§ VISCOUNT MIDLETON rose to call attention to the position created by the proposed reduction of ten shillings per ton of coal. The noble Viscount said: My Lords, I feel that I ought, perhaps, to apologise for asking your Lordships again to enter into a question which was discussed so recently as Thursday last, but I believe that I shall be stating the views of every member of the House who is not sitting on the Government Bench, and possibly the views of some who are, if I say that after the short discussion in this House last Thursday, and the much fuller discussion in another place on Friday, there is not one member of your Lordships' House who has the faintest idea how the Government are going to carry out their policy. This induces us in no unfriendly spirit, and while fully entering into the difficulties with which the Government are confronted, to invite the Government to explain some of the cardinal points upon which we are at present in doubt.
§ All we know at present is that the Government have decided something and settled nothing. They leave the whole industry in a condition of unsettlement and unrest, which I think has had no parallel since the coal-mining industry began its operations; and without dwelling too much upon past troubles I suggest to the Government that the history of the present year is one which, considering the magnitude and importance of the subject, is hardly to be looked back upon by any Government with satisfaction.
§ What happened at the beginning of the year? You had a strong feeling expressed 521 by the miners that in relation to the profits of the industry they were not getting enough, and the coal owners were getting too much. Then the Government under duress appointed with the utmost haste a Commission, which was to decide the question and was encouraged to deliver a verdict upon a most intricate subject within three to four weeks of the time at which it first began its sittings. I do not think any Commission ever presented a more deplorable aspect than did the Sankey Commission while it was sitting, and no Commission has ever been more deplorably shown up, to use a popular phrase, by the events since it ceased to sit. A Commission has always hitherto been supposed to be a sort of arbitration tribunal, on which men did not express their own views. This Commission electrified the world by a series of exciting speeches, and appeals made by members of the Commission to witnesses and at the expense of the witnesses who came before the Commission.
§ There was no pretence of a judicial spirit shown, and when we came to the findings the main findings were that a certain rate of wages was to be given as from January 1 last. That rate of wages was given at once, and immediately a dispute arose over piece-work prices—a question which any ordinary Commission, given ordinary time, and had the learned Judge not been forced to deliver his opinion almost before hearing the evidence, would have considered. Then there was a coal strike in Yorkshire. The Commission also laid down that in the middle of July there should commence a seven-hours working day. At the same time as this came into operation the Government found themselves forced to increase the price of coal by 6s. in order to breach the great financial gap caused by the seven-hours day. I am not going to trouble your Lordships with any sort of disquisition on the figures given us by the President of the Board of Trade. He exhaustively considered in his speech last Friday the questions of tonnage, of finance, of hours, of holidays, and all the vexed questions which have caused so much miscalculation or difference of calculations by different individuals. I take all those as he delivered them.
§ What we really want to know is, first, the justification for the reduction by 10s. in October of the price which had been raised 6s. in July, and we want to know 522 whether it is possible to carry on this industry if the last suggestion of the Commission—namely, that owners' profits should be limited to 1s. 2d. per ton—is going to be carried out. With regard to those two points I appeal to the Government to consider that they are not dealing with this industry simply for the expediency of the moment or for the purpose of making their Budget balance before the close of the financial year. If they are going to deal with the 10s. and the 1s. 2d. in that spirit, the result can only be that they are going seriously to hamper what is, I suppose, the key-industry of the United Kingdom at this moment. The export trade in coal in the past has amounted to 77,000,000 tons a year, and it is by far the largest in bulk of any export trade in any part of the world. Financially it is, I believe, by far the largest asset that we have in our export trade. Looked at from the point of view of shipping it is by far the most important, because on the coal sent out depends the return of the commodities that we most require. How can the Government expect to deal with an industry of this kind by these haphazard decisions, none of which endure and the whole object of which when discussed is to establish a Budget arrangement to last for the financial year.
§ I ask the Government whether they have considered the result. Take the 1s. 2d. I am not speaking on behalf of the coal owners, or in any way against the arguments of the coal miners. I am speaking from the general desire which we all have that our reconstruction should begin upon a permanent basis. What were the profits of the coal industry before the war? They were about £25,000,000 a year. I do not know whether that was too much or too little, but the fact remains that about £10,000,000, had to be spent either on development or on the repayment of capital or reserves, which had to be and came within the expenditure of the year. That leaves, therefore, £15,000,000. The Government now say that the sum which can be levied is to be 1s. 2d. on an estimated output of 225,000,000 tons—that is to say, £13,125,000. Upon that one of two things must happen. Either the colliery owners who have got hitherto £15,000,000 profit must be cut down to short of £10,000,000—that is one alternative—or the colliery owners who previously spent a large portion of £10,000,000 on develop- 523 ment must cease to spend that sum on development.
§ I ask your Lordships to look at it in another way. It has been laid down by the Excess Profits Act that the ordinary trader has a right to his pre-war profits plus 60 per cent. of any profits that he makes in excess, annually. You now lay it down in the case of the coal owners that they are entitled to their pre-war profits plus 5 per cent. of any excess. Surely, my Lords, the difference between 60 per cent and 5 per cent. is in itself anomalous. But by far the most important consideration on public grounds is not merely whether you are treating the coal owners with fairness, but whether you are meting out to them such injustice as must paralyse the trade. The whole of our future in coal depends on development. The whole of the policy of shortening hours depends upon development. If you want to bring our coal production up to anything like the standard which obtains in the United States there is no question but that you must be prepared to undergo considerable expenditure in the sinking of new shafts in order to shorten the distance that men have to go below ground, and so reduce the hours that they lose in getting to the coal face to work. You must also spend largely on machinery, without which you cannot possibly lessen the cost of labour.
§ And at the very moment when you ought to be doing that, at the very moment when five years of arrears ought to be made up, you say to the coal owners, "We intend to cut down your profits by 79 per cent., or if you want any more you must take it by stopping development." What inducement do you give them for development? If a man is not going to get more by development than he gets at present, of course he will not spend money on development. if a Company have to spend £250,000 on a fresh shaft which may be required in order to develop a mine and increase production they will not undertake that expenditure if they are not going to get any more profit as a result of the increased production. It is obvious that under this policy the tendency of even the greatest companies will be to go on with the least possible expenditure and to let matters take their course, leaving it to the Government when some fresh problem presents itself to initiate further action.
§ Those who know best inform us that within five years the problem will present 524 itself in so acute a form that not merely will the output on which we depend entirely for the future success of this trade be greatly decreased, but there will be arrears of work on which you will have to expend capital to an inordinate amount in order to get back to the figures of the old output. The Government have treated this industry as a national asset, and they cannot afford to neglect it. I should like to ask them one other question. How do they propose to carry out this scheme by which all the collieries happening to produce house coal or gas coal or coal for other domestic purposes are to sell at a price 10s. a ton less than that charged for coal produced by other collieries which have the good fortune not to produce this particular kind of coal? Are the latter to compensate the former for their loss?
§ What is the position at this moment? Within a few days you will have a large number of collieries in Yorkshire working at a gigantic loss. Some of them will be paying out in wages every week £10,000 more than they receive, because they have to sell at 10s. a ton less, and they have only been making a profit of about 2s. a ton. How is this going to be managed? Are the Government going to act as bankers to the whole colliery industry of the country? Are they going to advance to those who are losing, and afterwards recover, if they can, from those who have made the profits? Surely we have a right to an answer to those questions, and those who are engaged in the industry have a still greater right to know under what conditions they are to carry on under this extraordinary process of selling for 40s. what it costs them nearly 50s. to produce. Is the colliery owner in Yorkshire to borrow? Is he bound to produce if he does not want to do so? And if he fails to make a profit under the Government scheme, is he bound to go on throwing away his coal in that manner in order that the Government may sell it at a price we all desire to see given for it if it can properly be given?
§ It seems to me that each step the Government take in these interferences lands us deeper and deeper in the mire. We have seen it in other industries, but they were not all key industries. I have ventured to say at this Table before, and I have never been contradicted, that there is not a single industry which the Government have taken over—an industry where 525 a profit was being made by the private owner—in which the Government have not only lost all the interest on the capital but have actually incurred an annual loss in addition. That applies for instance to the telegraphs and to the telephones, and, as I see from the papers this morning, also to the case of the Department of the Public Trustee. In regard to the coal industry I am sure we shall all agree with the objects that the Government have in view—first, to square their own balance sheet; and, secondly, to bring down prices so that the rate of wages may not continue to rise. But they must do that under some scheme which will not ruin the industry. What they are doing is to bring the whole industry into confusion.
§ The other day my noble friend Lord Askwith made a remark which I believe will be echoed by every member of this House. He said that in all these disputes differences nothing was more fatal than that any body of men who felt themselves aggrieved should go running to Downing-street and demand some concession which, before the other side have even been heard, is very often granted to them, and then, that having been done, Parliament is asked to ratify what the authorities in Downing-street have found it necessary to concede. That method of procedure is absolutely fatal to any permanent or settled policy regarding the industries of the country.
§ At present, if the intentions of the Government are what we believe them to be, however desirable their object, the manner in which they propose to carry them out will have all the evil consequences that we most desire to avoid. They will not increase output—they give no inducement to the increase of output; they will not increase development—on the contrary, they give every impetus to the reduction of development; they will not stabilise the trade on a permanent basis—on the contrary, the whole of the policy so far does not carry us more than a few weeks or a few months ahead.
§ Without knowing the Government's case more thoroughly I should not wish to make the slightest imputation on the fairness of the settlement arrived at, but seeing that the settlement is denounced by all parties who have been concerned, that it is not accepted with any special delight by the miners, and that it is regarded by the 526 coal owners as being most oppressive and injurious to their industry and most unlikely to produce permanently satisfactory results, we have a right to ask the Government to give us a more detailed explanation than we have yet had of the reasons which have caused them suddenly to adopt this policy and the manner in which they propose to carry it out.
§ LORD GAINFORD
My Lords, I do not want to repeat what I said the other day in speaking on this subject, but there are one or two aspects of it which I did not allude to on Thursday night upon which I should like to dwell this afternoon. The only gratification that I have in connection with the interference which has been so much condemned by the noble Viscount who has just sat down is that even the miners themselves, I believe, are beginning to realise that Government control with trade is calculated to interfere with that freedom which they have always enjoyed, and I think they will have their eyes opened, by the continuation of this control system, to the fact that nationalisation cannot be expected to be an unmitigated blessing if they get their own way in regard to the conduct of trade.
There are serious objections to the system of control which is now in operation. There is no doubt very good reason for the Government. to do its utmost to reduce the cost of living, but it seems to me very dangerous to embark upon the principle that because the price of coal is unduly high for the householder the coal producer should be called upon, at no matter what sacrifice, to make good the reduction which the State desires to see in the price of household coal. With equal justice you could call upon the tanner and the bootmaker to make a reduction in the cost of boots for the benefit of the public. Similarly the worsted spinner and the tailor could be called upon to make good the reduction which is required in the price of clothes, and so on with the farmer and the butcher in regard to meat, and the miller and the baker in regard to the price of bread.
As I understand, the proposal of the 10s. reduction in the price of coal is coupled in the mind of the Government with their intention to introduce a Bill to limit the profits of the coal industry, at any rate for a year, to an average of 1s. 2d. a ton. These two questions must be considered 527 together. I wish on behalf of the coal owners to point out how unfair is a limitation of profits if it is applied to them and to nobody else. On principle I object to the limitation of profits, unless it is a case of some very unreasonable profiteering, which we all condemn. But if trade is to run its course in the ordinary way that it did in times gone by it should be free from unnecessary interference. A proposal of this kind will place the coal owner in a very different position from what he was in before the war—and when I speak of coal owners I am referring to the 300,000 or 400,000 shareholders who own shares in colliery companies in this country. Before the war £100 of profit was subject to a reduction of 1s. 2d. in the £ for Income Tax; that would, of course, leave £94 3s. 4d. Now, if the Government is going to have its way, that £100 profit is first reduced by ls. 2d. on a reduced output which is equivalent to only 60 per cent.—in other words, it is £60 instead of £100. Then it is going to be further reduced because the hours have been shortened since that estimate was framed, and the general belief is that the output will be reduced front 9 to 12 per cent. That will reduce it to about. £52 10s. Then there is 6s. Income Tax as compared with 1s. 2d. before the war. That will further reduce the £100 to £36 5s., and as it is admitted that money only goes half as far as it did before the war, that will reduce the profit to £18 2s. 6d. as contrasted with £94 3s. 4d. before the war.
Therefore the coal trade view with great indignation and consternation any proposal of this kind which will limit their profits. They object on principle to any limitation on their industry which is not applied to all other industries. Trade is not like a weed which easily grows. Trade is a sensitive plant which requires a good deal of cultivation in order that it may grow and prosper. It is necessary that confidence should be given to trade, and nothing is doing more to hinder the development required in the coal industry than this interference. May I submit one illustration that was given me by a coal merchant this morning as I was leaving Darlington station? He said, "The Government really do not understand what they are doing when they reduce household coal by 10s. They do not realise how it works. Take, for instance, the price I am getting for my bunker coals which have been going down the coast. 528 There was under the Regulations a minimum price of 37s. a ton, but we have got up to 70s. a ton. But the Government on December 1 issue an order that the maximum price of coal in this class of market has to be reduced to 31s. a ton; in other words, from 70s. to 31s. is the change of price from one day to another." If you are going to have changes of that kind they are, of course, very upsetting to trade arrangements; and so far as I know, whilst there may have been a reason for limiting the bunkers supplied to the coasting vessels belonging to the nation, the reduction from one day to another from 70s. to 31s. seems to be altogether uncalled-for.
Let me give your Lordships an illustration of how the price connected with the household trade works. The price on December 30 for household coal delivered in Darlington was 35s. 1d. That is being reduced to 26s 6d. for 21 cwt. or 24s. 3½d. for a ton of 20 cwt. Manufacturing coal is still permitted to remain at the price at which it was being sold in November—namely, 27s. 1d. I put it to any sensible man, Is it reasonable that a colliery owner should be called upon to sell his best screened coal at 24s. 3½d. and to be called upon to sell his small coal for manufacturing purposes—which is, of course, inferior coal—at 27s. ld.? What will be the result? The result must be, human nature being what it is, that individuals will try and send their inferior coal into the household trade and their better coal (for which they get a higher price) into the manufacturing trade. But that is not the object which the Government had in mind. They naturally desired that the household coal should retain its existing quality. If that quality is to be maintained it means that a lot of new officials must be appointed in order to see not merely that the best coal is directed into the household markets but that the quality of the coal is up to the old standard. That means additional waste and cost to the nation.
I will give your Lordships an illustration of the operations in connection with the 10s. reduction. In the Darlington market, as I have said, the effect would be to reduce the price of household coal to 24s. 3½d. Now, a very good business has been established in recent months in connection with briquette making which requires a somewhat expensive plant, and the process is a 529 difficult one to perfect. After this trade has been established by making use of small coal, the manufacturers now find that, instead of briquettes being able to be sold at 6s. 6d. (cheaper than household coal), they will have to be several shillings dearer than household coal. The result will be that the whole of the briquette-making industry will be stopped from this time forward. I do not believe that the Government realise the way in which they are interfering with trade by the orders they are giving out.
The one thing I want to say to your Lordships more than another is that from every part of the country I am receiving outcries against the imposition of calling upon collieries to work at a loss. In the whole of the federated area in the Midlands, where the collieries have no export trade, the coalowners have been either losing money or carrying on with only a very small margin. They intend to ask the Government to make good the 10s. reduction, which will mean that the over-burdened taxpayer will be called upon to make good this amount; ultimately the loss will not come out of the trade at all. You cannot indefinitely call upon any firm to carry on their industry at a dead loss, but that is the operation which the Government are forcing upon the coal owners in many parts of the country. In South Wales, in Northumberland, and in parts of Scotland, where they have a certain amount of export trade, the collieries can no doubt carry on with the help of the higher prices they get for the coal they export, but in all the household collieries, which are working at a loss or with a very small margin of profit, they are to be called upon to finance their concerns at 10s. a ton less, which will compel them to look to the Government to make good their losses. It ought to be realised, I think, that not only will a great deal of money have to come from the overburdened taxpayer but that, so long as you have this control system, an unnecessary Government Department will be in existence all over the country with its offices and staffs endeavouring to direct individuals how to conduct their trade, which trade the staffs do not thoroughly understand but which the traders do understand.
§ THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (LORD LEE OF FAREHAM)
My Lords, I hope your Lordships will recognise that I am in a position of some disadvantage in dealing 530 with this question, in that it is not very closely connected with the duties which I am normally called upon to perform; but I think I share in this respect a disadvantage which is common to all your Lordships in that the Government is, represented by (if I may so call it) only a nucleus crew in your Lordships' House, and that in nearly all these debates it becomes incumbent upon some member of the Government who is not connected with the particular Department to do his best to deal with the questions which are raised. I trust your Lordships will recognise that I am extremely anxious to deal as candidly and as fully as I can with the points which have been raised by my noble friend Lord Midleton, who is not at thee moment in his place.
§ LORD LEE OF FAREHAM
I will deal with those points as briefly as I can. The noble Viscount commenced his observations by saying that the Government had decided something but had settled nothing, and he rather gave the impression that they were living from hand to mouth in this matter and making only short decisions, which covered a period possibly of a few weeks or months, and that they took no long view of the future of this great industry. It is very difficult to take a very long view of anything in these days. We are living in a world which is completely dislocated. Problems of unparalleled magnitude and unfamiliarity crop up from day to day, and means to meet them have to be improvised, very often on the spur of the moment. I do not think it is possible to sit down in these days, as one did in times of peace, and look calmly ahead and plan one's policy for a period, perhaps, of a decade or even longer.
My noble friend Viscount Midleton made some very caustic comments upon the procedure and findings of the Sankey Commission. I certainly hold no brief for that particular Commission, either for its procedure or its findings. In fact, I am not sure, had I been called upon, speaking from that Bench, to dilate upon the proceedings of the Sankey Commission, that I should not have endeavoured to be even more caustic than my noble friend. But when criticising the action of the Government in accepting certain of the findings in the Interim Report of the Sankey Commission, 531 one must for a moment remember, and bring into account, what was the general situation at the time that Commission was set up. I spoke just now about a dislocation of the whole national structure. If we look back to the early days of last spring and realise what were the internal dangers then overhanging us—certainly not less than the external dangers through which we had just successfully come—I do not think the Government can be condemned for accepting certain of the findings simply because, if the conditions had been different and there had been ample time for calm reflection, they would not have been willing to accept one or two of those proposals. At any rate, they were accepted. The Government undertook to put into effect, both in the letter and in the spirit, certain of the findings. It is quite obvious that that undertaking on the part of the Government must be honoured.
I believe that the setting up of the Commission and the decision of the Government averted a great national disaster at the time, and it may be that if the findings and the decision of the Government to accept them were not altogether the best that could have been arrived at, at any rate that was the price which we had to pay then—the price of averting what might have been a complete national catastrophe. That is all I have to say about the Sankey Commission and the findings.
My noble friend Viscount Midleton then addressed certain questions to the Government. He wanted to know, first of all, what was the justification of the 10s. reduction now, following so soon upon the 6s. increase in July last. I thought that question, which admittedly presented great difficulties before it was thrashed out in debate in another place, had been made abundantly clear. I do not know whether your Lordships wish me to go again over the whole ground that was covered in the recent statement of the President of the Board of Trade, but he admitted quite freely that the estimates upon which the Government proceeded in assuming that that 6s. increase was absolutely necessary were only estimates. It was impossible to foresee certain things in the then future—notably, the great American strike—and it was not possible to foresee that the deficit in the working of the mines would be cleared off so quickly.
The Government found themselves in this situation only a few weeks ago, that the 532 deficit in the working of the mines, as a result of the 6s. increase—mainly as a result of that—and owing to the immense profits that were being made out of the export coal trade, had been practically wiped out, and that by the end of the financial year there would be apparently a profit in the neighbourhood of £17,000,000. The question naturally arose, What were the Government to do in the face of that state of affairs? They treated, and I think rightly treated, this prospective profit in the financial year of £17,000,000 as a national asset which could properly be applied to national purposes. They further decided that of all national purposes at the present time none was more important than a reduction in the cost of living. It is true that if this asset had been distributed over the whole of the coal business, the reduction could not have been anything like 6s. a ton. It would have worked out somewhere in the region of 3s.
It was also felt by the Government that, speaking generally, the industries of this country with few exceptions were doing extremely well at the present moment; and, at any rate, that they were not dependent for the progress they were making upon getting their coal at a lower figure. Consequently they decided that it was not desirable to apply this prospective surplus to a reduction of the cost of coal at a flat rate over the whole output, but to make a real and very substantial reduction on one item, that of coal for domestic consumption—not on that one item alone, because there was the coastwise bunker coal to which Lord Gainford referred also—but that was to be the main object to which this asset was to be applied. It is, of course, permissible to hold strong differences of opinion as to whether that was the best means of disposing of the money available; but, at least, I think there can be no confusion in the minds of any of your Lordships as to what was the Government's policy in the matter. And by that policy they are prepared to stand. I wish to point out that this action was quite compatible with the statement made by the President of the Board of Trade shortly before, that funds were not available for making a reduction of anything like 6s. a ton over the whole industry. I hope I have made that point clear, if it was not clear before.
533 The second question that Viscount Midleton asked was, How can the industry be carried on if the profits of the coal owners are limited to 1s. 2d. per ton? He then proceeded to state what, in his opinion, were the pre-war profits, and he quoted the figure of £25,000,000, which he said was not challenged. That figure is distinctly challenged. I think I am right in saying that the Inland Revenue authorities, in giving evidence before the Sankey Commission, showed that these profits were not more than £22,000,000, and—
§ LORD GAINFORD
I do not know whether the noble Lord will allow me to intervene at this moment. I think I ought to say that the authorities for quoting the figure of £25,000,000, to which exception has been taken in some quarters, were the President of the Board of Trade and the Coal Controller on April 10 and April 11 last. They have regarded this figure as being the pre-war profits of the coal trade at conferences which were held with them. The coal trade have no accurate figures themselves, and we have always relied on the figure quoted then by the President of the Board of Trade.
§ LORD LEE OF FAREHAM
That was before the evidence was given by the Inland Revenue before the Sankey Commission. I do not think the figure of £25,000,000 can be accepted in support of his argument. The noble Lord went on to say that, under the proposals of the Government the profits of coal owners were going to be reduced by 79 per cent. That is a figure which I am quite unable to identify. If he takes some particular year, perhaps the year immediately before the war, some such figure might arise, although even then I think he is probably exaggerating. In dealing with a matter of this kind it is obviously impossible to deal with any one particular year. I understand that if the average profit for the five years preceding the war is taken as the standard it will be found that the average profit for those five years did not exceed 1s. Therefore 1s. 2d., which was the recommendation in the Interim Report of the Sankey Commission, and accepted by the Government as the basis for the legislation they are about to introduce, really represents an increased profit over the average before the war.
§ VISCOUNT MIDLETON
Will the noble Lord make it clear to the House whether 534 those who have made less than 1s. 2d. in the past are to be allowed to keep what they have made, if it is under ls. 2d.; or are they going to be reduced because others having made more are going to be reduced to 1s. 2d.?
§ LORD LEE OF FAREHAM
When I come to the details of the scheme I may be able to deal with that point. The Government agreed to this figure of 1s. 2d. in the belief that it did represent an increase over the average profits. It has not escaped the notice of the noble Lord, no doubt, that 1s. 2d. applies only to coal actually raised. There ate a number of charges outside that figure which are otherwise provided for. The noble Lord also made the point that 1s. 2d. was not enough; it was insufficient to provide for reserves to be set aside for future development, and so forth. I do not wish to anticipate the details of the Bill, which will be introduced I believe in the course of the coming week, but I think it will be found, if the noble Lord will kindly wait until then, that the scheme will provide for sums equivalent to interest on fresh capital brought into the industry to be treated as constructive expenses in determining profits in accordance with the principle of the Finance Act and for further reduction to be made to meet the wastage of assets. The figure of 1s. 2d. is not inclusive for the profits of the coal-mining industry, but only as regards the profits arising from the raising of coal.
Lord Midleton then asked, How can the collieries be run at a loss?—as in many cases they would be, according to his statement, as a result of the 10s. reduction. He said, "How can they finance themselves from day to day unless the Government make some adequate arrangement for advancing them the necessary means?" That point has been clearly recognised by the Department. It is perfectly obvious that in many cases coal owners and individual mines will be very seriously embarrassed financially even to meet their wage bill week by week on account of this reduction. The Government recognises its responsibility in that matter, and the Coal Controller, I understand, is holding a conference to-morrow with the Coal Owners Association to work out the details of a scheme, which will be, roughly, on these lines: a very simple statement of claim will be made by the individual coal owner or mine affected, and an immediate advance pending a detailed examination of the 535 claim, will be made, by telegraph if necessary, in order to relieve that particular mine or coal owner from any serious financial embarrassment.
Speaking roughly, the case made by Lord Midleton, and further developed by Lord Gainford, was that the whole business of control is bad, and that this is only another example of the evils which result from an attempt on the part of the Government to control some great industry. We are all familiar, I think, with the evils which spring from control. We are not quite as familiar, I am thankful to say, with the evils which spring from lack of control under the abnormal circumstances of the time. It is a choice between two evils, and I venture to say that at the present time it is not possible to choose what I believe would be the greater evil of decontrol under existing circumstances.
Attention was called by Lord Gainford to certain obvious anomalies. He said, "How is it possible to carry on business in coastwise bunker coal with the price at 60s. to-day and from 30s. to 35s. to-morrow?" It is only possible to do so if the Government take the responsibility of treating the whole industry as a whole and average the losses in one district, against the gains in another. I can assure your Lordships that it is not from any desire to interfere and meddle in what is undoubtedly an extremely complicated trade that the Government have suddenly forced down the price of coastwise bunker coal; but the height to which that price had risen was causing so much embarrassment in other directions, in our internal affairs, leading to a complete congestion On our railways and to high rates on the railways—it is not merely a case of rates, but it is a question of the total inadequacy of traffic facilities—that it became imperative, somehow or another, that coastwise trade must be set going again. The only way in which it could be set going again was by reducing the cost of bunker coal, and it was felt that in disposing of this national asset which had accrued through the increase of prices and the enormous profits from our export trade generally, a substantial reduction should be made in the cost to our coastwise traffic.
Again, in the general policy of endeavouring to bring down the cost of living, I should be as glad as any of your Lordships if control in all departments, and in every shape and form, could be got rid of at 536 once. No one will view that day with greater satisfaction than I shall. But I venture to say that in the present state of complete dislocation of the whole national structure it is still necessary that it should be kept to a certain extent in splints, if it is to be kept intact at all. You could, of course, do away with all control of this great industry, but let us make no mistake about what the immediate result would be. I have consulted with coal owners who, taking only their selfish interests, would be greatly in favour of de-control on account of the profits which it would bring, but they tell me this—and I have little doubt that it is correct—that if you were to de-control to-day you must be prepared for something like double prices. Prices would start soaring at once, and I should like to ask Lord Gainford and Lord Midleton—I do not know whether the latter is a coal owner—whether they are prepared to face, in the present state of social unrest, a course of action which would result in an enormous increase, if not the doubling, of coal prices. Are they further prepared to face a situation—if you free the industry of all control, foreign exports being quite unrestrained—where, owing to the almost frantic demand for coal at any price all over the world, a very large proportion of our output would inevitably flow out of this country? With foreign bunker coal at 105s. to 107s., and a ready market even at that price, I wonder what proportion of our output would go abroad—unless home prices went up accordingly.
§ LORD GAINFORD
The noble Lord has asked me a question. Will he allow me to interrupt him? On Thursday, I indicated that it would be absolutely essential in the interest of the home producer for a time to arrange for a limit of the coal which went into the export trade, and also a limit of price to protect the home consumer; but I said that I believed that that could be better done by the trade itself, with representative committees appointed all over the country, which would have powers to protect the home consumer. I thought it could be done far better through the trade than by a Government Department.
§ LORD LEE OF FAREHAM
I understand that the noble Lord recognises that de-control would be impossible at the present time, but that he suggests that control, which must continue for some time, 537 had better be exercised by the coal trade itself, and that the Government should stand aside. The Government have a great responsibility in this matter, and in the present situation he gives no guarantee that the control would be effective or that it would be accepted, and I think the Government cannot delegate its responsibility in this matter under present conditions.
I have only this to say in addition. Lord Midleton was evidently under the impression, or felt, that the Government policy had not been clearly defined in regard to these matters. May I summarise in a few last points what the Government policy is? I have dealt with the 10s. reduction. I have also dealt with the reduction of coastwise bunkers from 60s. to 32s. 6d. according to the district, in order mainly to neutralise the subsidy which is now being paid to the coasting trade, and consequent difficulties. They further proposed a reduction on foreign bunkers in the cases of ships which are chartered or requisitioned by the British Government. I think I have already dealt with the limitation of export, and with the proposal that the coal owners' profits should be limited to 1s. 2d.—not, as is sometimes assumed in the Press, that no owner is to make more than 1s. 2d., but that taking the aggregate profits of the whole industry there is to be an average profit of 1s. 2d. upon every ton of coal raised. I would beg your Lordships to wait for details of that policy until the new Bill is introduced, as I think it will be next week.
Further, strict control of domestic consumption is to be maintained, and compensation will be given to merchants, wholesale or retail, who had bought stocks before the reduction and are now compelled to dispose of them at a lower price. There, again, we shall have to take into consideration the profit that those merchants made in July last, when the price was suddenly raised, upon coal which they had bought previously. So far as is possible, in dealing with the question of distribution, each district will be made self-supporting. Finally, in dealing with the question of coal for export, a preference will be maintained to our Allies over other countries, and particularly to Italy. That is our general policy. It is, of course, absolutely essential that in order to carry through that policy control must continue, and therefore while I am in agreement with your Lordships as 538 to the desirability of getting rid of control, it is utterly impossible that the Government should surrender its responsibility in this matter at the present time.
§ LORD BUCKMASTER
My Lords, if courtesy, ability, and an anxious desire to place before the House all the information that was possible, could render this control by the Government of our coal industry palatable, the noble Lord who has just sat down would have succeeded in his task; but I cannot help thinking that we suffer most unfairly in this House from the fact that it is almost impossible for us to have the policy of the Government defended here by any noble Lord who is in any way responsible for what takes place. The thing which astonishes me is not the difficulties which noble Lords find themselves in when they attempt to represent the interests of Departments with which they are in no wise concerned, but it is their good nature in undertaking on behalf of the Government any such duty at all. The noble Lord who has just sat down has certainly done the best that could be done with a situation of admitted difficulty. But see what it was that he said. He said, "You cannot expect the Government in a case of this kind to look ahead. Just see the situation in which we stand. All we can do is to wait until a situation emerges, and then deal with it."
§ LORD LEE OF FAREHAM
I am sure the noble Lord does not wish to misrepresent me. I said that in the situation in which we were last March and April it was really impossible for a Government to sit down calmly and consider only a policy which would be applicable for a decade, and which might have been quite unsuitable and inadequate for dealing with what was the threatening of great national disaster. After all, you cannot cure earthquakes with pills, or offer a bun to an infuriated tiger. It is rather a dangerous operation.
§ LORD BUCKMASTER
I am not going to waste your Lordships' time by bandying 539 words with the noble Lord. My recollection is that what he has referred to now was dealt with in another part of his speech, and had to do with another view of the situation with which I disagree just as profoundly as I do with the first view. But it is unnecessary to say whether that is the Government policy, because it is in fact what they do. It is exactly what does happen. There appears to be no power of looking ahead beyond a few days. From hour to hour the Government policy changes, and changes diametrically, first inclining in one direction and then in the other, and all the time it seems to me they are overlooking what is the essential thing that we desire to keep in mind. The thing that it is necessary to keep in mind is not how to maintain the profits of colliery owners or anything of the sort, but how to maintain the industrial supremacy of this country. That can only be done by enlisting and securing the good will of the men who are engaged in every department in the coal industry, both employers and men.
What is the effect of the Government policy on the men? It is this. The men are quite unable to understand how such swift and sudden changes can be reconciled with any fair and reasonable treatment of the situation, and believe that they have been made for the purpose of discrediting their claim to nationalisation, and to furnish a kind of object lesson to the world as to the uselessness and worthlessness of Government control. That is their idea. The result is that, so far from your having enlisted their good will, you have made them more angry and more suspicious than they were before. They believe that the 6s. a ton was put on in the first place for the purpose of exciting against them hostility on the part of the rest of the community. They did not believe it was necessary, and now, when they are told one week that it could be reduced by 2s. at the very most, and the next fortnight are told that it is going to be reduced by 10s., and when that statement is prefaced—
§ LORD BUCKMASTER
Certainly, and that is prefaced by the statement that in that particular branch of the industry the cost of production is greater than the sale price. You select for the purposes of the reduction that branch of the industry which 540 is already, according to the contention, being worked at a loss. It is not surprising that the miners—it is not surprising that everybody—find themselves quite unable to reconcile such treatment with a wise and considerate management of so vast a concern. It is not merely that the coal owners themselves are disturbed and distressed by this, but the effect is the same everywhere. When the noble Lord justifies what has been done by saying that the original estimates were wrong, I do not think that he quite appreciates the effect of such an admission. If the Government estimates are wrong, and the Government information is so faulty that the Government cannot see from fortnight to fortnight where it is going, how is it possible to have the least confidence in the way in which this industry is conducted under its management?
I quite agree with what the noble Lord said, that it is unwise in the last degree to expect that we can have all control taken off our industries without any warning. I have always thought with regard to food and coal, and it might be even in a lesser degree with regard to the railways, that the control should be continued for a time, but what many people protest against is its indefinite prolongation, and they see no reason for thinking that we shall be any nearer having this control removed in six months time than we are at the present moment. Whenever it is going to be done the prices are sure to swing backwards and forwards. The mere fact that you remove the control is certain to effect that. I think the noble Lord will agree that this has happened in every case where the control has been removed, but the prices have ultimately steadied. They have always begun by violent fluctuation, however, and we have to face that. But what most of us want to know is why it could not be faced sooner with regard to coal than the Government seem to think at the present moment is desirable. I must say that it inspires one with no confidence to hear the statement made by the noble Lord as to what are the circumstances. I have noticed this difficulty. The Government's decisions appear to have been marked by lack of foresight, by imperfect information, and I think also by an imperfect appreciation of the changes to which their policy will give rise.
§ LORD LEE OF FAREHAM
May I ask the noble and learned Lord whether he 541 thinks that the Government should have been able to anticipate the American strike and the railway strike, and that their estimates should have been based upon an exact knowledge of those events?
§ LORD BUCKMASTER
The noble Lord is asking me a question, and it is only courteous that I should answer it. I should say, to their credit, that they did anticipate the railway strike. As to the American coal strike, I did not gather from what the noble Lord said the extent to which that had influenced the position at home.
§ LORD STRACHIE had the following Questions on the Paper—
§ To ask His Majesty's Government—
§ 1.Whether it is a fact that many collieries are being called upon to finance for several months the difference between the cost of the war wage and the Sankey wage, and the 10s. per ton placed on the price of coal to meet the same.
§ 2.Whether the reduction of 10s. per ton now made in the price of domestic coal will not place collieries supplying such coal at a disadvantage; whereas the exporting colliery making large profits not only retains such profits until payable to the Inland Revenue at the end of the financial year, but will not suffer the 10s. a ton reduction, and will not therefore the result be that collieries already financing heavy losses will be called upon to finance an additional 10s. a ton.
§ 3. Whether colliery companies will have to use money due to their shareholders or to realise reserve funds, or to borrow money, if they can, from their banks to finance the 10s. dole granted to domestic consumers by the Coal Controller.
§ The noble Lord said: My Lords, may I intervene for a moment, because by doing so I may shorten the discussion. The noble Lord the President of the Board of Agriculture, has practically answered the Questions standing in my name on the Paper. Therefore it will hardly be necessary for me to put them. I understood the noble Lord to say that the collieries which are in need of money in order to carry on will 542 get an immediate advance in respect of the 10s. per ton reduction in coal. The collieries which I am principally representing in this House—the small collieries which can only carry on from hand to mouth—would, as a result of this reduction of 10s. per ton, be in a position in which they could hardly pay wages. Perhaps the noble Lord knows that already one coal owner in Somerset has had notices posted up in his collieries saying that next Saturday they will be closed—by this 1,700 men will be affected—if the Government do not undertake to make an advance to compensate for the 10s. reduction. Can the noble Lord give me an assurance that it is the intention of the Government to make this advance and not to wait for an audit of the accounts? I understood the noble Lord to say that it was the intention of the Government to telegraph down—
§ LORD STRACHIE
And that it would not be necessary to render a strict account immediately. If that is so, the difficulties would be met. There is another point that the noble Lord did not make clear. He knows that the general public is under the impression that the colliery owners are to get the 1s. 2d. a ton profit which is talked about on every ton of coal raised. That, of course, is not the case. In some collieries they will be allowed to make only a profit of a little more than 3d. a ton under the Government scheme. I think that ought to be known to the general public outside. The public should understand that there will be very unfair treatment of the poorer collieries, while the richer collieries will, perhaps, get the 1s. 2d. a ton profit. The small collieries will get only 3d. a ton instead of getting the profit of 6d. or 9d. a ton which they do now. Perhaps the noble Lord will throw a little light upon that matter.
My Lords, there were one or two things which gave us a gleam of hope and satisfaction in the speech of the noble Lord who spoke for the Government. The first was his appeal to us to see the text of the Bill which is to be introduced before we criticise its details. I feel that in a matter of this sort the exact details are essential to come to a proper conclusion. I cannot say that I feel very sanguine that when I see the details I 543 shall be much happier than I am now after the general discussion. But the noble Lord who spoke for the Government referred to the Sankey Commission. I think it ought to be remembered that the Sankey Commission was appointed to inquire into two things, wages and hours, and the coal owners were not given notice of anything else, and were not prepared with evidence on anything else. In fact, anything based on the Sankey Commission Report which deals with the regulation of profits seems to me to be dealing with a matter which was entirely ultra vires, and the Government have no right to fall back upon that Commission for it.
I sympathise with the noble Lord to some extent because he said that in this House the Government had to set out with nucleus crews. I think he might have said nucleus crews of landsmen who know nothing whatever of navigation. There are noble Lords on that Bench, however—for example, the noble Earl (Lord Crawford) who often leads the House who, I think, has a very considerable knowledge of collieries, and if he had a free hand to speak about his knowledge of collieries instead of Government policy he might very much enlighten the House. I understand also that it is contemplated that this further interference with trade and the regulation of profits is to be for a year only. Yes, but what security have we when we find the Government from day to day interfering in a new and unexpected way in the conduct of business that, when the year is up, there may not be some other incident—perhaps an Australian strike instead of an American strike—that the circumstances will not again be changing, and we must continue in this protracted uncertainty? Does anybody suppose that any body of capitalists will put money into an extension of the industry of coal mines in the extreme uncertainty of the future and the extreme peril of the present?
The whole talk of a profit of 1s. 2d. seems to me to be entirely fallacious and erroneous. Whether it is 1s. or 1s. 2d. it is not material what the profit is that you make upon a ton. The question is what is the profit you make upon your capital expenditure and your working expenses. The cost of producing a ton is probably twice as high as it was before the war, and if 1s. or 1s. 2d. was a fair remuneration on capital when the trade was left free, then on the present relation of cost to profit 544 clearly in order to give the same sort of return for capital you ought to have a profit of 2s. 4d. or even more a ton now. Therefore the talk of a fixed profit per ton is entirely fallacious.
I am told that a colliery nowadays, to be worth taking up, ought to be on a very large scale, producing perhaps 1,000,000 tons a year. The small collieries are obsolete, and in the natural course of things would disappear; but to develop a fine new colliery, say in Durham, you have many subsidiary things to develop. You would require a capital at least two and a-half times as large as you did before the war to produce the same return. Does anybody suppose that you will induce people to invest capital to an amount two and a-half times as much as before the war at a rate of profit which will be materially lower than the profit before the war? All these things make us tremble for the state of trade in this country when it is in the hands of a Government—as the noble Lord said just now—who are ignorant and in a hurry. A combination of ignorance and hurry seems to me to be the most disastrous combination for the effective conduct of industry, whether by a Government or by a firm.
I understand from the noble Lord that this 1s. 2d. is to be taken as the total amount of profit that the Government will allow to be divided among all the collieries of the country, but well-managed collieries or prosperous collieries will get more and other collieries will get less. But if, in an emergency, you are obliged to pool the trade for the sake of the welfare of the country, surely that pooling ought not to be at the expense of the well-managed and efficient collieries and for the benefit of the less well-managed and the inefficient. Suppose that in Lancashire you had to step in in an emergency and take control of the cotton mills. Would you say that in order to keep up the mills with obsolete machinery you would penalise the new mills with the best spindles and the best machinery? It is quite clear that, if trade is to succeed, you must allow the people who are competent and who put their brains and intelligence into the work and have provided themselves with up-to-date plant, to make more profit. You would not allow a man who had an ironworks which ought to be scrapped to make a certain profit at the expense of an intelligent man who had put up first-rate plant.
545 All this seems to me to be absolutely disastrous. In order to stave off a temporary difficulty, perhaps to pacify the organised trade unions of the country, you embark upon a policy which you cannot justify economically or rationally, which you say is to stave off something very disagreeable to you as a Government. When this Bill is produced nobody will allow us to criticise it, because it will be introduced in the House of Commons, and when it comes to us we shall be told that we are an ineffective and powerless body, and that the Bill has gone through the House of Commons, and we must take it. I feel very strongly that in the disastrous meddling with trade upon which the Government are embarked, and in the hopeless confession of ignorance and impatience which the Government have made, we have no security for the proper management of the trade of the country.
§ LORD EMMOTT
My Lords, I desire to ask one or two questions. Perhaps, however, I may be allowed in the first place to say that I heard with perfect amazement the description of how, now that this difficulty has been created by dropping the price of household coal 10s., it has been necessary, days after the event, for the Government to meet coal owners and to devise means of telegraphing money in order to enable them to pay their wages. From a business point of view never in my life have I heard of such an amazing thing. If this is what Government control and Government management of industry means, the sooner we get rid of it the better. The noble Lord who made such a clever and persuasive speech in defence of the Government said that they could not look far ahead. But they could have looked ahead in regard to this 10s. reduction on household coal. They must have known that this difficulty would arise, that there are collieries turning out house coal to-day already making a loss, and that they would be in a financial difficulty the first week that this reduction took effect, and would need to borrow money from the Government in order to pay their wages. If they did not know that, it shows that the people who are attending to this are incompetent; if they did know it, it was a very extraordinary proceeding to arrange this reduction of 10s. for house coal without making provision for difficulties of this kind.
546 Let me take another thing—the fact that coastwise traffic no longer competes with railways. That was no sudden matter. Everybody knew that that was coming, that it was taking place increasingly for months and months. Yet no provision was made by the Government, who were in charge of the railways, by gradually raising the rates for goods traffic in a way that would have remedied that. Look at the ports and harbours. The authorities of the ports and harbours came to Parliament even daring the war with Private Bills raising their rates to a reasonable figure. If the railways had not been controlled by the Government, if the whole of the responsibility for finance on behalf of the railways had not been taken by the Government, the railways would have come to Parliament year by year asking for a reasonable increase in goods traffic rates, and then everything would have been better in this country than it is to-day. As it is, the Government have not raised the rates for goods traffic although trade would have borne it; in fact, the raising of those rates ought to have been done years ago. I admit that we cannot do away with control at present; I suppose it will be very difficult to do away with control until prices seriously drop. However, I promised not to talk about the matter, but I want to ask two questions.
I suppose it would be too much to ask Lord Lee to tell us exactly how this 1s. 2d. is now divided; if he can do so briefly I am sure there are many noble Lords who, like myself, would be very glad to hear the answer. My first question is this, Does the fact of the reduction of 10s. in household coal alter in any way the division of the 1s. 2d. per ton profit? The other question is, What rate of interest is going to be allowed on the new capital to be invited to be put into the sinking of shafts and the development of the coal trade, and will the Government be undertaking some permanent responsibility as regards that capital? It is a rather serious matter if they are going to take a permanent responsibility in that way; then they may make the de-control of coal a much more difficult thing.
§ LORD LEE OF FAREHAM
My Lords, I hope that my noble friend Lord Emmott will not expect me at the moment to answer some of the detailed questions which he addressed to me. For example, with regard to the rates of interest it would 547 be obviously necessary to consult with my right hon. friend the President of the Board of Trade. But may I reassure my noble friend about the general scheme of the Bill. It is a Bill which in any case runs only to the end of the present financial year—it covers only the twelve months ending April 5, 1920. I think it will be only in accordance with precedent, and certainly wiser, if your Lordships would wait for the introduction of the Bill before I attempt to explain its details.
I am sorry that I did not make it clear in my speech what the general idea was, and perhaps I may express it now ill a sentence. It is that each owner under the scheme of the Bill will receive, not 1s. 2d. per ton on his individual output, but a share of the aggregate profits of 1s. 2d. a ton calculated on the whole output of the United Kingdom. This national pool will be distributed amongst owners in the proportion which the Finance Act standard (as fixed for Excess Profits Duty purposes) bears to the total. It is a Bill for a strictly limited period; it does not continue control beyond the end of the financial year; and I hope that when the details are before your Lordships some of the difficulties to which allusion has been made will be cleared away.
With regard to the point raised by Lord Emmott about the extraordinary procedure of the Government in discussing this matter of the advances only now, I understand that this system of advances by the Coal Control Department to individual mines where there is a financial shortage has been going on for some time, and that with regard to this new reduction the shortage cannot arise for some weeks. There is always a lag in these matters in making up the accounts and so forth, and I am informed that there is ample time both to discuss this matter at the Conference to-morrow (and possibly on subsequent days), and to come to a decision which will be satisfactory, I trust, to the coal owners. I do not know whether my noble friend Lord Strachie feels that he has had a reply to his Questions. I had detailed replies, but I thought I had 548 practically covered the ground in my general remarks.