§ 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 679 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 680 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 681 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 (Honiton)
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 682 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 (Aylesbury)
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 683 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 684 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 685 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.
686 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 687 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 (Leeds, North-East)
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 688 over the next four years. He must be aware of this contradiction.
§ 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 689 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—
§ 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
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 690 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. 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.
§ Mr. Deputy Speaker
Order. The hon. Gentleman must challenge the Minister's facts in debate if he catches my eye.
§ 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.
§ Sir John Eden (Bournemouth, West)
On another point of order. One of the documents now being considered in the debate is "Finance for Steel". Is it not 691 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 692 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. 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. 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. 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 (Leeds, North-East)
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 694 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 695 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.
§ 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 697 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 (Sheffield, Brightside)
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 698 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 (Ebbw Vale)
I do not doubt that the day of judgment is coming, but I hardly expected that Her 699 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 700 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 701 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 702 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.—
§ 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 704 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 (Sheffield, Brightside)
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 705 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 (Cambridge)
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 706 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.
708 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 709 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 710 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 (Aylesbury)
It is now over 40 years since I was first 711 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 (Cleveland)
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 712 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 713 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.
714 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. George Lawson (Motherwell)
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.
§ 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 716 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 (Rutherglen)
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 717 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, 718 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 (Sheffield, Hallam)
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. 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 726 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.
§ 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 (Penistone)
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. 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 (Honiton)
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 (Motherwell)
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. 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.
§ 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 (Cirencester and Tewkesbury)
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 (Cleveland)
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 (New Forest)
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 (Sheffield, Heeley)
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 763 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 (Cambridge)
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 industriesI 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 toextensive 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 767 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 (Ebbw Vale)
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 770 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 771 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 772 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.
774 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 (Bournemouth, West)
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 775 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.
776 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 777 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'slong 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 toconcentrate 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 thatthis 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 783 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, 784Investment 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.
§ 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 figureappreciably greater than the £200 million referred to785 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.
§ 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.
§ 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.
§ 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—
§ 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?
§ 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
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.
§ 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 228.797
|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.|
|Alison, Michael (Barkston Ash)||Amery, Rt. Hn. Julian||Atkins, Humphrey (M't'n & M'd'n)|
|Allason, James (Hemel Hempstead)||Astor, John||Awdry, Daniel|
|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).|