HL Deb 04 June 1946 vol 141 cc709-56

3.28 p.m.

THE EARL OF DUDLEY had given Notice that he would call attention to the recently announced Government policy in regard to the iron and steel industry, and its effect on that industry; and move for Papers. The noble Earl said: My Lords, I make no apologies to your Lordships for moving this Motion which I have narrowed down, for the purposes of this debate, from a wider one which stood in my name in the Minutes of Proceedings. The subject is one of very considerable consequence to the country, and it looms large in the public mind at the present time as the result of the Government's expressed intention to bring important sections of the iron and steel industry under public ownership in the lifetime of the present Parliament. I must first disclose to your Lordships that I have a large personal interest in this industry. I would not, however, have the temerity to address your Lordships on this subject,. had I not been able to say with all honesty that during the twenty-five years in which I have been actively engaged in the industry, I have been far more concerned, as a Councilman of the British Iron and Steel Federation and as Chairman of the British Iron and Steel Corporation, with the welfare and advancement of the industry as a whole than with my own stake in it. In claiming some degree of public spirit in this regard, I would add that it only follows the example shown over this long period by my colleagues in the councils of the Federation. I have heard them described in the course of the debate in another place by almost every derogatory name conceivable. But I can assure your Lordships that in all my experience of public and commercial life, I have never found a body of men possessing a greater sense of public responsibility and disinterested loyalty to the industry in which most of them have spent all their working lives.

As, no doubt, many of your Lordships have done, I have followed very closely the two-day debate in another place and I believe that nothing emerged from either the Government spokesmen or from any protagonists of their so-called policy to justify this latest death-sentence on private enterprise in one of our most virile basic industries. The effects, I am convinced, will be tar-reaching and disastrous. It is now abundantly clear, I think, that the decision to nationalize iron and steel has been taken purely on political grounds, and not from any economic merit or necessity. Indeed, after claiming that the decision was taken on the facts of the industry in the circumstances as they are now, the Minister of Supply went on to quote from a Labour Party pamphlet called Let us Face the Future, and he cited exactly six words, namely, "Public ownership of iron and steel" as his mandate and justification for this revolutionary measure.

To assume that this piece of propaganda, which the great majority of the electorate have neither seen nor read, together with the general references to public ownership made in the course of the Election, now confers upon the Government the right to take over one of the best organized self-governing industries in the country, seems to me a travesty of that intelligent democracy which Ministers of this Government never seem to tire of evoking. The Chancellor of the Exchequer, in his turn, did not disguise his relish at the prospect of plucking this "ripe peach," and he actually congratulated the independent chairman of the Federation on having so completely welded the industry together as to make it ready to fall into his lap. This is what he actually said: I desire to pay my tribute to the right honourable gentleman the independent chairman, Sir Andrew Duncan, for what he has done. In what he has done he has ripened this industry for nationalization as the sun ripens peaches on a wall. I am deeply grateful. Nothing could be more effectively designed to discourage good planning and cohesion in any industry than that contemptible sentence.

The case for nationalization of some public services can possibly be argued. The coal industry, it can be said, has sunk so low in the political cockpit over many years that it can only be retrieved as a nationally-owned industry. There can be no case whatever, on the grounds of unhappy relations, for the nationalization of an industry which for many decades has a record of good fellowship and absence of strife between all of those engaged in it, which is hardly equalled by any other. It will be a great tragedy, I submit, to undermine that state of affairs. The men who work at the furnaces and the mills can only be kept happy and contented by the most sensitive elasticity of treatment, and by strong decisive leadership. They will get neither of those things under State management, hedged around, as they will be, by departmental regulations, Treasury yardsticks and political vacillations. In the long run, and from long experience, they know that they get a square deal under private enterprise. They know that there is mutual respect, confidence and understanding, and a good team spirit. Without that, the industry could never have achieved the records of production which the Government themselves have so rightly extolled. So fulsome indeed was the praise last week for the managers and workers in iron and steel, that it seems that the Government take it for granted that the same spirit and effort will be forthcoming when these men become the graded and uniform servants of a State bureaucracy.

What is it, in fact, which makes for that vigour and foresight in planning—that "sweep and freedom of management" as the Lord President terms it—and which, incidentally, form the very mainspring and source of the industry's detailed schemes? In my view it all comes down to the expert experience, the untranslatable enthusiasm and the integrity of the managers of the individual undertakings. What is going to be the effect of public ownership on this precious and intangible asset? The Lord President said that there was no reason why the Government should not buy the same brains and technical knowledge as are at present available. I do not deny that that is hypothetically possible, but even if you could ensure continuance of the same managerial zeal and initiative, it would not be enough. It is the hand at the helm that counts; and the hand of the State can never be so light, so sure, so experienced, so free from political tremors, or be guided by the same vision and understanding, as the hand of enlightened private enterprise.

A leading Socialist Member in the debate last week emphasized that nationalization implied no reflection upon those engaged in the industry. Most of those serving on the management side, he said, are "big men with a big outlook and vision." But he went on to say that "they are the victims of finance capital." I should like to know what this means, and, incidentally, whether the Government have found any support for their views among these very men to whom he referred. Who, precisely, are the villains of the piece whom the Socialist Party are now going to liquidate?

In their speeches last week the Socialist Party drew a completely unreal distinction between those who manage the plants and those responsible for the economic policy of the companies. But, my Lords, they are often the same men. I should say that the great majority of the directors of our iron and steel concerns, have worked their way up from the bottom and often retain an active part in the management of their firms. They are familiar with local conditions and keep the closest possible contact with their younger colleagues who may be full time managers. What intimacy or understanding can flourish between managers and the nominees of a Government Department appointed to watch over them and answerable to Parliament for every action which they may take, even in day to day administration? That is my first point.

My next concerns the nature of the industry's plan, as recently published in the White Paper, which does not seem to be fully understood. There is nothing hasty or ad hoc about this plan. It is based on schemes which have been carefully worked out by the various sections and firms of the industry for months and years past, as part of their planned and deliberate evolution. They are schemes which in the main but for the war would have been carried into effect long ago, to follow on those other great schemes of extension and reconstruction at Ebbw Vale, Corby and elsewhere which were carried out in the years immediately before the war. As usual they were carefully scrutinized by independent technical experts, by committees of the Iron and Steel Federation and by the appropriate Govern-Departments. In this way we have fully ensured that the unified plan is one which would serve the interests of the community, the consumers of steel, and the industry as a whole. I cannot emphasize too strongly to your Lordships the forward-looking spirit and the amount of give and take which has supported the framing of this plan. Even the Government, who have had it before them for over six months, have not been able to make one criticism of principle or of detail.

The industry's plan then accepts as a primary condition the fullest measure of Government supervision which would ensure its being carried into effect equitably and wisely. Government supervision is nothing new to this industry. For years past it has subjected itself to it. But it would be entirely wrong to assume that the plan was predicated equally on public or on private ownership. The Lord President seemed to go out of his way to stress that this was a purely technical report and that the industry had not attempted to argue for or against public ownership. That is perfectly true. That, he said, was the "political aspect" of the matter. We might well wish that the future of this great national industry could be taken out of the rip-tide of Party politics into which the Government and their supporters have now plunged it. But the Government cannot expect the authors of the plan to be complacent on the score of ownership.

May I emphasize—what should be obvious to the Government—that the blue-printing of this intricate plan was based all along on the intention that it would be carried out at the risk, on the responsibility and at the cost of the units concerned? Why indeed go to the immense trouble of working out the details for each plant and adjusting the balance of capacity between them, if a national steel corporation is going to expropriate and merge them all? I will go so far as to say that the plan is technically incapable of execution under the Government's present proposals. The Lord President, however, went on to say last week that there would be a lot of argument between firms before the plan could be enforced in practice. He said that the Government had already approved in principle a large number of the component schemes and, finally, that, with State ownership assured, there would be no hold-up or uncertainty.

The whole seriousness, of the situation lies in the fact that die prompt execution of initial schemes totalling some £50,000,000, already approved in principle by the Ministry of Suppy, is likely now to be held up for an indefinite period, just because very momentous; issues are not yet decided, since the companies concerned have no clue whatever as to how their own construction may be affected by changes in the general plan which the Government may make. How can directors, who are the trustees of their shareholders, start on their schemes under this threat of expropriation without the smallest idea of how the interests and assets of their shareholders are going to be safeguarded? The same utter uncertainty will prevail in the case of the remaining £100,000,000 or so of new works planned.

Your Lordships will readily understand that the reconstruction of a steel works entails, in the main, the destruction of existing plant, not necessarily all of it obsolete, but still capable of producing material at a comparatively low cost, though not the very lowest. It follows that this plant is still an asset of considerable value, and that it would be sheer idiocy on the part of the directors to replace it with new plant from which—taking the long-term view that they must take, since the plant will not be installed for several years—they can never recover any benefit whatever to the shareholders. The Chancellor of the Exchequer in his speech last week gave no indication whatever as to how these difficulties would be surmounted or on what basis the shareholders would be compensated for their existing assets. The bait of cheap money which he held before the nose of the industry will not catch a single fish if the new money has to over-ride existing investments.

What fundamentally, then, is the reason for State ownership? What can it possibly accomplish that cannot be better accomplished by private enterprise subjected to Government supervision? The Lord President admitted last week that the onus was upon him to show by argument that nationalization will be an advantage. But what did he do? He proceeded to cite the fluctuating fortunes of the industry in the inter-war years and he concluded that physical changes now needed, which the industry and not the Government have put forward, could be carried out "more cleanly and more sweetly"—I quote his exact words—under public ownership. That was the whole extent of his so-called argument.

All the nebulous dangers which were adumbrates in the debate by Government spokesmen—the danger to society caused by the scrapping of plant and consequent possible dislocation of population; excessive prices; actions prejudicial to international relationships; failure to raise funds for proper development; priority requirements; lack of good planning in various directions and so on—all these are matters which would be fully and adequately safeguarded by the Government supervision proposed in the industry's plan, and which would also guarantee to the Federation that unified authority about which the Minister of Supply has such unfounded doubts. Indeed, as regards prices and further plant extensions, the degree of control necessary to safeguard the status and the profitability of the new State steelworks is likely to be very much more harsh and more rigid than under the present system which the Socialists decry.

Whereas at present the only possible criterion is efficiency, and no manufacturing group in the Federation has any prerogative over another, it is inconceivable that a State Corporation, however inefficient, should be allowed to incur a loss, or should be allowed to "lose face" as a result of competition. Your Lordships will readily understand how jealous the Treasury will be on these points. And what then will be the effect on the engineering and export trades and indeed upon the taxpayer also? The disasters to the country which will follow the threat of this nationalization scheme are almost limitless. There is to be a long interim period before the necessary Bill can be drafted and brought in, and meanwhile the Minister of Supply, who denies any uncertainty or delay, hopes for detailed consultations with the industry, firm by firm. What is going to happen in this indefinite interim period? It must follow that initiative and progress will be largely atrophied.

The industry will be comparable to a man awaiting execution in the condemned cell for an unspecified period. The industry will no longer attract the best recruits, and young men of brains and ambition who are at present its future leaders will seek employment elsewhere. That is already happening. The goodwill of individual firms, many of them founded a century ago, which is the greatest selling point of their products, particularly in the export markets, will be rapidly dissipated and lost. These names are the hallmark of private enterprise and they cannot possibly be anything else. The indecision and obtuseness of the Minister in attempting to define the limits of his nationalization scheme within the industry is already causing immense confusion and dislocation, and hardly any firm can tell whether it is in the scheme or outside it. Whatever limits are eventually decided upon, the industry and many of the firms in it are bound to be emasculated.

To illustrate the utter perplexity which exists in the Minister's mind, I would instance a contradiction contained in his two statements with regard to the Control Board. In his preliminary announcement on April 17 he said: The Board will also act as my advisers on questions arising in the preparation of the scheme of nationalization, including the definition of the sections of the industry to be taken into public ownership. But in his speech on May 27, after he himself had made an abortive attempt to define those limits, he said: It is completely false to suggest, as has been done in some quarters, that this Control Board will be asked to design the pattern of nationalization. Nothing of the kind. That the Government have already determined. I hope very much that the noble Lord who is to reply for the Government this afternoon will be able to tell us with more clarity what the functions of the Board really are to be when at last the Government, if they ever do, have discovered suitably experienced and well-disposed men to serve on it and when it is ready to go into action. I hope he will tell us what the Government intend to do next, and how soon. How are they going, in the Lord President's exact words, to "develop managerial consolidation and managerial fluidity"—whatever that may mean? How are they going to make good the serious delay which they alone have incurred—six vital months—in considering a plan which they now admit is acceptable and sound? How are the Government going to tackle right away some of those elements of cost, like coal, which are admittedly outside the control of the industry and which are, to a large extent, responsible for that war-time rise in prices which it is the unanimous wish of the industry, unprompted by social economists, to correct? These are questions which demand immediate action, not the promise of piecemeal consultations and eventual legislation.

The Governments proposals stand condemned by all men of good sense and knowledge of the industry. I feel quite sure that the weight of advice given to the Government was preponderantly against a scheme of nationalization. In the months during which the Federation's scheme was under consideration by the Government, it must have passed through a committee or committees of Ministers, civil servants and technical experts before it went up for final Cabinet decision. What was the verdict of these advisers and senior administrators, as well as that of the leaders of the trade unions concerned? The people have a right to know what it was, and I ask the Government to produce these reports so that we may know the reasoning which lay behind this calamitous conclusion. I beg to move for Papers.

3.44 p.m.


My Lords, I speak to this Motion with some difficulty owing to the lack of clarity in the statements that have been made about the iron and steel industry. I have tried to follow what has been said in another place and what has been written, and I find it extremely difficult to arrive at a consecutive story. I am very glad however to notice that the noble Lord, Lord Winster, is here, because he will no doubt deal, with clarity and courtesy, with the questions which the noble Earl has asked and those which I propose to ask. I trust he will not follow the precedent which he created last week when I had occasion to put one or two questions to him. I put, as it were, a couple of ferrets down a likely-looking hole, and had the most astonishing result, because I got not an answer to my questions but a small puff of camouflage smoke and the sight of Lord Winster doing sixty "over the horizon. Moreover, he reproved me for addressing your Lordships on a Second Reading in terms of a Committee stage. He will not be able to do that to-day, so I will venture to repeat the same tactics I adopted then and put certain questions in the hope of getting a definite answer. I am sure he will find me very reasonable, as always.

We have been enjoined more than once in your Lordships' I-louse and elsewhere on these measures, not to make political capital on either side of the House out of the difficulties in which this country is situated, and I, for one, certainly have no wish to make any worse what is obviously a difficult problem, namely, that of the restoration of British industry to a modem basis. When I say Lord Winster will find me reasonable, I am sure he will, because I wish to preface my remarks by saying that when sensible people, including a very large number of sensible supporters of the Government and members of the Government, have arrived at a certain conclusion, they have presumably done so for very good reasons. If we accept that they are both sensible and patriotic people, it behoves us to examine their conclusions with care and, if we differ from them, seek to persuade them to our point of view.

In order to examine the problem raised by the noble Earl's Motion we must first see exactly what it is we are talking about. That involves looking into not only the conclusions which the Government and their advisers have reached in the matter of the iron and steel industry, but also the data on which they have reached those conclusions. Now of the data there is one outstanding document which is familiar to all those who have followed this question, and that is the report of the Federation. I understand that the Government accept, broadly speaking, the report, though not perhaps in every detail. I think Mr. Wilmot said in another place that he was broadly in agreement with it. The Federation, in that report, have arrived at a certain conclusion. The Government, accepting that report, have arrived at a different conclusion—a different conclusion certainly as to ways and means. There must be some reason for that. We can at least accept that data as being common property, and argue from that point.

There was a series of other data referred to in another place in the course of the debate last week, about which perhaps there is slightly more controversy. Here I would like to touch upon two points which need clearing up and which certainly, so far as I am concerned, need the statement of an opposite view. Mr. Wilmot, in another place, referred to the profits earned by iron and steel companies in past years, and there I think perhaps some of your Lordships opposite will agree that he was less than fair to himself in an otherwise very lucid and interesting speech, because at that point, instead of dealing with the problems of the iron and steel industry and the Government's proposals, he took what I think may be described as a rather more political view. He submitted certain figures about increases of profits, percentage-wise, and quoted increases in the profits of certain individual companies.

It is very difficult to discuss profits, either percentage-wise or by individual instances, in any industry or in any group of companies. I do not think it is a point that lends itself to debate at all, but it is clearly less than fair, either to an industry as a whole or to the individual components of that industry, to speak of percentage-wise increases referring only to the figures for individual parts, and not to the figures for the whole, as he did. I am reminded at this point of a Lancashire friend of mine (unfortunately now departed from this world), who started life as a mill hand and who ended up as a director of one of our great industrial companies in this country. Incidently, he was not a Socialist. I was arguing with him about a percentage increase in a certain context, to which he retorted "50 per cent. of nowt is jolly little"—only he did not use the word "jolly"! I think the increase to which Mr. Wilmot refers falls into that category.

The second point in his speech on which I think some comment is necessary concerns cost. As your Lordships well know, the question of costs is a very difficult subject even for an accountant and it is not the sort of subject that can be properly debated in Parliament. Costs are extremely difficult to examine, extremely difficult to compare. Comparison between costs in this country and costs in America, for instance, becomes entirely and completely ludicrous, as do comparisons between costs of production in this country and costs of production on the Continent. You can only compare like with like; you cannot compare like with unlike, which is what has been attempted in so many cases in the iron and steel industry. You cannot, for instance, compare the costs of production of pig-iron and steel here in England, where we have very little ore and that of very low grade, with the cost of production of pig-iron and steel in America, where they have ore with a very convenient and high content.

Nor can you compare costs of conversion from coal. In America it is mined in convenient and large measures, and in this country it is mined in very old and very difficult measures. Similarly, you cannot compare costs in this country with costs on the Continent without an adequate allowance for wages and costs of living, and Heaven knows that is difficult to arrive at. Therefore I suggest that in discussing this matter extraneous elements like that of the profitability of certain companies in this country during the last few years and comparisons of profits between groups in this country should be left out of account as misleading and as tending to introduce what may be called political prejudices into the matter instead of allowing us to examine it dispassionately, as it should be examined. Before passing from that, may I say that the record of profitability of the iron and steel industry in this country during the last twenty or twenty-five years has not been really considerable? On the other hand, costs of production from those materials which are available in this country have been very remarkable.

In discussions which have taken place both in another place and elsewhere in the country quite insufficient weight has been attached to how much has been achieved by the iron and steel concerns in producing iron and steel out of the materials available to thorn. If we were, say, American citizens instead of British citizens, we would know a great deal more about the competence and efficiency of the steel industry of this country than most of us do now, and, what is more, we would be telling the work how efficient it was. As your Lordships will be aware, and certainly as the noble Lord, Lord Winster, is aware, in this country we have achieved something that has never before been achieved anywhere else. I am referring, of course, to the production of steel from the Lincolnshire and Northamptonshire ore fields, from the lowest grade ore that has been commercially successfully worked anywhere.

If you say to an American in the steel trade who knows nothing about production in this country that concerns are currently smelting, and converting into steel, ore with an average content of about 24 per cent. he is inclined to think either that you are lying or that you are mad. That can be done here successfully, and what is more, it has been done during the inter-war years when the steel industry in this country was being described as inefficient and incompetent. During those very years, this achievement has been made possible by our steel producers here. I think it is time that those who have criticized the industry in the past had the grace to give it credit for what it has done.

I want to pass an to what I think is perhaps a more important issue, namely, qualifying exactly what is meant and what is intended by the statements that have been made. The noble Lord, Lord Winster, on May 15 in your Lordships' House said: Nationalization is not an end in itself, and the Government have at no stage taken a general decision to nationalist industries, as is rather mistakenly implied in the noble Lord's Motion. That was the noble Lord, Lord Teviot. The noble Lord, Lord Winster, added: The Government fully accept the position that nationalization ought not to be carried out on political or doctrinaire grounds. He was speaking with great care, from notes, and I feel sure he meant then what he said, and that he was also conveying views which his colleagues in the Govern- ment shared. I must assume that that is so, and I will refrain from asking him what might be regarded as an impertinent question, namely, whether he still means what he said then. Having regard, however, to the fact that the Government broadly accept the Federation Report on its general lines and conclusions, I must come to the conclusion, if that is a statement of the Government's motive in this matter, that His Majesty's Government think that they themselves can do better what the leaders of the steel industry have hitherto been doing. But I wonder whether that is the unanimous view of all Lord Winster's colleagues? It is true that in another place the Lord President said much the same as I have quoted the noble Lord, Lord Winster, as saying,. In particular, he said: We are debating the future of a great, vital, basic: British industry. It is, therefore, not in its essence a matter of policy at all. It is in essence a business matter, namely, what is the best course to take in the interests of the community and of the nation in the handling al this great, vital, basic British industry. Then, again, It is not really a Party political matter; it is a matter of business, and national business at that. Those two statements are very clear, and we can agree with Mr. Morrison on that statement entirely. If there is a better method of running this industry we must examine it and if they can persuade us to do so we must agree with them.

But His Majesty's Government and the Federation, while agreeing with the report in the main, apparently disagree about how to run it. Sir Andrew Duncan was described by both the Chancellor of the Exchequer and the Lord President in terms of very high praise as an extremely competent business man, which we all know him to be, and as being a leader in business matters and in industrial organization. Sir Andrew Duncan, however, does not agree with Mr. Wilmot and Mr. Morrison about how this business ought to be run, both of them having arrived at their conclusions from the same data. Is not that rather odd? One man for whom the Government express the highest regard, and certain gentlemen in His Majesty's Government who have little or no experience of business and none at all of the iron and steel industry, arrive at an entirely different conclusion about how the business ought to be run. I am inclined to wonder in point of fact whether the assertions made by the noble Lord, Lord Winster, on May 15 in your Lordships' House and by Mr. Morrison in another place last week, really do represent the true motive of His Majesty's Government in putting forward these proposals.

I would like to ask the noble Lord who is to follow me, and perhaps the noble Lord who is going to close this debate, whether efficiency really is the real motive at the back of these proposals or not, because until we know that it is very difficult to continue discussing the matter. If the motive is efficiency and nothing else, then it is up to those who disagree with His Majesty's Government to put forward their arguments, and the Government, as sensible people, may be persuaded to say: "Well, we agree with you; we were wrong; it is perhaps more efficient to go on in the way we are going." That is one type of argument. It is a totally different thing to argue the matter on a doctrinaire basis which, however, the noble Lord, Lord Winster, and Mr. Morrison have denied. I think we should have great difficulty in arguing the doctrinaire basis because in that line argument seldom if ever prevails. The whole history of dogma and the whole history of the human race shows that. Before we can proceed with the argument we must know what is the motive at the back of these proposals. That is the first of the questions I put to the noble Lord, Lord Winster—the first of the ferrets I put down the burrow.

As a matter of fact there is evidence that that is not the whole motive, because I observed that in the debate in another place Mr. Wilmot said: It is this system of private monopoly which stands condemned, and this is what the Government are determined to change. Note that, he said "determined" and not "think ought to be changed in order to render the industry more efficient" or anything like that.


Can the noble Lord give me the reference to that?


It is in Column 848 of the Commons Hansard report. Moreover, if he was only referring, as I think he was, to the monopoly aspect, that really has no bearing on the question of public ownership because it is admitted I think by all that the monopoly aspect can be dealt with per se by suitable Government control to which no objection will be taken I understand by the industry and which most of us would consider to be right, desirable and necessary. There are indications, apart from the statement by Mr. Wilmot which I have quoted, that have come to a great many of us that this alleged motive of efficiency is not the only motive. The noble Earl, Lord Dudley, has referred to possible differences of opinion and has referred to advice which His Majesty's Government have received.

My second question to the noble Lord is this: Was or was not the advice which His Majesty's Government received preponderantly against nationalization and public ownership of the industry? I am sorry to harp on this question of motive, but I regard it as so important to clarify the issue that I have perhaps detained your Lordships too long on it. May I quote two lines, if I recollect them rightly, which seem to be very appropriate in this context, because it is by motives that people are going to judged. Your Lordships may remember a remarkable play which was put on here in London which was called "Murder in a Cathedral" and you may recollect the Archbishop Thomas à Becket, while being tempted by a devil, in his prayer says: Lord save me from the greater treason, Doing the right thing for the wrong reason. It is by motives that people will be judged, and until we learn what those motives are we cannot profitably continue a fair and sensible examination of this question.

The last point I want to raise is on the proposals themselves. I found in Mr. Wilmot's admirable speech a great deal of interest and balance and, with the exception of the one point that I made, fairness. But I found nothing adduced as evidence to show that His Majesty's Government could run this industry more efficiently than those who are running it now. Moreover, he was not clear—at least not clear to me—in what he said about public ownership. I want to leave the question of control on one side. We are perhaps more in agreement about control, or so much in agreement about control that it is not worth developing that point. Mr. Wilmot spoke about public ownership. Noble Lords on the other side of the House, and their friends in other places, speak of public ownership and nationalization in the same breath. They are two rather different things. Which is meant here, and what sort of public ownership?

Public ownership ranges over a very wide field. It may be whole or it may be partial. It may, for instance, represent an investment by the State as in the Anglo-Iranian Oil Company. It may represent the whole ownership of civil aviation. Is it intended in referring to public ownership in the iron and steel industry to have partial or whole ownership, either in any one concern or in any concern up to a certain point? I do not know whether I make myself clear. If up to a certain point is intended—say up to production of steel billets—is it intended to take into public ownership the whole of production up to that point in every case or riot? Or is it intended, in order to facilitate the provision of capital required for the development, of this industry—and this has been put forward as one of the motives by a spokesman for His Majesty's Government—to make an investment in an existing structure? I do not think we can discuss public ownership and nationalization without knowing what is meant. My question to the noble Lord, Lord Winster, therefore, is: what is meant by public ownership? How far is it intended to go and where?

Lastly, what is meant by taking over integrated concerns? I think that Mr. Wilmot was asked about tubes, and suggested that public ownership might involve the taking over of the continuous process from the iron ore to the finished article—namely the tube. Does it follow that the same will be done throughout the industry, whether tubes are concerned or not? One does not want specific examples to be given, it is too early yet to ask for them, but I do think we need clarification about what is meant by public ownership and the form it is to take. I hope that noble Lords opposite will agree that I have asked questions which are legitimate to ask, and that I have taken a reasonable view about: their proposals. I do not wish them to think that I agree with their proposals—for I do not—but I find it difficult to disagree until I know what it is I am disagreeing about. And that has not been made clear to me. If that is made clear, and the conclusions are what I fear, then I wish to finish what I am saying by using the striking phrase which was used recently by the noble Viscount, Lord ElitKink—if he will allow me—and say that I am squarely and roundly opposed to nationalization.

4.23 p.m.


My Lords, the noble Earl who moved this Motion made a most forcible contribution to this discussion, and every word that he said merits deep and full consideration because we all know the part which the noble Earl has played in the iron and steel industry as past president of the British iron and Steel Federation, past president of the Iron and Steel Institute and, generally speaking, as one who for many years has been amongst the leaders of the industry. The views which the noble Earl has to express on this subject must merit most careful consideration by the Government. I think that many points which he raised will be covered in the course of the remarks which I have to make, but there were one or two special matters which he mentioned to which, perhaps, I might reply at once. I certainly accept fully the noble Earl's statement that he is far more concerned with the industry than with his own personal interests. But when he tells me of derogatory terms being employed about heads of the industry, I must remind your Lordships that the Government have praised these men in no uncertain terms, that the Government have warmly praised the contribution that they made to the war effort.

The noble Earl asked if the Government's decision with regard to the industry had been taken on political grounds. I answer at once "No," and I will return to that point later. He further said that managerial zeal and intelligence were not enough, that it was the hand at the helm that matters, the hand of enlightened private enterprise. Many of the workers engaged in this industry who have had experience of that hand at the helm have asked for nationalization, and although I do not wish, in my remarks, to dwell too much upon the past—because it is the present and the future which matter—yet the fact remains that enlightened private enterprise was not showing up in a very favourable light during some of the immediately pre-war years. And it was on that account, because private enterprise was not showing up in a very good light, that the situation was reached to which the noble Earl referred when he said that Government supervision was nothing new to the industry. Had the private management been so enlightened as the noble Earl claimed there would not have been any need for that Government supervision, which he admits was nothing new to the industry.

The noble Earl raised certain questions relating to compensation. That is a matter which will, of course, have to be dealt with when the Bill is introduced into Parliament. He asked me what would be the functions of the Board. The Control Board will be a board of management and workers which will be set up and operated. Until legislation has been enacted, the industry must continue to function. Government help and Government control must continue. That is admitted on all sides. The Control Board will take over functions hitherto performed by the Iron and Steel Control, that is, regulation of production and distribution and advice on prices. But it will not be a function of the Control Board to settle the pattern of the measure of nationalization which will be decided upon. It will be concerned with technical advice and will function for a limited period. The noble Earl rebuked the Government for having taken six months to consider the plan laid before them. Had they taken less than this time the Government would have been accused of acting with undue haste. I am asked if the Government will publish the Report. That matter has been raised in another place. It has been suggested that the Report ought to be published in order that Parliament can judge why the recommendations of the expert committee have been set aside. When my right honourable friend, the Minister of Supply received the Federation's Report, he naturally asked the officials of his Department to examine it.


Only the officials?


The noble Lord always anticipates me. Our minds must work alike in many matters. The Minister of Supply naturally asked his Department to examine it, and for this purpose arranged for some people with special qualifications to assist his Departmental officials in their examination. The purpose of that examination was to consider the Federation's plan from the standpoint of its adequacy and broad technical and economic suitability to provide a fully efficient industry. The examination was not in any way concerned with the question of the ownership of the industry. Comments were, of course, made on certain financial aspects, but as the noble Lord, I am sure, knows, it is not the practice to publish such Departmental papers. In any case, there has not been any serious criticism upon the broad aspects of the Federation's proposals from a technical angle, although there are a great many points of detail which will have to be clarified as the proposals come forward for more detailed examination. I think that the noble Earl will find the rest of the questions which he addressed to me, and the points which he raised, will be dealt with in the course of my remarks. I have endeavoured here to deal with certain specific points he put forward.

I listened with great interest to the speech of the noble Lord, Lord Rennell. As I listened, I made a certain comparison in my mind between his speech and that of the noble Earl. I thought that the noble Earl's speech was hot-rolled strip—rolled while the metal is hot. And I thought the noble Lord's speech was cold-reduced strip, obtained by further rolling of hot-strip in cold conditions. Certainly the speech was very reasonable. I gathered that the noble Lord is against nationalization of the iron and steel industry. I take comfort to myself by remembering that twenty years ago the Liberal Party was against nationalization of the coal mining industry, but recanted last week and supported the Government measure to that end. We shall no doubt hear a similar recantation in the course of time—


Without enthusiasm, as the noble Lord said last week.


Without exuberance, the noble Marquess said. But as I remarked, I do not think that any of us have ever seen the Liberal Party exuberant about anything. I listened to the quotation from my speech. It sounded very well, and I was astonished to discover how well I had spoken on that occasion. The noble Lord asked if all my colleagues shared the view that I expressed on the subject of nationalization. Certainly they do. I know of no subject on which my Party is more solidly united or more solidly behind the Government than this matter of the nationalization of the iron and steel industry. Some noble Lords laugh. I shall be very glad to hear that noble Lords know more about my Party than I do myself. But what I have said is most certainly true, as the vote taken in the other place the other day clearly indicates.

To come to the three questions which were addressed to me by the noble Lord as to what is the motive at the back of the proposals, I would say that the motive is twofold: it is the national interest and the welfare of the workers engaged in the industry. Those certainly are two of the leading motives which actuated the Government in their decision:


My actual question, if the noble Lord will forgive me, was whether the motive was solely that of efficiency or whether there were doctrinaire and dogmatic motives.


No. They were not doctrinaire or dogmatic motives. Efficiency is the motive, and that is bound up with what I said—that the primary motive was the national interest, which of course involves the efficiency of the industry. I was asked whether the advice which the Government received was for or against the policy of nationalization? I do not imagine that the Government asked advice on the subject of whether to nationalize or not. I imagine that what they asked for was the facts about the industry. Having got at the facts, it is then the function of the Government to decide what policy they will pursue in the light of the facts which have been put before them.

I would like to answer in some detail the third question which was addressed to me. The noble Lord asked what is meant by public ownership in the iron and steel industry, and how far it is intended to go. That question has been answered in full detail by my right honourable friend, the Minister of Supply, in another place. He said there that the Government would take over iron ore, coke ovens omitted from the coal scheme (because they were associated with steel works), the manufacture of pig-iron, the manufacture of steel from pig-iron or scrap, and primary or heavy rolling sections of the industry because smelting and primary rolling are essentially one industry. Beyond this were various other finishing operations, so closely integrated with iron and steel as to be virtually one process. In these cases the Government would take over the whole plant. Where finishing processes are more distinct and carried on in separate independent works, the Government will examine the set-out before deciding on the exact lines of demarcation. As regards the tinplate industries, where these are completely integrated industries they will be taken in. Where the rolling processes are separate, there must be consideration firm by firm. The same considerations apply to tubes. Spun-pipe factories are linked up with blast furnaces, and will therefore come under public ownership. The manufacture by iron foundries of iron castings, which in this industry is linked up with engineering, will be left to private enterprise; and jobbing foundries with local connections will also remain under private enterprise. That is what was said by my right honourable friend, and I hope that the noble Lord will take it as a full and detailed reply as to how far it is intended to go.

To come to the general current of the debate, I must emphasize at the outset of my remarks that the decision to transfer to public ownership certain sections of the iron and steel industry is no snap decision. It represents the fulfilment of a decision taken after long and intensive research, and fairly and squarely put before the electorate at the General Election. Speaker after speaker on the Labour side made the iron and steel industry the constant subject of his remarks.


If I may interrupt the noble Lord, did he not say rather earlier that the decision was taken for no political reasons?


It was not taken for political reasons. The two remarks are not incongruous. Because a policy is put before the electorate, that does not mean that a decision to follow that policy has been taken for political reasons. Contrary to the idea which has been put abroad this afternoon, the Labour Party does not put forward half-baked ideas. It is not a case of somebody waking up in the morning and saying, "It is a fine day. Let us nationalize something."The Labour Research Organization is very good and very thorough. We know that our proposals are right, and we put them forward with a full sense of responsibility, and we intend to put them through. It was admitted last week that we had a clear mandate for the nationalization of the mining industry, and equally, we have a perfectly clear mandate from the people for our proposals about iron and steel. Really noble Lords opposite must learn to respect the verdict of the umpire and not sulk when they are sent back to the pavilion. I invite them to deny two propositions. First of all, the industry cannot be left to itself. They cannot deny that, because even the industry admits that it cannot be left to itself.




My second proposition is this, that the industry is not competitive within itself. What becomes of the argument for private enterprise, in the case of an industry whose leaders admit that Government control is necessary, and in which what I have always been told is the mainspring of private enterprise, namely competition, is lacking? Competition disappeared after the Iron and Steel Federation was set up in 1934.


That was under war-time conditions—


I beg your pardon?


Under present conditions of control—




When everything is controlled.


I say that competition disappeared after the Iron and Steel Federation was set up in 1934, when the industry became a private monopoly. The industry is not competitive within itself; and it is not competitive against its foreign competitors. It is not able to compete against them. Not only is Government control necessary in this industry, and has been shown to be necessary in this industry, but that control must become closer and more direct. Certainly the Government admit that the industry may well take pride in its war record, when it reached perhaps the very peak of its efficiency, and the Government have paid full and generous tribute to the record of the iron and steel industry during the a full sense of responsibility, and we war. But it happened that that state of intend to put them through. It was affairs coincided with the maximum of admitted last week that we had a clear State control that the industry has, ever mandate for the nationalization of the experienced.

As I have said, I do not want to labour the past too much. I am concerned more with the present and the future. But facts and figures incontestably assert that there was a pre-war decline in efficiency, and only State control, applied under the pressure of war conditions, succeeded in converting the industry into a war-winning factor. We have considered the argument, the cons as well as the pros. A decision has been reached in no Party spirit, in no doctrinaire spirit, but with sole regard to the interests of British industry as a whole, that is to say, the national interest. The facts led the Government to the proposals which were put before the country at the General Election, and which are now being put before Parliament. That being our considered opinion, as to what in a matter of supreme national interest will best serve the national interest, we must embody our conclusions in a measure on the Statute Book.

Here is a particular industry, which is the foundation of our whole industrial system. If the Government have reached the conclusion that only by certain measures can the iron and steel industry be kept healthy and improved in health, then it would be the negation of the whole idea of Government not to put our conclusions into action. There are one or two things I would like to say with regard to a statement made in another place by Sir Andrew Duncan. He said that there had been no strikes and no troubles in the industry for forty years. I think that was a tribute to the workers as well as to the management. But in the case of many of those who did not strike, their loyalty and good behaviour did not save them from appalling unemployment, from great hardship and great misery. It did not save them from the sense of being trapped by circumstances which they could not control, the sense of man's hand being against them. If Sir Andrew Duncan could point to forty years of even conditions, of continuous employment, of forty years without booms and slumps, of forty years without periods of wild profits, but during which the industry had progressed steadily along lines of steady, efficient development in the interests a the whole industry, that would be a better picture to be able to point to than forty years without strikes.


May I ask the noble Lord a question? He has two or three times mentioned the question of the workers and the question of their welfare. I think the House would be very reassured if he could tell us that at all times, during all discussions with them, all the trade union; concerned with this industry have been in favour of the Government's proposals.


May I also ask the noble Lord, before he resumes his speech: Does he insinuate that all these difficulties which he has adumbrated over these forty years were entirely due to the management?


No, no. I implied nothing of the sort at all.


I only want it to be made plain.


The noble Lord is perfectly fair. I quite agree. I merely pointed out that, while there have been no strikes in the industry for forty years, that has not prevented a great deal of hardship, misery and suffering.


But not due to management.


With regard to the point put to me by the noble Earl, Lord De La Warr, I think I could best answer that by referring to a statement made by the Chancellor of the Exchequer. I am afraid I may be out of order, but the Chancellor of the Exchequer, when speaking on this subject in another place the other day, did make it perfectly clear that the great trade union concerned with this industry has been constantly propagating and advocating the transfer of the industry to national ownership. We have been told that we are embarking on this policy without sufficient inquiry. There have been inquiries galore. What information is it really suggested that we should acquire which is not already available to us? While the doctor argues, the patient dies.

What has been wanting for a long time has been the courage to take action on the diagnosis which has long been available. This Government have had the courage; which its predecessors have lacked, to proceed from diagnosis to treatment. We accept the main lines of the Federation's proposals. They constitute a very sound basis for reconstruction. But we differ from the Federation upon an essential point. The Federation considers that the interests of the industry would be best served by a continuation of the existing monopoly arrangements, plus the existing private ownership, plus Government control. Well, the physicists confirm us in our belief that oil and water will not mix. This industry has a parlous future before it. It be a task of the first magnitude to maintain it as an efficient and effective industry. Opinions inevitably differ as to how that can be best achieved. But we do not believe that it can be done if control and ownership are divorced.

I have said that we largely agree with the Federation's plan. But what does that plan involve? It involves scrapping 30 per cent. of our steel capacity, and scrapping 40 per cent. of our blast furnace capacity. And this only a beginning. Imagine the social upheavals which these figures represent. There must be responsibility to Parliament for the changes involved and for the finance involved. The raising of the great sums of money which are required can best be handled by the Exchequer under a system of public ownership, and only under such a system as we propose can a plan be enforced upon the whole industry. The Federation says that this and that is desirable, but the Federation has no power to enforce its opinions upon the whole industry.

A lot of people who have never thought out anything in their lives, least of all the justification for their own existence, tell us that we have not thought out our proposals; that we are proceeding on the lines of learning to swim by jumping in. Well, that would not be very sensible, but it happens not to be the way the Government proceeds. We see the main outlines of our policy perfectly clearly, but I confess to some surprise when we are reproached because on questions of demarcation we propose to examine the very complex problems involved, and to consult the people concerned before finalizing our decisions. Some noble Lords opposite would. I suppose, finalize first—


Just what you have done.


Or more probably never finalize at all. I do not suppose that the industry likes our proposals. I confess I apprehended certain faint signs of dissent from them during the noble Earl's speech. I do not anticipate or believe for one moment that the industry, either by doing those things they ought not to do or by leaving undone those things they ought to do, will seek to sabotage our proposals. Those concerned will be neither so foolish nor so unpatriotic as to do that. They have a far greater sense of public duty than many who seek to speak in their name. The President of the Federation has gone on record. He has said that the industry will endeavour to improve and continue the contribution that it has been making to the export trade.

Those were statesmanlike words, and I contrast them with the wild and whirling words of Mr. Churchill about the industry being in a purgatory of suspense, bent and blurred by Government policy, and on the road to bankruptcy and economic collapse. That may be how Mr. Churchill sees the industry, but it is certainly not how the industry sees itself or how the Government see the industry. A section of the Conservative Party applauds these aboriginal war-cries of Mr. Churchill, but in doing so they run the risk of being told that the Conservative Party is an extinct volcano, of which the only sign of life is a faint wisp of smoke over the crater, emanating from the dying embers of Mr. Churchill's cigar. Unlike Mr. Churchill, the Iron and Steel Federation can be relied upon to lay aside political and individual prejudices and to be guided by consideration of national interests. There are always a certain number of people who seek to profit by a debate of this sort, to bang the war drums of private enterprise and to take their troupe of circus horses for another shambling trot through the capitalist arena. I must say to them that they are living in a completely obsolete world. In this matter of the iron and steel industry there is no issue between public and private enterprise. In the iron and steel industry we are dealing with a monopoly, and not with competitive private enterprise.

None of my friends on these Benches would, for one moment, assert that the policy of public ownership is infallible or inevitably bound to be a one hundred per cent. success in every detail, but we do say that in one direction after another the old system has demonstrably failed, and to revert to that system now as a solution of present difficulties would be a bankruptcy of statesmanship. We cannot retrace our steps, we cannot even stand still where we are, where our basic industries are concerned. We have to be on the march. Our proposals in regard to iron and steel have been carefully thought out over many years. We have reached the conclusion that to leave this industry to carry on under private ownership, even under some measure of Government control, would be attended by many drawbacks, and with your Lordships' permission I will enumerate them, since we are asked so particularly for the motives which have actuated us.

First, there is the danger of control both by the Federation and the Government being negative and irritating, instead of getting that freedom and positive action which will come from public ownership. Secondly, the Federation is really dependent upon retaining the good will of a great number of individual firms which constitute its membership. There can be no guarantee that control by the Federation can, in times of stress and strain, be fully effective. There are bound to be many occasions when the division between control and management would not work but would create divided loyalties between the Federation and the company shareholders to whom their directors, as has been said this afternoon, stand in a position of trust. Thirdly, in the operation and development of the industry there would have to be compromise as between firms, which might often not be in the national interest. Fourthly, there are many social implications in the development of the industry involving important questions of location of plants, the shifting of population and the effect on amenities, all of which are, in the Government's view, far better controlled in the national interests when an industry of this size is under unified public ownership.

It is common ground that this industry must be under control of some sort. The industry itself recognizes that. The issue is not, therefore, between competitive private enterprise and public ownership, because the steel industry abandoned competition many years ago. The real issue is whether the working and development of the industry is to be left in private hands with a central controlling body—the Federation—together with some Government control over its activities, or whether it should be brought under public ownership. Those were the alternatives which lay before the Government. After the most careful consideration, the Government has come to the conclusion that it is only by public ownership that this vital industry can be efficiently organized and run to further the national interests in supplying the various consuming industries with steel which they require in the proper quantity, of the proper quality and at the proper price. Those are the motives, those are the reasons, which have actuated the Government in coming to their decision; and in spite of what the noble Earl has said, I invite your Lordships to endorse the bold plans of the Government in regard to iron and steel, because in those plans alone can the road to the salvation of the industry be found.

4.49 p.m.


My Lords, for twenty-eight years I was a director of one of the largest steel foundries in Scotland, probably the second largest in the United Kingdom. That is my reason for saying a few words on this subject now. I understood the noble Lord to say that he had a mandate at the Election for the nationalization of the iron and steel industry. I do not remember in Scotland any mandate or any mention of the nationalization of iron and steel. I do not believe that the working men of Glasgow or of the Clyde have ever called out for the nationalization of a private industry like the iron and steel industry. I believe you can look at nationalization in two ways. There is, first of all, the nationalization of what might be regarded more as public services than as actual industries or manufacturing enterprises. I believe there probably is some desire for the nationalization of public services like electricity, gas and water, because those are public services rather than actual industries. Much as I dislike the idea of nationalization, in my mind some of the advantages to be gained from the nationalization of public services outweigh my dislike of the principle of nationalization. As an instance of that, I may say that in my part of the world we used to have our electricity generated by private industry. Owing to the small consumption in that area, the charge for electricity was one shilling per unit, which was a pretty high charge. Now we are to be nationalized, and an arrangement is being made whereby that company will be taken over. The bait that is held out is that we shall be charged 5d. or 6d. a urn and that therefore many more people will be able to take advantage of supplies of electricity who hitherto have had to put up with the inconvenience of oil lamps and candles. Undoubtedly in this case the advantages to the public outweigh my opposition to nationalization in principle.

We are informed, however, that as a result of this nationalization, there is expected to be a loss of—20,000 annually to the Government, and that that—20,000 loss will be covered by putting it on to other areas which are more prosperous. For how long, I wonder, will urban areas tolerate bearing the burden of the losses in rural areas? But a at is another question, To nationalize a public service is one question, but to nationalize a purely manufacturing enterprise, especially one that is progressive, efficient and paying a profit, is another question. I cannot see any reason for disturbing the present position and for nationalizing that industry because of purely political ideologies. I think the time chosen for bringing this question forward is most unfortunate, and most unwise on the part of the Government. In the iron and steel trade we are facing many difficulties in turning over from war-time to peace-time conditions. We are doing all we can to recapture our export trade, but there is no doubt that this talk of nationalization has caused a great deal of disturbance and depression.

In the case of the company with which I was associated, we required great quantities of selected coal to work up special lines of steel for rails, railway wheels, boiler plates and other things. We took an interest in a colliery to assure our supplies, and our supplies were, until recently, coming forward regularly, but to-day, now that nationalization has taken place, we are not getting our coal, and one quarter of our furnaces are not working. That never would have happened if nationalization was a good form of administration. The other company with which we were associated, knowing there was going to be a great drive for export, planned to put down a new range of blast furnaces of the most modern kind and to re-arrange its shops. The whole cost of that rehabilitation scheme was to be £3,000,000, and that was mentioned in the report of the Iron and Steel Trade Federation. We naturally expected that when the Government read it, they would ask to confer with us. We have not, however, heard a single word; we have never been called to attend any conference whatever, but out of the blue has shot this red meteorite of nationalization, for no reason that we know of. This firm is not inefficient; it is most progressive, and is one of the largest steel firms in the country. We cannot see why it should be nationalized in any degree whatever.

This policy of nationalization must affect employment. On the one hand, you have a quarter of the blast furnaces shut down by one company, and, on the other hand, the Government have told the other company not to go on with its scheme until they have made up their minds what they are going to do. I gathered from the noble Lord just now that it would be six months before they could definitely state the whole of their scheme and say which part of the industry was going to be nationalized and which part was not. That period of six months will be a period of uncertainty, and will cause great confusion. Three months ago our unemployment figures in Scotland were 32,000, but to-day they are 70,000. That should not be the case, and it is causing serious concern. I think I heard the noble and learned Lord on the Woolsack say, when he was speaking on the nationalization of the coal mining industry the other day, that one of the reasons for nationalizing the coal mines was that further amalgamation to any great extent was impossible under private enterprise. I do not like the word "impossible". In connection with our steel works, our ship works and our coal mines, I know that there were a number of schemes for amalgamation in contemplation. After the 1914–18 war, there was great amalgamation in the railways and in shipping, and we anticipated that there would be great amalgamation schemes brought forward after this war. We were planning to do so, and had we had the time to think out these questions and to bring forward this scheme for extended amalgamation, I am confident that it would have been a success. All the great amalgamations of industry in Great Britain, in coal, in iron and steel, in shipping, or in railways, have held their own in comparison with the amalgamation of industries anywhere else in the world, whether Government or private.

5.9 p.m.


My Lords, may I, before I forget, reply to a point made by the noble Duke about the time? He said, "This is not the right time." There was a charming book written on Cambridge University politics which included a list of reasons for not doing things, and one of them was called "the rightness of the time." The book remarked: Time is like a medlar; it is always rotten before it is ripe. Surely what we know about the present time is that we have a certain number of years, during which we can sell practically anything, before we are faced with the real difficulty of how we are going to face the problem of unemployment and to solve that problem when the storm really comes. I should have thought it was the plain duty of the Government to try and use these few years to see that when that time does come the structure of industry is so arranged that it can meet the problems of full employment. That it cannot possibly do without some changes in the structure. Noble Lords may think that these proposals are ill-advised for that purpose, but I do not think they can possibly maintain that it is not the type of thing which ought to be done. It seems to me above all that it ought to be done.

May I, after trying to answer the noble Duke upon that point, make this comment on the debate. This is the third we have recently had on nationalization, and how different it is from the last. In the last debate noble Lords opposite seemed to me to have been dimly aware—not always dimly—that they were defending what was an indefensible position. Nobody really defends the coal trade. Like the woman in the Scriptures who had suffered much from many physicians and was no better, but rather the worse, the coal trade has suffered for many years from doctors of all kinds. Nobody thought that conditions between employers and employed were anything but awful. I think noble Lords opposite were prepared to acquiesce in the proposition that desperate diseases called for desperate remedies. Indeed their attitude to nationalization seemed to be like that of the cynical doctor who said: "When you are pretty sure your patients are going to die, pack them into the hospital, and then you will not get the blame." In other words, when you think industry is going to pieces, then it may be nationalized but not before.

Nobody on either side of the House can say that the situation is the same with regard to iron and steel. Nobody can say that the relations between employers and employed in the iron and steel industry are anything but good. Nobody does—and If should have thought nobody could—say that the iron and steel trade is at the moment an inefficient trade or, for that matter, is likely so to become. I do not think that we on this side could possibly defend the proposals of the Government on the grounds of the inefficiency of the industry and on no other ground. A point might be made, I understand, about the necessity of controlling and running the industry as a whole, and the difficulty of doing that under control instead of under ownership. That seems to me, with respect, looking at the debates, not proven.

I think everybody on both sides has to admit the masterly, account of the industry given by Sir Andrew Duncan whom everybody respects, whose ability everybody admires, who is acknowledged to be completely free from Party politics in the bad sense. I should say the same impression was made on me by the speech of the noble Earl. Is the conclusion therefore that the reasons for doing this are political? The noble Earl said they were purely political, but a long life of correcting undergraduates' essays has made me suspect the adverb "purely" before any adjective. It all depends what you mean by "political." The noble Lord, Lord Rennell, said that we ought not to do things for political reasons. I have not got his exact words, but I think he said we should do things for the welfare of the community as a whole. I, in my innocence, thought that that was politics. Is it not? The noble Lord seemed to think that "political" means "doctrinaire."

Is there only one kind of doctrinaire politics? The noble Lord, Lord Winster, accepted that view, that by saying a thing is political you mean it is done for Party reasons or for Party politics or abstract politics or doctrinaire politics. I should have thought myself that if you are considering the welfare of the community and the position of an industry in the community you are considering, as you ought to consider, political questions. Those are political questions. I do think this is important because it does scorn to me a pity that your Lordships' House should think that the adjective "political" is a bad adjective, and that when people do things for political reasons they do there for bad reasons. I wish we could find some words to distinguish between the doing of things for political reasons which is wrong, and doing things for political reasons which are not only not wrong but are incumbent upon us to do.

I was amused yesterday to read an account of the speech made by Mr. Eden at Leamington on Sunday where he began admirably by saying that in regard to nationalization we ought to realize that sometimes nationalization was good and sometimes nationalization was bad and we should look at the facts of the case. Then suddenly to my surprise he went on and said that the treatment which the Government proposed to mete out to the iron and steel industry was ill-considered and a costly gesture of political prejudice, and at the best the results would only be confusion and at the worst it might entail a national disaster. It was a clear example of doctrine run riot. I wondered to myself how anybody as reasonable as Mr. Eden could talk what I might be excused for calling such rhetorical non sense. I wondered if he had been rereading his political leader's first broadcast.

Then as I read on, I found what happened, because he began talking about the evils of materialism and Marxism and how we were on our way to the slave State. Then I saw where it all came from. It is clearly the voice of -Professor Hayek, that able Continental professor who combines an extraordinary command of English with a complete ignorance of England. I said to myself: "Who is being led away by abstract continental theories now?" I say this really with all seriousness. It will be an evil day if this country were divided between the disciples of two continental theorists, one called Karl Marx and the other Professor Hayek, because both seem to me to be tarred with the same brush. They have no sense of reality. They are abstract and they are doctrinaire in the worst sense.


I hope the noble Lord will repeat that part about Karl Marx to the Chancellor of the Exchequer.


I am quite ready that the Chancellor of the Exchequer should hear what I have to say on this—I am quite unrepentant, but I don't think he would dissent. It will be an evil day—and I repeat that—if we are divided between the disciples of these two. I am told that Professor Hayek's book has been sent to all Conservative Members of Parliament. It has sold 9,000,000 copies in America, and that alone should be a warning. I do pray noble Lords to avoid those continental wines which the Englishman cannot stand. There is the heavy Rhenish wine of Marx, or the sparkling Viennese wine you get from Professor Hayek.

My countrymen, trained on the more rigid logic of the Shorter Catechism and innoculated at an early age with Calvinism, are immunized against such abstract theories. I do not think that the English are. Professor Hayek is much more dangerous than Karl Marx. Karl Marx was obscure. Indeed he wrote so abominably that almost nobody has read his work. But Professor Hayek writes in a charming style, and if you do not take care he will go to the heads of the Conservative party, and when that happens it will be a very bad day for this country. If that is what politics mean let us avoid it.

You may do things for reasons of political theory and all you mean is that you have an abstract and simple conception of how the country ought to be run. No-one should have that. Any country is far too complex, elaborate and intricate for that sort of stuff. It is true that there is a temptation, on both sides, to apply political theory in that sense to the practical concrete problems with which you are confronted. But it is evil and bad just as much on one side as on another. I freely admit that my Party suffers from that disease as well as the other Party, and it is perhaps because I have felt my Party suffering from it so much that I am really concerned when I see this blight in another form, in the form set out by this Viennese professor, affecting noble Lords on the other side, because the results will be dreadful and much more dangerous. This professor writes so well that you read his work and then you are lost unless you have a properly critical mind.

Now may I say why I think there are reasons—whether you call them political or not—which lie behind the proposals of the Government. I propose to do that, if I may, by quoting a pamphlet (I wonder if any noble Lord has read it?) which was published in 1943 under the auspices of Nuffield College. May I hasten to add that Nuffield College has no responsibility for what the pamphlet said, and that the only concern of Nuffield College was to bring together people of all kinds, of all Parties and of all views to try to see whether they could come to some sort of common mind as to how they should deal with problems of unemployment. That was the concern, as it has been the concern of us all. We quarrel and shall go on quarrelling as to what was before the country at the last Election. I shall be bold and give my own version. I think that in the minds of the people as a whole there were two things, one of which it would be bad manners to put emphasis upon and so I shall not do it. I think many people of the country wanted to make it perfectly clear that they did not really believe that God meant the Conservative Party to go on ruling the country for ever and ever. But that is Party politics.

What I think they really were concerned about was that they felt we were not going to stand for a repetition of the wholesale unemployment with which we were cursed between the wars. I think it is true also that they held—though we did not always formulate it to ourselves like this—that no theories of any kind should stand in the way of making a recurrence of that kind of unemployment impossible. I think that the public would have condemned as severely an attempt on the part of the Labour Party to say that we will not (I hope that I am using my "shall nots" and "will nots" correctly, but it is difficult for me) have the cure of unemployment stopped because people say it must only be done by nationalization. But they were perfectly determined that people should not stop the cure of unemployment or the bringing about of full employment because there were people who said: "You must not do it if it involves nationalization."

I think that anybody who had read carefully either Sir William Beveridge's book on Full Employment or this pamphlet by these various people who met at Nuffield College and compared them with what seem the extraordinarily jejune proposals of the White Paper would have said that the White Paper was based on the principle that it is not proper to cure unemployment if the cure involves any nationalization at all. In these days—that is in 1943—this pamphlet (it is called Unemployment Policy and Organisation of Industry After the War) set forward a hope of curing unemployment as a possiblility which emerged in this conference. The conference consisted of employers, employed industrialists, trade unionists, academics, practical men, representatives of all political Parties, and for one happy moment it seemed that they were determined to look at this question as a practical question and see what ought to be done. And they produced a picture of the structure of British industry with which they were all roughly in agreement.

They thought that British industry ought to fall roughly into three divisions. There was the section of industry first of all which should be nationalized, and by that they meant run by a public corporation—not like the Post Office—which should give the utmost freedom of initiative and decision to the people running it, only guided by public policy. They thought that that referred to certain divisions of industry, especially industry in which there was a monopoly. Secondly they thought that there were certain industries which by their nature were not quite monopolies, but tended to be dominated by a few firms, and therefore to become what is called quasi monopolistic. They thought that these should be controlled in various ways. They they thought that there was a third part which ought to be left entirely to private enterprise. The reasons given for that it seems to me are very simple, very familiar and very old—namely that when you consider the nature of the industry you see there are certain parts of industry where the general advantages of wholesale structural organization outweigh those of individual initiative, and other parts where the advantages of individual initiative outweigh those of large scale organization.

That is an old consideration, and applies to all sorts of questions about Government interference. This Conference supposed that there were those three types of industry and held that you could not deal with the problem on unemployment just by having separately efficient industries. It was necessary to have something to deal with the trade cycle. You might have a lot of industries, each efficient in itself, and yet still not be able to tackle the trade cycle. It was also held that you could not deal with the trade cycle without giving the Government power over a considerable amount of investment, especially in the capital goods industries. They thought that the old means of trying to deal with the trade cycle by what were called public works were quite inadequate and did not cut nearly enough ice. For that purpose, it was held, the Government must be able to offer a public policy of preserving full employment and dealing with the trade cycle. To do that the Government must have great control over a largish section of industry, with wide powers over capital investment in that section of industry.

It seems to me that the Government must have read this admirable paper, because they have followed that suggestions made, both in regard to coal and in what they say about iron and steel, so far as what they call public corporations are concerned. The writers of this paper lay down that it is very important that you should not have the old-style nationalization, but that you should try and invent a corporation, by which you will get practically the same thing as you now get in a large organized industry.

I do not know how many noble lords have read a book, more widely advertised than it deserves, called The Managerial Revolution, by Mr. James Burnham. I thought him a conceited young man when he was at Balliol, and I think him a conceited middle-aged man now. I think it is much over-praised, but that something of what he says is true, that industry is governed not by the people who own it—that is, shareholders—but by the managers, by the directors. People might be given just as much freedom and scope under a properly devised Government scheme of the kind described in this pamphlet as they have now under the control of shareholders. They thought that you could only deal with unemployment if you allowed the Government sufficient control in order to be able quickly and efficiently to deal with investments in the heavy industries.

In the whole of the pamphlet, nobody says which industries ought to be nationalized. I rather think myself that they all think it should be other people's industries, but not their own. I looked at this on rather a high line, until I suddenly realized that the one thing I could not bear to be nationalized was University education. I think it is probably common, therefore, to take the view that other people should be nationalized, but not oneself. I think that is because you take a natural pride in your own job, especially if you have done it well, and tend to say, "I do not like these new conditions." That is natural, and I do not think it is at all surprising that managers and directors of the iron and steel industry, whom no one could accuse of doing a thing badly, look with distrust on this new proposal, and say, "No, we do not want it." If it is true that you can only deal with the prospects of unemployment which face us, and that you can only put through a policy of full employment by much more public ownership in certain selected industries than you have now, then it is not political—in the bad sense—to say that you will do that, even though the industry is efficient.

5.36 p.m.


My Lords, I do not intend to be political at all but I would like to ask the noble Lord who has just sat down whether he really contemplates that this policy of nationalization will do away with all the ups and downs of trade and world slumps and booms, because as sure as we are here this afternoon they will recur. Does the noble Lord suggest that by this control the Government will in some way get over the difficulty of finding buyers? In the future as in the past, that will be our difficulty, since whether an industry is nationalized or not, whether it is run by the Government or by private enterprise, you must find a market for your goods. If you do not sell there must, as a result, be unemployment.


The noble Lord began by asking me a question, although he got rather away from it, if I may say so. Of course, I do not suppose that there will not be ups and downs. If the noble Lord will not think me pedantic, Plato says somewhere that "Storms may overwhelm any ship, but it is better, nevertheless, to know how to steer."


Steering by nationalization in other parts of the world has ended in disaster. The noble Lord has referred to the G.P.O. and the B.B.C., but I do not consider them very good examples. There is another question here which I would like to ask. When I asked the noble Lord, Lord Winster, if he was coming back, he told me that the noble Lord, Lord Pakenham, would reply. The noble Lord, Lord Winster, instanced the question of what part of the industry was going to be nationalized. So far as I could gather, he did not deal with the case where the whole of a business from the iron ore, the coal, to the finished article, is in the hands of one firm. In such a case, would that firm be nationalized? There are quite a number of firms in that position. Perhaps it is too much to ask for an immediate answer, so perhaps the noble Lord will bear it in mind.


I am replying to the debate to-morrow, but I am ready to deal with it now.


I was horrified by one of the reasons which the noble Lord gave for his belief that nationalization was aging to be a success. The noble Lord referred to the question of the location of industry and of the happier feeling that would exist between the employer and the employee because of the fact that the Government were to be the employer. With regard to Stevenage and the question of the location of industry, there does not seem to be any very happy feeling there. There was undoubtedly an upheaval there. I do not think that there will be that happy feeling. Another thing of which I am quite certain is that I do not think that there is a likelihood of happier relations between the employers and the employees when the workers are told that they are not to be allowed to go on working at a factory at which in the pre-war days they may have been employed, but are going to be shifted to somewhere else.

Then there is a very important question in respect of which I do very strongly urge consideration. At the moment there is a period of appalling uncertainty. I was having lunch to-day with a foreigner who is desirous of doing business on a very considerable scale with large firms in this country. The one thing that worries him is that he cannot get delivery. He cannot get any firm dealing with the particular commodities which he is desirous of obtaining, some of which are in the iron and steel industry, to give any definite information with regard to delivery. Those firms say: "We really do not know where we are. We cannot say that we can deliver by any reasonable date." I know quite well where this man intends to go. He is going abroad again to do business with foreigners. If that is going to continue, then we are going to lose customers. As I mentioned in the argument which I put forward on the last occasion when I addressed your Lordships, I have yet to hear from any member of the Government any real, sound, cogent reason why it should be thought that this system of nationalization is going to be a success. We hear pious opinions to the effect, "Oh yes, this is going to happen and that is going to happen." I. am not now talking in a political sense at all. As a business man, I wish to know why it should be considered that, where there have been difficulties in the past, the general conduct of business is going to be so improved that the troubles which have occurred before will not happen again with a different employer. I do not know if the noble Lord quite got what I was saying, because he was talking to his noble friend, Has the noble Lord got that?


In so far as I have not got it, I shall have a chance of reading Hansard before I come to reply to the noble Lord.


It is a very simple question. Let me repeat it. I may not have been quite clear, What I want to hear from the noble Lord is an answer to, this very simple question. I would like him to give us some really sound and very cogent reasons why the Government consider that this alteration from private enterprise to national ownership is going to result in a great success. I have heard pious opinions to the effect, "It is going to do this, and it is going to do that." But I have never received any reason why it is going to dc those things. That is what I am so anxious to get. I did not get it during the debate on the Bill dealing with the nationalization of the coal industry.


I can set the mind of the noble Load, at rest. Reasons will be forthcoming in my reply.


Thank you. That is good. I will be delighted to hear those reasons, because I did not get them on the previous occasion. I do not wish to go over ground that has already been covered. I come now to this question of monopoly. It has been said that the iron and steel industry is now a monopoly. Yet it is proposed to change from one monopoly to another monopoly. Is it likely that this new organization or this new monopoly, managed by a totally different set of people (of course, a certain number are sure to drop out) is going to be a success? This new monopoly is going to be, to a very considerable extent, managed by people who, I think it is only reasonable to suppose, cannot have the experience or the knowledge of the ups and downs of trade which the people who are running the industry at present possess. I am sure that if the noble Lord in his reply could show reasons why this new monopoly is likely to be a success, it would relieve the minds of a great many of us.

I now come to this question. I have asked this question before, and I have got no answer to it. Would the noble Lord just listen? This is the third time I have asked this question. Perhaps the third time will be lucky. Suppose that a firm, which is not nationalized, finds out some particular way of producing, at a cheaper cost and of a better quality, articles which the nationalized industry is producing, is that firm going to be allowed to do it? I have asked that question twice and have received no answer to it. If it is not going to be allowed to do it, then undoubtedly progress will be hindered. There is no question about that. If any such firm, which is not nationalized, is allowed to continue doing business, it will become a competitor of this new monopoly, or not quite a monopoly, because according to the noble Lord, Lord Winster, it is not quite a monopoly, in so far as it does, from what I can gather, allow of certain people carrying on. Supposing those firms, which are not nationalized, by their efficient management are able to compete—as is very likely to happen—efficiently and well against the Government business—is that to be allowed? I have no doubt whatever that I shall again be accused of being gloomy. But undoubtedly the outlook is extremely gloomy. We are all aware of that fact. We are all extremely anxious to know a great deal more than we do at the present time of the reasons why the Government are in this extraordinarily confident mood about the future of this policy which they are putting forward so quickly. And really, when those ideas are put forward to Parliament, no thought-out scheme is presented. As far as I can see, no thought-out scheme has been presented in this case. The noble Lord, Lord Pakenham, who is going to reply for the Government, has stated that he is going to tell your Lordships some of the reasons why he considers that this scheme will be a success. It will be the first time that we have heard those reasons in this House. That is all I am going to say. I am aware of the fact that there are many who wish to speak, but I wanted to ask those questions because I had asked them before and had not received an answer.

5.39 p.m.


My Lords, I am intervening in this debate to-day because I have been distinctly asked to do so. I have to say the same thing to your Lordships as the noble Earl who moved the Motion said with regard to himself, that I certainly am an interested party. I cannot plead, as he was able to do, that I have had a great deal of national service or group service. I am my own altruist in this particular matter. In listening to the debate to-day, with my ordinary common sense, not having had much experience of politics or Parliament, I am a little lost in the maze of words which are used, particularly by the members of the present Government. It was emphasized by the noble Lord—and in another place by the Minister of Supply—that his Party had a mandate for the nationalization of the iron and steel industry. It is perfectly true that the noble Lord called attention to the Labour Party Manifesto, but, much to my astonishment, he described the Labour Party as the Socialist Party. I have never felt that they were synonymous terms or recognized as such.

It is true, of course, as has happened before, that certain ideologists have walked away with the practical people in the Labour Party, and are doing the talking and shouting for them. But that they are the Socialist Party, I learned with great astonishment. I learned with even greater astonishment that they possess a mandate in this matter, because it is a fact that in the General Election there were more votes cast against those people who wanted nationalization than there were in their favour. According to my ordinary, common-sense understanding of the meaning of the word, that does not give a mandate. My noble friend Lord Winster to-day has talked a great deal about getting capital control. That is ownership. Capital control, to the ordinary common or garden man's mind, means ownership. Well, bless my soul, the iron and steel trade to-day is owned by tens of thousands of our fellow citizens.

It is a matter of opinion whether it is more desirable that capital should be found voluntarily by tens of thousands of people out of their own savings, and employed at their own risk, or whether it should be taxed out of them in the form of a Government contribution. I personally would prefer to make my own investment rather than have a tax-collector put it on my Income Tax form and say, "That is so much for acquiring the iron and steel industry." That is the only other way. Generally speaking, I cannot conceive of nationalization being in the country's interest, because to buy out an industry by giving national money raised in such a manner is to put the investor really and truly into a better position than he occupied before. He has a kind of debenture; he has the nation behind him as security for his investments, once he is bought out in this manner and is no longer risking his money and adventuring his savings.

Then the word "control" was used. We have had Government control for many decades. Every intelligent citizen expects it. We expect an intelligent Government to exercise control, through Factory Acts and other legislation necessary in the conduct of industry, in the same manner as our grandfathers evolved such legislation in the centuries that have passed. That is control as any ordinary man with common sense understands it. Then we come to nationalization. That reminds me of the dear old traditional lady who found very great comfort indeed in the blessed word "Mesopotamia." She had no notion what it meant but she loved the sound of it. It was a blessed word and she liked to hear it spoken by her spiritual advisers.

The noble Lord who recently spoke wanted to know what nationalization really meant, and I make the same inquiry. What does nationalization mean? It probably means giving a shareholder a Government security instead of a risky one. It means removing from their appointments your well-trained factory inspectors and other Government servants who have been looking after the public interest in factories and other places of employment. It means also, as I see it, getting rid of the experts who have the knowledge and experience to manage our intricate business affairs, and replacing them by a totally inexperienced Minister in pursuit of patronage and power—I am afraid that is how I have to describe his motives—and supported by a financially irresponsible bureaucracy. Certainly in my business, and I think in most businesses, one does not like financially irresponsible servants; they are no asset. We know that, up to a point, in the increase in the number of civil servants whose services we now enjoy, through the way in which the country is now governed.

I wish now to come to a more personal matter. I do not want to detain your Lordships any longer, but I was asked to put in a word on behalf of the industry of which I am a member, namely, the motor industry. The members of that industry were talked about in another place, and a noble Lord was quoted as being entirely and intensely dissatisfied with the iron and steel people. I think that criticism in another place was unfair, and I was asked by my colleagues to go on record as saving that it gave an entirely erroneous impression. In the motor industry we have had negotiations over the years with the iron and steel people. I am not here to do any special pleading for them—personally I do not like such bodies at all—but, having had experience of them, I think I speak for myself and for colleagues in my industry when I say that we view with horror any possibility of getting out of the frying-pan of the Iron and Steel Federation into the fire of Whitehall.

My noble friend addressed a somewhat personal question concerning specific details to one noble Lord opposite in particular. In the speech of the noble Lord, Lord Winster, the Government emphasized strongly that they knew what they were doing and that they had spent months in studying the problems of this proposed nationalization. I happen to be chairman of a company, and Lord Winster gave most specific details as to the people in the iron and steel industry who are going to be nationalized and those who are not. I have the document here and I would quote it to your Lordships but for the fact that the noble Lord has already done so. He gave a very careful definition, as indeed did the Minister of Supply in another place. He started by saying, "Yes, we are going to nationalize iron ore." I have here the report of what the Minister said. The noble Lord read it almost word for word, but I would like to bring it home a little more. I am quoting from Column 853 of Hansard of Monday last: I propose to tell the House which sections it is proposed should be brought under public ownership, subject, of course, to the possibility of excluding some special individual plants where conditions are exceptional. We think it right to start with the iron ore and with those coke ovens which were omitted from coal scheme as being associated with steel works. We should also take over the manufacture of pig-iron, and the manufacture of steel ingots from pig-iron or scrap we must include the primary or heavy rolling sections of the industry, since steel smelting and primary rolling are essentially one industry.…Beyond this, there are various other finishing operations, some of which are so closely integrated with the actual iron and steel making as to be virtually one process. We intend, in such cases, to include the whole plant. That is very categorical, and I think it was endorsed by the Minister here this afternoon.

Now the company to which I am referring certainly does not mine ore but it possesses every other qualification for being nationalized. It has a blast furnace, and it makes pig-iron; it has coke ovens making coke for its blast furnaces, and it has rolling mills. So it possesses every qualification, and if the Government have Studied the question with such care and made up their mind with such firmness as to what is to be done, then there is no question whatever but that this company is going to be nationalized. Its essential business is making motor-cars. Some people view with some concern—and very properly so—the question of whether this is or is not a threat to nationalize the whole motor industry. Presuming that it is not, because I suppose there must be some limit to the ignorant grasping of even these nationalizers, and granting that they do not intend to nationalize the whole of the motor industry, what is going to happen? We cannot imagine for one moment that one motor-car company, enjoying the blessings of this super-excellent Government management, will ever permit the Government to buy motor-cars from anywhere other than that particular firm. They must obviously acquire a monopoly in the business of supplying motor transport to the Government. Of course, being a monopolist, I do not so much object to that—or being a potential monopolist; please do not misunderstand me.

Then I look at the other side of the picture. What do my people tell me then? They say, "Please do not send me abroad to sell national motor-cars. I shall have to be a politician if I go abroad to sell motor-cars made by a Government institution." The ordinary economic considerations will be swept away, I assure you. It may be that the Government officials know very little about these problems, but that does not hinder the noble Lord telling us that they know all about them. I would like him carefully to consider what it means, and to consider how he would like to go abroad in this export drive that he himself and his Government are thrusting upon us, and urging us to undertake, and to sell to another Government or to a person biased in favour of another country a thing that was obviously manufactured by our country. Business has never been done in that way, but the Government hope to do it. I admire their hopes, but I have no faith in them.

I think that to make any discrimination, or to nationalize, as it is called, the iron and steel trade, will be a national disaster. It cannot fail to be, because the organization which is so light-heartedly undertaking this particular task really and truly knows nothing whatever about it. If you examine for one moment the present Government, you can count on one hand the members of it who have had any experience, except under conditions of war, of the administration of Government matters. They are all learners. They have my respect, and they have my good wishes, but when they come along, because they are ideologists, and say, "We are going to give you a new Heaven and a new earth, the old things are going to be swept away—behold, I make all things new," the only advice I can give to your Lordships is, do not believe them.


My Lords, I beg to move that the debate be now adjourned.

Moved, That the debate be now adjourned.—(Viscount Greenwood.)

On Question, Motion agreed to, and debate adjourned accordingly.