not enjoy any situation where those who have taken authority there reject the six principles. I hope that the hon. Gentleman equally will deplore the rejection of the six principles involved in that speech.
  Mr. Thorpe: Is the Prime Minister aware that, however great the criticisms that may be levelled against him, there are those of us who marvel at the dexterity of those who, on the one hand, support Mr. Smith and, on the other hand, reconcile their support with the oath of loyalty that they have taken in this House to the Crown? [HON. MEMBERS:
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  "Hear, hear."] Is he aware—[Interruption.]
  Mr. Speaker: Order. Noise, even in approval, takes up the time of the House.
  Mr. Thorpe: Is the Prime Minister further aware that, while there would be support for any honourable settlement which ended a situation in which the constitution put forward by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) and the right hon. Member for Streatham (Mr. Sandys) and torn up by the rebels, there are others who will be prepared to support the Prime Minister in sanctions, however expensive?
  An. Hon. Member: Bombs?
  The Prime Minister: While not agreeing with the whole of the preamble, on the main Question the answer is "Yes, Sir". On the last part of the right hon. Gentleman's remarks, the position is that all of us in this House, according to our different conceptions of what should be the answer in Rhodesia, have tried to get a solution in Rhodesia. Sanctions were implied and, indeed, threatened by the previous Government. They have been applied. If, and I repeat if, last night's speech is to be read at its face value as a slamming of the door, the sanctions will continue.
  Sir Alec Douglas-Home: Can the Prime Minister help the House, because there seems to be a slight contradiction between one attitude of Mr. Smith and his latest speech? Is it true that in the latest communications to the Prime Minister from Mr. Smith, Mr. Smith has said that he and his colleagues still stick to the blocking quarter plus one. There appears to be some discrepancy, and perhaps it should be resolved.
  The Prime Minister: There is always a contradiction between what I learn from Mr. Smith in negotiations and what he says in meetings of the Rhodesian Front. This has been a problem that I have had to face, and the right hon. Gentleman knows that he had to face it as well.
  It has been agreed that communications should be kept confidential, but certainly I agree with the right hon. Gentleman that there has been no suggestion by Mr. Smith in any exchanges that I have had

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  with him, on board "Fearless" or subsequently, that he would go back on the principle of the blocking quarter which we discussed and which we prevailed upon him to accept. The right hon. Gentleman now admits that he was wrong in thinking that Mr. Smith offered him any acceptable settlement last year when he was there.
  While conducting these exchanges, Mr. Smith has been moving further and further in the opposite direction, under pressure, to accept a so-called constitution which rejects every one of the six principles, with its particular emphasis on apartheid.
  Mr. Philip Noel-Baker: Is it not clear that Mr. Smith's speech represents the death knell not of majority rule but of his régime. Will my right hon. Friend give us a White Paper showing what the United Nations is doing about sanctions and about any measures that he proposes to tighten them?
  The Prime Minister: On the question of the speech last night, Press reports at present refer to
  "the death knell of majority rule".
  Indeed, it went further, and seemed to refer to the present situation in Rhodesia as something which Mr. Smith intends should last not only for many years, if the quotation is true, but for hundreds of years in the future. That is what the speech suggests.
  I have had no communication from him to say that the "Fearless" terms have been formally rejected. They are there. But any message in terms of acceptance must be read against the basis of his speech last night.
  Several Hon. Members rose—
  Mr. Speaker: Order. Mr. Heath. Business Questions.

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House whether he will state the business of the House for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Yes, Sir. The business for next week will be as follows:
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MONDAY, 12TH MAY—Remaining stages of the Post Office Bill.
Motions relating to the Fertilisers (United Kingdom) Scheme and the Ploughing Grants Schemes.
TUESDAY, 13TH MAY and WEDNESDAY, 14TH MAY—Committee stage of the Finance Bill.
THURSDAY, 15TH MAY—Supply (19th Allotted Day):
Until about seven o'clock, an Opposition Motion on the Failure of the Government's Housing Programme.
Afterwards, National Insurance Contributions, also on an Opposition Motion.
Consideration of Lords Amendments to the Immigration Appeals Bill.
FRIDAY, 16TH MAY—Private Members' Bills.
MONDAY, 19TH MAY—Remaining stages of the Transport (London) Bill.
Motions on the Import Duties (Temporary Exemptions) (No. 3) Order, the Police Pensions (Amendment) Regulations, the Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit Scheme, and on the National Insurance (Industrial Injuries) (Amendment) Order.
If the progress of business allows, it is hoped to rise for the Whitsun Adjournment on Friday, 23rd May until Monday, 9th June.
Mr. Heath: May I ask the right hon. Gentleman two questions? First, he has announced two days for the Committee stage of the Finance Bill next week. Can he tell us that additional copies of the Finance Bill will be available, by whatever means he has arranged, otherwise we shall come to the situation which I described yesterday, in which the House will not be able to proceed with its business.
Second, can the right hon. Gentleman say specifically when the Industrial Relations Bill will be published? Will he recognise that whatever date that is, there must be a proper interval between publication date and Second Reading while the House is sitting so that hon. Members can come together to discuss it if they wish. An interval only of the Whitsun Recess will not be satisfactory.
Mr. Peart: The right hon. Gentleman quite rightly referred to the first matter when questioning me yesterday. My right hon. Friend the Chief Secretary will be making a statement immediately after business questions about the strike and its effect on the Stationery Office.
Master copies of the Clauses and Schedules of the Finance Bill itself have been printed. These will be available by tonight to all hon. Members. Other Bills have also been printed and I am making further arrangements. I am doing all I can. The Deliverer of the Vote is confident that he can meet the needs of the House.
I cannot say any more than I said last week about the date of publication of the Industrial Relations Bill. It is hoped to have it before Whitsun. I understand the point which has been made by the right hon. Gentleman and I will bear it in mind.
Mr. John Mendelson: Referring to pressure on my right hon. Friend to publish the Industrial Relations Bill, does he recall that the week before last, in reply to a question that I put to him he said that he was aware that further consultations were needed with the General Council of the T.U.C. As one meeting will take place on Monday, is it not likely that further meetings will be necessary? Surely this is a serious enough matter not to be hurried. Will my right hon. Friend therefore give an assurance that the Government will reconsider the publication date and postpone it until after the Whitsun Recess, so that there will be plenty of time for these serious negotiations?
Mr. Peart: I cannot give a specific assurance to my hon. Friend.
Mr. Mendelson: Will my right hon. Friend consider it?
Mr. Peart: I will consider it, but I cannot give a specific assurance.
Mr. Sharples: Now that it has been confirmed that the Home Secretary received the Report of the Boundary Commission on 21st April, may I ask whether the Leader of the House can confirm that it is the Government's intention to follow precedent and that the necessary Orders will be laid before Whitsun?
Mr. Peart: The hon. Gentleman knows that two further reports, affecting two other parts of the United Kingdom, are not yet available. We must wait until they are.
Mr. Rankin: Is my right hon. Friend aware that a promise was given that time would be provided for a debate on certain airport navigational charges? Has that been done?
Mr. Peart: Time cannot be provided next week.
Mr. Hirst: The Leader of the House has said that in the circumstances the Clauses and Schedules of the Finance Bill, limited though they be, to be discussed on the Floor of the House will be available tonight. Will he be more specific? It is important that hon. Members should have copies before, at any rate, ten o'clock. Otherwise, many of us will have departed to our constituencies. At the moment, there is only one copy in the Library which we have to queue to see.
Mr. Peart: There will be more than ample copies for all hon. Members.
Mr. Arthur Lewis: Has the Leader of the House seen Motion No. 295,
[That this House congratulates the Prime Minister on his political honesty and courage in resigning from the Labour Government as a protest against the introduction of charges on the National Health Service, supports the remarks which he made on his resignation, in 1951, when he then said, inter-alia: 'The principle of the free health service has been breached, and I dread to think how the breach might be widened in future years'; and deeply regrets that he should have assisted in widening the breach, in the principle of the free health service, by the Government's recently announced 25 per cent. increase in certain health charges.]
Will he arrange for the Motion to be debated, because it is good to have a Motion like that, congratulating the Prime Minister?
Mr. Peart: I know that my hon. Friend is anxious to commit me, but it cannot be debated next week.
Mr. Hirst: On a point of order. I do not think that the Leader of the House heard my question. He said that copies

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would be available. I asked by what time?
Mr. Speaker: Order. I thought that the right hon. Gentleman heard it and answered it.
Mr. Peart: I am sorry. Before the sitting finishes tonight.
Dame Irene Ward: On the Hunt Committee's Report, may we have an assurance that we will know more about where the £20 million is to come from before the House rises for the Whitsun Recess? If the right hon. Gentleman will not give us that information, may I ask whether we could have a debate on it? If the Government decide on £20 million, they cannot do so without knowing where it is to come from. Everyone in the development areas, particularly on the North-East Coast, wants to be assured that nothing is to be taken from the areas which really require assistance.
Mr. Peart: I do not think that I can give a specific promise for next week.
Dame Irene Ward: No, but I wanted—
Mr. Speaker: Order. One bite is enough for each Member during business questions.
Mr. Pavitt: It will be surprising if the Leader of the House has not noticed Motion No. 296—
[That this House recalls the decisions of successive Annual Conferences of the Labour Party, believes in the principle that service to the sick and disabled should be provided by the community free of charge at the time of need, and therefore calls upon Her Majesty's Government to restore this principle to the National Health Service and withdraw the proposed increase of charges for spectacle lenses and for dentures.]
If my right hon. Friend cannot find time next week to debate it, may I ask whether he can give an assurance that we will do so before any Statutory Instrument is laid?
Mr. Peart: My hon. Friend obviously knows that changes could not be made without Statutory Instruments being laid before the House, which provide an opportunity for debate.
Mr. Clegg: May I ask the Leader of the House whether, during the coming
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week, we are likely to have any more interesting statements from the Secretary of State for Social Services?
Mr. Peart: I should hope not. [Laughter.]
Mr. Speaker: Order. We must not drift into the merits at business time.
Mr. Roebuck: Is my right hon. Friend aware that it is some time since the House had an opportunity of debating the work of the Ministry of Technology, which is one of the great success stories of the Government? Will he arrange the business for next week so that we can tell the public the facts?
Mr. Peart: I cannot rearrange the business, even though it would be an interesting debate.
Mr. John Hall: May I draw to the attention of the Leader of the House Motion No. 285?
[That this House, recalling with approval the pledge given on 28th May 1963 by the Prime Minister, then Leader of the Opposition, that grammar schools would be abolished 'only over my dead body' and observing the lack of consideration shown for his Leader's wellbeing by the Secretary of State for Education and Science in pursuing his vendetta against the grammar schools, urges the Prime Minister to make it clear that he intends to honour his word.]
This is attracting considerable support and attention from both sides of the House. It draws attention to the sinister attempt by the Secretary of State for Education and Science to face his right hon. Friend the Prime Minister with two dreadful alternatives, one to honour the pledge to maintain grammar schools and the other to impose on the nation the cost of a State funeral. In view of—
Mr. Speaker: Order. The hon. Member must not drift into the merits of what he wishes to have debated.
Mr. Hall: I was about to say that in view of the appalling difficulty of these two alternatives facing the nation in deciding which is best, may I ask the right hon. Gentleman to arrange an early debate?
Mr. Peart: As I said last week, I find this argument extremely interesting, but it cannot be debated next week.
Dr. Gray: What has happened to the promise to give time to the Divorce Bill? Will the Leader of the House give an assurance that time will be found for it to be put through all its stages in the House before the Whitsun Recess?
Mr. Peart: I cannot give that assurance.
Mr. Wilkins: On a point of order. When was this promise made? We would like to be acqainted with it.
Mr. Speaker: Order. The hon. Member is responsible for what is in his own question. I am not discussing it. The right hon. Gentleman has answered it.
Mr. Ian Lloyd: Since the Leader of the House—
Sir Harmar Nicholls: On a point of order.
Mr. Tinn: On a point of order. I believe that inadvertently the Leader of the House did not answer my hon. Friend's question.
Mr. Peart: We must see how the Divorce Bill goes before any decision is made about time.
Mr. Ian Lloyd: Since the Leader of the House will doubtless have been made aware of the depressing contrast between the publication of the annual report of the Port of London Authority today and that of the Port of Rotterdam yesterday, and since he will further be aware that it is only deep sea British shipowners who may not bring containers into Britain, may I ask how soon the House will have a chance of debating what is fast amounting to a scandalous national situation?
Mr. Peart: I accept the seriousness of this matter. I think that I once made some remarks about it to the House. But I cannot alter the business for next week.
Mr. Hazell: Will the Leader of the House say when time is likely to be found to discuss the Report of the Select Committee on Agriculture?
Mr. Peart: Again, much as I have a deep interest in this matter, I cannot find time for it next week.
Sir H. Legge-Bourke: May I ask a question relating to the next 24 hours? In view of the precarious state of certain foreign exchange markets at the moment, will the Leader of the House say whether
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there is any likelihood in the next 24 hours of the Chancellor of the Exchequer having to make any statement, bearing in mind the difficulty that we had in obtaining a statement from him the last time certain markets had to be closed?
Mr. Peart: I hope that the hon. Gentleman will not press me on this point, for obvious reasons.
Mr. C. Pannell: As the Leader of the House has not announced that we will be debating the Report of the Select Committee on Privilege next week, and that it will probably not be taken before the Whitsun Recess, can he hold out any hope that it will be taken either in this Session or in this Parliament?
Mr. Peart: I want a debate this Session on this important Report. It should be considered by the House and it will be taken.
Mr. Younger: As the Government had to abandon the Education (Scotland) Bill last night because there were not sufficient Members present from their side to carry it through, may I ask the right hon. Gentleman why it is not down for next week's business? Will he say when it is coming?
Mr. Peart: I cannot say precisely, but it will come.
Mr. Ogden: As the debate on Thursday next week is to be cut short at 7 o'clock, will my right hon. Friend use his influence, not only with back benchers, but with Front Bench speakers on both sides, to keep their speeches as short as possible to enable as many hon. Members as possible to take part in the debate?
Mr. Peart: I am always anxious that that should be done, but I have no power to do it. I know that Mr. Speaker appeals to hon. Members to keep their speeches short.
Mr. Tilney: As the 50 per cent. increase in the charge for meteorological services at Liverpool and other provincial airports came into operation on 1st May, can the right hon. Gentleman say when we shall be able to debate the two Prayers on this matter?
Mr. Peart: I cannot say, but I shall convey the importance of this matter

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to my right hon. Friend. There will not be a debate on it next week.
Mr. Arthur Davidson: In view of the interest shown in the Hunt Committee's Report and the Government's proposals, can my right hon. Friend arrange for a debate on them in the very near future?
Mr. Peart: I think that this is an important matter which is worth discussing on the Floor of the House, and I shall convey my hon. Friend's views to my right hon. Friend.
Mr. Goodhart: Will the right hon. Gentleman try to persuade the Home Secretary to make a statement next week about the Boundary Commission's Report, particularly as the Commission's proposals will have a most damaging effect on the size of the Labour vote at Huyton?
Mr. Peart: I have replied to that.
Mr. Speaker: The hon. Member cannot argue merits. He can ask for a debate.
Mr. Peart: I answered a similar question earlier, when I said that we were waiting for two further reports.
Mr. Hector Hughes: Will my right hon. Friend find time for my meritorious Motion which seeks to improve the conditions relating to cars for disabled persons?
[That this House is of opinion that Clause 12 of the regulation relating to disabled persons' cars, which provides that when the child or children of the disabled person reaches the age of 14 years or ceases to depend on the disabled person the car will not be replaced, by substituting a later age which will enable the disabled person to continue his or her care of the relevant child or children.]
Mr. Peart: I know that this is an important matter, and that my hon. and learned Friend tries very hard to keep Ministers informed about it. I shall bear it in mind, but I cannot provide time for a debate next week.
Mr. Edward M. Taylor: Is the right hon. Gentleman aware of the grave anxiety and concern in thousands of Clydeside homes today over the uncertainty
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at Upper Clyde Shipbuilders? Will the right hon. Gentleman give an assurance that a statement will be made next week, or soon thereafter, about a final decision?
Mr. Peart: The hon. Gentleman is right to ask about that. My right hon. Friend promised this, and I shall inform him that a statement should be made next week.
Mr. Russell Kerr: In view of the imminence of a major strike by university technicians at the Imperial College, and elsewhere throughout the country, can my right hon. Friend give an assurance that there will be an opportunity for an emergency debate during the coming week?
Mr. Peart: I cannot say that, but I shall inform my right hon. Friend that hon. Members are interested in this, and perhaps he will keep the House informed.
Mr. Goodhew: The right hon. Gentleman gave the dates of the Whitsun Recess, but he qualified his statement with the remark that they were subject to the progress of business. Is the right hon. Gentleman aware that the lack of progress is due to the failure of the Government Chief Whip to keep hon. Gentlemen opposite here at night to vote for the Government? If that is so, why take it out on the rest of the House?
Mr. Peart: I am anxious that the hon. Gentleman should have a very good holiday.
Mr. Philip Noel-Baker: Will my right hon. Friend bear in mind that within the measurable future the House ought to have debates on Rhodesia and Nigeria?
Mr. Peart: I note what my right hon. Friend has said. Not next week, but I shall bear it in mind and inform my right hon. Friend.
Mr. Bruce-Gardyne: Is the right hon. Gentleman aware that more than 11,000 qualified and experienced teachers in Scotland are today facing dismissal, and that if these dismissals are proceeded with the entire education system in Scotland could be disrupted? Will he therefore ensure that the Secretary of State for Scotland makes a statement to the House urgently on the question of re-registration with the General Teaching Council?
Mr. Peart: I shall draw the hon. Gentleman's point of view to the attention of my right hon. Friend immediately.
Mr. Hugh D. Brown: If the dates for the Whitsun Recess are conditional on progress made with Government business, including the remaining stages of the Post Office Bill, will my right hon. Friend encourage my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) to start his Whitsun Recess from Monday?
Mr. Waddington: Can the right hon. Gentleman say when, if ever, there will be time to debate the Report of the Textile Council, bearing in mind, in particular, the concern felt in Lancashire as a result of the Chancellor's purchase tax proposals?
Mr. Peart: This is an important matter. I cannot say that it will be debated next week, but I shall report what has been said.
Mr. Speed: Does the right hon. Gentleman think that, unintentionally, he misled my hon. Friend when talking about the Boundary Commission? Is the right hon. Gentleman aware that the 1949 Act says that as soon as a Boundary Commission has reported the Home Secretary shall lay its report before the House. Will the right hon. Gentleman reconsider his earlier reply about a debate on Motion No. 292?
[That this House notes that the Secretary of State for the Home Department received the report of the Boundary Commission for England on 21st April and calls upon Her Majesty's Government to implement its recommendations before the next general election.]
Mr. Peart: I have given a reply, but I shall examine the matter very carefully. I thought it was reasonable to suggest that before my right hon. Friend makes a precise statement he should receive the other two reports.
Sir Knox Cunningham: On a point of order, Mr. Speaker. It will not be without your recollection that the Prime Minister's Question Time today lasted for 23 minutes, and that Question No. Q4 dealt with Northern Ireland. Can you say whether there was any particular reason why no Ulster Member was called to ask a supplementary question?
Mr. Speaker: Mr. Speaker has a difficult task to allocate time as between issues as between the two sides of the House. He cannot go back and examine just why he moves from a particular question. The simple fact, however, is that the Rhodesia Question came at 29 minutes past three. If we are on an important Question at that time I usually let it run over. It ran over from 29 minutes past three to about 36 minutes past three. I hope that the hon. and learned Member will understand.

H.M.S.O. PUBLICATIONS WAREHOUSE (INDUSTRIAL DISPUTE)
The Chief Secretary to the Treasury (Mr. John Diamond): With your permission Mr. Speaker, and that of the House, I should like to make a statement about the industrial dispute at the Cornwall House publications warehouse of Her Majesty's Stationery Office.
After a pay claim by Her Majesty's Stationery Office employees at the warehouse who are members of the Society of Graphical and Allied Trades, discussions have been proceeding about a proposed pay and productivity agreement.
The S.O.G.A.T. chapel at the warehouse came out on strike last week. It has refused to return to work until a final agreement is concluded. The details of an agreement have been extensively discussed in negotiations which are temporarily adjourned while various points are considered.
The House will understand that it is difficult for me to say more at this stage without possibly prejudicing the negotiations. In the meantime, all possible arrangements are being made to avoid undue inconvenience to Members.
Mr. Iain Macleod: On the industrial dispute side of that statement, is the right hon. Gentleman aware that as discussions are proceeding the only comment that I wish to make is to invite the right hon. Gentleman to keep the House closely informed, either through himself, or through the Department of Employment and Productivity, whichever is appropriate?
Can the right hon. Gentleman go a little further on the point about undue inconvenience to Members? Does the

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right hon. Gentleman realise that this is not just a case, for example, of the Finance Bill, but that this afternoon there were no copies of the Hunt Report, or of "Task Ahead", although both were vital to the Questions before the House this afternoon?
Does the right hon. Gentleman agree that the only way to deal with this is for Ministers to look ahead to see when their business is coming before the House and to make advance arrangements so that the minimum inconvenience is caused? Can he assure us that those instructions have gone to all Ministers in the Government?
Mr. Diamond: I am grateful to the right hon. Gentleman for his opening comments.
On the second question, the right hon. Gentleman is right when he says that one should take every possible step to anticipate difficulties as they arise. This has been done for the Finance Bill itself, and more particularly for the Clauses which are to be debated, and no doubt amended, in Committee. The same comment applies to the Bill that we are to discuss this afternoon, and to other Bills.
I take the point made by the right hon. Gentleman. Instructions have gone to all Departments that the very thing requested by the right hon. Gentleman should be done. I hope that the inconvenience of hon. Members will be minimal. I regret that it is not possible completely to avoid inconvenience.
Mr. Murray: Does not my right hon. Friend agree that the Government and Parliament should do nothing that encourages any blacklegging against the printers of Her Majesty's Stationery Office and that Government servants should be placed in no different position from other industrial workers? On whose initiative have the talks been adjourned? When does my right hon. Friend expect them to be resumed?
Mr. Diamond: Talks cease when two parties find it inconvenient to carry on talking. I regret that talks are not proceeding, but they are not for the moment. It is not a question of printing. It is a question of the warehouse; it is a question of distribution only. Printing is continuing. Distribution direct from the printers to the House under customary
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procedure is carrying on. Public distribution which goes through the warehouse is not taking place.
Mr. Thorpe: Without in any way intruding upon the merits and the details of the matters which are the subject of discussion, as we are dealing with a dispute in Her Majesty's Stationery Office and as there is, therefore, Ministerial responsibility, may we know whether the Government are in any way represented at those talks, and, if so, by whom and in what capacity?
Mr. Diamond: Yes; there is Ministerial responsibility. I am speaking as the responsible Minister, because H.M.S.O. is the departmental responsibility of the Treasury and, therefore, I appear as the employer, as it were. In the usual way, officials of my right hon. Friend the First Secretary's Department are participating in the discussions.
Mr. Boyd-Carpenter: Does the right hon. Gentleman's supplementary answers to the hon. Member for Gravesend (Mr. Murray) mean that the copies of the Finance Bill have been printed, but that the Government find themselves unable to obtain possession of what is, I suppose, their own property from their own servants?
Mr. Diamond: A number of copies of the Finance Bill were printed and distributed to all right hon. and hon. Gentlemen—[HON. MEMBERS: "Oh."] I am sure that the House would wish me to give a full reply—to all right hon. and hon. Gentlemen who applied for them.
This left those other right hon. and hon. Gentlemen who had not applied in the position that they could go to the Vote Office. After a certain amount of time the number of copies ran out at the Vote Office. There were clearly some hon. Members—it does not matter how many, because it is great inconvenience, as I explained when I moved the Second Reading of the Finance Bill—who suffered inconvenience. That position is now changed. A number of copies have been recovered. Arrangements have been made to distribute them to every right hon. and hon. Gentleman. [HON. MEMBERS: "Answer."] Arrangements have been made to distribute a copy to every right hon. and hon. Gentleman who did not apply individually for a copy.
Sir Harmar Nicholls: Is the right hon. Gentleman aware that he seemed to be evading the principle behind the question asked by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)? Were these documents—Government property—in the warehouse and available? Could not someone have had authority to collect them, or was the position that they were there but because the right hon. Gentleman was taking a very understandably cautious line Parliament's priority had to go by the board?
Mr. Diamond: Parliament's priority is a matter for you, Mr. Speaker, and you have ruled on it.
As to Ministerial responsibility, I am sorry if I did not make it absolutely clear that the strike is taking place at the warehouse, and therefore there is no distribution from the warehouse. Before attempting to interfere in that situation one must think carefully whether interference would be beneficial in the long run.
Sir A. V. Harvey: How many hon. Members received Bills automatically by post or delivered to them out of the 630? The impression gained on this side was that a great number of hon. Members did not receive a copy of the Bill. Will the Chief Secretary confirm that on Tuesday there were several hundred copies of the Finance Bill in the warehouse? What attempts did the Government make to obtain possession of those copies?
Mr. Diamond: I cannot give the precise number, but my understanding is that approximately 600 Members received their copies direct.
Sir A. V. Harvey: No.
Mr. Diamond: If the hon. Gentleman has better information, I do not know why he asked me. The best information I have is that it was approximately 600 and that there were at that time 30 Members seeking copies. Fifty Members have been sent copies. Some Members get a copy and then part with it, as was explained at the time.
Mr. Iain Macleod: Will the Chief Secretary return to the very important point which was made by my right hon. Friend the Member for Kingston-upon-Thames
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(Mr. Boyd-Carpenter) and which has been taken up by others of my hon. Friends? Are there copies available in the warehouse? Have the Government sent for those, and, if so, have they been refused?
Mr. Diamond: There are copies in the warehouse both of this Bill and of other matter which has been printed and which goes to the warehouse as part of the normal method of distribution.
If the right hon. Gentleman is suggesting that one should take the power into one's own hands to take a van and go there and take copies and start distributing them, without going into the question, as I am not a lawyer, of whose property they are, although I assume that they are the Government's property, all I would say is—and I return to what the right hon. Gentleman first said—that when negotiations are proceeding the least one says and the least one does may be the most helpful in the long run.
Mr. Russell Kerr: On a point of Order. Would you tell us, Mr. Speaker, how it is possible for the House to protect itself against this spate of triviality, particularly as we have a very important Bill to discuss this afternoon?
Mr. Speaker: Order. That is not a point of order. The hon. Gentleman will know, as every hon. Member knows, that the House is facing some very difficult problems of having the literature that it needs for its work, and hon. Member have a right to ask questions. I hope that the House will not press questions on too long, however.
Sir D. Walker-Smith: The right hon. Gentleman said that he was not a lawyer. Is the position that the Government are prepared to acquiesce in the tort, certainly of detinue and probably of conversion of Government property, indefinitely, without taking any action?
Mr. Diamond: As I am not a lawyer, I would not like to pronounce on detinue precisely. One has to take the responsibility of taking the view that the House would like this strike settled and the inconvenience ended in the shortest possible time. I have to take the responsibility of deciding which is the best method of achieving that. I am fully aware of the inconvenience to which the House is being put. More importantly, perhaps, I

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am aware of the much greater inconvenience to which the public is being put, because, whereas we are getting many copies, and sometimes all the necessary copies, the public is getting precisely nothing. I am doing everything that I can to bring this strike to as early an end as possible.
Mr. Michael Foot: Does not my right hon. Friend think that if we put all these and kindred delicate matters into the hands of the lawyers we would very quickly have industrial chaos from one end of the country to the other?
Mr. Thorpe: On a point of order. May we take it that it would be your Ruling, Mr. Speaker, that whatever the merits of this case there is no wish to subvert the law and, therefore, the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), who suggested that there might well be an actionable tort, wholly overlooked Section 3 of the Trade Disputes Act, 1906?
Sir D. Walker-Smith indicated dissent.
Mr. Speaker: What the right hon. Member for Devon, North (Mr. Thorpe) has said is not a matter for me.
Mr. Ronald Bell: Why does not the Chief Secretary come clean over this? Why not send somebody to collect these documents? If one set of people will not deliver them, why not get another set to do so? Or is the truth of the matter that the right hon. Gentleman is afraid of certain trade union jungle rules?
Mr. Diamond: I am not sure that I heard all of the last part of the hon. and learned Gentleman's supplementary question, but I gather that in the first part he asked why I had not sent a van to collect the documents. The short answer is that any fool could have done that.

ORDERS OF THE DAY

  IRON AND STEEL BILL
  Order for Second Reading read.
  The Minister of Power (Mr. Roy Mason): I beg to move, That the Bill be now read a Second time.
  It is, of course, customary and right when introducing new borrowing powers Bills to give the House a general survey of the state of the industry. It is especially welcome that the House should have a further chance to discuss the affairs of an industry like the nationalised steel industry, which is now in the process of important and rapid changes. I shall try to bring the House up to date on the problems and prospects of the industry and to give an account of how I see its future.
  Last year, 1968, was a good production year. It rose from 24 million ingot tons in 1967 to an annual rate of 27 million tons by the end of 1968 and is expected to be still higher this year. For 1969 as a whole, national production—that is, public and private—should be at a record level and it has already exceeded previous records in Scotland and Sheffield.
  On production generally, therefore, the picture is an encouraging one. I must record, however, that it is less encouraging on the balance of payments. It is true that there has been a steady increase in exports over the last few years; in 1968, they exceeded 5 million ingot tons for the first time. But imports have also been rising, and in 1968 they, too, reached the record level of almost 3 million tons.
  The steel industry is still a substantial net exporter, with a favourable trade balance on products of well over £100 million last year, but this steady rise in imports can only cause concern. It adds point to what I shall say about the imperative need for the industry to be fully competitive.
  During my speech I shall have no occasion to refer to the private sector of the industry. This is not because the Government are unaware of its importance or are indifferent to its progress. I am keenly interested in this side of the steel industry. My Department has made a point of establishing cordial relationships with the British Independent Steel

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  Producers Association and in its policy for the steel industry there is no bias against the private sector. I have also met representatives of B.I.S.P.A. What I am after is the prosperity and efficiency of the industry as a whole. Today, however, we are concerned with a Bill dealing directly only with the British Steel Corporation.
  The Bill arises out of the work done so far by the British Steel Corporation. Since it took over the nationalised industry less than two years ago, the corporation has been engaged on two main tasks: first, it had to organise the transfer of the nationalised companies and form them into a coherent organisation; and, secondly, it had to develop long-term policies for the future of the nationalised steel industry.
  I need not dwell on the importance of this task. Everything has had to be looked at from the beginning. All policies had to be reconsidered. What was right for the old—and, by modern standards, small—companies was not necessarily right for the corporation, one of the biggest steel producers in the western world; and what was right for the 1960s is not necessarily right for the 1970s. Everything had to be considered, moreover, against a fiercely competitive international background. I am glad to say that the preliminary work of reappraisal by the B.S.C. has now been completed.
  With so much to be done, the first phase of the corporation's existence has involved arduous work and a heavy strain for all engaged in the corporation's management. I am glad of this opportunity to express my appreciation of the effort that it has put in; and I pay special tribute to the leadership which Lord Melchett has provided during the first two extremely difficult and exacting years. I was particularly glad to invite him to remain as chairman so that the corporation could continue to have the advantage of his leadership.
  I was interested to learn in the Press of the undertakings which Lord Melchett is supposed to have obtained before reappointment, covering steel prices, closures, and a host of other matters. While I admire the fertile imagination which must have created these rumours, I assure the House that I have given no
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  undertakings on such matters, and nor were they sought.
  As regards the short-term, hon. Members will have seen the corporation's Second Report on Organisation, which recommended that the multi-product groups should cease to exist and that there was a strong case for organising their activities on a product basis. The corporation, as is known, has been urgently examining the feasibility of such a system and, if this is established, it will go on to consider the precise arrangements for constituting product divisions. It will then present its proposals to me.
  I will only say now that, like the corporation, I am anxious that these questions should be resolved quickly and that the organisation decided on should provide fully for rationalisation and optimum utilisation of the corporation's assets. I am also concerned, again like the corporation, to ensure that in any rearrangement, Scottish, Welsh and regional interests are fully considered.
  The Report on Organisation also recommended that the assets of the publicly-owned steel companies should be transferred to itself and envisaged their consequent dissolution. With nationalisation, the companies now play no real part in the running of the industry and I agree with the view expressed in the corporation's report in paragraph 30 that keeping the companies in being as shells is not justified.
  The corporation's staff need to be free to concentrate their effort on making the industry fully efficient and competitive. Hence, Clause 8(1) of the Bill empowers the Minister to transfer these companies' assets, and Clause 8(2) to dissolve them, subject to Parliamentary procedure.
  In encouraging the corporation in its move towards the dissolution of the companies, it is important to ensure that it does not incur fiscal penalties along the way. I have, therefore, included in the Bill, in Clauses 9 and 10, provisions for certain accumulated tax losses and allowances of the companies to be available to the corporation, and for any capital losses of companies which are dissolved to be set against chargeable gains of the corporation.
  Similarly, Clauses 11 and 12 provide for payment to the corporation of the

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  equivalent of investment grants which would otherwise have been payable to any of the companies had they not been dissolved or their undertakings and assets transferred to the corporation.
  Mr. Peter Emery: Before leaving the reorganisation question, would the right hon. Gentleman comment on a fact which is now widely known; that it is the intention of B.S.C. to reduce the 14 companies and 200 associates into four product groups? This is a matter of major importance from the reconstruction point of view, about which he should comment.
  Mr. Mason: I will, of course, be dealing with that point.
  If the hon. Gentleman has read the Second Report on Organisation—I have reported on this matter to the House—he will be aware that it has been decided to abolish the four groups and to consider whether product divisions make sense. The report on product divisions is not yet before me. However, I assure the hon. Gentleman that I will be commenting on this matter.
  The corporation's work on long term reorganisation and development is described in the explanatory brochure "Finance for Steel", published in support of the Bill, but I know that hon. Members take a very close interest in it and I shall, therefore, treat the matter at some length. Few Bills could have come before the House with such advance material, including the Second Report on Organisation, the annual report and accounts, the brochure from B.S.C. and the Explanatory Memorandum from my Department in addition to the Bill.
  The first requirement, as I see it, must be to create a pattern of production which allows the optimum use of the assets of the nationalised sector taken as a whole, rather than, as previously, of relatively small units.
  The optimum size of ironmaking, steelmaking and finishing units has been steadily rising for some years now. Steelworks in Japan and America are in existence, or being planned, with an annual capacity of 5 million tons or more, and, indeed, up to 10 million tons. Between 1961 and 1966, Japan added eight more works with an annual capacity of 2 million tons and the Common Market
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  seven. We built one, to bring our total number to two.
  In productivity also, we appear to be behind. It is generally accepted that in 1965 the United States steel industry used about half as many men per unit of output as us and that the Japanese and the Italian industries used about two-thirds. Subsequent trends in Europe have not been to our advantage either.
  What is right in their conditions is not automatically right in ours because we must take into account our own plant heritage and the specialised nature of some production, especially in alloy steels, where advantages of scale are not too important. But even so, optimum use of the industry's resources must involve greater concentration than ever before on very large works exploiting the latest processes.
  There are benefits to be gained from the size of management units as well as the size of plant. The B.S.C., in terms of crude steel output, is the second largest producer outside the Soviet Union. It can turn this to advantage by bulk purchases of materials at home and abroad, by co-ordinated development of new capacity, and by economies in the use of existing capacity. It has already made substantial savings in this way, but it is vital that it achieves more if it is to meet this fierce international competition.
  Sir Spencer Summers: Before the right hon. Gentleman leaves the point about concentrating production for greater efficiency, for which he is seeking the power and authority from the House, will he tell us which works in the process of concentration are to close?
  Mr. Mason: No, I cannot say that, but if the hon. Member has read and fully considered the four documents before the House in alliance with the Bill he will have seen that the British Steel Corporation has said that there will be generally four major producing units, in Wales, on Teesside, in Scotland, at Scunthorpe and, with general development in special alloy steels, in Sheffield. That is the general plan.
  We all knew that the concentration of the steel industry, like any other, can have social implications. Any changes should therefore be carried through only

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  after genuine consultation with the unions and after full account has been taken of these implications.
  I am glad to say that the corporation is consulting the unions fully on all its work on development, and will continue to do so. As a trade unionist myself, I hope that the unions will respond to the need for rationalisation. The steel unions always have done in the past—and will doubtless see that the process I have just described is necessary if the country is to gain all the benefits of bringing the bulk of the industry under one ownership.
  I should here like to pay tribute to the men on the shop floor. Steel-making has always been a skilled, arduous and responsible task, with, like coal-mining, a proud tradition. As technology advances, the nature of the work is continually changing, but it will remain challenging, and the environment of steel-making, with its shift work and with operations at high speeds and high temperatures, will not appeal to those who prefer a quiet and easy life.
  In my visits to steelworks, I have been impressed not only with the skill and care that men devote to the task, but with their wider interest in the future of their works and that of the industry as a whole. We must remember that, however much effort goes into the planning of development and operation of the industry, the ultimate result will depend on the work of the men of the shop floor.
  Apart from the direct consequences for employment of the rationalisation of the industry, there are also the implications for regional development. On these, the Government are keeping in close touch with the corporation which is very conscious of the importance of its works to the well-being of the localities where they are situated.
  In talking of planning, I should make it clear that there is no single "plan", no black book of closures, for example. I do not think that it would make good sense to try to establish in one's mind, or in the mind of the B.S.C., a list of plants which for various reasons may close. To list them now would have a damaging effect on morale and would put the industry back on its knees. The
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  work done so far has been mainly directed at general strategy and identifying all the relevant issues.
  The status of the plan is, therefore, such that no specific decisions about, for example, the future location of production have yet been taken. But a great deal is becoming clear about the likely shape of the industry. There will be a sizeable increase in production as home demand rises and also as export opportunities are properly exploited. The corporation has estimated that its production, as distinct from national, will rise from 23·6 million tons in 1968 to between 30 and 34 million tons in 1975.
  There will be increasing concentration on the L.D. process, with growing use of very large converters; as a result, the bulk of production is likely to come in the next few years from large L.D. plant on or near the coast in Wales, Teesside, Humberside and Scotland. The iron-making plant will be supplied by ore brought to new terminals in very large carriers and the corporation is building, or is considering, terminals in all the areas I mentioned. For special steels, rather different considerations apply, and the corporation has already said that it will be undertaking continued development in the Sheffield area.
  On prices, the corporation completed its major price review—there had not been one for the past 30 years—at the end of last year, and the Government referred the proposals to the National Board for Prices and Incomes, whose report is expected shortly. There have, I know, been many representations from consuming industries about these proposals and their effect on consumers is obviously one of the considerations we must take into account. But we must also take into account the financial position of the steel industry, both public and private at the moment. The House will not expect me to comment further until we have the Board's report before us.
  A major preoccupation of the corporation and the Government has been to establish the right financial basis for the future progress of the industry, and the Bill proposes both changes in capital structure and increases in the borrowing limits.
  As the Memorandum on the Bill explains, the corporation's long-term

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  capital at the end of September last totalled £1,042 million consisting of £834 million commencing capital debt; £180 million borrowings from the Minister; and £28 million pre-vesting borrowings. The corporation requested, and the Government have agreed, that £700 million of this shall be converted into public dividend capital and the Bill provides for this in Clauses 1 and 2 on an experimental basis.
  It is the Government's policy that this form of capital, the remuneration of which is by way of variable dividend based on the industry's earnings for a particular year and its reserves, rather than by way of fixed interest, is appropriate for those nationalised industries which are fully viable, but which are subject to fluctuating returns because of their trading conditions and the nature of their assets. The House will recall that p.d.c. was first adopted for the British Overseas Airways Corporation as an experiment in 1966.
  The B.S.C. is in competition with many other producers both in this country and abroad. It is engaged in an industry which, because of the cyclical nature of its market is always subject to sharply fluctuating returns, but most of the corporation's competitors have a capital structure which reflects and can accommodate that fluctuation. If the corporation is to compete successfully as a commercial venture it, too, should have a financial structure like that of its main competitors who enjoy a substantial element of equity in their capital and whose success is often judged by the rate of dividend they declare.
  For as long as the corporation is financed entirely by loan capital, its results will not be capable of comparison and may indeed at times fail to give a true reflection of its actual performance. The corporation is rightly concerned that this could affect its relationships with customers at home and overseas and fear that morale in the industry could suffer in consequence.
  The corporation took over the industry at a low point in the industry's fortunes, but, already, we can see a distinct improvement in its trading position. Looking at the next few years as a whole, there would seem to be ample justification for this further experiment with public dividend capital.
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  If it is right for the corporation to have p.d.c., it is right that it should have it from the start and not be saddled with an inflexible financial structure which is not properly geared to its needs. Moreover, the new structure should be seen to operate effectively from vesting date so that the corporation's position can be clearly judged from the very beginning.
  I have described this capital reconstruction as a further experiment. It is an experiment which I feel confident will succeed. Nevertheless, so that there shall be an opportunity to review its suitability for the steel industry after a reasonable period of time, the relevant provisions in the Bill are to be effective, in the first instance, only until the end of the corporation's financial year, ending in 1974.
  The Minister will, however, have power to make an Order, subject to Parliament's approval, for the provisions to become permanent or for their operation to continue for a further period. If no Order is made, the £700 million will revert to commencing capital debt, and any other p.d.c. invested in the corporation will from then on be treated as loan capital.
  Before leaving this subject, perhaps I should say a word or two about dividend policy. In doing so, I would stress that I am not in any way prejudging what the dividend should be in any particular year. That is something I must decide at the time in the light of discussions with the corporation and the Treasury. However, as a broad statement of my intention, my general policy on reserves, provisions and dividends will be, initially, that, as a minimum, all profits, after clearance of any past losses, should be paid as dividends until the Government have received, by way of dividends and corporation tax, a sum equivalent to the interest which would otherwise have been paid on the p.d.c., had it been in the form of fixed interest capital.
  Thereafter, I will be prepared to consider on merits proposals from the corporation for the allocation of some amounts to reserve against contingencies other than fluctuation of dividends; otherwise, profits should continue to be paid out as dividends.
  As the House knows, the corporation's borrowing powers were extended last July to the existing limit of £400 million in the 1967 Iron and Steel Act. It was

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  realised then, however, that this could be no more than a stopgap because over £270 million had already been used in meeting pre-vesting obligations taken over by the corporation; £13 million has been used up to now for interest on the remaining commencing capital debt of £134 million; and meeting day-to-day requirements and financing capital expenditure took about £70 million in 1967–68. In fact, at 30th September, 1968, the corporation was within £66 million of its present limit of £400 million and, clearly, an increase is needed if it is to finance its development programme.
  After very careful consideration, I have concluded that an increase to £650 million is appropriate to carry the corporation over the next five years, and I accordingly invite the House to agree that the present statutory borrowing limit of £400 million be increased ultimately by £250 million. The House will, however, wish to review the corporation's requirements some time during the course of this period.
  The Bill therefore provides for a limit of £500 million in the first instance and for the balance of £150 million to be available only by Order subject to an affirmative Resolution of the House. In addition, of course, the level of investment will be subject to annual Government approval in the normal way.
  The calculations on which these figures are based are fully set out in the Memorandum. Briefly, we assume capital requirements for this period as £1,130 million and internal resources and capital receipts as £20 million less than this. Allowing a notional £295 million for dividends on p.d.c., this leaves £315 million to be financed externally. When this is added to the existing borrowings at September, 1968, of £335 million, the proposed limit of £650 million results.
  I hope that that is as slow and clear an explanation as I can give—
  Sir Keith Joseph: The right hon. Gentleman will surely be aware that the figures which he is giving from the Memorandum are contradicted in every detail in "Finance for Steel", on page 8. My hon. Friends and I would be very much helped if he could new explain the differences, which amount to £140 million in cash flow
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  over the next four years. He must be aware of this contradiction.
  Mr. Mason: Yes, but I could not go into it in so much detail now as to be able to explain how these slight diferences come about. But I must try to help. What I am saying at the moment happens to be what the House must agree upon and not what might be—if there is one—a minor difference—
  Sir K. Joseph: It is a big difference.
  Mr. Mason: —on page 8 of "Finance for Steel".
  If I may repeat what I just said in a different form, the British Steel Corporation needs £1,130 million for general expansion and replacement over the next five years. Provision must be made—
  Sir K. Joseph: The Minister has just said—he read it from that document—that the B.S.C. requires £1,130 million to a set date for capital investment, but the B.S.C.'s own document, "Finance for Steel", says, on page 8, that, to exactly the same date, it needs £875 million. This is £255 million less than the Minister is telling us. This is not a small difference. There are differences in every figure in the two tables—one in the B.S.C.'s document and one in the Government's document. Surely we are entitled to an explanation.
  Mr. Mason: All I am asking the House is that it should, first, listen to exactly the figures which I am quoting, as distinct from the variations which there may be in "Finance for Steel". Then, if the House wishes, in Committee, these financial points can be pursued. I must repeat that, so far as the House and the Bill are concerned, the corporation needs £1,130 million for general expansion and replacement over the next five years. Provision must be made for £295 million, because, if the B.S.C. does well, £295 million would be expected to be paid on its p.d.c., which would bring the total to £1,425 million. It is expected that it will generate from internal resources and capital receipts about £1,110.
  The difference, therefore, between self-generation of funds and the anticipated requirements is £315 million. The authorised borrowing so far is £335 million and, therefore, the total borrowing over the next five years that I am

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  asking for in the Bill—as distinct from what the right hon. Gentleman is quoting from "Finance for Steel"—is £650 million.
  I hope that that will now straighten the matter—
  Mr. Nicholas Ridley rose—
  Mr. Mason: On the subject of borrowing, I am—
  Hon. Members: Give way.
  Mr. Mason: I see no reason to give way again on that point. I have answered it twice. I have told the right hon. Gentleman that there may be a minor variation—
  Sir K. Joseph: It is not minor.
  Mr. Mason: —and that it can be pursued, if necessary, in a discussion of the financial parts of the Bill.
  While on the subject of borrowing—
  Sir K. Joseph: On a point of order. The Minister specifically boasted of the documents before the House in preparation for the Bill. We have studied these documents, but it appears that he himself has not. Will the Minister please give an explanation of the vastly different figures behind the Bill in the B.S.C.'s own document? Otherwise, we shall have to move to adjourn this debate.
  Mr. Deputy Speaker (Mr. Sydney Irving): That is not a point of order. It is a matter which the right hon. Gentleman must pursue in debate.
  Mr. Ridley: Further to that point of order—
  Mr. Deputy Speaker: I have ruled that it was not a point of order.
  Mr. Ridley: On another point of order. The Minister has just said that the corporation requires £1,100 million—
  Mr. Deputy Speaker: Order. The hon. Gentleman is seeking in another way to pursue the same point of order.
  Mr. Mason: I see no reason to pursue the matter. I have tried to give an explanation. If there is a variation, there is no reason why it should not be pursued in Committee. I have given the figures of what I am seeking in the Bill, and that is exactly what the House must
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  agree upon—the Bill and the figures which I have given.
  While on the subject of borrowing, I am taking this opportunity to ask Parliament to grant the necessary powers to enable the corporation and, for as long as they remain in being, the companies, to borrow from sources other than the Government in foreign currencies. This has already been done—
  Mr. Emery: On a point of order. Would you assist the House, Mr. Deputy Speaker? The Minister is presenting certain figures—
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman is not going to use a point of order to raise a matter which is more appropriate to the debate.
  Sir K. Joseph: On a point of order—
  Mr. Emery: But I am still on one.
  The Minister has given certain facts—let us forget about the figures—in the presentation of his case. These facts are entirely negatived by the—
  Mr. Deputy Speaker: Order—
  Mr. Emery: May I finish the point of order?
  Mr. Deputy Speaker: Order. The hon. Gentleman must challenge the Minister's facts in debate if he catches my eye.
  Mr. John Mendelson: Further to that point of order—
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman is not entering into the debate by way of a point of order. He cannot do that.
  Mr. Mendelson: May I ask your protection, Mr. Deputy Speaker, for those hon. Members who represent steel workers and management, and who hope later to put a point of view for those who earn their livelihood in the industry. I hope that we may get away from these points of order. The point has been made from the Opposition Front Bench that should be made.
  Mr. Deputy Speaker: Order. I hope that the debate can proceed.
  Sir John Eden: On another point of order. One of the documents now being considered in the debate is "Finance for Steel". Is it not

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  a fact that it is on the Table, or are we to understand from the Minister that he is taking no part in the presentation of the document in any way?
  Mr. Deputy Speaker: Order. The hon. Gentleman is seeking in another way to raise a matter which I have ruled not to be one. There is a limited time for the debate, and many hon. Members wish to speak. I hope that hon. Members will wait for their opportunity in debate to challenge the Minister on this question.
  Sir K. Joseph: With the greatest respect, it is surely a matter of substance for the Chair that the Minister deliberately presented four documents to the House but refuses to answer questions on major differences between two of those documents. How can the House debate—
  Mr. Deputy Speaker: Order. I understand the right hon. Gentleman's difficulty, but he cannot raise this as a point of order. The right hon. Gentleman will be making his own speech, and I am sure that he will be able to deal with the matter most effectively.
  Mr. Mason: As we have wasted time. I must move on.
  Powers to borrow from sources other than the Government in foreign currencies already exist for the Air Corporations, the Gas and Electricity Councils, the Scottish Electricity Boards, and there is provision in the Post Office Bill. It is the Government's policy to encourage the nationalised industries to take the opportunity to borrow in foreign currencies if they wish, and the Bill confers this power on the nationalised steel industry.
  Each borrowing will be subject to the Minister's consent and the approval of the Treasury, both as to the source and terms of the loan in question, and in considering each borrowing the Government will be guided by the circumstances prevailing at the time. The provisions about the aggregate limit on borrowings and Treasury guarantees will apply.
  There remains to be mentioned a minor provision concerning the corporation's financial year. For reasons connected with the character of the industry, many steel companies end their year in
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  September. On taking over the industry, the corporation wished to continue this practice so as to avoid unnecessary dislocation and keep down the burden on its accounting staffs—and after much consideration I agreed to its request by prescribing 30th September, 1968, as the closing date of its first financial year under Section 59(1) of the revived portion of the 1949 Act.
  It would also have helped the corporation if its accounting period could always end on a Saturday, as it has long been found administratively convenient in much of the industry to draw up accounts and statistics at the end of the last working shift on a Saturday. I would have liked to agree to this, but as the law now stands it cannot be done, though there is no doubt that it would greatly assist the corporation's accountants. I have, therefore, included in this Bill a provision which in effect prescribes the Saturday nearest the last day of September as the closing day for future financial years of the corporation.
  There could, however, be no denying the advantages that could accrue if the corporation's financial year could coincide with that of the Government and the greater part of the public sector. While I have no intention of forcing the corporation to move in this direction I have, nevertheless, taken the opportunity to include in Clause 13 the necessary power to prescribe a different period by Statutory Instrument subject to annulment by Resolution of either House of Parliament against the possibility of eventually being able to change from September to March.
  Apart from the points of order and interjections, and the variations between the Steel Corporation's brochure and my figures, I have described the work so far done by the corporation.
  Mr. Ridley rose—
  Mr. Mason: The corporation will be the first to recognise that much remains to be done. The upward movement of costs must be checked. Productivity must be increased. Arrangements for redeployment of men must be perfected, and the corporation's finances must be strengthened. The Bill puts the industry in a position to master the industry's problems and achieve success.
  Mr. Emery rose—
  Mr. Mason: I shall not give way. I have been speaking for a long time.
  Mr. Deputy Speaker: Order. The right hon. Gentleman is not giving way. The hon. Gentleman must not persist.
  Mr. Mason: I have been speaking a long time and I am eager to give those hon. Members with steel interests the opportunity to make a contribution, rather than those hon. Members who rise to make party political points or to niggle about the brochure.
  I note that the Opposition intend to divide the House on the Bill. I do not yet know what they are opposing, but I hope that it is not to give heart or hope to those within the steel industry or without that the embers of denationalisation still glow. There is hardly a flicker left, and the quicker this is realised by all the better.
  The British Steel Corporation wants to be rid of this niggling party political interference, and rightly so. On behalf of the nation it has a major job to do. On its success so many others depend, and while I am in office it will be given its chance.
  Mr. Emery rose—
  Hon. Members: Order.
  Mr. Deputy Speaker: Order. I hope that hon. Members will leave matter of order to the Chair.
  Mr. Mason: The corporation stands for British Steel, and internationally must be seen to do so. Its image will brighten only by success, and it will need Parliament's backing for that—and that means all of us.
  In asking the House to give the Bill a Second Reading we are enabling the B.S.C. to weld itself into a strong, internationally-viable steel industry, and from the passing of the Bill there can be no turning back. I hope that the House fully understands that.
  4.46 p.m.
  Sir Keith Joseph: There must be a simple explanation, and I shall offer one, of the differences revealed in the interjections during the Minister's speech between the White Paper and the British Steel Corporation document, "Finance for Steel". We on this side of the House are not the least
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  surprised that when two documents serving slightly different purposes are put before the public there are differences in them. What absolutely amazes us is the Minister's failure to do his homework. We have done ours, and I have a long list of other differences.
  The Minister grins, but he has not done his homework, and he has tried to cover that up by riding off a most important set of differences between the figures. These are not trivial Committee points, but huge chunks of taxpayers' money, totalling more than £200 million. I am sure that they can be simply explained, but the Minister should be able to do so. I will gladly give way to him if he chooses to give the explanation during my speech. It would be courteous if he did so. I hope that someone will help him to understand.
  My right hon. Friends and I oppose the Bill, and I shall explain why. I hope that nothing I say will be taken in any way as a criticism of the management of the B.S.C. It is not the managers or men whom we have occasion to criticise, but the Government, and the system that the managers and men have to work. I hope that, having said that, I shall be freed from any thought that I am imputing ill will, malice or incompetence to the managers, which I am not doing for a moment when I criticise what lies behind the Bill.
  Let me summarise the reasons why we oppose the Bill. We disapprove, first, of the wholesale power the Bill gives the Minister to scrap companies and trade names even before the B.S.C. has firm proposals to put before the Government What will replace them?
  We distrust the borrowing powers. We distrusted them before the debate began, and we distrust the calculations behind them even more now that the Minister has revealed that he does not understand what he is asking the House to approve. We distrust these borrowing powers for the very good reason that neither the corporation nor the Government have yet arrived at any development programme. We do not necessarily criticise them for that. But they are asking virtually for a blank cheque for a great deal of public money before deciding what to do with it.
  We oppose the Bill because we have no evidence whatever that enough is being done to increase the competitiveness and

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  efficiency of the industry and we note that the Bill makes no contribution to those purposes. We oppose the Bill because we see the corporation as a monopoly and we observe that, not surprisingly, since this is the normal behaviour of monopolies, it appears relatively insensitive to the needs of customers. We see it as a monopoly which is ready perhaps to compete unfairly with its dependants in the private sector. We regard the public dividend capital as the merest window dressing. These are the reasons, each to a greater or lesser extent covered by the Bill, why we shall vote against it.
  I come now to various aspects of the policy of the corporation and the Government covered by the Bill, and the first is investment. There are apt, from time to time, to be criticisms of the comparative productive performances of the steel industry compared with those abroad. I hope that the Government realise that, owing to their political treatment of the industry, the investment capacity of British steel has been delayed by between five and seven years. I am not, and I shall be seen not to be, pretending for one moment that everything was perfect in the past. But investment programmes had been decided by individual companies which could have been put into effect and would have been financed and would have been producing competitive steel today for the benefit of the nation had not the Government embarked upon nationalisation.
  We have no clear investment decisions now before us. The only clear decision is the negative one—and I do not quarrel with it—that there shall be no green field site development. What we are presented with in the corporation document is a mass of alternative projects—coastal site development, ore terminals; enlarged capacity in a number of places, for example—a number of possible ways of spending money but no particular choice between them. We know that the difficulty of decision making is choosing between alternatives and establishing priorities. The corporation mentions a number of new techniques, such as spray steel, continuous casting and others, but does not choose between them and does not allocate resources between them.
  Mr. George Darling: Some are alternatives.
  Sir K. Joseph: Some are alternatives and some are not. But the point is that we have no development programme. I am not seeking to rush the corporation, but the Government are coming to the House with a borrowing requirement without telling us what the money in general is to be spent on.
  Then we come to the question of the structure of the industry. Here again, the Government and the corporation are equally vague. We intensely dislike monopoly centralisation and the principle of having a single investment-decision-maker in any industry, because no human beings are infallible and if there is only one decision-maker and it makes a mistake, the industry and the nation suffer. We want the industry to be competitive, responsive to the market and enterprising. We doubt whether it will be these things while 90 per cent. of it is in State hands. But that does not mean as the Minister sought to imply, that we think that the right answer is to go back to the precise position as it was before nationalisation.
  The Bill is brought to the House without the corporation or the Government having decided on the structure of the industry. At the moment, there is regional grouping. That may be transformed, we are told, when the Committee under Dr. Finniston has made its recommendations and the corporation has decided whether to move over to product grouping. We have the gravest distrust of product grouping. It gives us the impression that, instead of having one centralised monolithic monopoly handling all steel products except those in the private sector, we are going to have perhaps four monolithic monopolies, each responsible for one product group, with no one such monolith competing with another monolith. This is no help to British steel consumers.
  Do not the Government realise that half the output of British steel goes into British exports and if British steel is not competitive British exports will not be? Do not they realise that, unless there is some scope for competitive enterprise, decentralisation of management, vigour, competitiveness and enterprise, the customer and the nation will suffer?
  We fear that the over-centralised structure of the industry which lies behind the

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  Bill will sap the industry of management initiative. We fear that the industry, whether it remains as it is now or is broken up into product groups, will become more and more remote from the market and more and more insensitive to the needs of consumers. We must add the fear that to impose upon the industry so shortly after the nationalisation upheaval yet a further upheaval in a shift from regional to product grouping may take the heart out of management and men.
  Mr. Eddie Griffiths: While the right hon. Gentleman is on the question of the competitiveness of the steel industry, will he recount for us the evidence of Mr. Judge to the Monopolies Commission and say whether this was in the interests of the consumer?
  Sir K. Joseph: I said that the industry was not perfect before. [Laughter.] Hon. Members may laugh, but debate would be livelier in this House if they were a little more humble about what they defend. We accept that, while there is nationalisation, the corporation must carry out at least the functions of a holding company and, of course, control capital investment, set a target on capital employed and control trading policies and top management selection, but we fear that it is going far beyond this into an excessive degree of centralisation.
  Does not all this make us ponder the complications that nationalisation brings with it? Decisions in this complicated world are inherently difficult enough even when made by independent companies responsible for their own results. How much more difficult do decisions become when they have to be made in the glare of publicity, when Ministers and Parliament have to be persuaded that they are right, when they all occur in the midst of public debate! Is it surprising that, as a result of all this, decisions are delayed, investment opportunities missed and the edge of management blunted? How much harder management becomes when the rigmarole of nationalisation is added on to it!
  Every change in this industry is to be made—the Parliamentary Secretary grins, but I was not attempting a technique other than that of debate. I am very willing to answer any point where I can be shown to be wrong. I was dealing with
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  the changes that will be carried out in the industry. The Minister and his predecessors have stressed that there must be changes. In future these will have to be made by central decisions, approved by the Minister and the Cabinet, and possibly by Parliament. Where is the scope for spontaneous speed in reaction to changing needs? It is all gone because of nationalisation and the industry is in danger of becoming ossified.
  What a bitter paradox it is that, but for nationalisation, many of the changes necessary in British steel would already have occurred spontaneously. I will tell hon. Members how they would have occurred. Some of the private companies would have flourished, some would have faltered and some might have gone bankrupt, because that is how the private enterprise system should work. None of that has happened and the whole industry has been left inert, waiting for Government and centralised corporation fiat.
  The country has suffered. Instead of some companies flourishing, some faltering and some going, either into reconstruction or worse, now all companies must go, because the Bill gives the Minister power to authorise the B.S.C. to abolish all companies and all trading names. I am not saying that every company and every trading name should be preserved, but in many cases there were links of loyalty between companies and managers and men. All sides of the House should value that. Some of the products of some of the trading names are world-renowned. Surely the Minister will reassure us that he will not allow the B.S.C. to abolish the companies and trading names, particularly before the new organisation to take their place has been decided, without seriously considering the damage that might be done.
  It looks as if the Government are encouraging B.S.C. to centralise as much as possible and to dismantle all potential for decentralised enterprise before the day of judgment, before the next election. Will this Bill and the policies behind it help? [Interruption.] Will this Bill—[Interruption.] The hon. Member for Ebbw Vale (Mr. Michael Foot) doubts the day of judgment is coming?
  Mr. Michael Foot: I do not doubt that the day of judgment is coming, but I hardly expected that Her

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  Majesty's present Administration would hold office right until that day.
  Sir K. Joseph: We do not think that this Bill will help the efficiency or competitiveness of the industry. We have no evidence that the B.S.C. is making the progress we should like to see it making in reducing costs. Nationalisation has not yet begun to justify the claims made for it, that it would rationalise British steel far more quickly than private enterprise.
  The Minister at least did not boast that productivity has risen. Productivity always rises as the productive cycle rises. What we want to know is what productivity will do next year when the production cycle stabilises. The Minister rightly told us of the rising import trends, reflecting on the competitiveness and capacity of the industry. We are told that there is to be a cut in the manpower of the industry by 50,000 men by 1975, and that much of that reduction will be achieved by wastage and retirement. We hope that the Minister will be able to tell us that it will not be long before the benefit of increased efficiency is harvested by the British steel users and the public.
  We fear that the B.S.C. is demonstrating the normal attitude of a monopoly. It is concentrating on price rises and deferring cost cuts. While deferring the cost cuts it has made application to the Prices and Incomes Board for a whole range of price rises. Half of British steel goes into British exports and it will be no comfort if B.S.C. makes tolerable profits by monopoly methods, while at the same time the shipbuilding, motor and engineering industries cannot export as much as they would otherwise have been able to.
  I am glad to see that those advertisements are no longer appearing, claiming that B.S.C. is not a monopoly and does not exercise monopoly powers over many products. It is just not practical for many British steel users to obtain reliable and alternative steel from abroad, of the quality and to the time that they require. To that extent B.S.C. employs a monopoly power and we hope—although that is a very weak weapon against monopoly—that it will not exploit its position. The Minister has told us that the P.I.B. Report is expected soon and we cannot comment
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  on the price rise further until we know what the Government's decision will be, and what are the recommendations of the report.
  I turn to the borrowing powers contained in the Bill. I should not have thought that the unhappy experience of the debate of 12th July, 1968, would have been repeated today. Then the Parliamentary Secretary failed to explain to the House with any great clarity why the Government had to come so soon to raise the borrowing powers of the B.S.C., in contradiction to the prediction given by the Minister who nationalised the industry only the previous year.
  The comments of the Press on the performance of the Government, particularly the comments of the Economist, were very rude indeed. They said that the B.S.C. was badly served by the presentation, on its behalf, of its borrowing needs by the Minister concerned. What had happened was that the Government had to reveal that in nationalising the industry they had totally underestimated the amount of capital required and they had therefore arranged borrowing powers which proved within a year to be grossly—by £150 million or more—inadequate for the purposes that should have been known by the Government at the time of nationalisation. The refinancing of existing borrowing by the companies that have been nationalised had not been fully considered. The poor Parliamentary Secretary had to face the storm for that.
  The explanation no doubt had not been given to him. My hon. Friends and I would have expected that, at least the lesson of that experience, that humiliation last year, would have been learned by the Minister and his colleagues, yet we have had just the same today, another complete failure to do homework, another lack of understanding of the documents that the Minister has put before the House.
  I hope that the Chief Secretary will give us the answers to my questions. Will he confirm that all the calculations assume that the price increase now before the P.I.B. is granted in full? I think that is the assumption. It is mildly presumptuous. No one would have objected to it if it had been made with a suitable qualification, but I have not seen a qualification in the documents. Secondly, will the Chief Secretary

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  explain the contrast between the table on page 5 of the White Paper and the table on page 8 of the B.S.C. publication "Finance for Steel"? I will not go into the figures now, they will leap to his eyes. There is a contrast between the capital expenditure predicted and the cash flow. Therefore, the borrowing requirement is different in each case. It appears from the documents that the time covered by both tables is the same.
  Our interpretation is that the B.S.C. has based its figures on one end of the increased capacity spectrum. One of the documents predicts that there may be an increase in productive capacity of between 5 million ingot tons and 9 million ingot tons between now and 1975. It is open to the corporaton to take one end of that spectrum in its assumptions about investment finance needed and for the Government to take the other end. It may be that that is all there is between these two tables, but it would have saved a lot of confusion if the Minister had known that the tables differed one from the other and why.
  The third question which I wish to ask is whether, and to what extent, the capital forecasts assume that the corporation will be a net buyer or a net seller of steel capacity. Will it sell more of its existing capacity back to private enterprise—what are called fringe operations or boundary rectifications—or will it expect to buy from the private sector more than it sells to it? Would the Chief Secretary give the assumptions within the investment programme?
  I come to the capital structure. The Minister did not mention the huge fact of revaluation. The corporation revalued its assets. Perhaps the Minister does not know that. Does he know it? I wonder if he does. The corporaton had vested assets to a book value of over £1,000 million. It shows in its accounts that it wrote those down—and that may have been the sensible thing to do commercially—to near its commencing debt of £834 million. This was a big write-down. Would the Chief Secretary explain where the £130 million referred to in the bottom paragraph on page 43 of the accounts features? So far as I can see, the £130 million does not come within the more than £250 million write-down shown in note 9 on page 47 of the glossy version of the Annual Report and Accounts. Is
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  a further write-down of £130 million intended, or has it taken place and I have failed to find it in the accounts? The Government will agree that these are large figures. I hope that the Chief Secretary will give us the necessary information.
  I come to the question of the public dividend capital. We do not for a moment blame Lord Melchett for seeking to convert part of the capital from fixed interest. Fixed interest is a very inflexible burden for any trading organisation to bear. The Minister said that British Steel was burdened with what he called an inflexible structure of fixed interest capital. But who imposed that burden only a few months ago? Why did not the Government think of all this when they nationalised? Why did they not think of it and not nationalise? Public dividend capital is the merest window dressing.
  The Minister's explanation that people abroad might misinterpret the level of dividend or the lack of dividend by British Steel was the most disingenuous of explanations. We are dealing with sophisticated people. The Minister may not understand the accounts, but the people who deal with British Steel mostly do. In case it is thought that I am being arrogant, I confess that there were many parts of the accounts on which I had to take advice. But the Minister has advisers and he should have asked for advice before introducing the Bill today.
  Public dividend capital is a sort of bastard equity. It is a bogus equity; it is a sham equity. The essence of equity is that the shareholders effectively own the business and act as a discipline on management. That is the function of shareholders—to take the chance of profit, the risk of loss, and to exercise discipline on management. I do not say that they always do so, but there have been some encouraging instances recently when they have.
  It is no use the Minister saying that the taxpayer is the equity holder of British Steel. That is so diffuse a truth that it loses all bite. The corporation, if it had equity in the proper sense, would have to seek finance from the market and satisfy its shareholders that management was effective. But the p.d.c.—
  Mr. Ridley: I may be wrong, but I thought that "p.d.c." means "payment deferred constantly".
  Sir K. Joseph: I fear that that description has a lot of plausibility.
  The Minister is unlikely to refuse finance to the corporation. We hope that the Minister will, so far as he can, carry out some of the functions of a shareholder. We hope that at least he will fix a realistic target for the p.d.c. yield. The Minister has the power to impose the target, but he is not required to publish it. Nevertheless, we hope that the Minister will tell the public what target he gives to the corporation for its dividend yield, because unless that is known we cannot tell whether he is using his powers realistically. If the target is not realistic, the corporation will be allowed to trade with the benefit of subsidy and there will be unfair competition with its dependants in the private sector.
  We have tried to analyse what the dividend payment may be from the forecasts in the various papers. It looks as if there might be a payment of dividend, if all is well, of £70 million in 1970–71. But we cannot tell what yield that would represent because we do not know what the p.d.c. will amount to. The Minister has power to treat loans as fixed interest capital or as p.d.c. I wish that the Minister had told us what he intended to do.
  For many reasons, we do not like the Bill. We dislike its background. We dislike there being one centre for making decisions for virtually the whole of British Steel. We dislike centralisation and the degree that British Steel is, we think, centralising. We dislike monopoly. We dislike the threat to great trading names and the employment links of companies. We dislike Government financing of industry which should be financed through the market. We dislike the sham equity, the pseudo-financial arrangements.
  It would be possible to imagine a real equity stake in some or all of the corporation. It would be possible to imagine management depending on the market for finance and on the approval of shareholders, with their own money at risk, for reappointment. That would be real equity—quite unlike this bogus p.d.c. We want a flexible, competitive steel industry, and that is why we shall make any changes
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  necessary and practicable to provide the disciplines of competitive enterprise for steel. We shall restore a competitive framework for steel.
  For the reasons I have given, and particularly because of the power to eliminate trading names and companies, I hope that my right hon. and hon. Friends will go into the Lobby against the Bill.
  Mr. Deputy Speaker: Many Members, including all Members for the steel constituencies, wish to speak in the debate. I appeal to those who are called to make reasonably brief speeches.
  5.20 p.m.
  Mr. Eddie Griffiths: It is right and proper that I should declare my interest in the debate. Before I entered the House last year I spent 16 years on the shop floor at a steel works in North Wales. I am proud to represent a steel constituency, and one of the greatest steel cities in the world, Sheffield. I am sponsored by the biggest industrial union in the steel industry, B.I.S.A.K.T.A., and I can, therefore, rightly claim to speak on behalf of steel workers. Although some of my comments will be critical of the British Steel Corporation I hope that they will be taken as constructive and not, as were those of the right hon. Member for Leeds, North-East (Sir K. Joseph), destructive.
  The profitability of the steel industry up to 1968, judged on the ratio of profits after depreciation to capital employed, in the late 1950s averaged about 16½ per cent. Over the six years from 1962 to the present it averaged 5·2 per cent., and the last financial statement shows that it has reached the appallingly low figure of 1·9 per cent. This is a sad reflection on the operation of management in the private sector prior to nationalisation. Prior to nationalisation accusations were made against the private steel owners of nepotism, lack of planning, not pushing exports sufficiently, lack of investment and lack of funds for research. The drop in the return on capital employed suggests that there had been neglect.
  On nationalisation, the then Minister of Power, my right hon. Friend's predecessor, invited Lord Melchett to be Chairman of the British Steel Corporation. I believe that a big mistake was then made by the B.S.C. when Lord Melchett surrounded himself, I assume in

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  consultation with the Minister, with the old steel bosses whom my hon. Friends had been decrying and criticising. These people were taken on as part of the corporation more or less on their own terms.
  During recent discussion on salaries in the nationalised industries, and the Steel Corporation, in particular, it came as no surprise to me that the managing director of the Midland group received last year £27,200. No wonder that Lord Melchett has been pushing the Minister to improve his, in comparison meagre, return of £16,000 up to £25,000. It has been a great error, which is recognised on this side of the House and is now recognised by Lord Melchett, that these old steel bosses were taken in. I could name them; Mr. Cartwright of South Wales, Mr. Peech of the Midland Group, Sir Richard Summers, Mr. Craig and Mr. Macdiarmid, some of whom spent many thousands of pounds fighting nationalisation. It was a great mistake in tactics and management of the B.S.C. to take these people.
  Mr. David Lane: Is the hon. Gentleman suggesting that in preference to this Lord Melchett should have filled all the top posts on the British Steel Corporation with people who had no practical experience of the industry?
  Mr. Griffiths: I have mentioned nepotism. Most of these people were there not because of their outstanding knowledge of the steel industry, but because they had the good fortune to be born in certain beds. If we were to look at the levels below the principals in these firms we would have found up and coming managers and future directors who would have done this industry credit.
  I am not a financial wizard, and I accept the decision of the Minister to recommend that the British Steel Corporation has the public dividend capital, because it has inherited the burden of debt incurred by the private companies.
  On the dissolution of the companies, the individual companies' debts and liabilities were taken over by the corporation. For the past 18 months, apart frdm statutory obligations of meeting periodically they have been of no useful purpose to the corporation and it is, therefore, wise and sensible that the companies should be dissolved. The Minister
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  has made it clear that if the corporation considers it expedient to use the names of the companies—which often bear no resemblance to the originators of the companies—for commercial reasons, this is a good thing.
  It is absolutely vital that the companies should be dissolved because it is time once and for all that the steel industry was taken out of the political arena. The right hon. Gentleman said that they have been neglecting capital investment because of doubts and fears about nationalisation. Bearing in mind the lessons of the past, it is essential to let the corporation get on with the job of running the industry without fear of political disruption.
  Two powerful factors have come to bear on the performance of the group system. Apart from any good points about product divisions, there are two disadvantages which must be in the forefront of the mind of Lord Melchett and the British Steel Corporation. The first is that the powerful steelmasters have been the king-pins in their own region. They have not taken kindly to the authority of the corporation and its chairman. Little empires have been built around them, and they have not missed an opportunity of flying the regional flag whenever they could. For instance, the Colville group made an announcement about a plan for a £300 million steel plant. The announcement was made without authorisation from the corporation, it was premature, and it has done a great deal of harm to morale in the industry.
  The second disadvantage of the group system is the great bitterness which has been created in individual groups. Eighteen months ago, from the works of John Summers, where I was employed, I took up very strongly the fact that in the Scottish and North-West group all the plum jobs on the long-term planning committee, and so on, were going to Colville's personnel. In South Wales there has been great bitterness between Port Talbot and Llanwern, Llanwern feeling that Port Talbot had the edge in the group administration. In the Midlands it has been felt that the United Steel Company carried substantial sway over the English Steel Company. There has been bitterness created and for this reason it is a good thing that the various groups will disappear.
  Mr. Emery: Does the hon. Member argue that by doing away with the company name there will still not be regional rivalry? Is he saying that if the Scots are left out the Scottish personnel will not be annoyed, or that if there are to be only people from Cardiff, or from Scunthorpe, or wherever it may be, there will not be rivalries? Surely they will still continue.
  Mr. Griffiths: I am grateful for that intervention. What will happen is that the power vested in the product groupings will be far less than at present in the geographical group system. Therefore, the power vested in those product groups will take second place to the general administration from the B.S.C. headquarters.
  I come now to deal with the corporate plan. On this, I speak for every steel man in Great Britain. This, to me, is the great non-event of 1969. I can tell the House that steel men from most areas of the country have been perched precariously on the ends of their seats waiting patiently for the great announcement about the "broad brush" plan the corporate plan which was to show exactly where development was to take place so that they would know exactly where they stood. But I regret to say that all we have had is a series of "ifs" and "buts" and possible alternatives. Indeed, the corporate plan, as submitted for this debate goes little further than what was known to all of us from the Benson Report.
  For that reason, when one considers that the B.S.C. have been looking at this problem for some two years since vesting date, there has been great anxiety in practically every plant in the country, with men wanting to know the future of their plant. A good deal of unrest has been created by the B.S.C. itself. I remember appearing on television with Dr. Finniston, who had just come back from Japan. He talked of green field sites, and one got the impression that any steel plant which was not two feet from the sea shore was done for and would be out of existence in a few years. That idea now seems to have gone by the board, certainly in relation to the period up to 1975. That sort of talk emanating from the B.S.C. can only do a great deal of harm to steel workers, who are my biggest interest.
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  My right hon. Friend spoke about buoyancy in the industry. I do not feel that we can lay credit for this on the B.S.C. It has been caught up in the upsurge of demand, a demand which it is unable to meet. I agree that production has gone up—not to record tonnages for the tonnages have been achieved in the past—but exports have not increased very much in the last two years, and imports have risen from 1·6 to 2·5 million tons in 1968.
  Indeed, the B.S.C. at the moment is suffering the indignity of shopping round the world for ingots, slabs, plates and, to put the top hat on it, for scrap to keep our mills going. I am not laying the blame completely at the corporation's feet, but at the feet of people who have been associated with the industry for the past 10 or 15 years. Indeed, in 1968 we even imported a quarter of a million ingots so that we could process further and keep our customers happy.
  In the works with which I was associated I remember the general manager saying to us that the only way we could keep going without redundancy was by ensuring that material was to be delivered within three weeks of the date of receipt of the order. We have now reached the stage when the only way we can keep customers happy is by lengthening the delivery date. I believe that in its assessment of capacity the steel industry, as opposed to the corporation, has tended to go for the troughs in the cyclical movement of demand and has not aimed at higher capacity to meet peak demands. I sincerely hope that we shall get increased capacity which is likely to come from Port Talbot, Scunthorpe and Teesside, possibly some of it during the next 18 months. The criteria for good management is not to plan after the harm has occurred, but to be able to look forward and to predict likely trends with some sort of accuracy.
  I am sad that in the report there is no mention of a comprehensive steel scrap policy. The Rotherham and Sheffield area has had the indignity of having to curtail excellent levels of production because of a shortage of scrap. Up to 18 months ago a substantial tonnage of scrap was being exported at something like £11 a ton. Today the B.S.C. is buying in American scrap and other scrap at probably approaching double that price. It

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  would seem to be a simple remedy that the B.S.C. and private owners should have stocked scrap; they should have bought it in for occasions when production went up. It is history repeating in the steel industry. As soon as production reaches a certain level there is an embarrassing shortage of scrap, and a lengthening of delivery dates.
  I am sorry that there is no mention in the report, among all the other technical advances, of the feasibility of transporting hot metal. This may be of great importance to a number of plants in the near future. Nor is there mention in the report of plans or experiments in the transporting of iron ore from the docks to the plant by belt system. I am told that in the United States they can transfer iron ore by this method using a system of belts anything up to 50 miles. I am disappointed that there is no mention of that advance.
  My right hon. Friend made reference to regional interest, which is mentioned in the report. It says that "the corporation recognises the great importance of the steel industry to the economies of Scotland and Wales" in ensuring that specific attention is given to Scottish, Welsh and regional interests. I suggest that we have our priorities a little back to front. Scotland and Wales combined employs only 38 per cent. of the B.S.C. work force. I should prefer the statement to have read that we shall always be concerned about the regional interests, including those of Scotland and Wales.
  I should like briefly to touch upon the question of morale in the industry. At the moment, morale in the steel industry is very low, and a great deal of the responsibility lies with the B.S.C. It is no good Lord Melchett or anybody else going around saying that 50,000 jobs will be lost in the industry and then, in the next moment, saying that there may be development of steel plants abroad. Possibly both matters are equally valid, but why couple them together? It appears to be rubbing salt into the wound.
  It is no use the Minister saying, "The B.S.C. has said that it will give six months' notice for plant closure and up to two years for any major works closures." The steel worker is an honest man, who wants to see a good future for his children, as does a worker in any
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  other profession. He wants to be able to say to his son when he leaves school, "There is a future for you in the steel industry." Although in the corporate plan there is mention of Port Talbot, Scunthorpe, Teesside and Sheffield, what about the other works? What about the other works? What will steel workers at such places as Ebbw Vale, Barrow, Workington, Shotton and Corby think tomorrow morning about the full implications of the corporate plan on them? There is no indication that their futures are as secure as the works where the main investment is to take place.
  I want now to give hon. Members what might be termed a visual demonstration. I am holding two copies of a very well worth while document. It is an edition of Steel News, the monthly newspaper of the Steel Corporation. The copy in my left hand is the edition intended for the head office staff. Hon. Members may be able to see that it is printed in bold black on a very white background. I imagine that the paper is fairly expensive.
  In my right hand I have the same edition intended for the Midland group employees. It carries the same story with the same black lettering, but it is printed on what I would describe as a dirty-white background. Why is there this difference in finish? After all, the document is of interest to steel workers everywhere. There may be a simple explanation. However, whether a man is a brusher-up or one of the top people in the sales department of the corporation at head office he is an employee and worthy of the same sort of treatment.
  The report talks about company names and company loyalties. The loyalty of employees to individual works is well known in some areas. I hope that in time the same loyalty will accrue to the Steel Corporation. But loyalty cannot be transferred in the same way as profits and losses from one side of a page to the other. Loyalty will only be won if it is deserved. In my remarks about the corporation, I have tried to be constructive. It will learn by its many mistakes. The same loyalty will come to the corporation, but it will have to earn it.
  5.43 p.m.
  Sir Spencer Summers: It is now over 40 years since I was first

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  associated with the steel industry. It so happens that it was with the same firm as the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths)—John Summers & Sons. However, this is the first occasion on which I have dared to intervene in a steel debate. I do so now because I am no longer connected with the company and am freer from the taint of vested interest. Incidentally, when I was connected with it, I did not realise the future fame of one of its employees who has just given us the benefit of his advice.
  He told us that what was wrong was that so many of the former experienced people in the steel industry were still associated with it. I can only assume that he would have preferred a series of totally inexperienced people introduced into the industry to take their places. If ever there was a more obvious claim for bureaucrats to take the place of experienced people, I have yet to hear it. That was the sum total of the speech to which we have just listened.
  Mr. James Tinn: The hon. Gentleman has misunderstood my hon. Friend's point, though I am sure not deliberately. Replying to an intervention, my hon. Friend attempted to make it clear that he envisaged the B.S.C. looking to existing management people who were perhaps without the benefit of family connection but who had a real stake in the industry and the ability to serve it.
  Sir S. Summers: I will not be drawn into the dangers or otherwise of nepotism. The hon. Gentleman's complaint was that there were far too many of the old steel bosses, and names were mentioned, most of whom had nothing to do with the fact that they belonged to a certain family or were born in a particular bed.
  I listened carefully to the Minister's speech, and I thought that it was quite disgraceful. Every word of it was read, and it was patently obvious that every time the thread of his discourse was interrupted by an intervention, he was thrown off stride because he did not know the subject that he was here to represent. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has already alluded to the fact
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  that the Minister did not do his homework. If this is the way in which the Government are to seek to defend the permanency of nationalisation, when next time the topic is raised I hope that they get a better advocate.
  I want to concern myself more with the Bill than with the state of the industry. In the main, it deals with two points—the revised financial structure of the Corporation, and the constitutional position of the companies. I propose to spend a few minutes dealing with those two points.
  I think that everyone will acknowledge that an industry faced with world competition ought not to be saddled with 100 per cent. fixed interest bearing capital. Therefore, I do not complain about the principle of changing this situation. However, why was not it dealt with when the corporation was first set up? What mysteries have been explained, and what facts have come to light through ownership by the State? What has become apparent that was formerly obscure, and what has changed since the setting up of the corporation? The answer is nothing. It was all known before.
  Why was not it done before? There is little doubt that the reason is that it would not have been a very attractive proposition when steel was nationalised to tell the public that there was a danger that the interest on the capital employed, taking one year with another, was unlikely to be met, but to ask the public, notwithstanding that, to underwrite the proposition that in future the public would be the shareholders of the enterprise instead of those who were formerly there. In short, the public was deliberately deceived and, in my view, the nationalisation of steel was put forward on a false prospectus which it is now too late for the public to intervene and put right.
  I said that I accepted the proposition that 100 per cent. fixed interest bearing securities was wrong, but I am not sure that swinging the pendulum so far the other way as to leave only 16 per cent. fixed interest bearing securities and have the so-called dividend capital amount to 84 per cent. is not carrying matters a bit far.
  Under this arrangement, we are told that at 6¾ per cent. the prior charge on

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  the industry will be some £11 million and that anything over that, by inference, would be an unreasonable and an intolerable burden. However, there is capital of some £800 million and a turnover of over £1,000 million. Is it really to be argued that anything in excess of £11 million per annum will be an intolerable burden for the industry? It may be inappropriate to the steel industry if I use the term "feather bedding", but, frankly, that is what it amounts to.
  In private enterprise, equity capital from time to time has to go without any interest for various reasons. In subsequent years management and companies frequently try to make good to their shareholders what has been lost during the lean years. In short, they try to average it out.
  Here we are to have dividend capital. I am confident that there will be some years—I suspect the early years—during which an inadequate dividend will be paid because of the results of the industry. Any attempt to average out, so that the Treasury over a long period may be said to be having a fair deal, will in practice be quite impossible, because, the moment that high dividends on the steel industry are recommended to average out over a period, the pressure from consumers, and perhaps from wage earners, to pay lower dividends and leave more resources and cash in the industry will be so great as to be irresistible. In short, the Treasury will sometimes get the right amount, sometimes less, but will never get more. It is as well that the public should be alerted to that fact.
  I now turn to the future of the companies. This notion of eliminating the companies and substituting what is called product groups is in my view a mistake of the first magnitude. It has nothing to do with the argument that the Minister sought to advance, whereby concentration in a limited number of plants will breed great economies. This may well be so, but to talk about concentrating in Wales, where there are already a series of highly sophisticated plants, is quite meaningless. If there is to be concentration in Wales, I ask: in which part? If the plant is 20 or 120 miles away, the advantages of the economies sought by this argument are lost.
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  I was glad that the hon. Member for Brightside, who is no doubt well placed to know this, said that morale in the steel industry is very low. This is my experience from such limited contact as I have. It is low, because staff and management do not know whether the plants in which they serve have a future. It is low, because many in the middle management who have looked to promotion see the ladder that they had in front of them removed and replaced by a completely obscure ladder involving great changes of location and uncertainty as a result.
  It is not as though this was a change brought about from private enterprise days to this situation. It had tremendous change in between. We had a series of people telling the Minister in the early days the way that they thought the steel industry should be developed. He came to this House and said, "I have no preconceived ideas. I have some very wise, experienced people who will tell me the sensible thing to do." By and large what they recommended was done, but it has lasted the twinkling of an eye. It is now to be replaced with something else. Who is to know that the next one will have any more permanency than the one it is now seeking to replace.
  I fear that this notion of setting up a series of individual monoliths, as they were described by my right hon. Friend the Member for Leeds, North-East, according to the several products, will deny any choice or alternative source of production to the customer who comes along to buy British steel. I am not satisfied when we are told that this has the great advantage that the site where it is most economical to roll a sheet, a plate or a girder will be chosen by the British Steel Corporation and economies will follow from it. Is the customer to have no say where his material is to be made, the degree of supervision, the degree of research that is to be applied, etc?
  Mr. Eddie Griffiths: At the moment we respect the wishes of customers both at home and abroad who specify to the B.S.C. particular works, even though export sales are centralised. It is only if it is impossible to get suitable delivery at that works that an alternative supply is suggested.
  Sir S. Summers: The hon. Gentleman cannot have it both ways. Either he says that the preference of the customer shall have priority, in which case this notion of concentrating where it is most economical to make a particular product goes by the board, or the reverse takes place. It is not possible to roll a steel product in the interests solely of the manufacturer and simultaneously to choose where the customer wishes to have it done. These two things are incompatible in many cases. I fear that paying insufficient attention to the link with the customer, the good will of the customer and the overseas agent will damage our results.
  Mr. Frank Hooley rose—
  Sir S. Summers: I do not want to dwell on this point very long.
  Mr. George Lawson: Will the hon. Gentleman say whether evidence was brought forward that, prior to nationalisation, in a number of cases within my own knowledge, customers were afraid to complain to the steel works because they thought they might be blacklisted for supplies?
  Sir S. Summers: I do not understand what lies behind what sounds rather like a barbed question. No customer ever hesitated to complain to the company with which I was associated for many years if he thought that quality or delivery was inadequate for his needs.
  I cannot help feeling that a lot of this policy now recommended by the British Steel Corporation derives from a visit to the United States where there are several large corporations each with as great an annual tonnage as the whole of the British steel industry. But the position in America is different. If a customer does not like the product of one vast corporation he can go to another. Here, if a customer in Norway, Sweden or some other part of the world does not like the treatment or the quality of British steel there is no alternative. It is central buying and central manufacture.
  Mr. Hooley: He can go to Germany.
  Sir S. Summers: Therefore, it is unwise to pay so little attention, as apparently is now being paid, to the loyalties of and the links with overseas buyers and
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  agents which are liable to be completely destroyed.
  I end with a personal comment. In the middle of the last century my grandfather was in a small way of business in Stalybridge on the outskirts of Manchester. He earned his living, with a handful of men, cutting up sheet metal into horseshoe shaped pieces to put on the clogs of the operatives in the cotton trade in Manchester. He went to the Great Exhibition of 1851 and put his life's savings into the purchase of a machine which stamped out the same horseshoe shaped pieces of metal. He made a profit from it. With that profit he bought a mill. He again made a profit and bought another mill.
  Then 10 brothers pooled their resources and founded John Summers and Sons, of Shotton, where the hon. Member for Brightside earned his living. Since that date they, and those who followed, have created an undertaking with £100 million assets employing 15,000 people being paid over £20 million in wages every year. Now these brothers have all gone. Two were Members of this House, albeit Liberal Members. I do not know what the Liberal Party will do today, but I am sure, Liberal Members or not, that if those 10 brothers were here they would join me in the Opposition Lobby tonight.
  6.0 p.m.
  Mr. Gregor Mackenzie: I must apologise to the hon. Member for Aylesbury (Sir S. Summers), because I missed the first few minutes of his interesting speech. This debate has been like a re-run of the Second Reading debate on the nationalisation of the steel industry. I am not disappointed; there are those of us who relish the prospect of such a re-run. Some of us have some specific points to put because we want the industry to be as successful as possible.
  Unlike the hon. Member for Aylesbury, I welcome the abolition of some of the boundaries we have had in the industry over the years. Now we can look at the industry as one, and assess the value of any schemes put forward for modernisation, and rationalisation. Even those of us who are not as closely involved as some of my hon. Friends who worked in the industry know that we have to look at the prospects of the industry with very

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  great care. From the reports that I have read, and it has been difficult to digest such a great mass of documents, it seems to me that the industry is grasping its opportunities. It realises that there is the need for change and rationalisation and technological change if we are to meet the challenge from overseas competitors.
  While I have no fear of real and profitable rationalisation or technological change, or of broad plans for the industry over the next 10 or 20 years, there is cause for concern in many areas of the country among the men who work in the industry, men who have given a lifetime of service. In my area coal is closely linked with steel. Jointly these industries are the biggest employers. It is no reflection on the present Government—more on the previous Government—but our experience of the run-down in coal has not given some of my constituents a lot of confidence about what will happen to steel. They want to be satisfied that this will be tackled in a different way and there will not be a run-down in the industry without a replacement of jobs.
  The first thing I want to tell the Minister is that he must not see this problem in complete isolation. When we look at the problems of the steel industry we should see them as a matter for regional planning, and the various agencies concerned should be consulted and make their assessments and plans based upon the important rôle that the steel industry has to play in the community.
  I was pleased to read in the B.S.C. annual report something which seemed significantly different from anything I had seen or heard about the operations of the industry in the past. This was to do with the obligations it had to the community and to individuals members of the industry. There is one case which affects my family. A very close relative worked in the industry for 46 years, and when he went out of that industry at about the age of 60 he got nothing at all—no job or prospects at his age. This can happen; it can cause confusion, and it worries people.
  I am particularly concerned to read that there is to be this tremendous run-down and want some assurances on this point. I realise the methods of achieving this, such as wastage and retirement,
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  but this may not be how it is seen by some of the young people in the industry. I compliment the corporation upon having one of the best industrial training schemes for craftsmen that I have ever seen. One of the problems in Scotland, and I have no reason to think that it is not a problem in other areas, is that these young craftsmen are well trained, but once they are trained, because of wage conditions, they move into another industry or another part of the country. Because of the worries about the future this process may be accelerated. It is happening in my area and it worries me.
  The annual report of the corporation says that the industry has a place in the community and social obligations to the community. I represent an area which has spent a great deal of money on the infrastructure of the community based upon the work provided by the Steel Corporation and the previous owners. In my area there is an advanced programme of house building, school and hospital building, all dependent upon the success of the industry and upon the industry remaining where it is. I hope that the leaders of B.S.C., before taking these decisions affecting so many areas, will look closely at their obligations to the local authorities and to others who have built up such a large infrastructure around the industry.
  This brings me to two specific problems of my country. I do not like the term "regionalism". Neither myself nor my fellow Scots are being nationalistic, but we are concerned that the Minister, together with his other right hon. Friends who control Scottish affairs, transport and trade, will soon come to a decision on the important question of the iron ore terminal on the Clyde Estuary, as proposed by the Clyde Port Authority. We in Scotland very much appreciate the visit of the Minister to examine these problems for himself, to see the work at close hand and we hope that in his discussion with leaders of the Steel Corporation in Scotland and the Scottish Ministers he will have realised that we feel this to be a key point not only for the Scottish steel industry, but for the whole Scottish economy.
  I do not apologise for putting forward the hopes of the people of Scotland about this iron ore terminal. It is fair to point out that the iron ore terminal is

  719
  not only important to the Scottish steel industry, but to the Scottish economy as a whole. I also believe, like many who have looked at it, that this question is important to the steel industry as a whole.
  This is an important point which must be carefully examined. My right hon. Friend the Secretary of State for Scotland has often said that the heavy industry in the West of Scotland was based on geology and geography. That is true. The steel industry in Scotland owes a great deal to this. The changing pattern of things is such that we hope that, whilst in the past we flourished on the geology of the West of Scotland, we can now flourish on some of the advantages of the deep-water harbours which we are able to offer on the estuaries of the River Clyde.
  I know that this has been, and is likely to be for some time, a matter of controversy between the various areas of the country. I know that we now have Port Talbot, and I hope that it will be successful, but I shall be interested to hear how the proposed channel is to be costed, and how high are the dredging costs. I shall be interested to hear, too, how high the costs would be for doing this work on other estuaries, and whether, even after extensive dredging, they could provide the facilities that we are able to offer on the Clyde.
  We have many natural advantages, and I think that we could make a good case for this terminal in our area, not only on the basis of saving capital, but on the basis of reducing the normal working costs to the industry. I have said that we have natural advantages, but I have heard in the arguments about deep-water harbours, it being said that what is needed is not merely deep water, but a lot more as well. It is said that there is a need for the associated services of dry docking, that tidal conditions must be considered, as must be the width of the channel and the space available for these large vessels to operate.
  All that evidence suggests that the Clyde Estuary compares more than favourably with any other estuary in the United Kingdom. Therefore, not only from the point of view of its natural advantages, but because of the conditions which obtain in that area, we hope that the Minister
  720
  will give serious consideration to siting this installation there. I know that when considering this terminal my right hon. Friend has to consider the whole question of the hinterland of the terminal and all that goes with it. I do not intend to comment on whether we should have green field development or brown field development—I leave that to others of my hon. Friends—but I hope that consideration will be given to this important question and the social and economic consequences of such a project. I ask my right hon. Friend to examine with great care the social consequences of all this, particularly in the West of Scotland.
  I welcome the Bill as an earnest of the intention of the Government and the corporation to improve the industry and hope that my right hon. Friend will stress to the corporation the urgency of building an iron ore terminal on the Clyde Estuary.
  6.13 p.m.
  Mr. John H. Osborn: I value the opportunity of taking part in this debate and listening to the Minister's account of progress in the steel industry, but I regret the last few paragraphs of his comments which degenerated into a political diatribe. I had hoped that this subject would be taken out of politics.
  Since the 1967 Act was passed I have been somewhat diffident about taking part in debates on the steel industry, because, like the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths), I have an interest to declare. I am associated with a company in the private sector, and because I have an interest which may be interpreted as different from that of companies in the public sector I have not spoken on this subject for two years, but there are two factors which have prompted me to intervene in this debate.
  Firstly I have for 25 years been a member of the Iron and Steel Institute which celebrated its centenary not long ago. On that occasion I found that those in the industry, whether public or private, home or overseas, customers or suppliers and their advisers, talked about technology and the future of the world's steel industry. They talked, too, about administration and management, and I now consider that if it is correct to discuss the steel industry with the Iron and Steel Institute, it ought to be appropriate to make

  721
  observations amongst those who legislate for and control the industry in this country.
  Secondly, as a Member of Parliament I find that many of my constituents work in both the public and the private sector of the industry. Many of them have approached me, generally privately—some from the shop floor, trade unionists, junior management and management—to ask what the Bill is about, and how it will affect them. Because this Bill will affect the livelihood of many of those who live in my constituency, it is proper that I should intervene.
  What do we know about the performance of the British Steel Corporation to date? The Minister has given us a certain amount of information, but the results are disappointing, and I am sure that I am not the only Member who takes that view. Last year, because of a miscalculation in the original programme to nationalise steel, the borrowing powers were raised to £400 million. The corporation's record shows a loss of about £12 million, after a remarkable profit record in the preceding year.
  The difficulty is that for three or four years up to 1967 the steel industry has been in the cockpit of politics, and no one has been able to take the decisions necessary to make the industry competitive and keep pace with the technological changes which have been taking place. I do not wish to disparage the new management. Since then it has had to take stock of a situation which is the result of the passing of the 1967 Act.
  The steel industry has gone through violent technological changes in the last decade. In a recent paper delivered in Sheffield Dr. Finniston not only dealt with new materials and new specifications, but he said that there were new techniques of electric steel-making; that large-scale continuous casting was commonplace, and that there were now opportunities for using high-grade iron ore from overseas. The significance of all this was referred to in the Benson Report, and was known to leaders of the steel industry before then. The Minister referred to this in his speech.
  About four years ago we on this side of the House warned the Government that the industry had to be at its most flexible to meet this international competition and
  722
  technological change. The fact is that the industry was held back, and shackled by the very process of nationalisation. I do not wish to criticise the chairman, Lord Melchett, the deputy chairman, or the board of the B.S.C. for what they have not done. Rather, I commiserate with them on the immense task which they and their financial advisers have had to face in planning for the future. In fact, I go so far as to associate myself with the Minister's congratulations to them on what they have achieved against almost impossible odds.
  As the hon. Member for Brightside said, morale in the industry is low due to uncertainty among those in the industry, and this has been reflected in Sheffield. The corporation's first Report said that it was the corporation's intention to break the divisions up into geographical groups, and this has been done. At one time it was hoped that each of these groups would have complete autonomy and would manage its own affairs. In fact, it was hoped there would be competition between the groups, but this has not materialised and there has been excessive centralisation.
  The very process of implementing the recommendations of the first Report, let alone the effects of nationalisation, has brought about unheaval in the industry. This is not realised except by those who live and work in the steel-making areas. Drastic change is sometimes essential for a modern industry, and we in Western Europe have been made well aware of this in the past decade. However, persistant change only creates uncertainly and insecurity in top and middle management; and, if it creates those feelings there, what effect must it have on the men on the shop floor? With the steel industry in its present state of turmoil, workers may not even know their foreman and departmental managers. If they are to be confronted with a new set of bosses every year, they will soon become completely demoralised. This has already happened and will happen again if there is further change.
  This brings me to Clause 8, which applies to the transfer of property, and the Memorandum issued with the Bill, paragraph 14 of which indicates that the present group structure is to be replaced by a small number of product divisions. However, immediately after

  723
  that announcement in the Memorandum there is reference to the fact that the corporation's staff may be diverted from their present work. As I pointed out, another drastic change, particularly if it diverts the corporation's staff away from the work they have been doing, could create great turmoil.
  Many of those who have been affected by the recent upheaval have approached my hon. Friends in the hope that the next Conservative Government will not denationalise the steel industry, at any rate for some time to come. They have pointed out that there has been sufficient change and that the industry should be allowed to settle down. Many people in Sheffield view with abject horror the contemplation of yet another major upheaval—notably into product groups—occurring so soon after the first reorganisation. They fear that such a step would mean more jockeying for position and a further moving about of personnel.
  The Minister has slightly drawn aside the veil covering the future, but he has not outlined what the product groups are likely to be. He said that he did not know, but the B.S.C. must have made comments from which one can make a reasonable guess about what may happen. Indeed, it is easy, if one has a knowledge of the industry, to make a reasonable calculation.
  There could, for example, be a sheet and tinplate division and this would involve the Steel Company of Wales, Richard Thomas and Baldwins, John Summers and Colville, at Ravenscraig on the Clyde. There could be a tube and pipe division, with Stuart and Lloyds at Corby and Scotland, coupled with a part interest in Round Oak.
  A possible division which is of particular interest to Sheffield is in the alloy and stainless steel division. There might be a number of Sheffield alloy firms with, perhaps, Clyde Alloy in Scotland and firms such as Brymbo in North Wales.
  We then have the bulk steel sector, which might include in one section, blast furnaces, melting furnaces and cogging and, in another sector, light rolling mills, including bar and various other sections.
  This is conjecture, but something along these lines must have been put to the Minister, who might have indicated what
  724
  these product groups are likely to comprise. He should say how such an arrangement might affect a city like Sheffield.
  It is obvious that product groups involving steel, tinplate, heavy plate, tubes and pipes will not involve Sheffield at all. However, the creation of an alloy and stainless steel division would raise implications for my constituency in that Samuel Fox, in the public sector and Firth Vickers and Shepcote Lane are companies partly in the private and partly in the public sectors. Also in Sheffield there could be a steel melting and cogging division as well as bar rolling mills. This would mean a different headquarters for the different companies and a complete reorientation of the industry. If this is to happen, I hope that the Minister will outline what may be in store. Indeed, he should have done so before presenting the Bill.
  From the national point of view, such a step would create a number of monolithic, monopolistic activities and there would be no competition between them. From Sheffield's point of view, there could be an alloy division in competition with the private alloy sector. It is in this connection that I speak with some diffidence. But I return to a point which I have made before; that fair competition between the public and private sectors in this sphere is difficult, if not—
  Mr. Ridley: It is impossible.
  Mr. Osborn: I was about to say—if not impossible.
  The B.S.C. has exercised price leadership, the Minister said, for the first time in 30 years. This activity has been challenged by the private sector and, of course, all our calculations are dependent on the outcome of the report of the Prices and Incomes Board in this respect. The B.S.C. is in a monopolistic position in bulk steel and is likely to raise prices considerably. In these steels where they are in competition with others, they are lowering their prices.
  Mr. Ridley: Has my hon. Friend thought of the implications of the various branches of the B.S.C. having public dividend capital, on which they need not pay interest, competing with private firms in his constituency? Is not this a new dimension in competition?
  Mr. Osborn: It certainly is a new dimension and I hope that my hon. Friend will emphasise that when he speaks.
  As I said, I have no desire to express my personal views, which are strong, on this issue. The Senior Warden, Mr. Mark Balfour, on the occasion of the 333rd Cutlers' Feast, is reported to have said:
  "Relations between the public and private sectors of the steel industry had started well. But the current attempt by B.S.C. to use their privileged position to discriminate against some sections of the industry was tragic and threatened to fan the inevitable atmosphere of reserve into open hostility … Hallamshire's industries are undergoing a traumatic series of changes".
  That observation has a bearing on the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
  To summarise, the Minister is, of course, dependent on the verdict of the Prices and Incomes Board because, first, the whole programme of capital investment and Government borrowing is dependent on that report—and this, in turn, is dependent on the prices at which steel is sold—and, secondly, because the Restrictive Trade Practices Act is having an unusual effect on the relationship between the public and private sectors. The private sector cannot compare notes, so to speak. The public sector provides a large area of comparison and that is why the Minister has a price list. The Restrictive Trade Practices Act became ineffective within the B.S.C. once the Government created such a vast public sector.
  Let us not forget that the fixing of prices under arrangements concluded with the Iron and Steel Board provided the main plank of the original plan for the Labour Party's determination to nationalise steel. That was criticised at the time. Those criticisms bear out what is happening now since, under nationalisation, there is a greater degree of price fixing than ever before.
  I had intended to comment on the capital reorganisation of the steel industry and whether the process has been tackled adequately. I will only reiterate that, initially, I was not hostile to the concept of equity capital. However, equity capital without the normal control of shareholders, especially in this
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  type of organisation, is bound to create anomalies with which the industry will find it difficult to live.
  It is announced in the Bill that there will be facilities for overseas borrowing. Is not this tantamount to adding to our national indebtedness? After all, these funds are to be guaranteed by the Government. If private companies wish to raise money overseas, the money raised can be regarded as an investment by an overseas company or institution in Britain and does not count against our national indebtedness.
  This tactic of increasing our national indebtedness must receive the attention of the Government, and I wish that the Financial Secretary were in his place. I trust that the Treasury will take note of this aspect, since the sums which are to be raised in this way must, in the long run, appear in the nation's accounting. Overseas borrowing of this type must increase our national indebtedness—this at a time when we should be doing everything in our power to reduce our debts.
  Any other group of companies as diversified as the B.S.C. wishing to embark on capital expenditure for the sort of activities envisaged in the Bill would study its business activities carefully to see how much money could be generated by its own resources without having to borrow. We have the accounts of the publicly-owned companies in this volume I hold. Under each of the publicly-owned companies we find a number of subsidiary activities. Is not the British Steel Corporation in business to manufacture steel even if under a degree of State protection? If so, why is it in business for stockholding and merchanting, making concrete pipes, brick making, pipework, engineering, structural and general engineering, making wire, plant and machine tool manufacture, mining, quarrying and what-have-you? Any management placed in a position of financial stringency such as faces the nation particularly at the present time, would not find a banker willing to loan it money without first demanding that it put its own house in order. Such a management would have to decide what it can do best, and then dispose of its other activities to generate capital for its own reorganisation.
  Mr. Hooley: Will the hon. Member take the trouble to read paragraph 36 in the report on reorganisation? It says:
  "Diversification is common among steel companies throughout the world. In some countries abroad, and particularly in the United States of America, Europe and Japan, it is more widespread than in the United Kingdom and increasing rapidly."
  Mr. Osborn: The hon. Member has fallen right into my hands. They can go to the public to obtain the money for such diversified activities and they are measured by the profitability of their undertakings. The nation is in such difficulty because we have people at the helm who have no knowledge of these repercussions. The wrong decision has been taken.
  This has been an interesting debate, but the observations and reactions of hon. Members opposite fill me with gloom, I can assure them that their incompetence and incapacity to understand the industry will cause great gloom throughout the country and disillusionment among those who put them into office.
  Parliament once again by this Bill is to give the Minister a blank cheque because it is impossible for us at this moment to control the Executive, largely because of the complexity of the issue. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), accused the Minister of not having done his homework. I have tried to do some of my homework. We have not had the benefit of the observations of the Select Committee on Nationalised Industries, but we have been well documented.
  What of the future? Denationalisation is becoming more and more an impossibility if these product groups are to be formed. The single-purpose monoliths will undoubtedly suffer the fate of the dinosaur and other prehistoric monsters. The nation cannot afford this. The creation of product groups will prove unsatisfactory from the national point of view. I had hoped that the British steel industry would eventually become part of a European and international steel industry. It is becoming inward-looking and cannot take part in international developments. The monolithic nature of these monopolistic product groups will enhance this tendency to be inward-looking. Indeed, nationalisation itself will make the benefit international capital, in spite
  728
  of the arrangements the Minister has made for borrowing, become more and more illusory.
  I oppose the Bill because of the method of financing further borrowing, because of further reorganisation, the break up of old names, and the creation of a monolithic structure.
  Several Hon. Members rose—
  Mr. Speaker: Order. Again, I remind the House that I am anxious if possible to call all hon. Members from steel constituencies who wish to take part in the debate. If speeches are reasonably brief I shall be able to do so.
  6.34 p.m.
  Mr. John Mendelson: The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) started his speech by accusing the Minister of having put some politics into his peroration. The hon. Member must apparently have had his own peroration written for him by someone else and he saw it for the first time when he delivered it in the House.
  We listened to the right hon. Member for Leeds, North-East (Sir K. Joseph), who spent 80 per cent. of his time on piffle and propaganda before discussing the Bill. I must not use the term "tedious repetition", because that would be a reflection on the Chair, but the right hon. Gentleman engaged in boring repetition, making the same point over and over again and indulging in the same kind of propaganda.
  The right hon. Gentleman, who did not show any real sign of a knowledge of the industry—that probably was his handicap and why he repeated himself so many times; he spent a great deal of time on the position of the steel industry before nationalisation. His picture of an industry that was able to obtain any amount of capital in the market would have made all the old steel owners laugh if they could have heard it. I was a Member in 1962 and I remember that we were asked by hon. Members opposite to allow two loans to be made. One was for £70 million to Thomas Baldwin's and the other was for £50 million for Coalville's. They were to be guaranteed from public funds as loans on specially favourable conditions.
  The right hon. Gentleman, who now attempts to speak on steel, should go

  729
  back into the recent history of the industry and learn something about it before making such assertions. He tried to capture our benevolence by saying again and again that, of course, he was not claiming that the industry was perfect under private enterprise. I have never heard a more Dickensian statement in this House, which is sometimes full of Dickensian statements. It was the understatement not of the year, but of the century. With that facile statement the right hon. Gentleman hoped to do away with all the difficulties which the industry experienced.
  The hon. Member for Hallam, with me, was a member of the Standing Committee on the steel nationalisation Bill. He knows that capitalisation of the industry is one of its major problems and that many of the senior men of the industry said, "Get on with the job now that the decision has been made. We were not able to raise capital and we need £800 million over the next 10 years. Now at last let us have it with the help of the public". That was the message from the senior directors.
  Mr. Michael Shaw rose—
  Mr. Mendelson: I cannot give way because I wish to respond to Mr. Speaker's appeal.
  I am glad to have the approval of the hon. Member for Hallam, who was with me on the Committee.
  I shall spend most of my limited time dealing with the problems of the industry about which those who work in it are most concerned. I begin by challenging the statement of the hon. Member for Hallam about morale being low. Of course, it is low among some in the industry, but it is not universal. I know that the hon. Member quoted my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths), but there are variations on this theme. I have been in Stocksbridge, where I found there has been a great improvement in morale over the last 18 months at all levels. Many people including some in managerial positions are convinced that the decision has been a good one and that the industry is making good progress.
  The problems I wish to raise apply to the whole of South Yorkshire and to parts
  730
  of the industry beyond that area. What concerns me is the announcement by the head of the British Steel Corporation that there will be a number of inevitable reductions in the jobs available in the industry. I need not waste time on the need for rationalisation. The Minister again this afternoon gave good reasons for that. I do not know anyone in the industry, which is forward-looking, who would not regard that as agreed.
  But when there are to be reductions in job opportunities the head of the corporation has told the country that he hopes those who are most involved will be absorbed, there was one problem with which he failed to deal; and it was a very serious one. If, for instance, 560 jobs disappear in a particular place, it does not follow that those jobs will be replaced in that place. The statement that it is hoped that most of those who lose their jobs through technological changes and advances will be absorbed leaves a serious problem in that place.
  This was strongly stressed to me only last Sunday at a meeting of the joint committee of the Stocksbridge steelworkers' representatives. I was urged to make this point in the House to the Minister. My right hon. Friend will realise that it is a serious point and I hope that, either today, through his hon. Friend, or on a early occasion when he next addresses the House, he will be able to say something more about that.
  Another point which concerns those who work in the industry and which is allied to my previous point is related to different areas of the country which may have twin economic problems. In an area like, for instance, the West Riding, there is a declining coal industry, which means that—I need not labour this point with the Minister—there will be a serious loss of job opportunities. At the same time, for the opposite reason—because the steel industry is developing and going ahead and therefore undergoing serious technological changes—there will equally be loss of job opportunities.
  What we have not yet heard, either from the head of the corporation or from the Minister, and what the people who work in such areas in the industry are concerned about is whether my right hon. Friend has made sure that he is making proper arrangements with heads of other Departments and people responsible for

  731
  the policy of general economic development to ensure that the interests of those who belong to these industries are safeguarded and future job opportunities planned for them by those Departments responsible for economic planning. My right hon. Friend will agree that there are decisions here which he cannot possibly take by himself.
  I think that I will carry with me hon. Members who represent areas in a similar position when I stress that this point is of the greatest possible importance. Both these matters point in the direction of a continuing responsibility of the Minister for those who, because of technological changes, will inevitably lose jobs which they have held for years.
  I turn now to what has recently worried some of us. I will mention the scrap situation only in passing, because my hon. Friend the Member for Brightside has already referred to it. I want to say something negative and something positive. First—the positive point—a number of hon. Members who are concerned about this, and of whom I was not one, had discussions with the senior officers of the corporation and found a willingness to receive people and discuss the situation. This is a positive development.
  None the less, it cannot do away with the sad realisation that—to put it mildly—the planning ahead could not have been at its best—my hon. Friend the Member for Brightside investigated this problem—if it allowed such a situation to arise. We have a public duty, in the first debate in which we can put this on record, to tell the Minister that there is severe criticism of this aspect. He has considered it, but he must reassure those working in the industry that this will be done much better in future and that the same difficulties will be avoided.
  The twin point is the fluctuations in the demand for steel. This is a matter which I have been raising in the House for about 10 years. I dealt with it at great length when I moved an Amendment on the subject to the Iron and Steel Bill of 1967. We all know that, whether under private or public ownership, fluctuations in the demand for steel are inevitable. They are a result of our general economic system and they have to do with many
  732
  factors which are not under the control of those who make steel or of a Minister responsible for the steel industry.
  That creates a very serious problem for those who work in steel. Because of the trade cycle and the ups and downs of economic development, within comparatively short periods there is a glut of steel, through which people are forced on short time work, which is then replaced by an ever-increasing demand for steel, with lengthening delivery dates and people crying out for home-produced steel and unable to get it in time.
  I had an experience the other day in a hotel in Sheffield, when a gentleman said, "You do not know me, but I have recently heard you talking about steel at a meeting and I want to let you know that I am a businessman in a minor way. I know that you are interested in steel fluctuations. We now find that we have very long delivery dates, even for small amounts of steel." I and others hon. Members have proposed over the last 10 years that, under the Government's inspiration, the Steel Corporation should adopt a policy of stocking steel.
  When I moved my Amendment on this subject to the previous Iron and Steel Bill, we had a very long debate, and this was adjudged by hon. Members on both sides a matter which should not be a political plaything but which was a practical problem, for which a solution must be found. The then Minister promised the Committee that this would be gone into and action would be considered, although it would not be possible to do it immediately.
  The fluctuations in steel must, of course, be considered in two different ways. There is the bulk supply and there are the special steels. Anyone who knows anything about the industry knows that this is a much more difficult proposition for special steels than for bulk steels, but it can be covered in both sectors. It has rightly been suggested that it is much easier and cheaper to stock steel than to stock coal, so it is possible, with a slight addition to the final selling price, to have quantities of steel in stock, so that, when the demand increases—it does so sharply when the economic position improves, normally within three or four months—there should not be this lengthening of delivery dates.

  733
  I have said nothing about imports of steel, which is an obvious point. I am talking about the shortages for our manufacturers who are waiting for steel. There are no excuses for further delay in working out a proper stocking policy.
  In the period before 1964, when the right hon. Member for Bridlington (Mr Wood) was Minister of Power—I had a great respect for the right hon. Member and still have it—I made the same proposal. In reply to a debate, he said that his Department had made inquiries of the firms concerned and had received a negative answer. The firms were not prepared to work a policy of stocking to meet fluctuations in demand, because, they said, it would be too expensive. That was the only answer which the Minister could give. He was not opposed to the suggestion and saw some sense in it, but could not get co-operation.
  One of the purposes, I thought, of public ownership is to deal with a problem like this. We should not be obstructed by those who are afraid to add a little capital for an operation of this kind, even though they feel that there might be beneficial consequences.
  Shortly after the industry was nationalised, with the co-operation of the then Minister, I went to the Ministry of Power and had an interview with one of the heads of the sections dealing with steel. I discussed the stocking of steel with him and he said that he had information from the board of the Steel Corporation that after one or two even more urgent problems on organisation had been dealt with, this was to receive a high priority in the board's considerations and conclusions were to be reached. Did the corporation proceed with this inquiry? What conclusions, if any, has it reached, and is my right hon. Friend prepared to say that the policy favoured by most members of the Committee through which the nationalisation Bill passed will be implemented?
  One of the most novel provisions which we wrote into the Bill in Committee had to do with workers' participation in industry. My hon. Friends the Member for Poplar (Mr. Mikardo) and Barrow-in-Furness (Mr. Booth) and I drafted an Amendment which met with the support of all members of the Committee representing this side of the House. We established the principle of access to books,
  734
  reports and papers, for the first time I believe in a nationalisation Measure. There has been some implementation of this policy since then. The Minister accepted the policy, slightly amended and brought it forward on Report.
  We have had the development of the directors in the local groups being representatives of those working in the industry, on the shop floor. Two problems arise now. It is proposed to reorganise the industry on the basis of product groups and the first question is: what will happen to these local directors? What consequences will there be as the result of the reorganisation in this element of participation? The second point is more critical. There has been a good deal of appreciation of the work done by these representatives. There has also been some very considerable and serious criticism of the board of the B.S.C. because of the limited amount of participation that has been possible.
  The amount of participation of the part-time directors, compared with the full-time members has not been satisfactory. We had a disagreement in Sheffield recently over the creating of a new joint company, arranged between privately-owned companies and a mill which was publicly owned by the B.S.C. I will not go into the rights and wrongs of this operation, although I expressed my opinions at the time and, more important, all the local representatives of trade unions were strongly on the record as opposing the measure. They felt it ought to have been a different arrangement, with a 51 per cent. share publicly owned and a 49 per cent. share privately owned, instead of a 55 per cent. share privately owned and 45 per cent. publicly owned.
  I received definite information that the part-time directors on the board were not consulted about this merger, did not take part in the discussions leading to the final decision, and did not hear at it any earlier than I did, who received a letter from some of the local directors involved informing me, the day before a Press conference, at which the announcement was made. This was a very bad position for these part-time directors to be in.
  I hope that my right hon. Friend has seen to it that this position will be corrected in future. While I believe, like

  735
  many in the factories, that this element of participation is not sufficiently far-reaching, that it ought to be much more widespread and direct, we would be doing great damage to what we have so far achieved and to any hopes of extending it, if we created a position in which there was grave doubt about the usefulness and the position of the people allowed to take part as part-time directors.
  I conclude on a general point. I commend the Minister and the Steel Corporation for the arrangements they are making, in organising the industry in such a way that it is rational, and with that there is hope that it will in future cease to be the plaything of our political changes. We have now established that the industry is publicly owned, and will remain that way. At the same time, while we could not reach agreement, either with my right hon. Friend the Minister or with Lord Melchett over the question of the merger, because we thought the correct policy would be to go more into the public sector, rather than the other way, I hope that in future mergers of this kind, this merger will not be a model. Where rationalisation is necessary I hope that it would be organised in such a way that it increases the public sector.
  6.57 p.m.
  Mr. Peter Emery: I will not follow the hon. Member for Penistone (Mr. John Mendelson) in his comments except to elaborate later on the steel stockholding point, which is very important.
  Will the Minister please ensure that in the winding-up we have an answer to the obvious divergence of figures between those given in "Finance for Steel" and those in the White Paper? If we do not get this answer I do not believe that the Government are justified in asking the House to proceed with the Bill. The answer must be given before we vote.
  Product groups are now known to be the type of structure which the B.S.C. will adopt. I am sorry that the Minister would not deal with this in his speech. He suggested that he did not know. If that is so he is badly informed, because anyone else who knows anything about
  736
  the steel industry has had this information for a considerable time. What worries me about this structure is that, while all of us want to ensure that the B.S.C. can be as efficient as possible, and want to see modernisation, to achieve this efficiency, there are still considerable doubts about the provision of these product groups which must be aired in the debate.
  The first and major worry concerns the selling of steel. The major steel producers are concerned that they will not know from which plant their orders will be filled. If this goes forward in the new structure there will be a central selling department and no one will be able to specify, other than the particular qualities and specifications that they require, from which plant they want deliveries. The Minister must realise that over many years there has been built up a loyalty between certain producers and buyers.
  At the same time—and much more important—certain industries concerned with electronics and electrical manufacturing and with sonic manufacturing in general claim that, though specifications may be identical as between one plan and another for certain steels, there are differences in manufacture. Such firms have, therefore, specified that they want their steel to come from a certain plant and have not bought from anywhere else. They have often carried large stocks to ensure that they would always have the quality of specialist steel required from the firm they prefer. If the present proposals go forward, all that will be cut out and will create considerable problems and anxiety.
  The same applies to selling abroad. Many overseas customers have built up good relationships with such firms as Richard Thomas and Baldwin's, Colville's and Dorman Long. They still have considerable delight in doing business with the old names. Although there is need to streamline the industry this should not mean getting rid of a managerial structure which can be of use in selling British steel, both at home and abroad. The streamlining which hinders sales could not be of advantage to the corporation or to the economy.
  A problem which concerns all of us in this House is that of the cartelisation of steel. Will the Minister answer two questions? What arrangements which

  737
  might be considered to be restrictive in nature have been made between the corporation and other international steel firms outside this country? What unofficial discussions have taken place between the corporation and overseas firms on the limitation of marketing in certain sectors? In Europe, there is considerable fear of a movement towards cartelisation in steel markets throughout the Continent. If there is such a movement, then it would be wrong for the corporation to be associated with it. I am sure that both sides of the House would wish to condemn cartel arrangements. It is not just rumour. There are examples which I will not put before the House now, but which I can give to the right hon. Gentleman in private if he is concerned. But it is important that the Minister should make it plain tonight that the corporation is not to be associated with any cartel practices in Europe.
  I want now to deal with the small buyer and his problems and the question of steel stockholding. A problem which the small manufacturer will have to deal with, and immediately, is that there is likely to be an 8 per cent. increase in price for small order quantities. That is a major rise for small manufacturers, who make up between 60 and 70 per cent. of industry. The corporation should consider again the problems of delivery of small orders. I would not object to its suggesting that the lead time for supply of orders should be much greater for small batch orders. That would be a reasonable objective for it to set in order that its deliveries could be built up, including deliveries of small amounts, which are, of course, costly.
  An 8 per cent. increase would mean ensuring that many firms would not want to buy directly from the corporation but would go to the steel stockholders. A considerable argument is going on about the fact that the corporation is not encouraging the growth of steel stockholding on as large a scale as one sees, for example, in the United States, where the steel stockholder is an intermediary factor for the delivery of steel to small buyers throughout America.
  I believe that it could well be to the advantage of small manufacturers, and perhaps many larger ones, as well as to the B.S.C. if we could have efficient steel stockholders available to the corporation.
  738
  but there is considerable concern that the corporation is not willing to encourage individual firms to set up in such business. If that is so, it is important that the Minister should do all in his power to overcome the problem.
  The Memorandum on the Iron and Steel Bill says, on page 4:
  "A more specific financial duty will become appropriate if the Corporation has public dividend capital …".
  I do not know what that sentence means. Does it mean that, previously, the corporation has not had, as a public duty, to consider the use of its money? Does it mean that, because of public dividend capital, the corporation will suddenly have a greater financial responsibility? It is a strange sentence and it goes deep in condemnation of the Bill. Even before the hon. Gentleman's speech, I felt that the Government have not even the ability or capacity to run an old iron shop at a profit, let alone the nationalised steel industry. For that reason, as well as for the others I have given, I oppose the Bill.
  7.9 p.m.
  Mr. George Lawson: It always surprises me that hon. Members opposite, most of whom are reasonably intelligent—and I regard the hon. Member for Honiton (Mr. Emery) as a very intelligent man—can talk in such terms as to suggest that they are completely one-sided in their approach to a problem. For example, their approach to the steel industry now that it is nationalised seems so very different from their approach before. Why, for example, should anyone want to shackle the industry if it wants to enter into agreements abroad? I am not arguing for those agreements, but, if private enterprise is allowed to enter into agreements abroad, why is it not a good thing for a nationalised industry? I merely say that that is the kind of double approach to an industry that I deplore.
  Mr. Emery: I am not trying to indulge in double-think on this. My view is that any cartel arrangement, whether by a private or nationalised industry, is bad. I have always said that.
  Mr. Lawson: I return to another aspect of the approach of hon. Members opposite to an industry just because it happens to be nationalised. The hon. Gentleman expressed something like horror at the

  739
  possibility of the steel industry being organised on a product basis. I am not arguing for or against this, but surely it is recognised by all hon. Members, certainly on the benches opposite, that many large-scale private industries are organised on a products basis. I understood that the organisation on a product basis of very large modern industries was considered to be among the most advanced form of managerial techniques.
  The hon. Gentleman also expressed a feeling of distress that ancient, long-standing, honourable names of companies that people respected for a long time and wished to trade with may be blotted out. But is not that happening all the time when mergers take place? The electrical engineering industry, for example, has experienced merger after merger. The recent great merger was only a development of many others, and each merger resulted in the disappearance of long-standing and in many cases honoured names. These are commonplace things in industry.
  Hon. Gentlemen opposite might have advanced better arguments than they have so far. I like to hear good arguments. I sit here anxiously waiting for them, but until now I have heard very few. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) argued that it was impossible to have fair competition between a nationalised industry and a private industry. He nods agreement. But I wonder what hon. Members opposite think about coal and oil, for example. Oil is still a private industry, and it does not seem to be finding a great deal of difficulty in competing with the coal industry. I wonder what hon. Gentlemen opposite think about road transport, which is mainly private and does not seem to have a great deal of difficulty in competing with the nationalised rail transport system just as it had no difficulty in competing with the previous privately owned rail transport system.
  We insist on placing burdens and obligations on nationalised industries, expecting them to behave far differently from the way in which we expect private industry to behave. Perhaps it is right that we should, but let us recognise that this is so. When coal mining was a private industry we did not expect it to
  740
  deal as carefully and humanely with its workers as we expect the nationalised coal industry to do. We did not expect the steel industry when it was private to deal with its workers so carefully.
  There could be exceptions—perhaps the firm of the hon. Member for Aylesbury (Sir S. Summers) was one, but it is not customary to expect that a private concern would carry that obligation. It would say to a worker who was leaving, "We are sorry. You have been with us for 40 or 50 years and we will give you a gold watch—perhaps. But we must pay our way. We have no obligation towards you. We thank you. Well and truly done."
  We all insist that if the steel industry has to cut down on the number of its personnel it must deal with the matter in all sort of circumscribed ways. I do not object to this, but we should recognise what we are asking. If we are to insist on such different standards for a nationalised industry we should treat it differently and be prepared to measure its results differently.
  For years and years hon. Gentlemen opposite protested every time there was a suggestion that a railway station should be closed, but every time there was any suggestion of the railways not making money they also denounced the waste of public money and so on. That kind of thing is all too common, and it is time we got beyond it.
  I am not a steel man. I respect the knowledge of the hon. Member for Aylesbury and his whole lifetime of experience and the experience of his family. But I think I am reasonably informed on what happens in industry, and I am in contact with many steel men; I have represented my area for a long time. We must recognise that the steel industry, whether or not it was nationalised, was having a rough time. When it was privately run the Americans reached the stage where they were producing twice as much steel per man employed. This was not any fault of nationalisation. It is just what had happened with all the scope that private enterprise steel-making had. It is only recently that even the threat of nationalisation emerged. Year after year the industry dropped behind other countries. What advantages did Japan, Germany

  741
  and America have? It is true that in many cases they had the advantages of larger scale, but they showed the enterprise that has not been shown for a long time among those who have been running our industry, with some exceptions.
  This country will not be able to maintain anything like its standards of life unless we can get the steel industry on to a basis where it can look other steel industries in the face, and it cannot do that just now. That is our main argument here, and instead of returning to the old argument about nationalisation, hon. Members opposite should have come on to this theme. It does them no credit to denounce nationalisation but at the same time not to tell us that they would denationalise if they returned to power.
  I would respect them if they said that nationalisation would never enable the nation to solve its problems, and that, therefore, they would scrap it and return to private enterprise. But there has been no such suggestion. There have been manoeuvres here and there perhaps, but no suggestion of denationalising the steel industry. If they think that nationalisation as such is such a bad way to run important industries, they have an obligation to denationalise them, but they are not going to denationalise steel, coal, the railways and so much else. That is part of what I mean when I talk about their double-talk and double-think.
  I do not want to speak for long, because I know how anxious hon. Members can be when they want to enter the debate. They almost find it impossible to listen to other Members if they are anxious to speak themselves.
  I welcome the proposed change in the capital structure of the industry. This is another example of expecting nationalised industries to operate under standards we would never expect of a private industry. Earlier nationalised industries carried an enormous debt burden from the beginning, a debt burden in perpetuity. Even when they were paying the interest on the debt, this could be represented as no profit being made, because usually after the interest had been paid there was no profit. This was a quite different standard from that applied to private industry. There was no question of deception in the change of approach to this matter in terms of the capital structure of the industry.
  742
  I suggest that the hon. Member for Aylesbury should consider each industry which has been nationalised. If he does, he will find changes have been made in the structure. There has been not a rigid doctrinal approach to the structure—I know that there is a fair amount of doctrine on this side of the House as well as on the benches opposite—but continuous modification to meet certain problems as they arose.
  I am convinced that those engaged on pushing through the Bill had no thought of reorganising the capital structure of the industry so that it had a large block of equity. I was one of those who urged the previous Minister to consider this matter with great sympathy. I accepted from the beginning that that was a good thing.
  Sir S. Summers: The hon. Gentleman says that no thought was given by the Government to changing the capital structure. My complaint is that there was no forethought. The Government should have foreseen the need at the time.
  Mr. Lawson: I do not very much quarrel with that. We could benefit from a great deal more forethought than I sometimes see evidence of. But I also realise the position on the benches opposite. It is customary that we do not think very much beyond our noses. Only when we come up against a problem do we begin to consider a way round it. That is the case here.
  As a result of this modification in the capital structure of the nationalised steel industry, it will be possible to measure the results with the results in steel industries abroad and large private industries at home. Hon. Members opposite cannot object to that. I welcome the Measure which has been adopted. It could lift the burden on the industry which was such a burden on the coal industry, in which it had to be lifted in part, and on the railway industry and which has caused so much disgruntlement. Men in the industry became conscious of the burden, not the public. The public are not very interested in these details, but the men at work are.
  I have mentioned the control structure. Whether it will prove to be good or not, it is not something which has come from the dream world of people running the steel industry. It is a well-established type of control in large industry. Many

  743
  combinations of units are managed on the basis of products as distinct from geographical areas. I am merely making this point without arguing it with great vigour one way or the other. The steel industry is a remarkably diverse industry, with a host of products and by-products.
  If this type of control is a good thing in certain large-scale private industry, it might be a very good thing to adopt in the steel industry. It would not necessarily mean that the control was all centred in London, Wales, Sheffield or even in Scotland. But I would expect that control, based on products—and this is very reasonable when we think in terms of selling those products—to be shared in certain measure in its controlling headquarters.
  I would expect a nationalised industry—and this is where we ask of a nationalised industry what we would not dare to ask of a private industry—to show far greater concern for the peripheral areas than private enterprise. I can see no serious objection to this type of control, provided we keep in mind that area interests must be safeguarded.
  I turn to the green field-brown field argument. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) expressed dismay about the lack of a plan for the future. In some cases, we suffer from far too large plans with little body in them. There is a great deal of sense in what has been called "the brown field approach" and in considering whether what we have is being used to capacity and how we can get the most out of it with the least expenditure. That is a fair approach, provided we do not forget the future and drop behind, as we have been doing for so long, developments elsewhere. I cannot think of a better way of deciding how we can produce the largest amount of steel possible by considering where we can expand most rapidly, economically and cheaply. Provided we are thinking of the future, this is a common-sense and reasonable approach.
  I know from information given to me as well as printed information that there is a great deal of unused capacity in my area. Political pressure resulted in the building of the great Ravenscraig strip mill. There is the great modern cold rolling plant at Gartcosh, incorporating
  744
  very expensive equipment. It has never been used to anything like capacity. It is being used more now than ever before, but there is still plenty of spare capacity. We need to build up that capacity and to make the most use of it.
  A limitation on the possibilities of using capacity to the full in Scotland is the means of importing raw material. All the imported iron ore in the area comes up the Clyde to the general terminal quay in Glasgow, which can take ships of no more than about 21,000 tons. It is an excellent terminal, and a very fine transport system has been developed between the quay and the works in Lanarkshire. Nevertheless, it is very limited. It is working at about capacity now. It is important that a decision is taken to ensure, not only the continuance of existing capacity, but the development of future capacity which we all agree is so necessary. It is not possible for this development to take place unless we break this bottleneck of the limited channel through which the raw material comes.
  Developments in this area are necessary. We must make the fullest use of natural advantages—rock-bottoms which never shift, and there is no need to dredge, sheltered sea approaches so that there is no need to build large sheltering walls or to take ships into enclosures of any kind. There should be a minimum of delay and a maximum of safety.
  When the Benson Report was published in July, 1966, reference was made to a maximum size of about 65,000 tons. Since then, we have had on order two ships of 165,000 tons deadweight capacity. That shows the speed with which the change is taking place. If we are to bring rich iron ore from Australia right round the world, which is what the Japanese are doing, we shall require vast ships, not ships of 100,000 tons, but of 200,000 tons or perhaps 250,000 tons, and we must have somewhere to put them.
  This perhaps is for the future, but if the Scottish area is to develop according to the "brown field" plan, it must break the bottleneck of its restricted source of import supply. This can be done on the basis of a terminal that the port authorities have offered to build at a cost of £12 million. The future must

  745
  take care of itself, but we must have something of this sort now.
  I apologise for arguing with my hon. Friends, but we are all concerned with our respective areas. It is perhaps not usual for a Scot to say this, but we should be thinking in terms of British interests. I have argued here against Scottish Nationalism and in terms of Brtish interests, and I am doing so again. This is necessary in terms of Britain's interest. We should be thinking in terms of putting the British steel-making industry on a basis of such efficiency that it can look the Americans, the Japanese and the Germans in the face, and it must be done along these lines. I commend what is being done by the Steel Corporation, but I hope that the corporation will go a little further and move along the lines which I have described.
  Several Hon. Members rose—
  Mr. Speaker: Order. I again remind the House that many hon. Members who have sat here all day wish to speak. Reasonably brief speeches will help.
  7.33 p.m.
  Mr. Nicholas Ridley: I will not touch on the points raised by the hon. Member for Motherwell (Mr. Lawson) now, although I shall refer to many of them as I make what I hope will be a brief speech.
  I should like to complain about the way this sloppy Bill was sloppily presented by the right hon. Gentleman. I do not understand how two documents, one from the British Steel Corporation and one from the Government, giving totally different figures to the tune of £275 million could be published simultaneously and why the Minister should have no explanation for it.
  I should further like to complain that no financial target is included in the Bill, nor was one mentioned in the Minister's speech. We are asked to write off £700 million without being told the target for the return, if any, which we may expect upon it and what financial control will be imposed on the British Steel Corporation. We accept that the Minister wants flexibility, but he should tell us what is the present target and, if he wants to change it, we will accept that it will be changed, but to give no idea what return we are likely to get on £700 million is the height of financial irresponsibility.
  746
  I want almost to confine myself to objecting to public dividend capital. The intention is to pass the dividend this coming year, probably next year and perhaps even the year after that. It is strange that this proposal should be introduced on the ground that this is a fully viable industry but subject to fluctuating returns—I quote from the White Paper. Surely the industry will never be in a better position than now. We are told that the industry has not sufficient capacity to meet its requirements, it is booming, the mills are full and we are having to import. Why cannot it pay a dividend now? This is the most likely time for it to be able to yield 10 per cent. on its capital. But, instead of £70 million interest, we are told that there is a £12 million loss. The chances of getting a dividend in a slump year when the industry is running at 60 per cent. capacity are extremely slender.
  As we have been talking so much about the salaries of the board members of the British Steel Corporation, might not the Minister find it useful to gear the rate of return of the board members to the rate of public dividend on the capital employed? This might be a useful incentive to the board members of the British Steel Corporation to turn in a profit for the investors who put so much money into the industry.
  I accept that public dividend capital is not of major importance. What is lost in terms of capital is lost, and what profits are made in the future are made, and, naturally and inevitably, accrue to the shareholders, who are the taxpayers. Calling it one sort of dividend or another, or one sort of capital or another, will not alter the financial fact of profit and loss, and that I accept. What it amounts to is a decision about who will acknowledge that a loss has been made, whether it be the British Steel Corporation or this honourable House of Parliament. The British Steel Corporation may say, "This year we will pay no dividend", or "This year we will pay 10 per cent. dividend", which means that it has taken unto itself the decision whether or not the capital shall be written down.
  The capital value on the Stock Exchange of the £700 million of equity which we are being asked to pass, if it were quoted, would be barely £100 million, because there is no prospect of earnings to pay a dividend, and the future

  747
  looks very dim. It may be that the Government paid too much compensation, I do not know, but if this commencing capital debt cannot be met—I am not being partisan here—it would be much more sensible for them to come to the House and ask to have it written off. Parliament would then have control of the matter, instead of being left in the intolerable position that we are being asked to put forward £700 million worth of capital without a clue what return there will be and what financial objective will be put upon it.
  There are two substantial further objections to public dividend capital. The first was raised by my hon. Friend the Member for Aylesbury (Sir S. Summers). In good years the profits will be pre-empted by the workers in the industry—I do not blame them, good luck to them—and in bad years the taxpayer will get nothing as a return on this capital. So I am extremely sceptical whether we will see any of this money back.
  The second point is on competition, and here I come to the first point in the speech of the hon. Member for Motherwell. I said that it was impossible to envisage fair competition between public and private concerns in the same industry. In trying to rebut my argument he quoted two examples, the argument of coal versus oil and road versus rail, but in each case the successful competitor—road transport and the oil industry—has not been allowed to win. A vast amount of public money has been pumped into the coal industry. We recently wrote off £415 million, and we are losing more.
  Look at what is happening to the railways, with some £200 million of their capital being written off. Successful competitors who are winning the competition have not been allowed to win. If it had been the other way round nobody would have shed a tear for the oil industry; there would have been no public subsidies for it. The only possible result of competition between public and private concerns is that one or both will lose a good deal of money. Experience has shown this to happen.
  It is difficult, and indeed frightening, for competitors in the private sector of the steel industry to be told that the units of the B.S.C. with which they will
  748
  be competing will be put on to a public dividend capital basis, so that they do not have to pay dividends on their profits or interest on their captial—apart from the £135 million which is still on a fixed rate of stock basis, whereas the poor private competitor has to service his capital. I cannot believe that this is meaningful, without coming down on one side or the other as to which is the best system.
  I invite hon. Gentlemen opposite to recognise that we must firmly draw the line. It is an impossible position if the private sector wins and we have to go on pouring taxpayers' money into the public sector. It is equally impossible, if the public sector wins, to drive all the private competitors into the ground. None of these solutions is acceptable to either side of the House. I know that generalisations are often wrong, but I have attempted to define the situation.
  My last objection to public dividend capital is the curious desire which I find on both sides of the House to make nationalised industries commercial. The hon. Member for Motherwell was schizophrenic about this. Half the time he was saying that one must look after one's workers better, and that one must build iron ore quays in Scotland, because he happened to represent a constituency there which seemed to me to be a not very commercial reason. He said that one must put all sorts of welfare facilities there, which no doubt he would find convenient to him when he went up to his constituency. Then he said: "We must beat the Americans. We must look the Americans in the eye and bring down the price of steel below their price".
  Which does he want? He cannot have both. The Americans do not site iron ore terminals in their constituencies. They put them in the right place. They follow the disciplines of the market. They go to any extent to make sure that they have the most efficient type of production facilities.
  On the matter of commercialism, hon. Gentlemen opposite ape tycoonery. They want to think of themselves as launching great industrial enterprises which will beat the world—the Americans, the Germans, the Japanese. They are always seeking to cut off publicly-owned industry from the control of Parliament, from

  749
  Ministers, and from such tiresome interference as having to pay interest on capital.
  The amount of times hon. Gentlemen talk about the crushing burden of debt which industries have to carry! It is somebody else's savings. It is money which has been put up. It is not a crushing burden of debt to those who have to put up the capital. One cannot say that this inherited debt is something which should never have happened. One has to honour one's obligations to capital as well as to labour.
  Hon. Gentlemen opposite have the desire to make industries more commercial. My right hon. and hon. Friends always try to move nationalised industries back into the private sector by saying "Make it more commercial. Let us split it into separate, competing groups". What they are trying to do is to move towards denationalisation, without having to say so. I agree with part of the hon. Gentleman's speech. One cannot have the advantages of a private enterprise system without private ownership. One cannot have the advantages of the public ownership system without public ownership.
  We all seem to be trying to get the worst of every world by pushing ourselves into a position where there is no control at all, either by the shareholders in the private system, or by the Minister and his staff through the detailed control which is exercised over nationalised industries.
  When one sees the first signs of the B.S.C. beginning to rough up the shipbuilders with its new pricing structure, picking on people who cannot get competition to whizz up the price by as much as they dare, by keeping prices low where it is competing to try to frighten off competitors, or, as my hon. Friend the hon. Member for Honiton (Mr. Emery) said, by starting cartelisation schemes on the Continent, one is giving birth to a rogue elephant, a great industrial bull in a china shop. We shall have terrible trouble with this great animal, unless we take steps to control it.
  There are two ways of controlling it. We can control it either with the Socialist solution, by tying it with bits of string, by harnessing it to the Ministry and telling it what to do. But that is not consistent with commercial freedom. Or we can denationalise it and sell it back
  750
  to the private sector. That gives the advantages of commercialism, but does not give the hon. Gentleman the advantage that he can build an iron ore quay in his constituency in time for the next election.
  We can choose between these two alternatives. The point I make is that public dividend capital is a decisive move in the only direction which will get us nowhere further at all.
  7.48 p.m.
  Mr. James Tinn: I, like my hon. Friend from Sheffield, Brightside (Mr. Eddie Griffiths), have strong roots in the steel industry. As a steel worker and a member of the National Union of Blastfurnacemen and representing a steel constituency I am grateful for the opportunity to make a contribution to this debate. I shall try to be brief although, having experienced in this debate some rather long speeches, it is a little tempting to reply to many of the points which have been made.
  I wish to deal constructively and seriously with the industry and its importance and will try to be objective. But I cannot resist the temptation to take up one or two of the points which were made by the right hon. Gentleman the Member for Leeds, North -East (Sir K. Joseph), especially some of the party political points which he made. He lay much of the blame upon the lack of capital investment in the British steel industry as compared with the rest of Europe and this is most noticeable when one looks at the figures. When one looks at the comparable graph showing capital investment in E.E.C. countries compared with the United Kingdom one sees a lag. The right hon. Gentleman sought to explain this lag in terms of the uncertainty which he claimed was created in the privately owned steel industry because of the threat of nationalisation which had deterred investment plans.
  I find this a flimsy excuse for what is admittedly an appalling performance by the private steel industry in the capital sector. One conclusion to be drawn is that it makes the continuance of public ownership essential. We have heard a good deal in past debates about the damage done by uncertainty. The party opposite makes its contribution to the removal of future uncertainty by dropping any idea of denationalising steel.

  751
  I was not impressed by what appeared to be crocodile tears over possible abolition of company names. Let us face it, what customers want and what establishes a good relationship between a firm and the customer is its ability to supply a cheap product—perhaps I should say a competitive product—on time at a suitable quality accurate to specification. These are the kind of things which determine the relationship. If these factors are not present, or if they are and they disappear, no thoughts of loyalty will keep a customer dealing with this country. My hon. Friend the Member for Motherwell (Mr. Lawson) made the very valid point that names are changed frequently in mergers, in any event.
  A point was made about monopoly power and the importance of exporting industries not being priced out of their markets or put in difficulties as a result of rising steel prices. It is not so long ago that the publicly-owned coal industry, particularly in North-West Durham which produces some of the finest coking coal in the world, produced the coal at a loss and thereby sold it at a loss to the then privately-owned steel industry. That was a case of subsidy if one likes. Now, I suspect that some right hon. and hon. Gentlemen opposite would like the publicly-owned steel industry to perform a similar service of below-cost supply. But I see no reason why it should be regarded as an inherent feature of publicly-owned industry that it should subsidise the private sector.
  I turn then to the steel industry's contribution to regional development and, since I am the first speaker from the North, perhaps I might be allowed to make a point about that region. In the corporation's thinking, it appears that there are suggestions that, with the new product divisions in its reorganisation, it may provide opportunities for the setting up of a product headquarters in Wales and another in Scotland. However, not a word has been said about the North, and, through the Minister, I want to draw the attention of the corporation to the simple facts. In the Northern Region as a whole, there are over 61,000 steel workers of all kinds. In Scotland, there are 27,000 and in Wales there are nearly 72,000. Unless one thinks only in nationalistic terms, there appears to be a
  752
  strong case for a headquarters in the Northern Region.
  Then I want to express my concern at a passage which apears on page 11 of "Finance for Steel". It says:
  "The possibility of developing existing plant at Tees-side provides a major alternative option to that of the development proposed at Scunthorpe."
  That strikes me as being a little odd. I thought that all the development scheduled for Teesside was fixed and determined, except for the possibility of an ore terminal, to which I turn now as my hon. Friend the Member for Motherwell has claimed it for the Clyde. I hope that the industry will find that it needs three terminals, because I recognise the anxiety on the Clyde. But we have to face the possibility that only one more will be required and, briefly but I hope effectively, I want to make the case for Teesside.
  As a result of dredging work undertaken principally on behalf of the large oil refineries on both banks of the river, the Tees is capable of handling vessels of up to 85,000 tons deadweight, and I can assure my hon. Friend that it is capable of being dredged at a reasonable cost to take vessels in excess of 200,000 tons deadweight. What makes it almost unique among estuaries—and I do not give way to the Clyde on this—is that it has the additional advantage that there is an abundance of flat sites on either side. There is plenty of land available which is ideally situated, with a large-scale steel industry nearby. As a result of maintenance dredging, there has been a great deal of land reclamation, the size of which can be indicated by saying that the ordinary maintenance dredging of the river alone gives us an additional 100 acres a year.
  I now turn to the proposals about switching to product divisions. I have tried to keep an open mind, but I have not been able to see a prima facie case for them which counterbalances one or two of the practical arguments which I can see. It will be helpful if hon. Members can be given more information about the reasons why it is thought that this change is so desirable.
  It is important that uncertainty which is created by the proposed change should not be prolonged any more than is necessary. Bearing in mind that steel works

  753
  usually are built on an integrated basis to produce a fair range of products, I find the proposals difficult to understand. These plants are in existence. In the country as a whole, we are not starting from a "green field" situation. We are not starting from scratch. What does one do with a large and efficient plant which is producing more than one kind of product? Will it be operated under more than one management, or will it be run down? I hope that the latter is not the intention. It may be that my doubts are groundless. However, I have not seen the arguments in favour of the proposal, and I would like to have them put to me. Clearly there is every objection to change simply for the sake of it.
  Then there is the matter of competition. One of my hon. Friends made the very fair debating reply, quoting Mr. Judge's evidence to a commission, that there was no competition in steel and that it was not wanted. That was a fair point, but the fact that there was no competition in private steel is not conclusive proof to me that publicly-owned steel should not try to be competitive. I am still not convinced that the geographical divisions cannot compete with each other and provide a rough yardstick of efficiency. I am not convinced that that should not be continued.
  I would like some more information about the proposed overseas investment which is envisaged. I gather that it is mainly concerned with the preparation and safeguarding of raw materials on the one hand and the distribution, marketing and stocking side on the other. That would seem to be a reasonable proposal. However, there is the danger of exporting jobs by setting up production units abroad. I hope that that is not the case.
  My final point concerns labour relations, which are almost without parallel in industry. Labour relations are exceedingly good. If those of other industries were as good, the Government would not be considering the sort of legislation that they are. There are many problems and difficulties, but when they arise at plant level there is a set procedure which is followed. Small ad hoc committees are set up, with members from both sides and with neutral chairmen, and their findings are honoured. In view of the fact that relations are so good and that, since the war, the men have co-operated so well
  754
  and so loyally in the technological changes which the industry has faced, surely they are entitled to a reverse loyalty from the corporation.
  We realise that we are facing redundancy in future years. I recognise the difficulty of solving that problem. Steel has a pattern of employment based on seniority. I am desperately concerned at the position, for example, of a man who has given his lifetime to working in steel and, at the age of 50, has a fairly good established job. What does one do with such a man? He cannot be transferred to another plant, because under our system he must again start at the bottom. Generosity and imagination is required from the corporation at least equalling and matching that shown by other publicly owned industries which have faced similar problems—particularly the Coal Board.
  Subject to one or two reservations which I have mentioned, I believe that the Bill will assist the corporation in performing its task and I shall have no hesitation in supporting it.
  8.1 p.m.
  Mr. Patrick McNair-Wilson: The last time that I had an opportunity of contributing in a debate on steel in this House was my maiden speech in 1964. I was, unfortunately, involuntarily kept away from the House when the Bill to nationalise the industry passed through.
  I have found the debate extremely disappointing, since the Minister clearly had no idea of the detailed facts regarding the important borrowing powers which we are being asked to pass in the Bill. Today's debate will go down in history as an occasion when the Minister stuck to his brief, was asked an important question, could not answer it, and the only moment when he used his own initiative was in that display of political venom at the end of his remarks.
  To use a cinematographic term, this is a 3-d Bill: damaging, dangerous and deceitful. It is damaging to the industry, because of what it does to the structure of the corporation and the companies. It is dangerous, because we now have figures which are entirely meaningless to the debate, and it gives the corporation the opportunity of borrowing abroad, about which we have had no clear statement.

  755
  It is well known that the steel industry the impression of restructuring the finances of the corporation in a commercial way by converting the £700 million to p.d.c. when we know perfectly well that the ultimate decision about the return is left with the Minister. He is, therefore, captain, mate, bottle washer and cook on this ship, and he is also the principal shareholder. This is an extremely deceitful way of trying to persuade the general public that we are putting the corporation on a commercial footing.
  It is well known that the steel industry is vital to the economy of the country. It always has been and, I believe, always will be. The steel industry has always done a good job for Britain. I am far from convinced that it is in any way doing a better job now than when in the hands of private enterprise. The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) blew away some of the pink smoke that we have had puffed at us by the Minister by getting down to the real facts about what the corporation is doing and underlining some of the serious problems which it is facing.
  It is not a commanding height, as was once suggested by the Labour Party when in opposition. It is an industry which is subject to every sort of variation in the economic structure and policies of a Government. Some hon. Gentlemen opposite have criticised hon. Members on this side for introducing politics. The Labour Party brought the steel industry into politics. The Labour Party brought discussions on the steel industry into the highest political forum in the land. Of course, it is a political subject, and it has to be looked at in that light.
  I should like to examine the three areas that I have mentioned. First, the dissolution of the company structure and the product groupings. I should like to take up the point made by the hon. Member for Cleveland (Mr. Tinn), who talked about company names, and one of his hon. Friends who also said that company names were frequently changing in other industries. Being professionally involved in publicity I know the importance of brand images, the importance which can be attached to good publicity, and the goodwill stemming from it. The Steel Corporation is very
  756
  publicity-conscious. We have seen much in the Press about its advertising campaign. Indeed, it has been quick, since it has been in being, to issue advertisements saying, "Who calls the B.S.C. a monopoly?" I do, but that is neither here nor there. The point is that publicity is important.
  The hon. Member for Cleveland tried to dismiss company names as in any way relevant. They are very relevant as a selling aid, because of strong established links with customers who have been buying from companies using those names for a long time.
  Mr. Tinn: I was arguing about the realistic factors—quality of the product, time of delivery, and so on—holding a customer and accounting for goodwill. If the hon. Gentleman is right in saying that publicity is more important, then we can change the names, switch on this tremendous publicity campaign, and get goodwill that way.
  Mr. McNair-Wilson: The hon. Gentleman is making a fair point in that one cannot sell a bad product. I am saying that it is a pity to throw away goodwill when it has already been established.
  That raises another point. We know why these company names are to disappear eventually. It is a purely political reason. It is to remove, once and for all, any landmarks which could ever lead anybody back to denationalising this industry. The Bill is intensely political. Nevertheless, I should like to speak about selling and companies names.
  Frequently, particularly in export businesses, it is found that customers of British steel companies have established links such as those to which I have referred. When those links disappear and the corporation trades exclusively as the Steel Corporation, we could have a situation, in countries where we do not enjoy the best of political relations, in which we might find good orders being denied to us because people were unwilling to trade with the corporation per se. We can all think of countries where the Government are finding life rather difficult. For instance, South Africa. I regard what is being done in the Bill as unnecessarily damaging.
  I turn to the financial aspect. First, the failure of the Minister of Power to

  757
  answer the point about the missing £275 million. I hope that the Government will make sure that this point is answered when the debate is wound up. It is not good enough to dismiss it as a small, almost typographical, error. This is the most cynical disregard for the taxpayer and his money. It must be made crystal clear, by the end of the debate tonight, what has gone wrong in these figures.
  Predictably, this industry is coming back for more money. It is less than two years since the original borrowing figure of £300 million was fixed, and here we are with a limit of £650 million—more than twice as much—being set in the Bill. This well-trodden path to the taxpayer's pocket is once again being travelled by a nationalised industry. This is something which has to be examined in the greatest detail, and I assure the Minister that that will be done in Committee.
  It is probably the fact that at the end of each financial year the Minister will have an opportunity to decide on the return which is to be paid. This is what takes nationalised industries out of the realm of private business, because in a private business real disciplines exist. Nobody in his wildest dreams could imagine the Minister refusing this industry finance if it required it. No one can therefore ever see a situation where the corporation will be faced with the real disciplines which exist in private industry.
  That is particularly unfortunate, because it means that the corporation will be operating in a totally different sphere from the members of the British Independent Steel Producers' Association, the private sector, because they are still subject to real commercial discipline, and it is this element which makes it impossible for a person, like myself, who is involved in private industry ever to be able to come to terms with this sort of Bill.
  My last point on the financial part of the Bill is concerned with borrowing abroad. We know that the Government have borrowed about £3,000 million. We know, too, that to pay that back we need a balance of payments surplus of £50 million every month for five years. Yet here we are in this Bill once again giving the Government an opportunity,
  758
  through the corporation, to get foreign money.
  This is a most dangerous part of the Bill, because it allows the increase in total indebtedness to be pushed up by the corporation. We do not know anything about the terms upon which this borrowing is to take place. We do not know how it will be affected—by changes in exchange rates, or whatever—and we are enabling the Government to borrow money which they probably could not get in any other way from organisations like the I.M.F. I find this Clause extremely dangerous and distasteful.
  There is no doubt that the steel industry and British steel are vital to Britain. After reading the Bill and listening to the debate there is equally no doubt that the steel industry is entirely dependent on the British taxpayer, and in the Bill, and in this debate, we have been given nothing like sufficient evidence, clarity, or explanation, to lead the taxpayer to feel that his money is being wisely spent.
  The Bill places an additional burden on the people of Britain. It is a bad Bill, it is intensely political, and it will be with great pleasure that I shall support by party in the Lobby to vote against it.
  8.13 p.m.
  Mr. Frank Hooley: The hon. Member for New Forest (Mr. Patrick McNair-Wilson) will not expect me to echo any of his anachronistic doctrinaire statements. Of all that we have heard from the benches opposite tonight, the hon. Gentleman's attitude is the least constructive and the most out of date.
  The only point of substance that has come from the benches opposite concerns this curious discrepancy between the financial statement and the Bill, and I think the Minister owes the House an explanation about it. The discrepancy is not £275 million. That is a gross exaggeration. It is the difference between the net requirement of £200 million in the financial statement, and the net requirement of £310 million in the Minister's memorandum. Allowing for the fact that they cover different periods, the one five years and the other five and a half years, the discrepancy is about £95 million. Nevertheless, this discrepancy exists, and I am sure that my hon. Friend will explain it.

  759
  Listening to some of the speeches one would imagine that the steel industry was tottering into some sort of decline. In 1965 it achieved an all-time record output. In 1968 the output was only just a fraction short of that, and all the present indications are that output in 1969 will exceed that figure. Thus, in three of the past five years we have had record production, which hardly justifies some of the rather miserable comments made during the debate.
  The purpose of the British Steel Corporation is not to make profits, but to make steel, to provide this country with the most important basic raw material for our manufacturing industries. The success of the corporation will be judged by its ability to install modern capacity, to use up-to-date technological methods, to get rid of old plant where this is necessary, and to employ qualified scientists and engineers on a sufficient scale, which is what they have not been by private industry in the past. It is on the ability of the corporation to build up a massive capacity of modern steel-making plant that its success will be judged. Whether we get 1, 2, 3 or 10 per cent. on dividend capital is a secondary consideration. We must have the steel.
  My hon. Friend the Member for Penistone (Mr. John Mendelson) talked about stocks. I suspect that the real answer is to have sufficient reserve capacity to meet a surge in demand. I am not sure whether, from a physical or practical point of view, or from the point of view of the great variety of steels that we require, we can hold sufficient stocks against a surge in demand. What we need is a reserve capacity of steel-making plant which can be brought into production fairly rapidly when there is a substantial upturn in the demand.
  Mr. Tinn: Does my hon. Friend realise that that would involve having a surplus capacity of labour, that men would be out of employment during slack periods? There is a certain rigidity in the production of iron and steel. It is not possible easily to close down a blast furnace, a coke oven, or a steel furnace. There are good technical reasons for trying to preserve a steady output.
  Mr. Hooley: I take that point, but there is a wide variety of techniques for making steel not all of which involve the use of blast furnaces. We must have sufficient capacity to deal with fluctuations in demand. There may be some merit in what has been said about stockholding, but the basic need is to have capacity to meet all reasonably foreseeable demands.
  The borrowing capacity as provided by the Bill is about £200 million a year over the next five years. I shall be interested to know what discussions have been held with the steel plant manufacturers to make sure that they can provide the equipment on which this money will be spent as the new plant is built. They have been complaining about the slowness of the corporation's capital programme, but in the meantime some of them have built up important export orders, and I should like to be assured that if this capital programme gets under way the steel plant manufacturers will be able to continue to meet their export commitments and provide all the equipment that the corporation will need.
  I propose to deal next with the hiving off of extremely important and valuable assets of the corporation to private industry. This is not an academic point. My hon. Friend the Member for Penistone mentioned the episode of the Sheffield rolling mills. We handed over to private enterprise the most modern and up-to-date rolling mills in Europe and formed a company in which the private sector's contribution was the handing over of obsolescent plant. In spite of repeated and determined questioning and correspondence, I am still unable to discover what percentage of the plant contributed to the deal by the private sector is obsolescent and will be written off. I suspect that it is a high percentage of what private industry put into the deal. In exchange, it got 55 per cent. of the equity, while the public sector got a 45 per cent. holding in exchange for the most valuable and up-to-date steel making plant in Britain.
  I want to be assured that this kind of deal will not occur again. When the taxpayer has put up vast capital sums and the plant has been built, I want an assurance that it will remain firmly in the public sector. We may want rationalisation, we may want reorganisation, and

  761
  there may be fringes between the private and public sectors, but I want an assurance that the control of any company of that kind will stay firmly in the hands of the public and that the taxpayers' money will not be used in future to provide a sort of public-private dividend-capital for private shareholders and companies in the private sector.
  I echo what my hon. Friend the Member for Penistone said about information on such deals. This deal was kept very quiet until the very last minute. My hon. Friend quoted the astonishing fact that even some of the part-time directors on the board of the corporation were not informed that the deal was going through.
  I share some of the hesitation which has been expressed about the proposition that the corporation should borrow abroad. I hope that we shall receive assurances on this point. It is one thing to expect overseas enterprises to put risk capital into Britain's economy. If they want to do that, fair enough. If their enterprise flourishes, it may be useful in certain circumstances. It is quite another thing to ask for foreign money to which we then give a gilt-edged guarantee. If such funds are attracted to Britain, will the Government give a guarantee about changes in the parity of currencies? I would object to any investment in which a foreign investor was given, not only a gilt-edged Government security, but also a guilt-edged guarantee against any change in the parity of the two currencies.
  According to this week's Press, Lord Melchett made an announcement in which he suggested that the corporation would set up steel-making plant abroad. I do not know how far this was an official statement on behalf of the corporation or how far Lord Melchett was flying a kite. It is an extraordinary proposition. I should take the gravest exception to any suggestion of capital put up by the British taxpayer being used to finance a plant in South Africa or some such nonsense.
  I wonder what Lord Melchett was talking about when he made this proposition about using Britain's scarce capital for creating new plant and steel-making industry abroad. Which countries did he have in mind? What is the object of the exercise? Why should the British taxpayer be expected to provide
  762
  capital to create such plant overseas? If it is merely a question of obtaining more efficiently raw materials which do not exist here—such things as high-grade iron ore—it is understandable. The phrase quoted in the Press this week was "steel-making plant". The Government should give an explanation of this curious proposition.
  Much has been said about the importance of retaining the names of the old companies. I do not think that this has any great bearing on the corporation's efficiency. Austin and Morris became B.M.C. B.M.C. became B.M.C.-Leyland. However, there are still Austin cars and the Morris Minor, for instance. The merger made it possible for B.M.C.-Leyland to organise its production on a sensible and rational basis without losing those names, if it is thought that the names have a significance. Names such as Firth in Sheffield and Vickers could be retained if it was thought that they had some value. It need not in any way inhibit a sensible rationalisation of the production process.
  The corporation's Organisation Report talks about legal protection for the use of company names and trade marks. The Bill does not mention this. Has this point been overlooked in the Bill? Is this a serious issue, as I am tempted to think that it is from the fact that the corporation mentions it in its Organisation Report?
  I regard the question of diversification, on which I had an exchange with the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), as of considerable importance, for several reasons. The corporation clearly regards this as being of some importance, because it draws specific attention in paragraphs 34–36 to the very diverse activities which the corporation already undertakes and points out, for example, that in terms of capital employed the diversified activities—that is, the non-directly steel making activities—account for 16 per cent.; in terms of turnover they account for 10 per cent.; and in terms of manpower they account for 12 per cent. The corporation's not directly iron and steel activities form a significant fraction of its total activities.
  I again quote paragraph 36:
  "Diversification is common among steel companies throughout the world. In some countries abroad, and particularly in the

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  United States of America, Europe and Japan, it is more widespread than in the United Kingdom and increasing rapidly."
  The corporation would not have gone out of its way to make that statement in its Report unless it had regarded is as a factor of significance. I regard it as a factor of significance, because I believe that here lies part of the answer to the problem of the rundown of manpower.
  In the past the nationalised industries—particularly the National Coal Board, and it will occur with steel—have been forced, for technological and efficiency reasons, to run down their total manpower but have been inhibited in creating new sources of employment, of wealth, and new activities by the conditions imposed upon them by the Act.
  I see no reason why the nationalised industries should not have the same powers to diversify their activities as private industry has often had, particularly in steel, where it might prove to be part of the solution to taking up the slack in manpower which will necessarily occur through the general technological change. This appears to be envisaged in a statement in which the corporation says that, although it is thinking in terms of a loss of 50,000 jobs, it hopes that 12,000 new jobs will be created in the course of the reorganisation of its activities. I regard the question of diversification as being extremely important and I hope that no limitations will be placed on the corporation as to the way in which it may sensibly use this capital.
  The contraction of manpower is an important subject with which many hon. Members have dealt. I regret that the corporation found itself unable to resolve the dispute which arose between what are broadly the white collar and manual workers. My union, the Clerical and Administrative Workers' Union, was involved. I regarded the attitude of the six major unions as not particularly constructive or happy and I was not convinced that the corporation handled the matter in the best possible way, although I recognise that it was a complex and serious problem which did not lend itself to an immediate and obvious solution.
  In general, I do not take the obscurantist view that unions must hang
  764
  on desperately to their individual identities in all circumstances. The creation of a major new body in the steel industry was no doubt an opportunity to rationalise the union structure in the industry. I was not happy at the behaviour of the manual unions, which simply amounted to an attempt to maintain their particular interests, along with a calculated attempt to drive out, for example, my union—which has a long history of organisation in the steel industry, in Sheffield and in other parts of the country—and also to undermine the position of the other union involved. I hope that the corporation will look carefully at this problem to see if a solution acceptable to all concerned can be reached.
  8.30 p.m.
  Mr. David Lane: Some hon. Members are critical of the proposals in the Bill, even to the point of voting against them. However, all of us—plus the invisible legions of our colleagues who will soon be returning to vote—want to see a strong, prosperous and expanding steel industry. I particularly feel that way, having worked in the industry for a number of years after the war.
  My hon. Friends have made it clear that we have never maintained that everything in this industry was or is perfect. However, I find astonishing the blind eye which many hon. Members opposite turn to the fine achievements of the industry since the war. Its best plant is as good as one can find anywhere in the world, and I was glad to hear the hon. Member for Sheffield, Heeley (Mr. Hooley) mention the superb rolling mill plant in Sheffield. It was planned and constructed several years ago—those very years when, according to hon. Gentlemen opposite, the industry could do no good.
  For more than 20 years the steel industry has never been out of political controversy. The fact that so much good has been achieved by it is the greatest credit to the people concerned at all levels, both management and men. I pay tribute to the record of harmony in industrial relations, of which the industry is rightly proud, and I, too, hope that, after the current troubles have been settled, that harmony will soon be restored.

  765
  I shall be voting against the Bill because I do not believe that at this time we are, on the information before us, justified in giving what amounts to a blank cheque.
  I intend to comment on only three aspects; public dividend capital, borrowing powers and organisation. On the first, I am not against public dividend capital in principle for this industry. I do not want the industry to be saddled, as some other nationalised industries have been, with an excessive burden of fixed interest capital. However, the Government are going much too far in these proposals, which are equivalent to well over 80 per cent. of the total capital being in the form of private dividend capital.
  We do not always praise the Treasury, but in this instance we look to that Department to be the guardian of the taxpayers' money. In the booklet "Finance for Steel" published by the B.S.C. I was interested to read on page 6 a reference to the views of the Treasury, as given to the Select Committee on Nationalised Industries, about this question of public dividend capital. The Treasury's evidence included this comment:
  "If the experiment with B.O.A.C. proves successful E.D.C."—
  as it was then called; it is now p.d.c.—
  "may be extended in the future to certain other industries"
  I want a clear statement from the Chief Secretary that the Treasury is entirely satisfied with the arrangements now proposed for the B.S.C.
  How far are the Government prejudging the current price review by the Prices and Incomes Board? The Minister said earlier—I was astonished to hear him say this; I wonder whether I heard him aright?—that this was the first price review that the industry had had for more than 30 years. I suggest that that is totally wide of the truth. I recall, from the years that I worked in steel, being on the receiving end of at least two major price reviews from the then Iron and Steel Board. This is another cloudy area of our debate which I hope the Chief Secretary will clear up.
  The financial arrangements in the Bill add up to a quite inadequate financial discipline for the industry at this time. I entirely support what the B.S.C. wants to do about putting itself into a more
  766
  profitable financial structure, but the structure proposed is altogether too easy and favourable for it. Added to that is the total vagueness of Clause 5 about targets to be set for the industry. I make no apology for mentioning this again, for it is of fundamental importance. Not only has nothing sufficiently specific been said by the Minister about what he has in mind, but the Bill merely says that the Minister "may" set targets; it does not put a compulsory duty upon him, and it should.
  As has been mentioned in talking about financial discipline, we still have too little evidence of the results of the attack the corporation is making on its costs. In the booklet "Finance for Steel", the corporation refers to
  "extensive measures to improve efficiency".
  Before we leave Second Reading, I should like to be told a lot more about some of the measures the corporation has been considering.
  The borrowing powers we are to raise from £400 million ultimately to £650 million under the Bill; this will be many times the maximum possible amount of public money which might have had to be put into the industry under the former privately-owned régime. It is unsatisfactory to have to vote this sort of increase when we are still in ignorance of what the investment plans are to me. This point has been mentioned from both sides of the House several times. We know from the booklet, that an investment programme has been submitted to the Minister. The point was made, I think first by the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths), that we are all impatient for decisions on these vital questions.
  It is over two years since the Act was passed and nearly two years since vesting date. What has happened about the major scheme for development on the Clyde? I hope that my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) will catch your eye, Mr. Speaker, soon. I have no doubt that he will have something to say about this. I have a sentimental interest in it. What reassurance can be given to some districts which are particularly dependent on steel production? Many of them have been mentioned, and I add to the list, Consett. There is a natural anxiety in those districts to know what plans are to be put forward. Also, there are

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  the problems of overseas development and diversified activities, and we want further explanation of what is meant by recent stories about the B.S.C. doing more to tidy up the edges between the public and the private sector.
  Turning to organisation, the industry is now facing its second major upheaval since nationalisation. I find disturbing the signs in this Bill and in the accompanying documents that arguments for centralisation appear to be winning. I also find it disturbing that there is an apparent change of mind in the corporation's thinking within little more than a year. In its first Report on Organisation, the corporation dealt with this problem and came down in favour of groups broadly—but not purely—on geographical lines. I will quote two significant sentences from the report, issued in 1967. Paragraph 56, talking about the possibilities of a product grouping said:
  "On the other hand, the customer's freedom of choice would be limited, the scope for competition between Groups reduced and the Groups made more dependent on a single type of product."
  The report said, in paragraph 64:
  "The spur of competition other than in price between the groups or between the units below them is in our view highly desirable."
  Now, it seems—the corporation says this frankly in paragraph 54 of its Second Report—that it has moved from this philosophy, but this shift in view cannot increase our confidence in the corporation's judgment of these problems.
  I have the gravest doubts about the product organisation. I know that this used to be the basis of the organisation of the former British Iron and Steel Federation, but I am far from ocnvinced that it is the right system for the new structure. In the first place, this could lead to confusion at some of the multiproduct works like those of Samuel Fox, in the constituency, I believe, of the hon. Member for Penistone (Mr. John Mendelson). Again, I can see difficulties in the regions, in Wales and in Scotland. If they were merely the outposts of a nation-wide product division, there would be a loss of the sense of identity which is so strong in the Welsh and Scottish industries, which would do morale no good.
  But my main doubt rests on the position of consumers. It is amazing that
  768
  there was hardly a word in the Minister's speech about the position in which steel consumers are now placed as the organisation of the nationalised industry develops. They will, in effect, have to face one supplier if this product division system comes about. There will be an end to the valuable customer-supplier relationship at works level and customers will have, in effect, no choice. There are disturbing signs—I will not take more time to quote what I would have liked from the Report of the Iron and Steel Consumers' Council last September—of rather brusque treatment, to put it mildly, of consumer organisations by the corporation.
  All this suggests the shadow of a monolith creeping steadily over the British steel market. Monopoly has been mentioned a good deal. The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) recalled the statement of Mr. Judge in the debates over restrictive practices several years ago. But may I counter that by reminding him and others of the key point which will now affect consumers? In former days, if the consumers were dissatisfied with the delivery or service or quality of Dorman Long, he could go to South Durham or to Colville's or United Steel. In future, he will deal with one product organisation, probably in London, and will get it more and more on a take-it-or-leave-it basis—
  Mr. Eddie Griffiths: The customer does not have to go to the B.S.C. at the moment. He can go to the private Sector and even abroad.
  Mr. Lane: In certain cases, that may be so, but this is a very limited area of choice. I am disturbed by the growing take-it-or-leave-it attitude which I am afraid will be the result of these proposals.
  I feel great disquiet at the total of these proposals, and I suspect that the Government are not entirely happy with them. Far too many questions have been left unanswered for the Bill to be allowed to pass unchallenged. Perhaps, under nationalisation, we will never have satisfactory answers to some of these questions, which merely underlines the unwisdom of the Government's action a few years ago.

  769
  I should like to end on a more optimistic note. I hope that some, at least, of our fears and doubts will prove unfounded. I have tremendous faith in the potential of British steel, and it will be a tragedy for Britain if the fine spirit of this industry is squeezed out by the heavy hand of nationalisation.
  8.44 p.m.
  Mr. Michael Foot: The hon. Member for Cambridge (Mr. Lane) has at least succeeded in striking a slightly more hopeful note than some of his hon. Friends, and we certainly welcome that. All of us with steel constituencies take part in these debates partly to refer to the affairs of our own areas, and I propose to do so later.
  Like all my hon. Friends, I welcome the Bill because it offers the prospect that the publicly-owned steel industry shall not have to endure throughout its life the chains and shackles which were imposed on the publicly-owned coal industry. All of us know very well, particularly those of us who come from mining constituencies, that the coal industry had its prices fixed—in the public interest, maybe—while having to be subjected to all the propaganda as if it could act in a free market. These two circumstances cannot be combined successfully.
  In our predominantly mixed economy it is unfair to say to the steel industry, as it was unfair also to say to the coal industry, that its prices shall be kept at a level which helps to subsidise the rest of industry but that it is to be pilloried every day in the House or in the capitalist newspapers for not making fat profits. We must make up our minds.
  I hope that the Government will bear some of these factors in mind when they receive the report of the Prices and Incomes Board. I do not know what it will say, but the Board also has an incentive to try to make itself popular in many quarters, as have others in our public life, and the most popular thing it can say is that prices should be kept down. I am not saying that there may not be circumstances in what that should be decreed, but there may also be circumstances in which there is a good case for putting up prices.
  Therefore, I hope that the Government will not be intimidated by the Board when they receive the report on the steel
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  industry. Whatever criticisms may be made about them, those who run the steel industry know more about it than the people on the Prices and Incomes Board. We are rapidly coming to a time when a Motion should be moved in this House, "That the influence of the Prices and Incomes Board has increased, is increasing, and ought to be diminished". I urge the Government to take into account very strongly the representations about the pricing structure which have come from the publicly-owned steel industry, and not to be intimidated by the prestige and the interested proposals that may come from the Prices and Incomes Board.
  We were all staggered by the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph). That kind of stuff has not been heard since pre-Cobden times. He said that there may be some problems in the steel industry, but the way to solve them is to let the weak go to the wall; let us have a few bankruptcies and see how that helps the industry. I have not heard such elegant nonsense since I was instructed by a prehistoric professor at Oxford on the theory of perfect competition.
  The steel industry above all industries does not work in this way. The right hon. Gentleman praised the industry's record since the war very highly, but most of the money poured into it since then has been public money. Whether at Port Talbot, Llanwern, Ravenscraig, or the rest, in one form or another it has been public money. No sensible person in the Government, whether that Government was Labour or Tory, thought it conceivable that we could have decisions about investment in the steel industry made solely by the claims of the market. The Tories kept the Iron and Steel Board in operation partly so that it should decide questions of investment, precisely because they knew that these matters were of such wide concern that no one would dare to leave them to the haphazard claims of the market.
  Let us have no nonsense of the sort the right hon. Gentleman talked. In Ebbw Vale we know very well how the system of bankruptcies worked. The steel industry was closed there for many years, and we had 50 per cent. unemployment. We had the free market system fully in operation during those years. Then, by

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  the genius of Sir William Firth and some others, we started a new steelworks, the most modern in the whole of Europe, and the people we had to fight more than anybody to keep it in being were the financiers in the City of London. If they had had their way they would have closed it down after three years, and all the steel which came from Ebbw Vale which helped Britain to win the Second World War would not have been produced.
  Since then, the plant has made high profits. It has been a highly profitable concern ever since the market judgment of the City of London would have closed it down. I hope that, whenever we have discussions on the desirability or otherwise of reintroducing a free market economy, it will never be argued that it should be reintroduced into steel. The steel masters did not reintroduce this proposition. They know better. I hope that we shall hear nothing more of such a suggestion.
  The right hon. Gentleman made a lot of the awkward problems which the steel Corporation has to face. He spoke as if these problems would not have existed if the steel industry had not been nationalised. That was the inference, even if he did not spell it out in words. But we all know that these difficult decisions would have had to be taken in the industry whether nationalised or not. What was the meaning of the "deathbed" Benson Report, if it was not that? Some of us thought that its suggestions were not the right approach—and I hope I have the support of the hon. Member for Aylesbury (Sir S. Summers) at least in that.
  We would like to see that report buried. It was produced in haste to impress gullible hon. Members opposite that the steel industry had a plan. It was not a very good plan, but it was at least an indication that the steel owners themselves thought that some plan was needed, with someone taking the awkward decisions about which works were not to be sustained and which should attract new investment.
  These are extremely difficult problems and I do not blame the corporation for deciding to go more slowly in taking its decisions. It is right. It is more sensible to make the right decisions more slowly than to come up with grandiose decisions at the beginning. But, there again, the
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  right hon. Gentleman was much less fair than he should have been to a new corporation tackling some of these problems with intelligence and imagination and determined to make a success of the job with which it has been charged by the nation.
  Ebbw Vale itself faces difficult problems. I do not think that any hon. Member criticised more strongly than I did some of the appointments to the corporation. I made them because I thought it right that those who would be making these awkward decisions should be absolutely above suspicion. I agree with my hon. Friend the Member for Sheffield. Brightside (Mr. Eddie Griffiths) that severe criticism could be made of some of the choices of the Government. I made my criticisms to the Prime Minister and from him downwards. Incidentally. I also made them to the faces of the persons concerned. I do not like saying things behind people's backs and I informed them of my criticisms and that they should make their judgments all the more careful and scrupulous on that account.
  But, having said that, I believe in the principle which Charles James Fox laid down—that you trust a man until he does you a dirty trick. My experience is that those on the corporation have and are dealing fairly with these matters. We at Ebbw Vale have made the strongest possible representations to them. We have made it clear that we will fight and fight and fight again to prevent any major closure at Ebbw Vale. We have made it clear that our aim is to sustain Ebbw Vale as a fully integrated steel plant carrying out all the functions of an integrated plant, and detailed plans for the necessary investment to achieve that have been put up on that basis.
  These are not vague plans, or plans that have not been worked out with care, but plans that have been fully worked out, in detail, by those who have spent their life in the industry. These are practical plans by which we believe the whole of the works could be sustained and the employment of our people fully sustained, and good profits made for the corporation at the same time. What we demanded from the corporation, and what it has given us, is the assurance that those proposals will be most carefully and objectively examined, not only by the South Wales group,

  773
  but by the highest authorities in the corporation. That is the procedure which is going forward.
  Those proposals, which would involve investment of £20 million or £25 million or more in Ebbw Vale, are now being carefully examined. That is one of the reasons why some of us are so angry when we see the attempts, perhaps of some interested parties, we do not know, to try to say to the people in Ebbw Vale and elsewhere that decisions have been made quite contrary to this procedure. There was a report this week, and I have every right to protest about it in this House, in the Western Mail—on Tuesday—indicating that fresh decisions had been taken about Ebbw Vale which would involve a loss of jobs for 4,000 people working in my constituency.
  That was the purport of the headlines splashed right across the front of that newspaper. But no such decisions had, in fact, been taken. That morning I went to see Lord Melchett and he received me most courteously and promptly, with other members of the Steel Corporation. They denied absolutely the statement which appeared in the Western Mail. They confirmed to me that the procedure and the pledges that they had given to me as to how our Ebbw Vale plans were to be considered was in full operation, in the spirit and the letter of the agreement.
  I accept their assurance absolutely. As we are determined to fight to maintain an integrated plant in Ebbw Vale, and as we will not have it turned down by the corporation, we will certainly not have the plant closed down by the Western Mail.
  In dealing with this difficult problem it is not only the leaders of the steel industry or the trade unions, or the others who have to look to their responsibilities. The newspapers, too, must look to their responsibilities. Not only were those headlines in the Western Mail shockingly inaccurate and misleading, but they were also callous in the extreme, callous to thousands of people in my constituency, and they caused the gravest disturbance. We have had to take immediate action to kill this rumour and I hope that it is now dead. I hope that by stating the facts here I have helped further to kill it.
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  I repeat that the statements which appeared in the Western Mail on Tuesday have been repudiated by Lord Melchett and other members of the board in the clearest possible manner. They have reaffirmed that the principle they have stated to us time and again will be closely followed, and that our plans for sustaining that works will be examined according to the procedure stated to us. We will fight and use every means open to us to maintain this fully integrated steel works, which has contributed so much over so many years to pioneering advances in steel.
  No other works in the country has done more pioneering work than Ebbw Vale and we propose to preserve that situation. We have a very good basis, because no works in the country is more profitable. I know that in many other parts of the industry industrial relations are very good. They are extremely good in Ebbw Vale too. Whereas there are some difficulties in some other areas, in Ebbw Vale those responsible have conducted industrial relations on an extremely intelligent and smooth basis for many years. We have the basis of an extremely efficient, enthusiastic and effective works, and the plans for the future are put up by people who know their business and who have been responsible for this success. We hope that there will be others who will recognise their responsibilities in making these difficult decisions that have to be made in a great industry of this nature.
  I join my hon. Friends in wishing the corporation the best of success. I want to see this great publicly-owned corporation succeed. The spirit shown on the benches opposite has been churlish and pedestrian. The Opposition are utterly incapable of seeing not merely the industrial but the human possibilities of what we are doing. They want to conduct the old debates of the past. We want to make sure that this publicly-owned industry succeeds. I believe that it has made a very good start.
  9.0 p.m.
  Sir John Eden: As the Minister made clear, the Bill is about the general framework and future organisation of a very big business which occupies a central position in the British industrial and economic scene. With a

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  total labour force of more than 200,000 and an annual turnover of more than £1,000 million, the British Steel Corporation is the largest steel producer in Europe and the second largest outside the Soviet Union. Given such a massive concentration of power, it is right that we should study most carefully the proposals in the Bill and the Government's policies towards the industry.
  The Minister proudly proclaimed that we have a wealth of documents to help us in our task. He said that not many Bills come before the House with such backing material. He must be regretting that so many documents appeared. Perhaps it would have been better from his point of view if the corporation's image-makers had not been so prolific. However, having got them before him, it is fantastic that he did not study them before coming to the House today. He did not even seem to be aware that there are differences between his document and that produced by the corporation which are not just niggling, fiscal matters but which involve sums of money of considerable magnitude.
  The Government have calculated the corporation's external financing requirements on certain assumptions. We wish to question them a bit further. In the memorandum, the Minister gave the capital requirements of the corporation to March, 1974, as £1,130 million, whereas in its own paper, "Finance for Steel", the corporation made it £875 million—a difference of £255 million. What is the explanation? Perhaps, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, it is perfectly simple. Has the corporation based its figures on the assumption of a 5 million ingot tons increased capacity whereas the Minister has taken the higher figure of 9 million ingot tons? I am sure that the Chief Secretary will be able to give a full account of how these different figures appear in the two documents.
  In the same tables the corporation estimates its receipts from internal resources net of dividends as £675 million, but in the memorandum the figure is £815 million—a difference of £140 million. Again, there is no doubt a perfectly simple explanation; but the Minister should have given it when he was challenged earlier.
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  How much of the difference in these amounts will be used to finance further excursions into the private sector? My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) and my right hon. Friend the Member for Leeds, North-East properly questioned the Minister on this point. Is it the intention that the corporation shall sell back to the private sector more of its present fringe activities than it intends to buy from them?
  If the Government's figure of £1,130 million and the corporation's assessment of its capital for internal financing at £675 million are both correct, presumably the difference of £140 million will have to be met by further Government borrowing. These are not the only discrepancies or differences between the two documents. At later stages we shall have an opportunity to examine these two documents side by side in greater detail, and we hope that we shall have a proper explanation from the Minister how these differences have come about.
  We have heard much about the nature of this industry. It differs in many respects from other public sector utilities. It is a manufacturing industry; the nature of its business is particularly subject to cyclical trends; it has to face tough international competition. It is argued therefore, that it should in its capital structure and in other regards be much more like a normal private sector company. The only thing that seems to have emerged in all the discussion about this point is that those who are engaged in running this massive enterprise find the fact of nationalisation thoroughly irksome to have to bear. How absurd it is that, having gone through all this dismal process of compulsory purchase, we are now spending our time trying to model the industry as closely as possible on the private sector from which it has so recently been wrenched.
  Great significance in this context is being attached to the corporation's capital structure and the proposal to change a substantial part of it to what is called public dividend capital. It is claimed that without it the corporation would be unique among large steel concerns, both private and public, in the western world in having no equity capital. But as my hon. Friends have made clear, notably my hon. Friends the

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  Members for Cirencester and Tewkesbury (Mr. Ridley) and New Forest (Mr. Patrick McNair-Wilson), the use of the word "equity" in this context is extremely misleading. Perhaps it is deliberately intended to be so. Perhaps, as my right hon. Friend said, it was planned purely as a piece of window-dressing. Whatever was the motive for it, it is clearly intended by those who use it to imply that the corporation would be subject to the same disciplines and pressures as are experienced by private sector companies seeking capital in the market. But that will not be the case. In the private sector a company is answerable to its shareholders. They expect a satisfactory return on their investment. If it does not materialise, the company's shares are adversely affected, new money is difficult to raise and the board of directors is at risk. The device of p.d.c. puts the Minister in the place of shareholders, and I want to press him to answer this point.
  If things go wrong, what sanctions will the Government exercise? Will they stop the flow of capital? Of course not. I do not think one single hon. Member would imagine that they would do that. Mr. Silberstone, a part-time member of the coporation, writing in the March issue of British Steel gave the answer. He points out that the one fundamental difference between nationalised and private industry is that the nationalised industries can obtain their long-term finance only from the Treasury. Their requests are carefully scrutinised,
  "but they can in the end normally obtain finance for most of their capital expenditure projects. In addition, however great the losses they make, they cannot be declared bankrupt. Private firms on the other hand, however large, are subject to much stronger constraints."
  There you have it. That is the discipline of the market. That does not and cannot exist in the case of nationalised industries as at present constituted. But the need for this kind of discipline is even more important in the public sector. That is why we are determined to bring effective competition back into steel.
  In the place of the compelling forces of competition within the United Kingdom, we have today the whim of the Minister and the diktat of the Treasury. Since it is the Government's aim to erect their own set of standards, we should at least be told by what criteria they judge
  778
  the performance of the industry. This ought to be clearly spelt out.
  Yet Clause 5 of the Bill, which empowers the Minister to establish a target rate of return, is in the vaguest possible terms. It says:
  "The Minister may from time to time determine … the rate of return on net assets … which the Minister considers it is reasonable for the Corporation to achieve in that period …"
  It is most important to get this right, for unless the target set represents a reasonable return on assets, the servicing of capital will be inadequate and the corporation will have a further unfair advantage over the private sector.
  In our view, the Act should oblige the Minister to publish the target. So far, all we know is that it is the Government's intention to convert £700 million of the corporation's original debt to a form of variable return capital.
  Why have the Government gone so far as to convert 84 per cent. of the commencing capital debt to p.d.c.? There is no magic about the exact ratio between fixed interest and variable return capital, but there must be some explanation for the Government having opted for so high a proportion. I hope that the Chief Secretary will be able to explain.
  In March of this year, when the Government's acceptance in principle was announced, The Times commented on Lord Melchett's
  "long behind-the-scenes battle with the Treasury to win this concession".
  What was the battle about? What were the principles which were at stake? Did the Chief Secretary feel that the Corporation was moving too fast? It is early days yet, and perhaps he needed some convincing as to their ability to service their capital.
  There is little proof as yet that they are working on the right lines. They have already had borrowing powers up to £400 million. The bulk of this has been absorbed or earmarked, apparently without providing anything more than the initial finance to enable the corporation to carry on its acivtities. Now here they are again, asking for the total limit to be raised to £650 million. At the same time 84 per cent. of the original debt is to be freed of regular interest payments.

  779
  The requirement to meet a fixed interest charge as interest on at least a reasonable proportion of the capital loaned is in my view not only an important discipline on management. It is an essential yardstick by which to judge performance. When it is removed, to what else can one turn?
  There is, the Chief Secretary might say, the annual "dividend" which the Minister has power to determine. I do not know how he will set this or what criteria he will use, but I have a nasty feeling that the whole thing will be settled cosily over coffee and brandy. But the Treasury as distinct from the Minister of Power, is likely to take a much tougher line. Indeed, I hope it will.
  Therefore, I ask the Chief Secretary what return, or dividend, does he expect to get from the British Steel Corporation? Is it to be at the same rate as the corporation had understood it would have to pay on its full commencing capital debt, namely £56 million a year or 6·7 per cent.? The corporation makes it clear that if it were required to pay interest on the money it has borrowed, it would be in deficit by September this year to the extent of £100 million.
  So the Government propose to let it off the interest. What will take its place? What "dividend" can we expect? Clearly, we are in for one or two lean years. My hon. Friend the Member for Cirencester and Tewkesbury said that there is to be no dividend this year, and it appears from Command 3995 that we shall get only £10 million paid by March, 1970.
  It is true that there is the promise of better days to come. This is being flashed before us. We are told that, in the long-term, the really meaningful returns will more than compensate for their absence now. It is a case of borrow now, pay later.
  However, from the information published so far we cannot be too sanguine that there will even be any payment in the immediate years. The average rate of return between September, 1971, and March, 1974, cannot be greater than 9·7 per cent. If part of the new lending is to be in the form of p.d.c., the equity element will be increased above the £700
  780
  million. The "dividend" will, therefore, be correspondingly less.
  It is said that the purpose of the public dividend capital is to enable the corporation's financial results to be evened out over good and bad years. However, it should not be seen as a means by which to get capital on the cheap, giving the corporation still greater advantages over the private sector. The Select Committee on Nationalised Industries pointed out that the main significance of this form of equity capital is psychological rather than economic or administrative. No doubt the Chief Secretary will agree with that.
  It is in that context that the corporation is particularly keen to get it, for it sees it as an opportunity to raise morale within the organisation and to make people outside it apparently believe that it is doing better than it is. But while it hopes to boost morale by one measure, it is in grave danger of damaging it through another.
  The Second Report on Organisation differs remarkably from that published in 1967, and I want to compare the two documents for a moment because they make interesting reading. We were told in 1967 in Command 3362 that in a geographical grouping leading to the formation of multi-product groups there would be "more scope for competition". Whilst grouping on product lines would make it easier to
  "concentrate management expertise the customer's freedom of choice would be limited, the scope for competition between groups reduced, and the groups made more dependent on a single type of product".
  In its present document, after this massive study, we are told that
  "this system impedes rationalisation and the optimum utilisation of the corporation's units".
  It goes on to say that, as soon as possible,
  "the present type of multi-product group organisation should cease to exist".
  Hon. Members will have noticed that there is no mention of the customer, and no reference to competition. The industry is to be reorganised into a series of product monopolies, and one of the few remaining disciplines—customer choice—is to be stopped.
  Perhaps the real motive behind all this is to complete the demolition of the

  781
  companies themselves. As Lord Melchett very fairly commented in a recent speech which hon. Gentlemen opposite might care to note:
  "British steel was not in such a bad shape before nationalisation. Many companies were the equal of any in the world."
  Now these same companies, renowned throughout the world, are to go. The men who gave their loyalty to such famous names as Stewart and Lloyds, United, Dorman, Summers and others will be working for the corporation.
  My hon. Friend the Member for Aylesbury (Sir S. Summers) told us most movingly of the contribution that has been made to our national prosperity by some of the great families engaged in the steel industry. These companies are now to be destroyed.
  It is not for any nostalgic reason that I look back at the past for a moment. If something good is to go, we want to be certain that something better is to take its place before any firm plans are made for the future. The Government are, however, seeking powers to destroy assets of considerable value. It takes many years to win the confidence of the men in the industry and to earn the good will of its customers. But their destruction can all too easily be accomplished overnight.
  My hon. Friend the Member for Hallam reported on the feeling among people in the industry in his constituency. He has had long experience of it and knows the people well. He, like the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) told graphically of the impact of the continuous changes and of the uncertainty on the morale of the men working in the industry. These changes inevitably lead to insecurity both among middle management and on the shop floor.
  My right hon. Friend the Member for Leeds, North-East spoke eloquently of the difficulties of management in the public sector and of the dangers inherent in the very system of nationalisation which inhibits spontaneous reaction to changing market needs. It is this factor which makes us nervous about the process that is taking place in this major manufacturing industry. By drawing all the power into the centre, it is making the task of management more complex, it is making the possibility of error very
  782
  much greater, and it is making it less possible for management further down the line meaningfully to identify itself with the work that it is doing. There is a grave danger that the spirit of the men will be destroyed as effectively as the corporation is now writing off the companies.
  We have looked at this industry from a different vantage point from that taken up by right hon. and hon. Gentlemen opposite. We do not seek to go back to where we were before, as some have indicated. This is not a question, in our eyes, of once again shuffling the pack or starting all over again. This must not and will not happen. We want a rationalised steel industry, answerable to shareholders, flexible and competitive. Instead, for solely doctrinaire reasons, we have 90 per cent. of the industry concentrated in the hands of a State-appointed authority, subject to the arbitrary fluctuations of Government policy.
  On Third Reading of the Iron and Steel Bill in January, 1967, the then Minister of Power said:
  "The position in the British Steel industry today is both serious and extremely urgent."—[OFFICIAL REPORT, 26th January 1967; Vol. 734, c. 1799.]
  But over the last four years, because of their politically motivated disruption of the industry, precious time has been lost. Too much effort has gone into strengthening the centre, not enough into modernising capacity and reducing costs.
  Once again, the policies of a Labour Government are seen to be damaging the best interests of the nation. Once again, in this House and throughout the country, a massive vote of no confidence will be recorded against them tonight.
  9.25 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): In the time available to me, for which I am grateful, due to the courtesy of the hon. Member for Bournemouth, West (Sir J. Eden), which is substantial, I shall seek to answer all the main questions and the main arguments which have been put, but before doing so perhaps I might make two preliminary points.
  First, I recollect well that I had the privilege of speaking on the winding up of the debate when we passed the steel nationalisation Bill of 1967. Those who

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  have been in the Chamber on and off for most of the day and recollect the difference in keenness, in anxiety, in heat, and in political outlook, will agree with me when I say that one argument which is as dead as the dodo is the argument which we then debated.
  The hon. Member for Bournemouth, West, and his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in opening the debate for the Opposition, did their best to revive the issue in some carefully chosen words, as the right hon. Member for Altrincham and Sale (Mr. Barber), the present Chairman of the Conservative Party, did on that occasion, trying as hard as could be to be more royalist than the king, and more baronial than the steel barons themselves, but I do not think any of us is frightened. If I understand the hon. Gentleman aright, he said that we do not want to go back, that we want an efficient rationalised steel industry. For that I am grateful to him, and I hope that we shall join forces in our labours to achieve that for the benefit of the country and its interests, and for the steel workers themselves.
  Second, I want to congratulate both the hon. Gentleman and his right hon. Friend on their speeches. Neither of them could have better achieved the task of making bricks without any straw whatsoever. I know that comparisons should never be made, but I hope that the hon. Member for Bournemouth, West will forgive me if I say that I thought that the right hon. Member for Leeds, North-East did the job rather better than he did, but the right hon. Gentleman ought to have done so, because it is in his blood. He gets from his ancestors, as I do, this capacity to make bricks without straw.
  I was asked to explain the figures, and I shall be glad to do so. Perhaps I might start by inviting the House to look at this glossy paper "Finance for Steel". I have been asked to explain and to reconcile the apparent difference between certain figures in this document which is put forward by the British Steel Corporation, and the figures for which the Minister is responsible and on which he is asking the House to act.
  On the left-hand side of page 8 there is a heading,
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  "Investment proposals for next five years".
  A few lines lower down it says:
  "The investment proposals envisage capital expenditure during the five years ending March 1974 amounting to approximately £775 million and that expansion of business will require about £100 million more working capital, making a total of £875 million."
  In the next column there is a table setting out the £875 million and showing how it will be financed, and ending in the last line by saying:
  "Additional cash required to March 1974"—
  being a period of five years—
  "£200 million."
  I think that we are all marching together so far.
  Sir K. Joseph: That is the easy bit.
  Mr. Diamond: That is so. I have a very intelligent class, I can see.
  I now invite the attention of the House to the top of page 9, where it says:
  "It is, therefore, essential that the Corporation be provided win borrowing powers on a scale which will enable it to take advantage of all the opportunities of profitable development which may arise during the next five years. The amount of the additional borrowing powers should be substantial and should be appreciably greater"—
  I ask the House to note the word "greater"—
  "than the £200 million referred to above …".
  I now invite the House to look at my right hon. Friend's White Paper. On page 5 there is a table. The right hon. Member for Leeds, North-East quoted figures erroneously from the second column in the table, but I am glad to say that he was corrected by his hon. Friend. It says, "Capital requirements, £1,130 million". Above that for everybody to see is written, "5½ years Sept. 1968—March 1974".
  The first thing to which I must draw attention is that if one is publishing a document with regard to five years and there is also a document with regard to five-and-a-half years, unless nothing whatsoever was to happen during the intervening six months one would expect the figures to be somewhat different. I therefore want to reconcile the two figures. There is a figure of £875 million in the corporation's assessment. The corporation wants a figure
  "appreciably greater than the £200 million referred to"

  785
  and we have quantified that in a figure of £150 million. So we say that the B.S.C. figure for investment starts off at £875 million. We add £150 million—a probable figure—to arrive at £1,025 million. That is still a little different from £1,130 million—£105 million in two easy steps.
  The first is the difference of six months and £65 million. The second is the item to which my right hon. Friend referred as a niggling fiscal amount. It is, in fact, a figure of £40 million for the re-financing of the pre-vesting loans by the companies which are not counted against the borrowing limit. If anybody describes that as different from niggling, I would not agree.
  So I have reconciled the figures. The answer is that there is £1,130 million in the five-and-a-half years from September, 1968, to March, 1974, which is shown in the White Paper, for which the Government accept full responsibility, and I have reconciled it with the other paper to show that there is no difference if one takes a figure of the kind I have.
  Sir K. Joseph: We are most grateful for the Chief Secretary's explanation. Will he deal with two points? One table—that in the Government White Paper—allows for £295 million for dividends—p.d.c. dividends. There appears in the B.S.C. paper to be no provision for dividends, at least on the surface. Are we to take it that there is a concealed difference, in addition to the differences the right hon. Gentleman has explained, of a further £295 million, or are we to assume that before the B.S.C. calculated its cash flow it took off a p.d.c. dividend? The second question will be easier for the Chief Secretary to answer. It is simple: why did not the Minister of Power himself tell us?
  Mr. Diamond: Again, the figures are for a different period. Therefore, one cannot compare cash flow for one period with cash flow for a different period. The reason why my right hon. Friend did not attempt to go into this detail was that I invited him not to, as I am the Minister responsible at the Treasury for this.
  Sir K. Joseph: It is the Minister of Power's Bill.
  Mr. Diamond: If the right hon. Gentleman would be good enough to interrupt me as much as I interrupted him, he will
  786
  find that he will not interrupt me at all. I invited my right hon. Friend to leave it to me. [Interruption.] The right hon. Gentleman must not say that it cannot be true. I am telling him so. My right hon. Friend had responsibility for the White Paper and laid it before the House and gave the right hon. Gentleman repeatedly the right figure in the White Paper.
  The right hon. Gentleman was asking my right hon. Friend for a lot of niggling detail seeking to reconcile one figure with another figure for a different period. It is not my fault if the right hon. Gentleman had not read it and had not done his homework and, therefore, could not appreciate the figures. [Interruption.] Now he has the figures.
  Sir K. Joseph rose—
  Mr. Diamond: I will give way to the right hon. Gentleman shortly.
  If the right hon. Gentleman had read it and had seen that there was a difference he would not have placed himself in the silly position of asking why two different periods did not have the same figures.
  Sir K. Joseph: I acknowledge that I did not recognise the six months' difference, which is 7½ per cent. of the time. Is the Chief Secretary really asking us to believe that his right hon. Friend the Minister of Power knew the answers the whole while and refused to give them in response to requests by hon. Members simply because he, the Chief Secretary, had asked him not to do so?
  Mr. Diamond: I am telling the right hon. Gentleman that my right hon. Friend has full responsibility for the Bill and full knowledge of all the details which he is asking the House to approve. It is my responsibility, from the Treasury, to put myself at the service of the House and to give any details that hon. Members require, and I am giving the figures. I am sorry if the right hon. Gentleman does not like it. It is not my fault if he did not do his homework and did not read the document. I have given the House the full information and I am sure that it has been of value. I am grateful that hon. Gentlemen opposite now understand the position. In any event, it has not been a point of any importance.

  787
  I turn, therefore, to the important arguments which have been adduced by hon. Gentlemen opposite. I think that they object to the Bill on four main grounds. The first is the power to scrap names, as the right hon. Gentleman put it; the second is the borrowing powers, which he described as a request for a blank cheque; the third is the public dividend capital, which he criticised in many respects; and the fourth is the monopoly question or lack of competition, in which connection he threw his classics to the wind and talked about this company being four monopolies.
  Sir K. Joseph: That is right.
  Mr. Diamond: On the first, there is absolutely no relationship whatever between what is proposed for the reconstruction of the steel industry, and its organisation and what the right hon. Gentleman called scrapping names. These are shells of companies. They have nothing whatever to do with the organisation and the only purpose of removing these shells is that one must transfer assets and liabilities.
  It could be done in the normal process, each company separately, which would give a great deal of work to the lawyers and accountants in relation to transfer documents, winding up procedures and so on. I have some sympathy, from my professional point of view, on that score, but, as Chief Secretary, I would regard it as a gross waste of money to do that. My right hon. Friend has, therefore, invited the House to be good enough to do it in the cheap and expeditious way, and this will get rid of the shells.
  This procedure does not affect the organisation one iota. It does not reduce the goodwill or the right to use that goodwill. [Interruption.] As the corporation has explained, it does not affect the right to use names, and everything that constitutes goodwill which should be maintained continues. There is no reason why the corporation, if it wanted to carry on a part of its works or a factory, should not do so under an old name—
  Sir K. Joseph indicated assent.
  Mr. Diamond: I am glad to see the right hon. Gentleman nodding assent.
  I come to the question of borrowing powers and this business of a blank
  788
  cheque. I was asked to explain the statement in the White Paper in paragraph 6(d):
  "A more specific financial duty …"
  I was asked whether that meant a financial target and, if so, why we had not said so. The answer is, it does, and the reason one uses those words is that those are the words used in the Bill. We are sticking to the same words to avoid misundersanding.
  I was asked whether the financial target will be published. The answer is, yes it will be. The borrowing powers are required in connection with the investment proposals. It was suggested that these were not sufficiently firm or clear and that, therefore, the House is being asked to sign a blank cheque. I shall go over these figures a little more carefully. At present, the House has authorised £400 million in borrowing powers. We are inviting the House to give authority to approve borrowing powers up to another £100 million. That is all, because for the further £150 million beyond that we have to come to the House again. My right hon. Friend thought it proper only to ask for £100 million. Everybody knows how far £100 million goes in the steel industry, which is very capital-intensive.
  The firm plans that have been put forward amount to more than £100 million. They amount to £135 million for the near future. They consist of about £70 million for iron and steel making and associated facilities such as coke ovens, a further £70 million for primary and finishing mills and about £25 million for services and other items such as computer installations, a total of £165 million. We are asking for an extension of borrowing powers of only £100 million. In those circumstances, it is utter nonsense to describe my right hon. Friend's request as a request for a blank cheque.
  I have been asked: what is the financial target and what are the checks on this? As everyone knows, there is at the moment an inquiry in regard to prices. It would be ridiculous to fix a financial target in advance of fixing the price. It is necessary to find what price is regarded as appropriate to find what is a sensible return on the net assets. I hope that the House realises that no one is more concerned that I am to get a full return on these assets. I am responsible

  789
  to the House for these finances and no one is more concerned to get a full return. We shall agree a financial target with the corporation once the price has been agreed, and we shall announce it.
  For the individual investments the process is that, first, the Steel Corporation carefully prepares plans and then submits them to the Ministry. The Ministry, so far as it approves them, submits them to the Treasury and we agree to the extent that we are satisfied that the return is right and in accordance with the White Paper the Government themselves issued two years ago.
  Mr. Emery: Does the right hon. Gentleman want the House to believe that the right business approach is to set the price and then decide what the return is? That is the one way to bankruptcy. What we have to do is to decide what return one could properly get on one's assets and then set one's price.
  Mr. Diamond: That may be the hon. Member's view, but it is not mine, certainly not so far as a nationalised industry is concerned and certainly not so far as my responsibilities to this House are concerned. If the prices are high one would expect where there is a large share of the market open to the industry a larger return than if the prices were low. I am unable to understand why the hon. Member does not agree with me in that simple proposition. The higher the price the larger the net return in respect of those assets. It is as simple as that. [Interruption.] An hon. Member asks, "Are they controlled by world prices?" I do not know whether he was present when I explained that there is an inquiry. We are waiting for the results of that inquiry by the Prices and Incomes Board. Then we can fix the proper return in consultation with the industry.
  The next item which caused anxiety was the public dividend capital, which was described, among other things, as window dressing. It was suggested that it was not very important. I entirely agree: it is not very important. If, instead of "window dressing", one said that one of the main reasons for it was presentational, I would agree. It is not very important because it cannot be acceptable to the Government except under the terms which the Government have announced, and the Government made
  790
  it clear that public dividend capital would apply only—and even then only as an experiment—in circumstances in which the Government were satisfied that, over a period of years, it would make no difference to the return which the Government were to receive, but where there were fluctuating returns such as would cause difficulty and misunderstanding at the bottom of the cycle.
  Everyone has referred to the cyclical nature of this industry, so I say that this makes no difference whatsoever over a period of years. We shall expect at least the same return as we the Government, the Exchequer, on behalf of the taxpayer, would have received had there been 100 per cent. loan capital, fixed-interest capital, from the Government. I hope that I have made that absolutely clear.
  But it would be wrong to leave the reason purely as presentational. The House knows that the corporation took the view that one very easily misunderstands the success or otherwise of a company if one strikes an abnormal balance and it would be abnormal if the figure of profit or loss were struck after providing a return on the whole of the capital. The answer to the hon. Member for Bournemouth, West, who seemed to go along with that, and said that it would be misleading if the proportion of fixed capital to equity was unusual, is that it has been fixed at two-thirds, which is what it approximately is, because that is the average for steel works in this country and abroad.
  We tried to get a figure as near as possible to the average in comparable cases to make sure that, where there is competition, as there is here, and particularly where there is competition from abroad, as there is here, a quick look at the accounts would give an accurate answer comparable with other industries.
  Mr. Michael Shaw: Could the right hon. Gentleman explain the return which the Government are expecting on the new stock, as distinct from the loan stock? Is it to be the same in both cases, whether the Bill goes through or not? Does that take into account the different treatment for corporation tax purposes?
  Mr. Diamond: I am grateful: it must take that fully into account. When I say, "received", I mean received in one

  791
  case in return and in the other case in interest and corporation tax.
  The fourth and final argument was the one of monopoly, of lack of competition. I do not know how anyone who has looked at the document, as the right hon. Member for Leeds, North-East clearly had, and at the first page, with its graphic description of the ways in which the corporation competes in a host of different products could say that, even at home—forgetting the problems of exports and foreign competition—this corporation does not compete.
  Frequent use has been made of the phrase "90 per cent. publicly owned". That is a very misleading figure. It is 90 per cent. publicly owned in terms of volume, and 75 per cent. publicly owned in terms of value. In terms of value, therefore, there is three-to-one competion. One quarter of production is in private hands, and that is very real competition. There is also the freedom to import steel of every kind, which is very real competition, and the fact that the corporation has to export against other steel industries, some of which are, sensibly, nationalised but others of which are privately owned only.
  The right hon. Gentleman added that the corporation is insensitive to shareholders' control, and he wanted it to have that. I would ask him two questions of which I have not given him notice. First, does he own any shares in any company?
  Sir K. Joseph indicated assent.
  Mr. Diamond: Second, how often has he been to an annual meeting of a company and addressed it in the same incisive terms as he addressed the House this afternoon? How often has he had the privilege of having the matter debated for about six hours, and had the chairman and financial director give him a full reply, and supply him with such a mass of literature as is available now?
  Mr. Michael Shaw rose—
  Mr. Diamond: I was not asking my professional colleague.
  Hon. Members: Give way!
  Mr. Diamond: Of course I shall give way. I always do.
  Mr. Michael Shaw: I am most grateful to the right hon. Gentleman, and I am sorry to have two bites at the cherry.
  Does he realise that his reply to my earlier intervention still does not mean that he is putting the corporation on an equal footing with its competitors? He admits that the return on the share capital is lower than it would otherwise be because it takes account of the fact that it is treated as being lower by the saving in corporation tax that would have been made by interest had it continued to be paid.
  Mr. Diamond: I hope that I have not misled the hon. Gentleman. We are making the corporation exactly comparable. The Government would receive in either event at least the same amount, and without that assurance and that confidence on the part of the corporation we would not have agreed to public divident capital. The only difference is that as the industry's fortunes fluctuate there are good reasons for having the return corresponding more with the good years and less with the bad years, as everybody has admitted that the industry is of a cyclical nature.
  The right hon. Gentleman, regrettably, did not respond to my request.
  Sir K. Joseph: If a public company had produced reports and results and prospects such as are shown in the papers before us, the board of management would have been seriously at risk from the shareholders. The company would have found it impossible to raise money on the market and it would have been at risk of being taken over.
  The Chief Secretary is dealing in half truths in all that he has said. He seriously misleads himself as well as the country if he imagines for a moment that public enterprise is subject to any of the management discipline of private enterprise.
  Hon. Members: Oh.
  Mr. Speaker: Order. We have had through the day a rational debate in almost deathly silence. Let us finish it that way.
  Mr. Diamond: I accept some responsibility for the noise, Mr. Speaker.
  Notwithstanding that the right hon. Gentleman had a little time to think the question over, I did not regard his

  793
  answer as very convincing. He is seriously saying that he is opposed to the nationalised industry, not the Bill. Nobody has said anything in opposition to the Bill. The right hon. Gentleman continues in his traditional attitude of being opposed to the industry for one main reason, and that is monopoly.
  The right hon. Gentleman says that the industry is not sensitive to shareholders' control. I have invited him to tell us how often he, with his ability, has followed his investments in other companies in the same detail and with the same criticism and has had the same full information given to him. Of course, the answer is, "Never".
  I have not yet even referred to the fact that the House has the Select Committee on Nationalised Industries, which probes as much as the House wants it to and which consists of right hon. and hon. Members from both sides. It is ridiculous nonsense to talk about a nationalised industry being less subject to control of the owner than a private company.
  What the right hon. Gentleman is really speaking in favour of is the system which he describes as a better system—where there are a number of companies in the same field and where some prosper, some falter and some are made bankrupt. He believes that that is the real test. In other words, if one wants to know whether someone can swim, throw him into the river. If he gets to the other bank, he can swim and if he drowns then apparently he cannot. That is the system that the right hon. Gentleman believes in and promotes. I can think of no more rough, tough and wholly ignorant way of trying to ascertain whether an industry is best run in
  one way or the other for the benefit of the nation.
  What happens when a company goes bankrupt? I have had a little experience of clearing up the mess. What happens to the employees? Of course, the right hon. Gentleman is concerned only with a system under which a company takes account of its narrow commercial interest and no account of its social responsibilities in addition. That is not the kind of company we are looking to for the kind of organisation we are promoting. The steel industry is one which recognises its full responsibilities, having first of all full regard to value for money, and one would have thought that, by now, the right hon. Gentleman's argument would have been stone dead.
  I invite the House to listen to the view of The Times a short time ago. It said that the corporation
  "… comprises the 13 steel companies and undertakings which were taken over on nationalisation a year and a half ago. The Government's reason for proceeding with nationalisation had been transformed by then from political dogma into the impeccable industrial logic of providing a central management for an industry desperately in need of reorganisation."
  That is why I ask the House to support the Bill.
  Mr. Charles Grey (Treasurer of Her Majesty's Household)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 288, Noes 228.

  Division No. 203.]

  AYES

  [9.59 p.m.

  Albu, Austen

  Binns, John

  Buchanan, Richard (G'gow, Sp'burn)

  Allaun, Frank (Salford, E.)

  Bishop, E. S.

  Butler, Herbert (Hackney, C.)

  Alldritt, Walter

  Blackburn, F.

  Butler, Mrs. Joyce (Wood Green)

  Anderson, Donald

  Blenkinsop, Arthur

  Callaghan, Rt. Hn. James

  Ashton, Joe (Bassetlaw)

  Booth, Albert

  Carmichael, Neil

  Atkins, Ronald (Preston, N.)

  Boston, Terence

  Carter-Jones, Lewis

  Atkinson, Norman (Tottenham)

  Bottomley, Rt. Hn. Arthur

  Chapman, Donald

  Bacon, Rt. Hn. Alice

  Boyden, James

  Coleman, Donald

  Bagier, Gordon A. T.

  Bradley, Tom

  Conlan, Bernard

  Barnes, Michael

  Bray, Dr. Jeremy

  Corbet, Mrs. Freda

  Barnett, Joel

  Brooks, Edwin

  Craddock, George (Bradford, S.)

  Baxter, William

  Broughton, Dr. A. D. D.

  Crawshaw, Richard

  Beaney, Alan

  Brown, Rt. Hn. George (Belper)

  Crossman, Rt. Hn. Richard

  Benn, Rt. Hn. Anthony Wedgwood

  Brown, Hugh D. (G'gow, Provan)

  Darling, Rt. Hn. George

  Bennett, James (G'gow, Bridgeton)

  Brown, Bob (N'c'tle-upon-Tyne, W.)

  Davidson, Arthur (Accrington)

  Bessell, Peter

  Brown, R. W. (Shoreditch & F'bury)

  Davies, Ednyfed Hudson (Conway)

  Bidwell, Sydney

  Buchan, Norman

  Davies, G. Elfed (Rhondda, E.)

  Davies, Dr. Ernest (Stretford)

  Jeger, George (Goole)

  Parkin, Ben (Paddington, N.)

  Davies, Ifor (Gower)

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Parkyn, Brian (Bedford)

  de Freitas, Rt. Hn. Sir Geoffrey

  Jenkins, Rt. Hn. Roy (Stechford)

  Pavitt, Laurence

  Delargy, Hugh

  Johnson, Carol (Lewisham, S.)

  Pearson, Arthur (Pontypridd)

  Dell, Edmund

  Johnson, James (K'ston-on-Hull, W.)

  Peart, Rt. Hn. Fred

  Dempsey, James

  Jones, Dan (Burnley)

  Pentland, Norman

  Dewar, Donald

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Perry, George H. (Nottingham, S.)

  Diamond, Rt. Hn. John

  Jones, J. Idwal (Wrexham)

  Prentice, Rt. Hn. R. E.

  Dickens, James

  Jones, T. Alec (Rhondda, West)

  Price, Thomas (Westhoughton)

  Doig, Peter

  Judd, Frank

  Probert, Arthur

  Driberg, Tom

  Kelley, Richard

  Pursey, Cmdr. Harry

  Dunn, James A.

  Kenyon, Clifford

  Rankin, John

  Dunnett, Jack

  Kerr, Mrs. Anne (R'ter & Chatham)

  Rees, Merlyn

  Dunwoody, Mrs. Gwyneth (Exeter)

  Kerr, Dr. David (W'worth, Central)

  Reynolds, Rt. Hn. G. W.

  Dunwoody, Dr. John (F'th & C'b'e)

  Kerr, Russell (Feltham)

  Rhodes, Geoffrey

  Eadie, Alex

  Lawson, George

  Richard, Ivor

  Edelman, Maurice

  Lee, Rt. Hn. Frederick (Newton)

  Roberts, Rt. Hn. Goronwy

  Edwards, Robert (Bilston)

  Lee, Rt. Hn. Jennie (Cannock)

  Robertson, John (Paisley)

  Edwards, William (Merioneth)

  Lee, John (Reading)

  Robinson, Rt. Hn. Kenneth (St. P'c'as)

  Ellis, John

  Lestor, Miss Joan

  Rodgers, William (Stockton)

  English, Michael

  Lewis, Arthur (W. Ham, N.)

  Roebuck, Roy

  Ennals, David

  Lewis, Ron (Carlisle)

  Rogers, George (Kensington, N.)

  Ensor, David

  Lipton, Marcus

  Rose, Paul

  Evans, Albert (Islington, S. W.)

  Lomas, Kenneth

  Ross, Rt. Hn. William

  Evans, Fred (Caerphilly)

  Loughlin, Charles

  Rowlands, E.

  Faulds, Andrew

  Luard, Evan

  Ryan, John

  Fernyhough, E.

  Lubbock, Eric

  Shaw, Arnold (Ilford, S.)

  Finch, Harold

  Lyons, Edward (Bradford, E.)

  Sheldon, Robert

  Fitch, Alan (Wigan)

  Mabon, Dr. J. Dickson

  Shore, Rt. Hn. Peter (Stepney)

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  McBride, Neil

  Short, Rt. Hn. Edward (N'c'tle-u-Tyne)

  Fletcher, Raymond (Ilkeston)

  McCann, John

  Silkin, Rt. Hn. John (Deptford)

  Fletcher, Ted (Darlington)

  Macdonald, A. H.

  Silkin, Hn. S. C. (Dulwich)

  Foley, Maurice

  McGuire, Michael

  Silverman, Julius

  Foot, Michael (Ebbw Vale)

  McKay, Mrs. Margaret

  Skeffington, Arthur

  Ford, Ben

  Mackenzie, Gregor (Rutherglen)

  Slater, Joseph

  Forrester, John

  Mackie, John

  Small, William

  Fowler, Gerry

  Mackintosh, John P.

  Steele, Thomas (Dunbartonshire, W.)

  Fraser, John (Norwood)

  Maclennan, Robert

  Stewart, Rt. Hn. Michael

  Freeson, Reginald

  MacMillan, Malcolm (Western Isles)

  Stonehouse, Rt. Hn. John

  Gardner, Tony

  McMillan, Tom (Glasgow, C.)

  Strauss, Rt. Hn. G. R.

  Garrett, W. E.

  MacPherson, Malcolm

  Summerskill, Hn. Dr. Shirley

  Ginsburg, David

  Mahon, Peter (Preston, S.)

  Taverne, Dick

  Gordon Walker, Rt. Hn. P. C.

  Mahon, Simon (Bootle)

  Thomas, Rt. Hn. George

  Gray, Dr. Hugh (Yarmouth)

  Mallalieu, E. L. (Brigg)

  Thomson, Rt. Hn. George

  Greenwood, Rt. Hn. Anthony

  Mallalieu, J. P. W. (Huddersfield, E.)

  Thornton, Ernest

  Gregory, Arnold

  Mapp, Charles

  Thorpe, Rt. Hn. Jeremy

  Grey, Charles (Durham)

  Marks, Kenneth

  Tinn, James

  Griffiths, David (Rother Valley)

  Marquand, David

  Tomney, Frank

  Griffiths, Eddie (Brightside)

  Mason, Rt. Hn. Roy

  Urwin, T. W.

  Griffiths, Rt. Hn. James (Llanelly)

  Maxwell, Robert

  Varley, Eric G.

  Griffiths, Will (Exchange)

  Mayhew, Christopher

  Wainwright, Edwin (Dearne Valley)

  Gunter, Rt. Hn. R. J.

  Mellish, Rt. Hn. Robert

  Wainwright, Richard (Colne Valley)

  Hamilton, James (Bothwell)

  Mendelson, John

  Walden, Brian (All Saints)

  Hamilton, William (Fife, W.)

  Mikardo, John

  Walker, Harold (Doncaster)

  Hamling, William

  Millan, Bruce

  Wallace, George

  Hannan, William

  Miller, Dr. M. S.

  Watkins, David (Consett)

  Harper, Joseph

  Milne, Edward (Blyth)

  Watkins, Tudor (Brecon & Radnor)

  Harrison, Walter (Wakefield)

  Molloy, William

  Weitzman, David

  Hart, Rt. Hn. Judith

  Morgan, Elystan (Cardiganshire)

  Wellbeloved, James

  Haseldine, Norman

  Morris, Alfred (Wythenshawe)

  Wells, William (Walsall, N.)

  Hattersley, Roy

  Morris, Charles R. (Openshaw)

  Whitaker, Ben

  Hazell, Bert

  Morris, John (Aberavon)

  White, Mrs. Eirene

  Healey, Rt. Hn. Denis

  Moyle, Roland

  Whitlock, William

  Herbison, Rt. Hn. Margaret

  Murray, Albert

  Wilkins, W. A.

  Hilton, W. S.

  Neal, Harold

  Willey, Rt. Hn. Frederick

  Hooley, Frank

  Newens, Stan

  Williams, Alan Lee (Hornchurch)

  Hooson, Emlyn

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Williams, Clifford (Abertillery)

  Horner, John

  Norwood, Christopher

  Williams, Mrs. Shirley (Hitchin)

  Houghton, Rt. Hn. Douglas

  Oakes, Gordon

  Williams, W. T. (Warrington)

  Howie, W.

  Ogden, Eric

  Willis, Rt. Hn. George

  Hoy, James

  O'Malley, Brian

  Wilson, Rt. Hn. Harold (Huyton)

  Huckfield, Leslie

  Oram, Albert E.

  Wilson, William (Coventry, S.)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Orbach, Maurice

  Winnick, David

  Hughes, Hector (Aberdeen, N.)

  Owen, Dr. David (Plymouth, S'tn)

  Woodburn, Rt. Hn. A.

  Hughes, Roy (Newport)

  Owen, Will (Morpeth)

  Woof, Robert

  Hunter, Adam

  Padley, Walter

  Wyatt, Woodrow

  Hynd, John

  Page, Derek (King's Lynn)

  Irvine, Sir Arthur (Edge Hill)

  Paget, R. T.

  TELLERS FOR THE AYES:

  Janner, Sir Barnett

  Palmer, Arthur

  Mr. Ioan L. Evans and

  Jay, Rt. Hn. Douglas

  Pannell, Rt. Hn. Charles

  Mr. Ernest G. Perry.

  NOES

  Alison, Michael (Barkston Ash)

  Amery, Rt. Hn. Julian

  Atkins, Humphrey (M't'n & M'd'n)

  Allason, James (Hemel Hempstead)

  Astor, John

  Awdry, Daniel

  796

  797

  Baker, Kenneth (Acton)

  Harris, Reader (Heston)

  Page, John (Harrow, W.)

  Baker, W. H. K. (Banff)

  Harrison, Col. Sir Harwood (Eye)

  Pearson, Sir Frank (Clitheroe)

  Balniel, Lord

  Harvey, Sir Arthur Vere

  Peel, John

  Barber, Rt. Hn. Anthony

  Harvie Anderson, Miss

  Percival, Ian

  Batsford, Brian

  Hastings, Stephen

  Peyton, John

  Beamish, Col. Sir Tufton

  Hawkins, Paul

  Pike, Miss Mervyn

  Bell, Ronald

  Hay, John

  Pink, R. Bonner

  Bennett, Dr. Reginald (Gos. & Fhm)

  Heald, Rt. Hn. Sir Lionel

  Pounder, Rafton

  Berry, Hn. Anthony

  Heseltine, Michael

  Powell, Rt. Hn. J. Enoch

  Biggs-Davison, John

  Higgins, Terence L.

  Price, David (Eastleigh)

  Birch, Rt. Hn. Nigel

  Hiley, Joseph

  Prior, J. M. L.

  Black, Sir Cyril

  Hill, J. E. B.

  Pym, Francis

  Blaker, Peter

  Hirst, Geoffrey

  Quennell, Miss J. M.

  Body, Richard

  Hogg, Rt. Hn. Quintin

  Ramsden, Rt. Hn. James

  Boyd-Carpenter, Rt. Hn. John

  Holland, Philip

  Rawlinson, Rt. Hn. Sir Peter

  Boyle, Rt. Hn. Sir Edward

  Hornby, Richard

  Rees-Davies, W. R.

  Braine, Bernard

  Hunt, John

  Renton, Rt. Hn. Sir David

  Brewis, John

  Iremonger, T. L.

  Rhys Williams, Sir Brandon

  Brinton, Sir Tatton

  Irvine, Bryant Godman (Rye)

  Ridley, Hn. Nicholas

  Bromley-Davenport, Lt.-Col. Sir Walter

  Jenkin, Patrick (Woodford)

  Ridsdale, Julian

  Bruce-Gardyne, J.

  Jennings, J. C. (Burton)

  Rippon, Rt. Hn. Geoffrey

  Buchanan-Smith, Alick (Angus, N & M)

  Johnston Smith, G. (E. Grinstead)

  Robson Brown, Sir William

  Buck, Antony (Colchester)

  Jones, Arthur (Northants, S.)

  Rodgers, Sir John (Sevenoaks)

  Bullus, Sir Eric

  Jopling, Michael

  Rossi, Hugh (Hornsey)

  Burden, F. A.

  Joseph, Rt. Hn. Sir Keith

  Royle, Anthony

  Campbell, B. (Oldham, W.)

  Kaberry, Sir Donald

  Russell, Sir Ronald

  Campbell, Gordon (Moray & Nairn)

  Kershaw, Anthony

  St. John-Stevas, Norman

  Carlisle, Mark

  Kimball, Marcus

  Sandys, Rt. Hn. D.

  Channon, H. P. G.

  King, Evelyn (Dorset, S.)

  Scott, Nicholas

  Chichester-Clark, R.

  Kirk, Peter

  Scott-Hopkins, James

  Clark, Henry

  Kitson, Timothy

  Sharples, Richard

  Clegg, Walter

  Knight, Mrs. Jill

  Shaw, Michael (Sc'b'gh & Whitby)

  Cooke, Robert

  Lambton, Viscount

  Silvester, Frederick

  Cooper-Key, Sir Neill

  Lancaster, Col. C. G.

  Sinclair, Sir George

  Cordle, John

  Lane, David

  Smith, Dudley (W'wick & L'mington)

  Costain, A. P.

  Langford-Holt, Sir John

  Smith, John (London & W'minster)

  Craddock, Sir Beresford (Spelthorne)

  Legge-Bourke, Sir Harry

  Speed, Keith

  Crouch, David

  Lewis, Kenneth (Rutland)

  Stainton, Keith

  Crowder, F. P.

  Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)

  Stodart, Anthony

  Cunningham, Sir Knox

  Lloyd, Ian (P'tsm'th, Langstone)

  Stoddart-Scott, Col. Sir M.

  Currie, G. B. H.

  Longden, Gilbert

  Dalkeith, Earl of

  MacArthur, Ian

  Summers, Sir Spencer

  Dance, James

  Maclean, Sir Fitzroy

  Tapsell, Peter

  d'Avigdor-Goldsmid, Sir Henry

  Macleod, Rt. Hn. Iain

  Taylor, Sir Charles (Eastbourne)

  Deedes, Rt. Hn. W. F. (Ashford)

  McMaster, Stanley

  Taylor, Edward M. (G'gow, Cathcart)

  Digby, Simon Wingfield

  Macmillan, Maurice (Farnham)

  Taylor, Frank (Moss Side)

  Dodds-Parker, Douglas

  McNair-Wilson, Michael

  Temple, John M.

  Doughty, Charles

  McNair-Wilson, Patrick (New Forest)

  Thatcher, Mrs. Margaret

  Douglas-Home, Rt. Hn. Sir Alec

  Maddan, Martin

  Tilney, John

  Drayson, G. B.

  Maginnis, John E.

  Turton, Rt. Hn. R. H.

  du Cann, Rt. Hn. Edward

  Marples, Rt. Hn. Ernest

  Vaughan-Morgan, Rt. Hn. Sir John

  Eden, Sir John

  Marten, Neil

  Vickers, Dame Joan

  Elliot, Capt. Walter (Carshalton)

  Maude, Angus

  Waddington, David

  Emery, Peter

  Maudling, Rt. Hn. Reginald

  Walker, Peter (Worcester)

  Errington, Sir Eric

  Mawby, Ray

  Walker-Smith, Rt. Hn. Sir Derek

  Eyre, Reginald

  Maxwell-Hyslop, R. J.

  Wall, Patrick

  Farr, John

  Maydon, Lt.-Cmdr. S. L. C.

  Walters, Dennis

  Fisher, Nigel

  Mills, Peter (Torrington)

  Ward, Dame Irene

  Foster, Sir John

  Mills, Stratton (Belfast, N.)

  Weatherill, Bernard

  Galbraith, Hn. T. G.

  Miscampbell, Norman

  Wells, John (Maidstone)

  Gilmour, Ian (Norfolk, C.)

  Mitchell, David (Basingstoke)

  Whitelaw, Rt. Hn. William

  Gilmour, Sir John (Fife, E.)

  Monro, Hector

  Wiggin, A. W.

  Glover, Sir Douglas

  Morgan, Geraint (Denbigh)

  Williams, Donald (Dudley)

  Glyn, Sir Richard

  Morgan-Giles, Rear-Adm.

  Wilson, Geoffrey (Truro)

  Godber, Rt. Hn. J. B.

  Morrison, Charles (Devizes)

  Wolrige-Gordon, Patrick

  Goodhart, Philip

  Mott-Radclyffe, Sir Charles

  Wood, Rt. Hn. Richard

  Goodhew, Victor

  Munro-Lucas-Tooth, Sir Hugh

  Woodnutt, Mark

  Gresham Cooke, R.

  Murton, Oscar

  Worsley, Marcus

  Grieve, Percy

  Neave, Airey

  Wright, Esmond

  Griffiths, Eldon (Bury St. Edmunds)

  Nicholls, Sir Harmar

  Wylie, N. R.

  Gurden, Harold

  Noble, Rt. Hn. Michael

  Younger, Hn. George

  Hall, John (Wycombe)

  Onslow, Granley

  Hall-Davis, A. G. F.

  Orr, Capt. L. P. S.

  TELLERS FOR THE NOES:

  Hamilton, Lord (Fermanagh)

  Orr-Ewing, Sir Ian

  Mr. R. W. Elliott and

  Hamilton, Michael (Salisbury)

  Osborn, John (Hallam)

  Mr. Jasper More.

  Harris, Frederic (Croydon, N. W.)

  Page, Graham (Crosby)

  Bill accordingly read a Second Time.

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

  IRON AND STEEL [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to make new provision in relation to the finances of the British Steel Corporation and certain of their subsidiaries, it is expedient to authorise—
  (1) the substitution for the commencing capital debt of the British Steel Corporation to the Minister of Power of £833,988,359 4s. 1d. of a commencing capital debt of £133,988,359 4s. 1d.;
  (2) the payment out of moneys provided by Parliament of—
  (a) sums required by the Minister of Power for the making of payments by him to the British Steel Corporation, being sums the aggregate of which, taken together with—

  (i) the amount outstanding in respect of the principal of any money borrowed under section 19 of the Iron and Steel Act 1967 by the British Steel Corporation (other than money borrowed for the payment off of any part of the debt assumed by them under section 18 of the Iron and Steel Act 1967); and

  (ii) the amount outstanding in respect of the principal of any money borrowed under section 19 of that Act by the publicly-owned companies (within the meaning of that Act) otherwise than from the British Steel Corporation;

  does not exceed £500,000,000 or such greater sum, not exceeding £650,000,000, as the Minister of Power may from time to time by order (made by statutory instrument) specify; and
  (b) any sum required by the Board of Trade for making to the British Steel Corporation, in respect of an asset vested in them by virtue of the said Act of the present Session or in pursuance of arrangements approved by the Minister of Power, being an asset of a company in public ownership within the meaning of the Iron and Steel Act 1967 in respect of which a grant might have been made under section 1, 2 or 6 of the Industrial Development Act 1966 had the asset not vested in the British Steel Corporation and, in a case in which capital expenditure is incurred with reference to the asset by the British Steel Corporation, had it been incurred by the company, a grant of the like amount as the Board might have made to the company in those circumstances;
  (3) any increase attributable to the provisions of the said Act of the present Session in the sums which, under provisions of the Iron and Steel Act 1967, fall to be paid out of the National Loans Fund or the Consolidated Fund; and
  (4) the payment into the Consolidated Fund of any sum received by the Minister of Power
  800
  under the said Act of the present Session.—[Mr. Freeson.]
  10.15 p.m.
  Mr. Michael Shaw: I am sorry to delay the House, but I have one question to ask the Minister. Does the Money Resolution empower the Steel Corporation to spend the additional sums which it will have at its disposal for buying the additional fringe companies relating to its other activities? We should like to know the answer to this since it affects the debate which will take place eventually on the Committee stage of the Bill.
  The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): The answer is quite simple. The passage of the Money Resolution does not alter the position which has obtained up to now with regard to the B.S.C. purchasing or negotiating for the purchase of what the hon. Gentleman has called a fringe company. Any such move is subject to the Minister's authority and he has to be satisfied that it is an appropriate way to conduct the B.S.C.'s activities, in the same way as has occurred in the past when there has been a movement out of the public sector into the private sector.
  Sir Keith Joseph: The Parliamentary Secretary has not answered my hon. Friend. Will we be able, under the Money Resolution, to debate the question on the Committee stage? We are asking whether the Money Resolution is drawn widely enough to permit debate on capital acquisitions on borrowed money. The second question is whether in Committee the Money Resolution permits us to discuss the point which the Government have not answered, which is set out at the bottom of page 43 of the Annual Accounts—[Interruption.]—namely—
  Mr. Speaker: Order. The right hon. Gentleman is addressing the House and it must be most difficult against the amount of conversation which is now taking place. Sir Keith Joseph.
  Sir K. Joseph: —namely, the matter of the £130 million of accumulated losses which are referred to on that page.
  This, so far as I can see, is outside the terms of the Money Resolution, but we shall want to probe the treatment of

  801
  that sum of money. I should like an assurance from the Parliamentary Secretary that the treatment of the loans connected with the four new steel plants which are referred to on that page will be within the Money Resolution.
  Mr. Freeson: Strictly procedural matters are not for me to deal with categorically this evening. If there are any doubts about the points which might appropriately be raised in debate in Committee, I should have thought it was a matter for the Chairman of the Committee to give a ruling at the appropriate time.
  Sir Harmar Nicholls: The Parliamentary Secretary might not be in a position to answer the procedural question, but the House ought to have an answer. The Treasury Bench is full and the Minister himself is responsible. [Interruption.]
  Mr. Speaker: Order. I am listening with acute interest to the hon. Member for Peterborough (Sir Harmar Nicholls), but I want to hear him.
  Sir Harmar Nicholls: The Minister in charge of the Bill is in his place and is flanked by many colleagues from other Departments. The figure about which we are talking is not a niggling amount, and I hope that I am giving the right hon. Gentleman time to get an answer. We know how these things are done. There are ways and means of getting advice. He ought to be using the time which I am now giving him to get the answer. In the interests of Parliamentary responsibility for this huge amount of money, the procedural question ought to be answered before we grant it.
  Several Hon. Members rose—
  Mr. Speaker: Order. There is a host of hon. Members seeking to catch my eye. I must choose very carefully. Mr. John Peyton.
  Mr. John Peyton: I very much hope that the Parliamentary Secretary will be able to supply the answer to this question. It is no good his saying that this is a procedural matter which can be disposed of in the Standing Committee. Although it is unusual for a Bill of this kind to go to a Standing Committee at all—
  Mr. Speaker: Whether the Bill goes to a Standing Committee or not, the moment for deciding that momentous question has passed.
  Mr. Peyton: Mr. Speaker, surely even a Member of Parliament is entitled to an obiter dictum. I know that we are not entitled to very much. We do not even get the papers—[HON. MEMBERS: "Hear, hear."]—
  Mr. Speaker: Order. I hesitate to make a terrible pun and say that it might be an obituary if the hon. Gentleman does not come to his point.
  Mr. Peyton: I am not at the moment seeking to write my own obituary or anyone else's. The writing of obituaries is a matter for which the Treasury Bench is well qualified at the moment.
  We are giving the Parliamentary Secretary all the time that we can. I hope that the Parliamentary Secretary will answer the question, or call up some powerful allies from the Treasury, who are accustomed to conducting these debates, so that it can be explained on behalf of the Administration to what extent those of my right hon. and hon. Friends who will have the inestimable privilege of serving on the Standing Committee will be able to discuss the matter to which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has referred. Until the Parliamentary Secretary or some other Government spokesman—
  Mr. Speaker: Order. It will be for the Chairman of the Committee to which the Bill is sent to decide which Amendments are in order and which are not. The hon. Gentleman may ask general questions about the scope of the Money Resolution.
  Mr. Peyton: That is the point, Mr. Speaker. The Parliamentary Secretary has the responsibility of defining what the Money Resolution does and the extent to which it confines those of my right hon. and hon. Friends who will serve on the Standing Committee. At the moment, the look of perplexity on the face of the Parliamentary Secretary gives one the impression that perhaps he is in deep water and that the torrent of advice to which he is presently being subjected will not necessarily facilitate his easy response to the question posed by my right hon. Friend.

  803
  All that I wish to do is put him at his ease and make him feel that he is well able to answer the penetrating question put to him by my right hon. Friend. I acknowledge the smile on the face of the hon. Gentleman—
  Mr. Speaker: Order. We are not discussing the Parliamentary Secretary. We are discussing the Money Resolution.
  Mr. Peyton: Unfortunately, there is a very close association between the two. At any rate, we will be glad to receive from the hon. Gentleman a much better idea than we have at present about the extent of the discussion which it is possible for the Chairman of the Standing Committee to allow, bearing in mind the fence being erected by the Money Resolution.
  Mr. Peter Blaker: As I understand it, the Government are asking the House to pass this Money Resolution. My right hon. and hon. Friends are asking whether it is the right Money Resolution and whether it is framed in a satisfactory way. That is the purpose of the questions that they have asked.
  Before deciding whether to vote on the Money Resolution or whether it should go through unopposed, surely this is a relevant question for the Government to answer. It cannot be satisfactory for the Parliamentary Secretary simply to say that it is a matter for the Chairman of the Standing Committee to rule upon when the Bill gets to the Committee. We are not in Committee yet, and the question which is before the House is about the form of Resolution that the House should pass, which in turn will be binding on the Committee and will be guidance to which its Chairman will have to refer.
  Unless the Parliamentary Secretary is able to answer the questions put to him by my right hon. and hon. Friends, I fear that the horrible suspicion that the Parliamentary Secretary does not have a clue about what is going on will be confirmed. Will he kindly answer the question?
  Mr. Freeson: We will have our fun. Mr. Speaker.
  I have nothing to add to the specific points that were put earlier in the debate.
  804
  The fringe activities, the sale or purchase of plants and factories, etc. outside or inside the public sector is not changed by the drafting of the Money Resolution.
  The £130 million, to which reference has been made, is covered by the capital debt in the accounts.
  The detailed manner in which any such points shall be raised in Committee is not for me to include or exclude. It is for the Chairman to decide whether hon. Members are in order when they raise certain matters in Committee.
  Mr. Michael Shaw rose—
  Mr. Speaker: Order. The hon. Member has exhausted his right to speak.
  Mr. Peter Emery: I do not think that the answer given by the Parliamentary Secretary makes any sense in relation to the question that was asked. We know, from the same Ministry, the problems we have had with Money Resolutions in the past. For instance, when a question was put on certain aspects of the Mines and Quarries (Tips) Bill—
  Mr. Speaker: Order. One Money Resolution is enough.
  Mr. Emery: I realise that, Mr. Speaker. But the Ministry of Power has previously been unable to answer properly whether certain matters would be allowed to be debated by the drawing of a Money Resolution. At that time the Minister said that it would depend on interpretation by the Chair. Therefore, I ask the Minister: does he believe—I am not asking what he believes anybody else believes, but does he believe—that the drawing of the Money Resolution will preclude the Committee discussing peripheral purchase by the Corporation of other activities? If so, I shall want to vote against the Money Resolution. If this can be discussed in Committee, we may allow the Money Resolution to go through. But will the Minister give his view on what the Money Resolution will allow on that subject?
  Sir John Eden: I am sorry that the Minister has not been able to answer the question: what will be the scope for debate as defined by the terms of the Money Resolution? He has answered a number of other questions which were not put to him. In the circumstances, we cannot possibly allow

  805
  this Money Resolution to go by. Therefore, I must ask my right hon. and hon. Friends to vote against it.
  Question put:—
  The House divided: Ayes 241; Noes 98.

  Division No. 204.]

  AYES

  [10.28 p.m.

  Albu, Austen

  Fraser, John (Norwood)

  Millan, Bruce

  Allaun, Frank (Salford, E.)

  Freeson, Reginald

  Miller, Dr. M. S.

  Alldritt, Walter

  Gardner, Tony

  Milne, Edward (Blyth)

  Anderson, Donald

  Garrett, W. E.

  Molloy, William

  Ashton, Joe (Bassetlaw)

  Gordon Walker, Rt. Hn. P. C.

  Morgan, Elystan, (Cardiganshire)

  Atkins, Ronald (Preston, N.)

  Gray, Dr. Hugh (Yarmouth)

  Morris, Alfred (Wythenshawe)

  Atkinson, Norman (Tottenham)

  Gregory, Arnold

  Morris, Charles R. (Openshaw)

  Bacon, Rt. Hn. Alice

  Grey, Charles (Durham)

  Morris, John (Aberavon)

  Bagier, Gordon A. T.

  Griffiths, Eddie (Brightside)

  Moyle, Roland

  Barnett, Joel

  Griffiths, Will (Exchange)

  Murray, Albert

  Beaney, Alan

  Hamilton, James (Bothwell)

  Newens, Stan

  Benn, Rt. Hn. Anthony Wedgwood

  Hamilton, William (Fife, W.)

  Norwood, Christopher

  Bennett, James (G'gow, Bridgeton)

  Hamling, William

  Oakes, Gordon

  Bessell, Peter

  Harrison, Walter (Wakefield)

  Ogden, Eric

  Bidwell, Sydney

  Hart, Rt. Hn. Judith

  O'Malley, Brian

  Binns, John

  Haseldine, Norman

  Oram, Albert E.

  Bishop, E. S.

  Hattersley, Roy

  Orbach, Maurice

  Blackburn, F.

  Healey, Rt. Hn. Denis

  Owen, Will (Morpeth)

  Blenkinsop, Arthur

  Hooley, Frank

  Page, Derek (King's Lynn)

  Boardman, H. (Leigh)

  Hooson, Emlyn

  Paget, R. T.

  Booth, Albert

  Horner, John

  Palmer, Arthur

  Boston, Terence

  Houghton, Rt. Hn. Douglas

  Parkin, Ben (Paddington, N.)

  Bottomley, Rt. Hn. Arthur

  Howie, W.

  Parkyn, Brian (Bedford)

  Boyden, James

  Hoy, James

  Pavitt, Laurence

  Bradley, Tom

  Huckfield, Leslie

  Pearson, Arthur (Pontypridd)

  Bray, Dr. Jeremy

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Peart, Rt. Hn. Fred

  Brooks, Edwin

  Hughes, Hector (Aberdeen, N.)

  Pentland, Norman

  Brown, Rt. Hn. George (Belper)

  Hughes, Roy (Newport)

  Perry, Ernest G. (Battersea, S.)

  Brown, Bob (N'c'tle-upon-Tyne, W.)

  Hunter, Adam

  Perry, George H. (Nottingham, S.)

  Brown, R. W. (Shoreditch & F'bury)

  Hynd, John

  Prentice, Rt. Hn. R. E.

  Buchan, Norman

  Irvine, Sir Arthur (Edge Hill)

  Pursey, Cmdr. Harry

  Buchanan, Richard (G'gow, Sp'burn)

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Rankin, John

  Butler, Mrs. Joyce (Wood Green)

  Jenkins, Rt. Hn. Roy (Stechford)

  Rees, Merlyn

  Callaghan, Rt. Hn. James

  Johnson, James (K'ston-on-Hull, W.)

  Rhodes, Geoffrey

  Carmichael, Neil

  Jones, Dan (Burnley)

  Richard, Ivor

  Carter-Jones, Lewis

  Jones, T. Alec (Rhondda, West)

  Roberts, Rt. Hn. Goronwy

  Chapman, Donald

  Kenyon, Clifford

  Robertson, John (Paisley)

  Coleman, Donald

  Kerr, Mrs. Anne (R'ter & Chatham)

  Robinson, Rt. Hn. Kenneth (St. P'c'as)

  Conlan, Bernard

  Kerr, Russell (Feltham)

  Rodgers, William (Stockton)

  Corbet, Mrs. Freda

  Lawson, George

  Roebuck, Roy

  Crawshaw, Richard

  Lee, Rt. Hn. Frederick (Newton)

  Rose, Paul

  Crossman, Rt. Hn. Richard

  Lee, John (Reading)

  Ross, Rt. Hn. William

  Darling, Rt. Hn. George

  Lestor, Miss Joan

  Rowlands, E.

  Davidson, Arthur (Accrington)

  Lewis, Arthur (W. Ham, N.)

  Ryan, John

  Davies, Ednyfed Hudson (Conway)

  Lewis, Ron (Carlisle)

  Shaw, Arnold (Ilford, S.)

  Davies, G. Elfed (Rhondda, E.)

  Lipton, Marcus

  Sheldon, Robert

  Davies, Dr. Ernest (Stretford)

  Lomas, Kenneth

  Shore, Rt. Hn. Peter (Stepney)

  Davies, Ifor (Gower)

  Loughlin, Charles

  Short, Rt. Hn. Edward (N'c'tle-u-Tyne)

  Delargy, Hugh

  Luard, Evan

  Silkin, Rt. Hn. John (Deptford)

  Dell, Edmund

  Lubbock, Eric

  Silverman, Julius

  Dempsey, James

  Lyons, Edward (Bradford, E.)

  Skeffington, Arthur

  Dewar, Donald

  Mabon, Dr. J. Dickson

  Slater, Joseph

  Diamond, Rt. Hn. John

  McBride, Neil

  Small, William

  Doig, Peter

  McCann, John

  Steele, Thomas (Dunbartonshire, W.)

  Dunn, James A.

  Macdonald, A. H.

  Stewart, Rt. Hn. Michael

  Dunnett, Jack

  McGuire, Michael

  Stonehouse, Rt. Hn. John

  Dunwoody, Dr. John (F'th & C'b'e)

  McKay, Mrs. Margaret

  Strauss, Rt. Hn. G. R.

  Eadie, Alex

  Mackenzie, Gregor (Rutherglen)

  Summerskill, Hn Dr. Shirley

  Edelman, Maurice

  Mackie, John

  Taverne, Dick

  Edwards, William (Merioneth)

  Mackintosh, John P.

  Thomas, Rt. Hn. George

  Ellis, John

  Maclennan, Robert

  Thomson, Rt. Hn. George

  English, Michael

  McMillan, Tom (Glasgow, C.)

  Thornton, Ernest

  Ennals, David

  MacPherson, Malcolm

  Thorpe, Rt. Hn. Jeremy

  Ensor, David

  Mahon, Peter (Preston, S.)

  Tinn, James

  Evans, Fred (Caerphilly)

  Mahon, Simon (Bootle)

  Urwin, T. W.

  Faulds, Andrew

  Mallalieu E. L. (Brigg)

  Varley, Eric G.

  Fernyhough, E.

  Mallalieu, J. P. W. (Huddersfield, E.)

  Wainwright, Edwin (Dearne Valley)

  Finch, Harold

  Mapp, Charles

  Wainwright, Richard (Colne Valley)

  Fitch, Alan (Wigan)

  Marks, Kenneth

  Walden, Brian (All Saints)

  Fletcher, Raymond (Ilkeston)

  Marquand, David

  Walker, Harold (Doncaster)

  Fletcher, Ted (Darlington)

  Marsh, Rt. Hn. Richard

  Wallace, George

  Foley, Maurice

  Mason, Rt. Hn. Roy

  Watkins, David (Consett)

  Foot, Michael (Ebbw Vale)

  Maxwell, Robert

  Watkins, Tudor (Brecon & Radnor)

  Ford, Ben

  Mellish, Rt. Hn. Robert

  Wellbeloved, James

  Forrester, John

  Mendelson, John

  Wells, William (Walsall, N.)

  Fowler, Gerry

  Mikardo, Ian

  Whitaker, Ben

  White, Mrs. Eirene

  Williams, Mrs. Shirley (Hitchin)

  Woof, Robert

  Whitlock, William

  Williams, W. T. (Warrington)

  Wilkins, W. A.

  Willis, Rt. Hn. George

  TELLERS FOR THE AYES:

  Williams, Alan (Swansea, W.)

  Wilson, Rt. Hn. Harold (Huyton)

  Mr. Ioan L. Evans and

  Williams, Alan Lee (Hornchurch)

  Wilson, William (Coventry, S.)

  Mr. Joseph Harper.

  Williams, Clifford (Abertillery)

  Winnick, David

  NOES

  Alison, Michael (Barkston Ash)

  Hastings, Stephen

  Peel, John

  Atkins, Humphrey (M't'n & M'd'n)

  Hawkins, Paul

  Peyton, John

  Balniel, Lord

  Hay, John

  Pink, R. Bonner

  Batsford, Brian

  Heald, Rt. Hn. Sir Lionel

  Powell, Rt. Hn. J. Enoch

  Bennett, Dr. Reginald (Gos. & Fhm)

  Higgins, Terence L.

  Price, David (Eastleigh)

  Biggs-Davison, John

  Hiley, Joseph

  Pym, Francis

  Black, Sir Cyril

  Hill, J. E. B.

  Rhys Williams, Sir Brandon

  Blaker, Peter

  Hirst, Geoffrey

  Rodgers, Sir John (Sevenoaks)

  Body, Richard

  Hornby, Richard

  Russell, Sir Ronald

  Boyd-Carpenter, Rt. Hn. John

  Hunt, John

  St. John-Stevas, Norman

  Boyle, Rt. Hn. Sir Edward

  Jenkin, Patrick (Woodford)

  Sandys, Rt. Hn. D.

  Braine, Bernard

  Jones, Arthur (Northants, S.)

  Scott-Hopkins, James

  Buck, Antony (Colchester)

  Joseph, Rt. Hn. Sir Keith

  Shaw, Michael (Sc'b'gh & Whitby)

  Bullus, Sir Eric

  Kaberry, Sir Donald

  Silvester, Frederick

  Burden, F. A.

  Kershaw, Anthony

  Smith, Dudley (W'wick & L'mington)

  Campbell, Gordon (Moray & Nairn)

  Kirk, Peter

  Stodart, Anthony

  Carlisle, Mark

  Knight, Mrs. Jill

  Stoddart-Scott, Col. Sir M.

  Clegg, Walter

  Lane, David

  Taylor, Sir Charles (Eastbourne)

  Cooke, Robert

  Lewis, Kenneth (Rutland)

  Taylor, Edward M. (G'gow, Cathcart)

  Costain, A. P.

  Longden, Gilbert

  Temple, John M.

  Crowder, F. P.

  Maclean, Sir Fitzroy

  Turton, Rt. Hn. R. H.

  Currie, G. B. H.

  McNair-Wilson, Michael

  Waddington, David

  Dalkeith, Earl of

  McNair-Wilson, Patrick (New Forest)

  Wells, John (Maidstone)

  Dance, James

  Marples, Rt. Hn. Ernest

  Whitelaw, Rt. Hn. William

  Deedes, Rt. Hn. W. F. (Ashford)

  Mawby, Ray

  Williams, Donald (Dudley)

  Digby, Simon Wingfield

  Maxwell-Hyslop, R. J.

  Wilson, Geoffrey (Truro)

  Eden, Sir John

  Monro, Hector

  Wolrige-Gordon, Patrick

  Wood, Rt. Hn. Richard

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Morrison, Charles (Devizes)

  Wright, Esmond

  Emery, Peter

  Mott-Radclyffe, Sir Charles

  Wylie, N. R.

  Eyre, Reginald

  Neave, Airey

  Farr, John

  Nicholls, Sir Harmar

  TELLERS FOR THE NOES:

  Foster, Sir John

  Noble, Rt. Hn. Michael

  Mr. Jasper More and

  Glover, Sir Douglas

  Osborn, John (Hallam)

  Mr. Bernard Weatherill.

  Griffiths, Eldon (Bury St. Edmunds)

  Page, John (Harrow, W.)

  IMMUNITIES AND PRIVILEGES
  10.37 p.m.
  The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. William Whitlock): I beg to move,
  That the International Sugar Organisation (Immunities and Privileges) Order 1969, a draft of which was laid before this House on 14th April, be approved.
  With your permission, Mr. Deputy Speaker, and that of the House, I think that it may be convenient to discuss at the same time the other Motion,
  That the International Coffee Organisation (Immunities and Privileges) Order 1969, a draft of which was laid before this House on 14th April, be approved.
  Mr. Deputy Speaker (Mr. Harry Gourlay): Is it the wish of the House that the two Orders be taken together?
  Hon. Members: Agreed.
  Mr. Whitlock: These two Orders, which are the subject of the Motions, which you are allowing us to take together, Mr. Deputy Speaker, and which I am glad to commend to the House, have been approved in another place. They are very similar in both background and terms to the International Wheat Council (Immunities and Privileges) Order which was approved by the House last November. They are also made under the powers of Section 1 of the International Organisations Act, 1968, a measure which was welcomed by Parliament as bringing our legislation up to date, to meet the growing importance of international organisations in world affairs.
  The International Coffee Organisation and the International Sugar Organisation are two more of the four commodity organisations based in London to which we are acting as hosts. In order to regulate our relations with these Organisations, we have drawn up, as is customary, Agreements about their status in the United Kingdom. These draft Headquarters Agreements were laid before Parliament in February, Cmnd. 3915 and Cmnd. 3926. The Orders will make it possible for Her Majesty's Government to sign and give effect to these two Agreements. This country is a member of both Organisations, whose work is of the greatest importance for the economies of developing countries which produce
  810
  coffee and sugar. The conferences which recently drew up world-wide agreements about production and trade in coffee and sugar agreed, as a result of a United Kingdom proposal, that the privileges and immunities set out in the Agreements and in these Orders were suited to the needs of the host State as well as those of the Organisations.
  The precedent on which the two Orders now before the House are based—the European Space Research Organisation (Immunities and Privileges) Order—was originally approved by Parliament in 1965, and was followed last year in the case of the International Wheat Council Order which I have already mentioned. A feature which accords with views from time to time expressed by hon. Members is the limitation on the immunity from suit which has the effect that the two Organisations, and all the members of their staffs except the head of each, will have no immunity from the civil or criminal jurisdiction of our courts in matters arising from motoring offences and accidents. Another limitation makes it possible to sue the Organisations to enforce an arbitral award made under compulsory provisions in the Agreements. Personal privileges given to staff and representatives are limited, and do not extend to families in any case. Tax exemption is conditional on payment of a tax to the Organisations themselves.
  Mr. Eldon Griffiths: May I ask a question—
  Mr. Whitlock: Perhaps the hon. Gentleman will make his speech during the debate, and I can reply at the end.
  As the two Orders—
  Mr. Griffiths rose—
  Mr. Deputy Speaker: Order. If the Minister does not give way, the hon. Member must resume his seat.
  Mr. Griffiths: On a point of order. Mr. Deputy Speaker. I appreciate your Ruling, and I shall abide by it at once, but the House is surely not in a desperate rush, and it is unusual for the Minister to be so discourteous.
  Mr. Deputy Speaker: That is not a point of order. If the Minister does not give way, the hon. Member must resume his seat.
  Mr. Whitlock: As the two Orders follow so closely the precedent of the Wheat Order, there is probably no need for me to take up any more time in explaining their purpose and effect. They are designed to improve the treatment in this country of the International Coffee Organisation and the International Sugar Organisation within the accepted principles of United Kingdom policy on immunities and privileges, and I believe that the House will have no difficulty in approving them.
  10.38 p.m.
  Mr. Bernard Braine: I thank the Minister for the brief explanation that he has given of the two Orders before the House, but for reasons which I hope to show I fear that the hon. Gentleman cannot expect us to give our approval without first probing a little deeper.
  These are the first two Orders of their kind that I have had to scrutinise in my present capacity, but I have been in the House for long enough to know that Parliament does not care very much about granting an ever-widening circle of foreign representatives immunities and privileges denied to our own people.
  It may be that in this day and age one must accept the principle of granting such immunities and privileges to the staffs of highly reputable international organisations. The arrangement is, after all, reciprocal with other countries, and our nationals gain some benefit from it. That is why general approval was given to the International Organisations Act, 1968, under which these Orders are made. In fact, the principle was generally accepted even before the passing of that Act which merely brought up to date the previous legislation which was technically defective and of a somewhat haphazard character.
  It is obviously desirable that we should welcome international organisations here. It is sensible that we should encourage them to establish their headquarters in Britain rather than elsewhere. In any event sugar and coffee go together particularly well; they certainly suit my taste. Not only has Britain played a notable rôle in promoting sound international commodity agreements—this is
  812
  one thing which both sides of the House strongly support—but we are the centre of the Commonwealth. Many Commonwealth countries with which we are linked are important producers of sugar and coffee. All that I readily acknowledge.
  There are, however, certain details in the Orders which require clarification. How many people are involved? I should have thought that that would have been an obvious figure for the Under-Secretary to have given the House. He must know that Parliament has long been jealous about extending these privileges and is entitled to know how many persons enjoy them. When the Orders were under scrutiny is another place my noble Friend, Lord Bessborough, put his finger on an inconsistency in their provisions which was never satisfactorily explained. One would have thought that under all the Orders made under the 1968 Act, which was supposed to bring everything into ship-shape order, identical immunities and privileges would be granted. This is not so. My noble Friend discovered that these two latest Orders differ from, for example, the International Wheat Council Order in one important respect, namely, that they accord exemption from social security obligations to all foreign staff. Why should this be? It has long been the policy of successive Governments to afford comprehensive social security and National Health cover to all our citizens in return for contributions. It has long been the proud aim of successive Governments eventually to encourage other countries to do the same so that there would be complete reciprocity. A Yugoslav visiting Britain and falling ill can enjoy free treatment on the National Health Service here because a Briton visiting Yugoslavia can enjoy free treatment there.
  The reply given to my noble Friend on this point, however, was that the Wheat Council Order affected fewer foreign staff and they were perfectly happy with the arrangement. On the other hand, the Government spokesman claimed that the staff of the Coffee and Sugar Organisations are largely foreigners who are unhappy about coming under our social security arrangements. Why should there be this difference in treatment? How do the Government know that the staff of the Sugar and Coffee Organisations want different arrangements? Was every member of the staff

  813
  canvassed? What question was asked? Who asked the question? What right had the Government, anyway, to ask it?
  Further, even if this inquiry was conducted and the replies received were 100 per cent. satisfactory in each case, how do the Government know that future members of the staff of these Organisations would want the same rights? The Government's reply in another place was extraordinary. It revealed a slipshod and haphazard approach which is becoming all too characteristic of the Government in almost every field.
  Parts IV and V of each of the Orders—I am agreeable to taking them together because they are virtually identical—[HON. MEMBERS: "No."]—no doubt my hon. Friends will seek to comment upon the differences between the Orders. I am talking now about features which are common to the two Orders. Parts IV and V would appear to provide different rules for high officers and experts than for the rest.
  What do these phrases mean? I suppose that one could identify a high officer as being somebody higher than somebody else lower down. But "experts," whoever they may be, are simply defined as persons
  "… other than officers of the Organisation.…"
  What is an expert? Somebody suggested to me the other day that an expert is a person who is not more right than anybody else but is able to give more sophisticated reasons for being wrong. Or perhaps we could define an expert as one who knows more and more about less and less. Considering recent exhibitions from the Government Front Bench, certain right hon. Gentlemen opposite might qualify accordingly.
  Exactly what is meant by "experts" in this connection? Who are these people to whom we are extending these privileges and immunities? Are they, as distinct from officers of the Organisation, people who hop in and hop out of the United Kingdom at the Organisation's will? If so, how often does this occur? How many of them are there? And what are the implications?
  I protest against sloppy draftsmanship of this kind. As I have said on many occasions, the Government must understand that Parliament will not put up
  814
  with badly drafted legislation. [Interruption.]
  Mr. William Molloy: On a point of order. Are you aware of the difficulty that we are experiencing in trying to listen to the interesting argument being adduced by the hon. Gentleman because he appears to be coming under attack from his hon. Friend the Member for Bristol, West (Mr. Robert Cooke)? Would you kindly tell that hon. Gentleman to shut up?
  Mr. Robert Cooke: Further to that point of order. My hon. Friend pointed out that Parliament would not tolerate sloppy draftsmanship and I commented that, in present circumstances, we were lucky to have anything printed.
  Mr. Deputy Speaker: Neither comment is a point of order.
  Mr. Braine: I did not think for a moment that my hon. Friend was attacking me. He made a perfectly valid comment and I hope that he will have an opportunity to develop his argument in more detail later.
  May I draw the attention of the House to paragraph 16(c)(ii) of each Order which refers to the exemption of these officers and experts from Customs duties and taxes on the importation of
  "… articles which were in his ownership or possession or that of such a member of his family, or which he or such a member of his family was under contract to purchase, immediately before he so entered the United Kingdom."
  I question the word "immediately". What does it mean in this context? Does it mean a day or a week before he entered the United Kingdom? Would a contract entered into by an officer or a member of his family a month before he entered the country be permissible? The meaning is obscure, although it appears to have the intention of encouraging purchase just before, immediately before, entry; and that surely could defeat the real intention of the provision.
  Sir Harmar Nicholls: Has my hon. Friend ever seen a document as intricate as this with such a weak Explanatory Note, the paucity of which is surely a matter for comment?
  Mr. Braine: My hon. Friend is right. A better drafted Explanatory Note might

  815
  have saved the House a good deal of time and trouble. This one might just as well not have been published. The Under-Secretary said that these privileges and immunities do not apply to members of the families of these officers. Has he studied the paragraph which I just read out? He must tell those in certain quarters to get the facts right. Does the Order apply to officers and their relatives? I serve warning here and now—
  Mr. Albert Murray: Fear strikes our hearts.
  Mr. Braine: We have a long time for this debate. If the hon. Gentleman wishes, I, or my hon. Friends, who are raring to go, will go over the Order line by line and word by word pointing out the sloppy draftsmanship and the paucity of information laid before us. But I want to be fair—
  Mr. John Peyton: I share my hon. Friend's views about the paucity of information, but I hope that he will be fair, as he always wishes to be, and acknowledge that these documents—although the Explanatory Note is worthless—are drafted with a degree of clarity to which we are not accustomed in Bills. They may not be very good, but they are better than most.
  Mr. Braine: These matters are relative, of course. The Order may be a slight improvement on the Bills we have been getting and at least we have these documents, which has not been the case in some instances lately. But choosing my words carefully, I serve notice now that we will go over these Orders and any others that follow with a toothcomb to stop slipshod drafting like this. The very least that we expect from the Under-Secretary is that he will assure us tonight that there will be no repetition of this practice, which is treating the House with something like contempt.
  10.58 p.m.
  Mr. Eldon Griffiths: I tried to intervene earlier in the Under-Secretary's speech to ask him a civil and courteous question to elicit some information which the House should have. For some extraordinary reason, he did not show the normal courtesies which an hon. Member might expect when the House is not particularly
  816
  pressed. I must, therefore, start by asking him the question which I could not ask him then—
  Mr. John Biggs-Davison: My hon. Friend, for whom I have great regard and respect, is being a little unfair. No one would say that the Under-Secretary is discourteous. The trouble is that he has strict instructions not to give way lest he finds difficulty in answering questions.
  Mr. Griffiths: No doubt my hon. Friend puts a more charitable interpretation on the circumstances than I do. However, the question I wanted to ask the Minister arose out of his own statement. I understood him to say that dependants of those who will come here and enjoy diplomatic immunities under this Order will not themselves receive these immunities.
  I should like him to confirm to me now whether that statement is correct. If he will consult the International Organisations Act, 1968, the parent of this Order, he will see that it says in Schedule 1, Section 23(3)
  "Persons who are members of the family and form part of the household of such a member of the official staff … shall be entitled to the privileges and immunities set out in Part II of this Schedule".
  I have served on a number of Committees concerned with diplomatic immunities, as the Minister may or may not know, and we have debated with a number of his colleagues this question as to how far diplomatic immunity should or should not extend to families and to dependants. This is something I think we need to know, and in my judgment the statement which I thought I heard the Minister utter was incorrect. I will be very glad to give way now if he will tell me whether or not I understood his words correctly. Does it extend to families or dependants, or does it not?
  It seems perfectly obvious that the Minister either does not know or that he prefers not to get on to his feet because he is frightened of falling over them. The House of Commons is being asked tonight to admit to our country a number of officials who will serve the International Coffee Organisation—and I am one of those who welcome them to this country—but before Parliament gives the Government the right to extend to

  817
  these officials diplomatic immunities which involve relief from taxes of many kinds, we are entitled to know whether or not these immunities extend to their dependants.
  I find it beyond belief that the Minister is not prepared to give me an answer. Does he not know? I appeal to you, Mr. Deputy Speaker. Is not this a perfectly reasonable question which I am putting? It is obvious that the Minister is not willing to reply, and I shall therefore begin my speech under protest.
  I begin with this agreement, and I echo some of the words of my hon. Friend the Member for Essex, South-East (Mr. Braine) when he says that this is a poorly drafted Statutory Instrument. Let me say that I welcome both these Instruments. I am sure that the headquarters agreement signed in New York which has made it possible for the Sugar Organisation to be set up here was a good one, and that we ought to welcome it. The same is true of the agreement that permits the Coffee Organisation similarly to be established here in London.
  I am sure that the House welcomes this for several good reasons: firstly, because both these international organisations are concerned with the orderly management of international trade, and as a trading country ourselves we have—perhaps almost more than any other country—a great interest in seeing orderly management of world trade.
  Secondly, I am glad to see both these Organisations coming to London because I believe it helps our national capital, and has what I might call a number of spin-off advantages. The fact that the Coffee Organisation and the Sugar Organisation are headquartered in London is bound to bring a great number of delegations of experts to Britain, and this too I think should be welcomed.
  Having made these two general points, I should now like to look into some of the details of the Orders before us. I turn first to the whole wide question of privileges and immunities, which are not unfamiliar. They have been extended over the years to a whole array of international organisations and foreign embassies and consulates in this country. But Parts II and III of the Orders contain the extension to a fairly substantial number of people, perhaps, of exemptions
  818
  from British taxation. My hon. Friend the Member for Essex, South-East asked how many people we are now extending these privileges to. That is a relevant question. It was asked in respect of the Consular Relations Act and the Diplomatic Immunities Act, and we have the answers in those cases. We are entitled as a Parliament to know how many will similarly be advantaged under the Orders. We should know the answers at least approximately before we agree to them tonight.
  The taxes from which the servants of the two Organisations will be exempted are set out fairly carefully in the various headquarters agreements and, I believe, in the International Organisations Act, which is the parent of the Orders. The taxes referred to are income tax, customs duties, petrol, wine and spirits duties, the capital gains tax, estate duty and purchase tax, as well as exchange control. I believe I have covered most of them, but we have so many these days that it would be a very long list if I gave them all.
  I ask the Minister, in the dwindling hope of getting some sort of answer, precisely what is to be regarded as the necessary amount of wine and spirits freely imported for representatives of the International Coffee and Sugar Organisations for the purpose of their duties? The Minister may remember—though I do not know whether he remembers anything—that in the course of the passage of the Consular Relations Act we discovered the extraordinary fact that the Foreign Office had in practice given relief from duty on hydrocarbons and wines and spirits without any Parliamentary authority, and it had been giving this relief for some time. That is why we need to know what quantity of wine and spirits is regarded as being necessary for the performance of the duties of the gentleman who will come here under the Orders.
  Are they to have a quart of whisky a day, a week or a month? We are entitled to some idea of the view of the Foreign Office on the amount of wine and spirits a coffee expert requires to drink in a week for the performance of his duties. A definition is required, and I hope that the Minister will be able to give it to us when he replies. Some of us might imagine that they would prefer coffee anyway.
  Mr. John Farr: Is my hon. Friend aware that there is an international beverage known as Irish coffee, which requires not only a coffee content but an alcoholic base?
  Mr. Griffiths: I have heard tell of this brew, but I have not had the pleasure of sampling it.
  "Hydrocarbons" is an expert expression for petrol. How much petrol per expert or official will be brought into this country without payment of duty for the benefit of the International Coffee and Sugar Organisation? Is it to be supposed, for example, that a man here on behalf of the International Coffee Organisation will motor 100 miles a week, and if so how much free petrol will he have for that purpose? Or is it to be supposed that he will drive very much more than that? Once again, we should have some idea and hon. Members who do a great deal of driving know that the total relief from petrol tax is a considerable concession. Indeed, when we were debating the Consular Relations Act and the Diplomatic Immunities Act, we appreciated that we were giving these foreign guests an advantage of about 3s. 6d. or 4s. a gallon. I suspect that it is now about 4s. 6d. or 5s. per gallon. What is the approximate estimate that the Foreign Office is making of this concession now?
  I turn to the other range of taxes from which these gentlemen will be exempted. We must accept the exemption for income tax because it is reciprocal. British nationals serving abroad benefit from relief in the countries in which they are serving, although the relief we grant is much greater because, generally speaking, our income tax is much higher than in other countries. We are thus giving these guests in our midst a rather larger privilege because of the greater levels of our income tax.
  Sir Harmar Nicholls: I hope that my hon. Friend will not pursue that argument too far because, if what he says is taken literally by other countries, they may put up their income tax so that they can say how kind they are to our nationals.
  Mr. Griffiths: That is a possibility but I would not wish it on any of them. I am rather more concerned about the freeing
  820
  of those who come here to serve in these two organisations from exchange control, capital gains tax and purchase tax. No doubt some of these gentlemen to be exempted from income tax will have a fairly substantial income. If they are prudent, I am sure that they will wish to invest some of their income in the British stock market. This is one of the spin-offs to which I have referred. It should assist our stock market if we have these well-to-do, international gentlemen buying equities in this country. It is my hope, as one who approves of the international capital market, that they will do well and profit from their investments. But I understand that, uniquely, they are to be free of capital gains tax.
  It is surely not a necessary part of their duties in Britain that they should be exempted from capital gains tax. I see the case for exempting them from income tax because it affects their day-to-day work and that it is probably appropriate to let them off the hydrocarbon and spirit taxes because they need these things. In a previous debate, a Minister described whisky as one of the tools of their trade and to some extent he was right. But I do not think that playing the market is in any way a necessary part of their duties as diplomats in this country and do not see why their profits from doing so should be exempted from capital gains tax. Let us, by all means, exempt them from income tax and hydrocarbon oils tax, but surely not from capital gains tax.
  Then there is exchange control. I appreciate that it would be wrong to place guests and foreign diplomats in our midst under the onerous restrictions that we have to face. In a country with the foreign exchange problems that we have at present, with so much pressure upon our balance of payments, it is inequitable and moreover unnecessary, to provide large numbers of international civil servants with complete freedom from exchange control. Where they need to be free of exchange control for the purpose of going about their business abroad that must be right. This House would never wish to deny it to them.
  On the other hand, if they are going off on their holidays, if they are just buzzing down to Majorca for the week-end or pushing off to the Bahamas or somewhere of that sort, I should have

  821
  thought there was no reason, when they are going on personal holidays, for them to be exempted from the exchange controls and the allowances imposed upon British citizens.
  I turn to another exemption contained in the Orders, namely exemptions of the headquarters buildings set up by these two Organisations from any payment of local rates. The local authority, presumably the Greater London Council, or the London boroughs, will not be able to collect any rates from the offices of these two Organisations. There is a point of principle here. It is that missions, diplomatic and consular, and international, are supposed to pay for a proportion of the services which they receive from the local authorities. I believe that they are charged their water rate, because it can be metered. This is the practice in all foreign missions here.
  What is to happen, for example, in respect of the police services? We all know that the police services have to be provided for foreign missions. The Soviet Mission certainly requires them, the Chinese require them on occasions, although often the Chinese attack the police. There is the problem that, if additional police are to be provided for the protection of these large numbers of international missions in our midst, some arrangement ought to be made whereby the local authority, providing 50 per cent. of the money for the police, is able to be compensated in some fashion. This is not provided for in the Orders. It is quite wrong that if they are to be given complete freedom, as the Orders require, the Government should not come forward and show in what way they will make up to the local authority the proportion of money that is spent on the police protection of these buildings.
  I come now to the numbers and categories of persons in these missions who will benefit. We have asked for the numbers and we have not been vouchsafed a reply. I have studied with some care all the documents that go before these Statutory Instruments, the original International Sugar Agreement, the original Headquarters Treaty, and all the Schedules thereto. I find that persons who are members of the family and of the households of the officials attending
  822
  these Organisations are given immunities under the Orders. The Minister told us differently, but I am bound to say that in this case I have done my homework rather better than he has.
  Sir Harmar Nicholls: Article 15(2) in Part IV states:
  "Part IV of Schedule 1 to the Act shall not operate so as to confer any immunity or privilege on the families of officers to whom this Article applies."
  Perhaps that paragraph applies only to that Article.
  Mr. Griffiths: That is precisely the point, and this confirms my hon. Friend's comment about sloppy drafting. As I read that paragraph it refers to Part IV under the heading "Officers". I see no such provision under the headings "All Officers" which is a different category. Equally, in this extraordinary category of "experts" the Act does not confer immunity upon the families of experts. The representatives, the high officers and the experts have to pay for their families, but there is nothing in the Order covering the families of other officers. If the Minister had answered my question in the first place we should not be in this difficulty.
  It is not simply a question of how many will benefit. The question is how far the category of experts extends. There is no definition and nothing to show where the category of expert begins and ends. Presumably a chauffeur is an expert, and a chauffeur is covered in the Consular Relations Act and the Diplomatic Immunities Act. Is he covered here? We are entitled to know. Is the gardener employed by the head of mission regarded as having immunity? Is the nursemaid who looks after the family of the head of the International Coffee Organisation to be regarded as an expert—I have no doubt that she is an expert in her duty. Does the term "expert" include all these members of the family of the head of the mission?
  I come now to the Headquarters Agreement from which the Orders stem and which is both cognate and referred to in the Statutory Instruments. Article 26(2) specifies that the Government shall issue to all staff members on notification of their appointment a card bearing the photograph of the holder and identifying him as a staff member. This card is to

  823
  be accepted by the appropriate authorities as evidence of identity and appointment. Who will issue the identity cards? Who will have the photographs taken, and who will give them to the experts when they arrive here? Will that duty be laid upon the over-burdened police force, or will it be done by the Foreign Office staff? Is it the wish of the House that those who come to our country as guests should have to carry identity cards? I have lived for many years in foreign countries and, even if I have been required to have an identity card with a photograph, I have never been required to carry it with me. Will the Government, under Article 26, require diplomats to carry identity cards?
  There are other problems which I should like to ventilate, but I know that a number of my hon. Friends are anxious to join in the debate, and there are crevices which require exploration.
  I conclude with these two points. I welcome these two Orders. It is right that we should have them. It is utterly wrong that they should be so badly drafted, so full of holes and that there should be such a lack of definition as to those to whom they apply. Whereas I do not anticipate that we shall oppose them, I expect the Minister to do a little better and show us a little more courtesy than he has managed to do so far.
  11.26 p.m.
  Mr. John Biggs-Davison: Mr. Deputy Speaker, I have no—
  Mr. Roy Roebuck: On a point of order, Mr. Deputy Speaker. It used to be the custom in the 19th century to adjourn the House on the receipt of great news. I have to acquaint the House with the fact that Labour has regained control in Sheffield, and I ask that the House should be adjourned for that reason.
  Mr. Deputy Speaker: The point may be of interest, but it is hardly a point of order.
  Mr. Biggs-Davison: I do not know whether that qualifies as great or good news, but if it gives cheer to the downcast spirits of hon. Gentlemen opposite, so be it.
  824
  I have no wish to speak at great length. I know that hon. Gentlemen opposite wish to disperse to their constituencies, where they will be so gladly received. However, we should scrutinise these important Orders with the care that they deserve.
  Criticism has been made already of their drafting. I do not wish to join in it, although I defer to the view of my hon. Friends that these Orders might have been better drafted. At least we can be thankful that they exist in writing and that we have been able to obtain copies from the Vote Office.
  Those hon. Gentlemen opposite who obviously wished this debate to be brief might have been better served by their hon. Friend the Under-Secretary of State. The debate would have been a good deal shorter if he had given us more explanation of the Orders. He read a statement to us at almost breathless speed, and it was difficult to follow what he said. When he was asked for elucidation by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), he failed to give it. The debate has been protracted because we have been trying to probe the Orders and obtain replies to our questions.
  My hon. Friend the Member for Essex, South-East (Mr. Braine) referred to the debate in another place on the International Sugar Organisation Order, though not the International Coffee Organisation Order. In that debate, my noble Friend the Earl of Bessborough said—
  Mr. Roebuck: The hon. Gentleman must not quote what was said in another place.
  Mr. Biggs-Davison: I do not propose to quote verbatim what he then said, but my noble Friend pointed out that before the war he had been an international civil servant with the League of Nations Secretariat concerned with refugees. We are here concerned with Orders relating to the headquarters of international organisations, and the headquarters of the body my noble Friend served were also based in London. He said that in those days we did not have any of these immunities and privileges—they were not then felt to be necessary.

  825
  Times have changed. We wish to give full hospitality and reciprocity to international organisations, but there is no doubt that there has been the most remarkable proliferation of these organisations. We can usually debate them only one at a time, but this evening we are debating two together. But, since the war, so many organisations have come into existence, and to their representatives, whether they be high officers or low officers—
  Mr. Deputy Speaker: Order. The hon. Gentleman must relate his remarks to the Orders which are before the House. We are not discussing immunities in general, but merely their application to those people who are referred to in the Orders now before the House.
  Mr. Biggs-Davison: I am most grateful to you, Mr. Deputy Speaker, for bringing me back within the compass of the rules of order. I was trying to say that our view of these Orders relating to international organisations must be governed by the number of international organisations which exist. There comes a point when things get beyond the limit. We are entitled to question whether there may be too many international organisations now represented in this country whose officers, whether they be high officers or low officers, enjoy immunities. Our constituents are also entitled to ask us to scrutinise the matter in order to establish whether or not these Orders will put the number of proliferating international organisations beyond their reasonable limit—
  Mr. Braine: Would not my hon. Friend agree that we have these international organisations—they are here—and it is not, perhaps, so much their number that matters. What should be the concern of the House of Commons is the complete inability of the Government in laying Orders like these to tell us precisely what these immunities and privileges are, to whom they are to be extended and how many more people are to be added to those who already enjoy these immunities and privileges.
  Mr. Biggs-Davison: That is quite right. I hope that we shall be given a full reply. I have here a list of some, at least, of the international organisations which have been the subject of
  826
  legislation according immunities to their servants. It would be quite wrong for me to read the full list, but will the Under-Secretary tell us how many there are? First of all, how many organisations are there to whose representatives these immunities apply? We are now being asked to give immunities to the representatives of two new organisations—
  Mr. Deputy Speaker: Order. I must not allow the hon. Gentleman to go wide on the Orders. We are discussing the application of the Orders only to the groups concerned: we are not concerned now with any other groups.
  Mr. Biggs-Davison: Indeed. I was saying that we are now being asked to approve two Orders regarding two international organisations, namely, the International Sugar Organisation and the International Coffee Organisation, and that they be added to a formidable list of international organisations. If the Under-Secretary can help by assuring us that this is not completely out of control, that the numbers are not—
  Mr. Deputy Speaker: Order. The Minister would be out of order if he attempted to answer that question.
  Mr. Biggs-Davison: It is a matter of regret that the rules of order prevent the House being given this information.
  Perhaps the Minister will be able to tell us how many persons belonging to these two international organisations will be affected by these immunities and, of those numbers, how many are British subjects or commonwealth citizens.
  My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) recounted the immunity from taxation which would be accorded to officials of these two Organisations. It is a mouthwatering list of exemptions from taxation. It would be interesting to hear from the Minister what will be the loss to Her Majesty's Treasury and to the taxpayer from the immunities which will be accorded.
  Sir Harmar Nicholls: I do not think that our concern is what it is likely to cost. We want to know how far the privilege extends and to whom. We do not want to give the impression to anybody involved that we are niggling at

  827
  cost. But we should know to whom it applies.
  Mr. Biggs-Davison: I am sorry if I gave the impression of niggling. I accord my welcome to the Orders in general, badly drafted though they are and ill-explained though they were by the Under-Secretary. I do not wish to take any niggling attitude. But it is a matter of concern to this House to know how many persons are involved and to what extent there will be immunity from income tax, surtax, capital gains tax, selective employment tax, and, of course, from the municipal rates, to which my hon. Friend referred in his admirable speech.
  As other hon. Members wish to speak, I come briefly to the immunities from legal proceedings. The Minister said—although he spoke so fast that it was difficult to catch his words—that there were certain legal proceedings from which there would be no immunity and that we would welcome that. But there is a vast number of legal proceedings which it will not be possible to apply to officials of these two Organisations. We should take note of that. If the Minister wishes to say anything further upon that I should be grateful.
  Lastly, I wonder whether there is a security aspect to all this. I do not wish to say anything about a case which may be sub judice at this moment, but there have been cases in the past when members of international organisations, stationed in the capitals of other countries, have been engaged in espionage and activities dangerous to the state which has given them hospitality. We should like to be quite certain that no immunity that is accorded by this House would in any way preclude the necessary security measures against activities of that kind.
  11.39 p.m.
  Mr. John Farr: It is indicative of the state to which the Labour Party has sunk that the knowledge that it has gained control of a city council is greeted as great news by hon. Gentlemen opposite and raises a large cheer.
  Turning to the Orders, several points have been clearly made by my hon. Friends, which I do not intend to repeat. Instead, I should like to raise a couple of other points. I do so, because, as has
  828
  been said, the Under-Secretary spoke rapidly and briefly. What he told us was useful, but it was not sufficient. I have additional questions to put to him.
  I should like to know how on earth any Government Department could have permitted such a weak interpretation paragraph as paragraph 2. Its three subparagraphs contain a collection of words which are capable of almost any interpretation in the English language. For instance, what is the exact difference between "Representatives", the heading for paragraph 14, "High Officers"; the heading for paragraph 15, "All Officers", the heading for paragraph 16, and "Experts" the heading for paragraph 17? Why is not the difference explained in the interpretation paragraph?
  I know the Under-Secretary well and I know that he is not a man who would deliberately treat the House with discourtesy, but after the arguments of my hon. Friends he must admit that the House is short of the information it needs. My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) asked into which categories the different servants of the Organisation would fall. What would be the categories of chauffeurs, gardeners, cooks? Is a secretary classed as an expert, or simply as an officer? Into which category would clerks fall? Four different categories are itemised and each has a slightly different treatment and it would help the House if hon. Members were told what type of employee fell into each category.
  The International Sugar Organisation is to replace the International Sugar Council. Are the privileges which we are asked to confer on the Organisation at least equalled by privileges granted to members of the Commonwealth Sugar Agreement? The Commonwealth Sugar Agreement is an important structure upon which we depend for most of our sugar supplies. Do the officials of that important organisation receive like privileges?
  Sir Harmar Nicholls: On a point of order, Mr. Deputy Speaker. Has there, by some method not known to us, been formed a National Government? I see my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) acting as a P.P.S. to a Government spokesman. Has something happened of which the House should be aware?
  Mr. Deputy Speaker: The hon. Gentleman knows that that is not a point of order.
  Mr. Farr: I was asking the Under-Secretary an important question of concern to hon. Members on both sides of the House. Are officials of the Commonwealth Sugar Agreement to have the same kind of privileges that we are proposing to confer on officials of the International Sugar Organisation?
  Mr. Deputy Speaker: The hon. Member is going a little wide of the Orders. It would not be in order for the Minister to reply to those questions.
  Mr. Farr: My difficulty, and I am sure that it is shared by a number of my colleagues, is that we know too little about the scope of the Orders.
  Hon. Members: Hear, hear.
  Mr. Farr: I am glad to have the support of the Treasury Bench in that respect.
  Mr. Eldon Griffiths: With respect, Mr. Deputy Speaker, is not my hon. Friend in order in asking these questions? There is contained in the International Sugar Agreement an article which specifically deals with the experts of Commonwealth countries and other countries with which the International Sugar Organisation will have to deal when it comes to London.
  Mr. Deputy Speaker: We are not discussing that Agreement tonight. We are discussing the two Orders which are before the House.
  Mr. Farr: I respect your Ruling, Mr. Deputy Speaker, but I think you will appreciate that, dependent as we are in this country on the valued supplies of Commonwealth sugar, in making my speech tonight it is difficult not to refer to the Commonwealth Sugar Agreement en passant. I want an assurance that the Commonwealth Sugar Agreement officials receive at least like privileged treatment as these international officials do.
  As I said a moment ago, much of our difficulty would have been resolved and we would not have put these questions if only the Minister had told us the total number of persons who are to receive this privileged treatment. The Minister
  830
  did not tell us the total number. He did not take the opportunity which was afforded him by my hon. Friend the Member for Bury St. Edmunds of giving the House the benefit of that information. Naturally, hon. Members on both sides of the House are chary of granting an unknown number of officials these vast privileges which have been spelt out so ably in other speeches.
  My hon. Friend the Member for Bury St. Edmunds said that he believed that these officials and, we understand, their families who play the markets in this country would be exempt from capital gains tax. I would add that they would also be exempt from stockbrokers' stamp duty on these transactions.
  We are also in some difficulty in understanding how much importance we should place upon these exemptions contained in these Articles. We do not know how many people they refer to. The Minister must have some idea. Is it in hundreds or in thousands?
  Mr. Braine: It is an official secret.
  Mr. Farr: The fact that we do not have any idea from the Minister makes us reluctant to allow the Order to pass without further explanation.
  I wanted to refer to a couple of other points, particularly on Article 10 relating to the import of capital equipment. Why is it necessary for the Organisation to import large quantities of foreign capital equipment into this country, duty and tax free? I know from my own experience—and other hon. Members on both sides of the House know it—that in this country we have a very sophisticated range of office equipment, including the latest type of computer, which can surely satisfy the needs of the International Sugar Organisation, without bringing in a large quantity of capital equipment from abroad, duty and tax free. What are the types of equipment and goods which are referred to in Article 11?
  I understand from what has been said earlier in the debate that Article 12 means that these privileged people will receive a full refund of all petrol duty and that they will be able to drive around with duty-free petrol in their tanks. Article 13 apparently gives them the very important privilege of being able to purchase in any of our shops purchase tax-free goods.

  831
  We may be making a mountain out of a molehill, and we may not. We ask the Minister to give us some idea of the total number of people who will be in that very privileged position if the House confirms these Orders.
  11.50 p.m.
  Mr. Whitlock: I am sorry that some hon. Gentlemen opposite, by their sometimes pompous, and sometimes nitpicking, approach to this matter have delayed the House from giving a speedy welcome and approval to these Orders which are recognised by the hon. Member for Essex, South-East (Mr. Braine) as enabling us to act as a more generous host to the people of these organisations—a suitably generous host, but not an over-generous host.
  Where I am able to answer some of the questions which have been put to me I shall do so, but, as the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) said, he is an expert on this matter but he still does not know the answers to them. In some cases so pernickety and detailed are some of the questions, that offhand I am not able to answer them either. But where the questions are worth all the trouble I shall write to hon. Gentlemen opposite if I do not cover them in the course of my reply.
  I have been asked about the total number of staffs of these Organisations. The total number of staff of all grades of the International Coffee Organisation is at present 65, that of the International Sugar Organisation is 18.
  Mr. Farr: Do those figures include families?
  Mr. Whitlock: I said quite specifically "the staffs of these Organisations". I have no idea what their progeny is, and I shall not make inquiries about that.
  I have been asked why the provisions conferring on staffs exemption from social security obligations are in both these Orders and not in the Order relating to the International Wheat Council. During the negotiations with the Wheat Council we offered to exempt its staff from social security obligations, but the Council declined the offer because the majority of its staff are British and would not in any case have been
  832
  exempted, while the few foreign staff preferred to remain covered by United Kingdom arrangements. In the case of the Coffee and Sugar Organisations, the majority of the staff are foreign and prefer to be covered by arrangements made in their own countries or by the Organisations. The provision for exemption was therefore included in the Headquarters Agreement with these Organisations.
  I have been asked about the position of families under Article 16(c)(ii). Customs privileges are not given directly to families, but obviously an officer may use his privilege to import articles for members of his family. I point out to the hon. Member for Bury St. Edmunds that while the 1968 Act gave power to extend privileges and immunities of high officers to families, these Orders do not take that power, and therefore the Orders do not apply to families. I said that earlier, and I say it again.
  The hon. Member for Essex, South-East also asked about the application of Article 16(i)(ii) to an officer who had entered into a contract before arrival here. If he had entered into such a contract to purchase a month before he came here, he would still be under contract immediately before coming here, or else he would be in ownership or possession of the article. I therefore do not follow the hon. Gentleman's question.
  Mr. Braine: The hon. Gentleman has missed the point. I was questioning the relevance of the word "immediately". If that word was not in the Article, the meaning would be clear. The word "immediately" begs the question which I asked. I was questioning the use of the word "immediately". I was questioning the draftsmanship of the Order.
  Mr. Whitlock: If he had entered into a contract a month before coming here he would still be under contract immediately before coming here.
  Mr. Braine: Exactly. Therefore, "immediately" is redundant.
  Mr. Whitlock: The hon. Gentleman may question the draftsman on the insertion of this one word. I prefer to believe that the legal draftsmen have been exact and correct.

  833
  The hon. Member for Bury St. Edmunds asked how much wines and spirits can be imported by these Organisations for their official use. The Customs and Excise authorities have limits for the amount of spirits, and so on, which may be brought in, and they treat these as a ceiling. The authorities do not state that amounts which they treat as ceiling, because it would only encourage everyone to go up to ceiling. The ceiling was, I believe laid down in the days of the last Administration. One would therefore think that in those days hon. Members opposite would have been querying the figures.
  Full diplomatic taxation exemption is given only to high officers. That means to only one man—the high officer under the Coffee Order—because there is not one at present entitled under the Sugar Order. Other staff get only income tax relief emoluments conditional on their paying the internal tax to the Organisation and Customs privileges only on personal goods imported on arrival. They do not get duty-free petrol.
  I was asked about exchange control. The Exchange Control Act, 1947, is the authority for the provision in the Agreements. Therefore, exchange control exemption is not provided for in the Orders. Capital gains tax exemption is given only to one high officer in the Coffee Organisation. The exemption does not apply to capital gains arising in Britain.
  Relief from rates, which is accorded to a diplomatic mission under the Diplomatic Privileges Act, 1964, is relief from the so-called non-beneficial portion of the rates, which relates to services from which the mission or organisation is deemed not to derive direct benefit. The largest element in this part relates to education. The beneficial part of the rates includes drainage, fire services, refuse removal, street maintenance, parks and open spaces. The method of according the relief is that the Treasury pays the total sum involved to the local authority in the first place and recovers the beneficial portion from the Organisation. The mission or organisation does not pay the police element, because we have a duty under international law to protect its premises. Other points I should be very happy to write and enlighten hon. Gentlemen.
  834
  I hope it will be agreed by the House as a whole that the United Kingdom derives political and financial benefit from the presence of these Organisations. Their presence reinforces London's position as the centre of world commodity trade and valuably influences our balance of payments by the expenditure of these Organisations and of the many overseas visitors who come to them on business.
  The importance of the work done by these Organisations in regulating international commodity trade and assuring stable markets was emphasised at the United Nations Conference on Trade and Development and until now these bodies have not received privileges and immunities commensurate with their functions and importance. With the passage of these Orders that defect in our arrangements for international organisations will be taken care of, and I therefore hope that the House will approve them.
  12.1 a.m.
  Sir Harmar Nicholls: Am I right in supposing that if one of the people with these privileges and immunities invests and makes a gain on his securities, he will nevertheless have to pay capital gains tax?
  Mr. Whitlock: He would have to pay.
  Sir Harmar Nicholls: I have considerable sympathy for the Minister in this matter because I recall being in a similar position, when I played a part in getting a sugar Measure through all its stages. These are intricate matters and one would not expect a junior Minister to carry all the answers to complex questions in his head. For this reason, when we were in office, we made sure that a Law Officer was on hand to answer difficult questions. Hon. Members are entitled to such answers, and it is to be regretted that a Law Officer is not present tonight.
  My hon. Friends and I are not criticising the hon. Gentleman. I blame whoever organises Government business for not giving him the necessary support, particularly on legal and complex matters, to conduct the debate properly. It is the job of junior Ministers to listen patiently, to answer our questions as best they can and to get the Government's business through in the best possible way.

  835
  The hon. Gentleman must show patience and generosity to hon. Members who seem to be probing matters deeply. It is not helpful for him to talk about my hon. Friends being pompous and nitpicking in their attitude. We are merely doing our duty. He described the conditions which we are considering, when questioned by us, as being generous but not over-generous, and—
  Mr. James A. Dunn: On a point of order. Would you agree, Mr. Deputy Speaker, that you are stretching the over-generous side of your nature in allowing the hon. Gentleman to speak on matters which have nothing to do with the Order?
  Mr. Deputy Speaker: I was about to intervene, but I thought that the hon. Gentleman had almost concluded.
  Sir Harmar Nicholls: I would have argued the point if you had, Mr. Deputy Speaker—[HON. MEMBERS: "Oh."]—and I resent the presumption of the hon. Gentleman in raising that point of order. My comments are completely relevant.
  The Minister said that families were not covered by this immunity. Had a Law Officer been present, I would have asked him how that assurance squared with what appears to be the clear statement in Article 16(c)(i):
  ". . imported for his personal use or that of members of his family forming part of his household…"
  Perhaps, in legal jargon, those words do not mean what they seem to say. The Minister, who comes from a civilised part of the country, should know the answer. The hon. Gentleman said that my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) should not have asked a question to which neither of them knew the answer. But it is the job of the Opposition to ask questions to which they do not know the answers: if they do know, they are taking advantage of the House.
  Mr. Braine: Can my hon. Friend throw any light on the heading to Part V? Who are these "experts", and how many are there? We are complaining about this extraordinary loose language.
  Sir Harmar Nicholls: My hon. Friend has made one of my points. I do not blame the Under-Secretary. He should have had the support of those who can give an authoritative answer on legal and technical jargon. If it does not sound too pompous, the hon. Gentleman should not pass off these questions by saying that he will write to hon. Members. That is courteous, but the Opposition are not asking for their own personal satisfaction. We have a responsibility to Parliament to get these things clearly on the record, and in a private letter they would not be on the record.
  Mr. Biggs-Davison: It is worse than that. Time and again, Ministers say that they will write to hon. Members, but I have never received a letter answering my questions.
  Sir Harmar Nicholls rose—
  Mr. Frank Allaun: On a point of order. I understand that this debate can go on for only an hour and a half, and it started exactly 92 minutes ago—
  Mr. Deputy Speaker: Order. I am seized of the point of order, which the hon. Member can leave to the Chair.
  Sir Harmar Nicholls: If there is an answer, it should not be confined to a private letter. It should be on the record. This is a difficult and technical matter. The Government know that we will not vote against the Orders. We do not want to be ungenerous to the people who come here as our guests. The Government have a duty—
  It being one and a half hours after the commencement of proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 2 (Exempted business).
  Question agreed to.
  Resolved,
  That the International Sugar Organisation (Immunities and Privileges) Order, 1969, a draft of which was laid before this House on 14th April, be approved.
  International Coffee Organisation (Immunities and Privileges) Order, 1969, draft laid before the House, 14th April, approved.—[Mr. Whitlock.]

  HOUSING (SCOTLAND) BILL
  Order for Second Reading read.
  Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to a Scottish Standing Committee.—[Mr. McBride.]
  Question agreed to.
  Bill (deemed to have been read a Second time) committed to a Scottish Standing Committee.

  HOUSING (SCOTLAND) [MONEY]
  Queen's recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to prescribe a tolerable standard for houses and to make provision for the treatment of houses and areas, and for payments in respect of houses purchased or vacated, which do not meet that standard; to make new provision with respect to the repair of houses; to make further provision for grants by local authorities and contributions out of moneys provided by Parliament towards the cost of providing dwellings by conversion, or of improving dwellings; and for other purposes, it is expedient to authorise:—

  (1) any increase attributable to the Act of the present Session in the sums payable out of money provided by Parliament under sections 13, 16 and 17 and for the purposes of Part II of the Housing (Financial Provisions) (Scotland) Act 1968;

  (2) the payment out of moneys provided by Parliament of contributions to local authorities towards so much of any expenses incurred by them, or treated under the Act as incurred by them, for the purpose of the improvement of the amenities of certain areas as may be approved by the Secretary of State;

  (3) the payment out of moneys provided by Parliament of any administrative expenses incurred by the Secretary of State under the said Act of the present Session;

  (4) Any increase in the sums payable out of moneys provided by Parliament in respect of rate support grants which may arise from the inclusion, in the expenditure relevant to the fixing of the aggregate amount of those grants, of expenditure under the Act.—[Mr. George Thomson.]

  Dr. David Kerr discharged from the Select Committee on House of Commons (Services) and Mr. Garrett added.—[Mr. McBride.]

  FACTORY, PELAW-ON-TYNE (ATMOSPHERIC POLLUTION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]
  12.9 a.m.
  Mr. Bernard Conlan: I want to raise a matter which is causing many of my constituents great concern. The problems to which I wish to draw the attention of the House this evening are problems that I have raised many times before in correspondence with departmental Ministers, by personal representations, by Questions in this House, and in a previous Adjournment debate on 28th June, 1967, almost two years ago, and yet the problem remains.
  For the sake of the record, I should explain that in May, 1966, a planning application was made by the firm of Wailes Dove (Bitumastic) Limited, the purpose of which was for the erection of a building to be used for the application of a protective covering to steel pipes and fittings. This building was to be within the curtilage of a site used for many years by a firm called Robert Bowran Limited, which manufactures paints and varnishes.
  Planning permission was given and subsequently granted in August, 1966, by the Felling Urban District Council, acting on behalf of the planning authority, the Durham County Council. At that time the offensive nature of the operations proposed by the applicants was not apparent. When the factory became operational in September, 1966, immediate complaints were made by local people about emissions from the plant, and these complaints have persisted ever since.
  The factory is situated in the centre of a good-class residential area, and in some cases is a mere 20 or 30 yards away from the nearest houses. From time to time, the whole area is pervaded by acrid smoke and smells, and there is irrefutable evidence of interior and exterior paintwork suffering considerable deterioration and damage because of the heavily polluted atmosphere. Garments hanging out to dry after being washed are being spattered with a tar-like substance that has fallen from the surrounding atmosphere.

  839
  It is little wonder that my constituents are gravely concerned and worried at the possible damaging effects on their health.
  I said in my speech on 28th June, 1967, that these processes, being registrable under the Alkali Works, Etc., Regulations, 1906, should never have been carried out in close proximity to residential property. But once the factory was built and operational it was very difficult to deal with, and at this stage, Mr. Deputy Speaker, I would like to pay tribute to the officials of the Felling Urban District Council, especially the Public Health Inspector, and also to the Ministry's own Alkali Inspector, because they have been grappling constantly with a problem which is insoluble.
  The firm too has been trying very hard to remove the causes of the complaints. It has made extensive alterations to the plant itself, and has installed some fresh equipment, but without success.
  It is abundantly clear, I think, that no matter how much surveillance may be applied, and irrespective of any amount of new plant and equipment, the one and only solution is to transfer the factory to another site away from houses. Offensive smoke and fumes are inherent in this type of process. There is no escaping that fact.
  I am not at all sure that the arrangements for dealing with planning applications involving registrable processes are satisfactory. My hon. Friend the Joint Parliamentary Secretary, the hon. Member for Hayes and Harlington (Mr. Skeffington), told me in reply to a Parliamentary Question on 17th December, 1968:
  "Registrable processes are placed in a separate industrial group in the Use Classes Order, because of their special characteristics, to give local planning authorities effective control over their siting."—[OFFICIAL REPORT, 17th December, 1968; Vol. 775, c. 317–8.]
  If that is so, just how effective is that control? I find it very difficult to believe that if the planning application had shown clearly that the intended process might cause offence, as all registrable processes will, it would have been approved. I very much doubt that it made clear what the factory was to be used for.
  840
  Why not put the responsibility on the applicants to state specifically whether the premises are or are not to be used for registrable processes? I would like my hon. Friend to look at the regulations covering these circumstances, for it seems to me that there is a great need for a tightening up. I realise that that aspect of the matter does not affect the case I have in mind. But action of the kind I suggest could prevent a great deal of trouble and heart-ache for many people in the years to come.
  When my hon. Friend the Joint Parliamentary Secretary, the hon. Member for Widnes (Mr. MacColl), replied to the previous debate that I opened on this subject on 28th June, 1967, he said that it was for the local planning authority to take the initiative and make a discontinuance order under the town and country planning laws to stop the firm from carrying out the offensive operations. Although I acquainted the local planning authority with my hon. Friend's views, I regret to say that almost two years later the discontinuance order has not been made. In the meantime, my constituents continue to suffer.
  I readily appreciate the difficulties of the local planning authority. I am aware of the reasons why it does not press ahead vigorously with the order, although I do not agree with them. But I cannot and will not remain silent and let things drag on like this.
  All the representations I have made to my hon. Friend have been received with sympathy and understanding. I recognise that it has all along been his wish that the firm and the county council should enter into a voluntary agreement for the resiting of the factory at a more suitable location. But these discussions have been going on for a long time, and no agreement has been reached. The time has now come for my hon. Friend to lay down a fairly short time limit to enable the county council to make one final effort to reach agreement. If it is not reached at the end of the period, he must invoke his reserve powers and seek the revocation of the planning approval. There is no alternative way out. In the circumstances, I believe that the proposition I have made is both fair and reasonable and I look to my hon. Friend for action.
  12.20 a.m.
  The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): My hon. Friend the Member for Gateshead, East (Mr. Conlan) has pursued this matter on behalf of his constituents with very great and praiseworthy persistence. Although he has many other claims to fame in Gateshead and in this House, I tend to associate him with the undoubted hardship which a number of his constituents have suffered ever since this process in the factory was established in 1966. No one could have done more locally with the local authority or with my Department than he has to try to get a just solution.
  My hon. Friend made the point that had the planning authority fully understood when the application came before it what was involved in the process at this factory it would not have granted permission. I think that that undoubtedly is the case. It assumed from what was contained on the application form, which was for
  ". . application of protective covering to steel pipes and fittings 0…"
  that this was an extended use of a similar sort of procedure which had been carried on in the old paint factory and therefore came within Class VIII of the Use Classes Order. I have told my hon. Friend previously that where there is a process which creates a nuisance by virtue of the escape of noxious or offensive gases the application falls to be dealt with under Class V, and I am certain, therefore, that, had the local planning authority known what was really to take place and what the process really was to be, it would not have given permission.
  That is the unhappy position we have arrived at. Planning permission was given, the process started and the kind of conditions began to occur which my hon. Friend has described so graphically—droplets of bituminous deposits, smell, and sometimes noise as well, as he mentioned on a previous occasion. In these circumstances, what was the best remedy that could be afforded?
  As a result of public protests and representations by my hon. Friend, the local planning authority decided to take formal proceedings against the company
  842
  in the form of an enforcement notice served in October 1967 on the ground that what the company was doing was outside the terms of its planning permission. Subsequently this enforcement action was dropped, and I assume that it was dropped on the legal advice that planning permission had been given with-in the terms of the application. Although the application was not precise, it contained the words about a process
  "… of protective covering for steel pipes and fittings …"
  It is uncertain whether the enforcement notice would have been successful.
  But even if it were necessary to go ahead now with a discontinuance order, either made by the local authority or by the Minister, it would still be a lengthy process. I have the calculations before me of the time which might well elapse. Even if action were, say, taken next week and the order were unopposed, it might well take six to nine months. If the order were opposed, the quickest period would be 11 months and it might take as long as 14 months.
  If there is an alternative solution, it is preferable to try it, (a) because it is doubtful whether the firm would be held to have breached the conditions, and (b), even if one did persist in that way, there is the difficulty of a further fairly lengthy period during which my hon. Friend's constituents would have to put up with, perhaps not all the inconvenience they have had, because as a result of what the firm has done and because of what the Alkali Inspectorate has done the nuisance has been reduced.
  Nevertheless there is no doubt that this process is too close to normal homes. There is one other way in which the matter might have been dealt with, and that is by a discontinuance order under Section 28 of the 1962 Act. If such an order is served and is held that a valid planning permission has been given, then the authority would be faced with quite heavy compensation. That means that the ratepayers of my hon. Friend's constituency and other ratepayers in the county might be involved in the payment of a sum of probably not less than £100,000—it might be more. Again the process before there could be completion of this procedure might be a long one.

  843
  This is a matter which had to be taken account of by the authorities, and even my right hon. Friend if he made the order, which he can do, although he very rarely uses the power—it is much better used by the local authorities—compensation would still have to be paid by the local people. Consequently this is a factor which cannot be lightly turned aside, although it must not dominate the issue.
  I am glad that my hon. Friend paid tribute to those who have been seeking a solution, the officers of the Felling local authority and the county and also the Alkali Inspectorate. Once the Inspectorate knew what was happening—it was not registered until 1967 but operations started in 1966—it has been most thorough in keeping a constant watch and obtaining as far as possible some mitigation of the nuisance by the installation of specialised machinery. Looking at the records, I find that in 1966, after establishment but before registration, it paid six visits, no less than 30 in 1967, 90 in 1968, and this year up to the beginning of May it made 22 visits. It has done all it can within its powers to affect what improvement is possible. It is in no doubt that this type of work ought not to be allowed so close to a residential area.
  Mr. Jasper More: Does this not suggest that the law is in a very unsatisfactory state? I have a case in my constituency—
  Mr. Deputy Speaker (Mr. Harry Gourlay): Order. I hope that the hon. Gentleman is not suggesting any amendment of the law, which is not in order on an Adjournment debate.
  Mr. More: I only wanted to mention that I had a similar case in my constituency, of which either the Minister or his predecessor is aware. It seems very unsatisfactory that the planning committee should have given permission which produces the results that have put this burden on the Alkali Inspectorate.
  Mr. Skeffington: I agree with the hon. Gentleman. Certainly in the past these matters have been even more unsatisfactory. We have made a number of changes in the 1968 Act which will be helpful. There are two points which should help my hon. Friend.
  844
  My hon. Friend asked me whether the regulations were satisfactory in the sense that the planning authority obviously had not been aware of the full details of the procedure. The Durham County Council have instituted a new procedure designed to ensure that what happened here will not happen in future anywhere else in the county. This is encouraging, although it does not get my hon. Friend out of his difficulty or remove the grievance of his constituents.
  The question of a discontinuance order is difficult because of compensation, and an enforcement notice is also difficult. We have taken the view, although it has taken a long time to get to this point, that the easiest way would be for the local authority to come to an agreement, with financial assistance, to get a voluntary solution. I am sorry that this matter has dragged on, but I can now give my hon. Friend some encouraging news.
  The county council officers were instructed to pursue the possibility of a voluntary solution with a promise of some financial assistance towards the company's costs. They have recently agreed with the company on an alternative site free of these difficulties, and have established with the company the kind of financial help sought. These negotiations have now gone some way; we are not just hoping; something is happening.
  Subsequently sub-committees of the county council and the Felling Urban District Council have considered the case. Its conclusions and recommendations are now subject to ratification by the two councils, and I do not think that any difficulties will arise. A formal report will be made at the meeting of the county planning committee of the county council on 15th May, and I hope that there will be conclusive results. A recommendation will be made that this plan should come into effect and that the clerk should be authorised to open formal negotiations. The preliminary work has all been done. The recent petition of the Felling residents will also be reported at that meeting. As a result of the activities of my hon. Friend and of local residents we are now within sight of a solution. An acceptable site has been found, and if this solution comes about it will be in no small part due to

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  the activities of my hon. Friend inside and outside the House.
  I hope, as a result of this case and the case mentioned by the hon. Gentleman, that planning authorities under the procedures of the new Act will in future be given more information in the applications that they receive, so that adequate provision may be made or permission
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  refused if noxious processes are involved. This has been an unhappy case, and I hope that the news I have given will go a little way to lighten the feelings of my hon. Friend and of his constituents.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes to One o'clock.