HL Deb 15 May 1946 vol 141 cc206-62

2.44 p.m.

LORD TEVIOT had given Notice to ask His Majesty's Government to postpone their policy of general nationalization in view of world conditions, and to take immediate steps to free industry from controls, in order that private enterprise may enable this country to take its proper place in the markets of the world; and to move for Papers. The noble Lord said: My Lords, I have no doubt whatever that my Motion may be looked upon by certain members of your Lordships' House, and by the Government, as somewhat ambitious. I can assure your Lordships that the reason for the Motion is the extreme anxiety which some of us feel in regard to the present position of our country. I speak not only for myself but for many of my friends, men of great experience and knowledge in trade, finance and commerce, who feel as I do in the matter. This is not a hostile Motion at all. It arises from the anxiety which must be felt, I think, by everyone who is in touch with current affairs and who is impressed with the danger of the situation into which the country is rapidly going. I wish that if in future what we anticipate does take place we shall be able to say that we have expressed to the Government our belief that within a year or eighteen months there will be a very serious crisis in this country as a result of the policy pursued by the present Government.

In our view this policy must cause widespread retardation of the recovery of the nation from the effects of the war. In our view it will cripple industry and bring great suffering upon our people—that is to say, if we are right. And I have no reason to suppose, from the evidence I have, that what I anticipate will not take place. Feeling as I do, and with authoritative opinions agreeing with me on this subject, I thought it was my duty to bring this matter before your Lordships' House and to make a definite appeal to the Government to postpone the policy of general nationalization. I do not suppose for one moment that my appeal will be accepted, or in any way acted upon; but we feel this so strongly that we are putting it forward. I do not propose this afternoon to go into all the ramifications of the various industries that are now being nationalized, or are in process of working up to nationalization. That has been discussed ad nauseam in the Press, on the platforms, in your Lordships' House, and in another place. There is undoubtedly, however, a feeling of great uncertainty at the moment in regard to what one responsible Minister has termed "this experiment of nationalization." Another expression which has been used is "nationalization must prove itself." Yet a third expression which has been heard says "nationalization is on trial."

It is only within the last two days, I think, that the right honourable gentleman, the Minister of Fuel and Power, has expressed the very disturbing sentiment that "this great experiment, if it is a failure, is likely to bring the whole nation down"—or words of that sort. Surely, my Lords, this kind of expression from responsible Ministers must strike a note of very grave concern to all those who study the situation in our country to-day. In addition to that perhaps your Lordships noticed that the Financial Secretary to the Treasury said quite definitely in the other place in the Committee stage of the Coal Bill the other day, that it was the intention of the Government to nationalize all industry and services. In spite of all the speeches that have been made, and the impression which I think anyone is bound to get, that the Government themselves are worried, the Government intend to go on with this policy of nationalization. The economic side of all this was admirably dealt with last week by my noble friend Lord Cherwell. I was not present, but I very carefully read the report of the debate. There appeared to be, in respect of that side of it, no doubt that a very serious situation was arising.

The proposals of the Government do not seem to be sufficiently considered. We have got direct evidence in respect of that with regard to the iron and steel industry. It has to be remembered that not only are we dealing with the country's welfare, or with a business firm here and a business firm there, but indeed the whole state of our country, of the Empire, and perhaps to a great extent of the world. It does appear to me, in reading about and studying all these proposals that, not only has the carrying out of them not been sufficiently considered, but sufficient consideration has not been given to their effect in existing circumstances. In looking back on the history of other legislation of this magnitude and of this importance, I find that there have always been very exhaustive inquiries into all the pros and cons of such undertakings. Yet I find in relation to the present Government's proposals in a great many cases there has been no such consideration. It is not only the effect of this legislation on this country but, as I hope to show later on, the effect on other countries and the world which gives one cause for very serious thought.

I know that His Majesty's Government honestly believe that this policy of theirs is going to be of benefit to all the country. They must think so, otherwise they would not embark upon it. But, taking into consideration the experience of other countries which have embarked on this type of legislation, I have failed to find a single instance where it has been a success, and where it has not had to be withdrawn at great cost to the nation concerned. It is no use saying: "Oh, look at the General Post Office. What a success that has been. That was nationalized." That is a complete monopoly, and is not analagous to any of these other industries with which I am dealing to-day.

I ask in my Motion that controls should be removed. I do not say all of them. Some of them must continue, but there are a great many that, in the opinion of the business world, could be to-day cancelled with great benefit to the general business of our country. If I may paraphrase a remark of Mr. Winston Churchill: "Give us the chance and let us get on with the job." Believe me, the business community have got the knowledge and the experience to face up to the difficulties of the world to-day.

All this nationalization is definitely unsettling to our customers not only here, but in the world. We have such a magnificent opportunity at the moment. The world is a buyer of everything that can be produced almost anywhere, and yet the information and the evidence I have from all over the country suggests a feeling of frustration, of books filled with orders, but firms so tied up with restrictions and shackles that they cannot get on with the business. Confidence has got to be restored. It is all very well for noble Lords to smile and jeer at me but I am serious on this subject.

Let me take one or two instances. In dealing with the present picture, let us consider the coal industry. It is very problematical whether nationalization is going to be a success or not. If it does not result in producing more coal, if it does not produce cheaper coal, and enable us to build up that great export market which is so important not only to us but to the world, well, then, it will be a terrible failure. Whether any other course would have achieved what the Government are trying to achieve, I do not know, but there is no doubt that the result is very problematical, and I think from what the Minister has said on one or two occasions he is very disturbed in his mind as to what may happen.

Then we have the enormously complicated business of iron and steel. I will not go into that question which was fully debated in another place. The transport industry is awaiting nationalization. I am glad, in travelling about the country, to see on many lorries the words, "Hands off transport." I think that they are beginning to get concerned about it. I do not know what noble Lords will feel about ordinary transport, but I have always found on any occasion when I have wanted to send anything anywhere I could find some firm or other which was willing to do it at a very reasonable price, and that delivery was punctual. That has gone on for years.

I come now to a very serious matter, namely the giving up of the Liverpool cotton market, a market covering the world that has been here for 150 years. Let me give some short details with regard to it. Two million bales per annum were handled by that market. Customers from all over the world either came here themselves or had agents here who knew exactly the type of cotton required for the industries in their countries. That is a very big thing to give up. There is all the financing of that business, the shipping of the stock, the insurance of it and the banking in connexion with it. There is another question which is disturbing the producers of raw cotton all over the world. They all know that in Liverpool there was a market and they all knew that the price quoted there was something on which they could build. That has been broken up. Where is it going to be rebuilt? Nobody knows. Some say in Amsterdam, some say in Cherbourg, some say in Alexandria. It means that a great world institution, which was in this country, has been entirely given up.

Another industry is threatened. In fact I think that it has definitely been officially announced that Cable and Wireless are going to be nationalized. What a splendid service that organization has given. It has been most efficient, and I believe that the workers employed by that concern are paid higher than those in the General Post Office. Most efficient technicians are working for this organization and they have done a great work, very cheaply, throughout the world. Are His Majesty's Government quite sure that foreign governments from whom Cable and Wireless have concessions or permission to run their cables through their territories and facilities for doing their business through those countries, are going to be as happy in dealing with what is to them a foreign government as with an organization which is of world-wide reputation and with whom they have dealt intimately for years? I feel that is one of the things that is very problematical. In view of the difficulties and troubles, do the Government really believe that this is the moment to embark on this enormous experiment?

I ask the Government this question: Do they really believe that these industries, which have been built up from generation to generation—there are families, not only on the management side but on the workers' side, who have been in some of these businesses for generations—can be taken over and made into a Government Department? Is that what it means? I see my noble friend opposite shakes his head, but that is bound to happen under these proposals. And when State ownership come in, will the Government be able to produce the goods more cheaply for the customers—the same customers with which the industries have been intimate, again for generations? These things are worth thinking about, because business is a very intimate relationship between one firm and another, and immediately too much officialdom comes in, it makes the difficulties and troubles about which we all know. Will these various arrangements between firms and firms continue when the proprietor is the Government?

This brings me to another point which I think is of enormous importance. When a big firm here get to loggerheads with a firm in a foreign country with which they are dealing, it is settled in some way or other, whether by arbitration or by an umpire. Imagine the position, however, when the Government is the proprietor, and these disputes arise in the rough and tumble of markets. Surely it is better for Governments as such to be out of that sort of thing. It had better be thrashed out, in my view, by the agents of the firms or perhaps by the Embassies who are accredited to those countries and who are familiar with the local conditions. Firms are accustomed to do business with other firms, and to deal with rapidity and with technical competence. I say to this House that business cannot be done with the necessary rapidity to retain our trade if firms have to deal with a Government Department instead of what the industry concerned. I believe that it will be definitely a danger to the peace of the world, when Governments begin to haggle on terms and bargains in ordinary business transactions.

I say emphatically that it is all wrong to accuse the businesses and the great firms of this country of incompetence and inefficiency. It is not so. We have been able to stand up in the past in competition with all other nations, and hold our own. It is all wrong to say that when bad times and unemployment came, it was due to the inefficiency of our industries. It was not. It was due to world conditions over which they had no control whatever. It does not matter whether a firm or whether a Government is concerned, if the demand for the goods produced is not there, nothing will enable the producer to sell. Under the conditions that I have put before your Lordships, how can any firm which is at the moment half way to nationalization, or which has been warned, or which has the sword of nationalization over its head, launch out as it would like to do?

We know that the iron and steel industry were going to spend£168,000,000 to bring their plant up to date. That was not surprising in view of the position they got into during the war, and the disturbance they suffered in their ordinary business. None of us knows who the next victim is going to be. That is the feeling amongst us all: we do not know who the next one is going to be. I ask His Majesty's Government, why this hurry, why this undisciplined creation of uncertainty? Why? This experiment has not got into its stride yet in one instance. We do not know what is going to happen about it. Supposing it is a failure, are the Government going to continue? I say again that our industries are not inefficient; and how can people say, by any stretch of imagination, that if the demand for the goods is not there, it is the fault of the people who have had to compete for generations in producing goods which the world has at various times taken?

There is this great opportunity. Give us the freedom to get on with the job. The world wants anything we can supply. And do not forget that the competition in the world is going to be greater than in the past, for the reason that other countries which were not industrialized have now become so. We shall find that other countries which are going ahead much more rapidly than we are at the moment will continue to go ahead. We have to work hard, we have to endeavour to produce high-quality goods at a price at which they can be sold and at a price which will compete with that of our foreign competitors. I am sure your Lordships will agree with me in this remark; that nationalization, so far as we know it from history, is the grave of economic method. You must have competition and incentive really to produce the high-quality goods at the price at which they will be bought.

It was my duty, feeling as I do, and having access to so many people who are mixed up in all these affairs and who are full of great experience and knowledge, to put down this Motion, and so warn the Government of what we think is going to happen. I ask them to postpone the policy. Of course they will not do it; I do not suppose they can do it. I want them, if they will, to take all these matters very seriously to heart. I am sure that the members of other Parties in the country will support them if they find that this policy (with which we do not agree and which we feel from all the evidence we have is going to bring about disaster to our country) should be postponed. I feel that we shall only be too pleased to help to avoid this crisis which we see. Business is a very intricate and technical affair, and ought to be removed entirely from politics. I hope the Government will bear in mind the humble remarks I have made to your Lordships' House to-day. I beg to move for Papers.

3.11 p.m.


My Lords, I am sure that all of us are grateful to Lord Teviot for having brought this subject before your Lordships' House—all of us, whether we are in favour of nationalization or against it. I do not propose to-day to deal in generalities but to tell your Lordships something about some of the things which are going on in my world. You know that the principal world in which I live, in the business sense, is the world of metals. The supply of non-ferrous metals is a matter of the greatest importance to the country. Take copper; at the present moment there is only one buyer in this country for copper, and that is the Ministry of Supply. I do not want to say anything against the civil servants who are actually in charge of the purchasing of copper at the present time; they are very able men and they are struggling with very great difficulties. I know nothing of what their inner thoughts are, but I have a very clear idea of what mine are. We have to-day a position in which the metal is definitely in short supply all over the world; we have got possibly as much as a 400,000 ton shortage in this year, and 400,000 tons of copper is quite a lot. We, the producers, are told what we have to do by the Ministry of Supply, or at least they tell us what they think we ought to do.

For some reason completely unknown to me, within the last twelve months we were told by the Ministry of Supply that the production of copper should be cut down, and we told them we could not understand what they were talking about. We did not cut down our production, but a great many other people cut their production. The next thing was that the Ministry of Supply—this is an example of national planning—proceeded to regard blister copper as apparently valueless. On December 31, 1945, I made in the city an ordinary company chairman's speech in which I referred to the fact that there was no free market in copper and that copper was held up as a result of theme being only one purchaser. Within a day or two—this can be checked by reference to the Press—a Press notice appeared saying that our blister copper was not suitable for electrical work; it was not produced for that purpose. But we produce copper of two sorts, one sort for electrical work, in which the conductivity is high, and one sort for such things as sulphate of copper for spraying vines all over the continent of Europe, for making wood preservatives, for making brass taps and all the things that are required for houses and so on. That sort is never refined to a high level—it is a waste of money to do so—but it is sold as blister copper. These Government planners said "We do not want this stuff," and we asked "Shall we sell it overseas?" The demand was great and the supply was swept away. We are sold up to the end of 1947 on that particular type of copper, I will not say on instructions from but certainly with the permission of the Ministry of Supply on the statement that they did not want it. That is in a world in which copper is going to be short.

That is the sort of thing which happens when a group of men try to handle an enormous industry about which they know very little indeed. I believe that an ounce of experience is worth all the theory about how this thing is going to work. These men, excellent as they are, have not been working this thing with any understanding of the situation. Copper is used for everything from copper tacks, roof coverings and pipes right up to electrical work. For fireboxes of locomotives and so on, you want a tough copper which has got arsenic in it, but the actual Press communiquéfrom the Ministry of Supply referred to these coppers as if they were all required for electrical work. It takes some time for the offices that are really dealing with this thing to recover from the laughter which such a communiquéproduces. That is a personal business experience of planning by this Government which is going to take charge of all the industries of the country. All I can say is that if they are going to take charge of them on the lines on which they have taken charge of the copper supply up to now, then God help the country!

I am going to tell you another thing from my own direct personal experience; there is no theory about this. Our main production of copper is in the heart of Africa, in Northern Rhodesia. We are a very long way from the sea and we are linked to it by the Rhodesian railways. This is a very instructive story and before I end this little bit of what I am going to say I think you will see how absolutely sterilizing the threat of nationalization can be. The Rhodesian railways are a big, long, spidery system, not a bit like our great trunk lines. They go through vast empty spaces. They extend from Driburg to Mafeking in the Union of South Africa, through the whole range of Bechuanaland (which is under the Dominions Office), then through the whole depth of Southern Rhodesia (which again is under the Dominions Office), then through Northern Rhodesia (under the Colonial Office), into the Belgian Congo (under the Belgian Government), and at Umtali away on the east link with the Portuguese system.

Some years ago the Legislature of Southern Rhodesia passed a resolution in favour of nationalization of the railways. It was obviously a fairly complicated thing, far outside the power of the Southern Rhodesian Government, so it was referred to the Government here. In the middle of the war—I have forgotten the exact date—Sir Harold Howitt was appointed as special commissioner to go into the question of nationalization of these railways. He was appointed by the British Government in the United Kingdom, the only authority who could appoint him. Just before Christmas his able report was delivered to the Dominions Office and we heard nothing more about it. After discussing all the pros and cons he gives as his opinion that there should not be nationalization for five years anyhow. He does not say there should be nationalization at the end of five years. The Government issued his report and now the threat, a vague threat of nationalization five years hence hangs over the Rhodesian railway system.

Now just see what that means. Like all other transport in the Empire, the Rhodesian Railways are in need of rehabilitation. They are stretched to the limit at the moment to deal with the traffic of the countries through which they pass. Their rolling, stock, like most rolling stock in the world to-day, is a bit tired. Their locomotives are tired, their men are tired and, of course, the road bed wants a lot of repair. They want to spend about£6,000,000. How can they raise this£6,000,000 at the moment? They have a debenture debt of£20,000,000 which cannot be paid off until 1947. That is a big thing for them to do, but they can do it if they know they are going on. But they do not know where they are going, because the Government issue this thing without giving any indication of their policy. They put out this vague threat of nationalization, but they do not say, "We are going to do it; we are not going to do it; we are going to do it at the end of five years," or anything else.

What is going to happen? Are we to sit there in the heart of Africa waiting for the British Government to make up their mind, with a railway stretched to its limit, with another organ of the British Government urging us to produce more copper and to increase our output? We cannot increase the output unless we can haul more coal, and we cannot haul more coal unless we get the railway into condition. It is just typical of central planning; it gets broken up into bits. Somebody says, "This is a good idea," and they go ahead, and somebody says, "This is not a good idea," and they do not go ahead. What is going to be the result? If the railways cannot raise money to rehabilitate themselves you cannot continue the development of the great industries which are necessarily established in the heart of Africa. You cannot get coal to them and you cannot get the products away. What is going to happen then? The Ministry of Supply will then have to go to America or South America and buy copper for dollars instead of getting it for sterling. That is what I call the sort of stupid thing which happens where you have plans being made at a centre, or not made. In this case the Commissioner's Report is neither accepted nor rejected, it is merely published. It conveys this threat and, as the Government's reputation is known, the threat is taken seriously.

What is the Chartered Company to do? I have nothing to do with the Chartered Company; I am not in any way connected with it except through my interest in copper mines which are dependent upon the Rhodesian Railways owned by the Rhodesian Railway Trust in which the Chartered Company are great shareholders. How can they take any action unless the Government will tell them what they are going to do? It is just this sort of uncertainty that my noble friend Lord Teviot was referring to. You create unrest, you create difficulty and then silence. I am not to-day going to say what I think would be the best way to deal with the Rhodesian Railways, because I dare say that will come up again. We must, if we are going to carry forward the necessary development of the output of materials which this country needs from the sterling area, have those railways working properly, and they cannot work properly unless they are rehabilitated. I know as well as noble Lords opposite know that industry requires to establish a new degree of partnership with the Government.

I had a very educating experience when I was Chairman of the Mining Taxation Committee. Most of us in business know our own individual company problems thoroughly well, but I had to deal here with the problems of a whole industry. We found that over the industry as a whole the Government through its tax was acting as a blood-sucking parasite killing the industry and driving the business of the great overseas mining industry of the City of London out of London. May I just read one paragraph showing the sort of thing taxation was doing to the industry. Overseas mining exploration and development financed in, and managed from, London continued to expand till the outbreak of war in 1914. In the years after the war, the steep increase in the standard rate of Income Tax focused attention on the unfavourable position of mining enterprises subjected to United Kingdom taxation. The principal defects of the United Kingdom taxation, in relation to those enterprises were, and still are"— and at the time this was published still were— that no allowance can be claimed either for the cost to the enterprises of acquiring the right to the material mined (which, once mined, has no residual value), or for the so called 'capital' cost to the enterprise of the prospecting, shaft-sinking, development, and other work which is required to enable the material to be mined. In other words, the relation of that industry to the Government was that of a host to a parasite. The life-blood of the industry was being sucked out, and it was being sucked out because the amount of money that could be ploughed back into the industry out of the profits was seized, and, having been seized, was not there to rejuvenate and reinvigorate the industry. I have been told time and time again by gentlemen who support the present Government that we do not plough enough of our profits back into industry, so I have picked up a balance sheet to-day, just to see what we have been doing. The company to which I refer is twenty-three years old. These figures are given in a statement by Messrs. Deloitte, Plender, Griffiths and Co. It has spent£17,092,000 on its fixed assets. Having obliterated anything that was really doubtful, it has written off those fixed assets, that is to say, ploughed in,£10,900,000—almost£11,000,000—and it holds its fixed assets which have cost it£17,000,000 at the book figure of£6,000,000. I do not think anybody could plough in more than that. That represents an extraordinary effort in the twenty-three years.

Then I thought I would have a look to see how the product of the activity of that company was being divided. I did have a look, and I found that the taxation on profit for the year was£780,355, but that had to be added to a back-log of taxation (this company's year happens to end on June 30, and therefore does not quite correspond with the taxation year)—there had to be added the sum of£1,475,544, falling due to the Government, making a total of the Government's share of£2,255,899.

The capital of that company is£2,500,000. The share of the profit for the shareholders was£331,000 after all that could be ploughed back had been ploughed back. I do not think that supposing the Government held all the shares they would really be able to get any more out of this industry than they are doing now. The whole thing is becoming quite ridiculous. The Government take by far the greater part of the profits of the activities of the company, and the shareholders get only a small part. By this particular company, the actual nominal rate of dividend paid was 25 per cent. I received a certain number of abusive communications for paying such a high rate of interest. Actually, of course, we had put£17,000,000 into the undertaking, of which£1,500,000 was from Preference Shares. Subtract that amount and take£2,500,000 shares, and you find each share represents 26 of capital. So 25 per cent. nominal was four per cent. actual on the shareholders' money invested in the company—and that, after years of going without any return at all.

Now what are the Government trying to get if they say they are going to nationalize industries which are run on that sound, solid, conservative basis? They cannot get any more than they are getting now. And what of the shareholders? I have been a shareholder from the start of the company, and I would have done much better had I bought British Government securities and sat quietly at home instead of flying backwards and forwards between this country and Africa. Yet it has been worth doing, because it has given us the opportunity of supplying to this country a raw material for sterling, a raw material which they control, because the Government can control any of these companies. We are only too ready to take instructions in a general sense from the Government. Never in the whole history of the great companies of England have you found one failing to respond to the request of the Government when they wanted something done. No company would do anything so unpatriotic or so foolish.

So I say to the Government, please believe that there are an overwhelming number of men in industry who wish to serve the country, men who are doing their best to do so—and in many cases it has been a darned good best, an extraordinarily good best in face of very great difficulties. I say further to the Government, "Get rid of such uncertainties as those of which I have been speaking." How can we look forward and plan to give you—you, the Government, who are going to be responsible for industry—increased supplies of copper, if by failing to act, or acting, you create such uncertainty that the railways cannot be rehabilitated. If they cannot be rehabilitated, then even if we manage to maintain our output, we cannot increase it. We require to haul into Africa 10,000 tons of coal a week, and that is something which takes a bit of doing. It is you, noble Lords opposite, who can either create further uncertainty or create certainty, and allow enterprises such as this to go forward. And remember all the time that if that enterprise is checked, it is going to cost the country dollars, and dollars mean food.

3.38 p.m.


My Lords, in the very interesting and authoritative speech which he has just delivered, the noble Lord, Lord Geddes, has confined himself for the most part—as he said he would—to particular cases. I, on the other hand, propose to deal more in generalities. So as to know what it is all about, let us get clear in our minds the object which the Government have in view in their programme of nationalization. I do not imagine that they would attempt to deny that their primary object in taking control of different industries is to redistribute the national income, so as more nearly to equalize the incomes of individuals. This is undoubtedly what the electors thought. It is not much good equalizing incomes unless the smaller ones are to be substantially increased, and this was also the expectation of the electors. I need not repeat in detail the figures which have so often been given to your Lordships' House to show that the plunder of big thrift can of itself do very little to produce an increase in small incomes.

If every millionaire were left destitute, the plunder might be sufficient to raise all wages threepence a week, or something like that. There is nothing substantial to be secured on those lines. Any really considerable improvement in the standard of living of the mass of the people can be secured only by a very large increase in the production of goods and services. This is by far the most important aspect of the question, but it is certainly not the one that has received most attention. Beyond pious exhortations, that so far have completely failed to effect anything of importance, progress has been in exactly the opposite direction. Every workman is to have more wages and shorter hours unconditionally. We are, in fact, racing towards uncontrolled inflation. Little attempt is being made to adjust wages to output. We are dangerously close to the time when no one will attempt any longer to save, because there is no confidence in the stability of the currency. And if the currency goes, what about the capital with which to construct factories, to provide tools and raw materials, and to pay the workpeople before the goods they have made are marketed? Nationalization is to provide funds for charity which will do none of these things, but will swallow up hundreds of millions of pounds that might otherwise have done them.

If we are to survive, and fight our way back to prosperity, we must have factories, tools and raw materials. The more we economize the more of these there will be. Economy marches hand in hand with production. One of the results of nationalization will be to obscure the issue of economy, and enable the Government to put off the evil day. Shutting one's eyes to facts, however, in no way alters these facts; and the cardinal fact is the need for economy. How can we economize? The answer is painfully simple. We can economize by abandoning expenditure we cannot afford—principally social services—and pegged wages, which are in reality nothing but subsidies. It is no answer, although it is perfectly true, to point out that there are not more than half a dozen constituencies which would return a Member of Parliament with such a programme. It may equally well be pointed out that there is no limit to the financial absurdities which would receive overwhelming political support from the majority of the voters. Offer- them ten times as much of other people's money as they are now promised, and their enthusiasm will know no bounds, They will follow, as the children followed the Pied Piper. The great majority of British voters have the mentality of little children. They are incapable of recognizing nonsense when they hear it. It is useless to suppose that we can stop short of the danger point. We are far past it already. Pressure will increase until the crazy edifice topples over.

All this naturally gives the Communists a glorious opportunity, of which they appear to be taking full advantage. Nationalization will suit them down to the ground. They do not care a snap of the fingers for liberty or democracy. Their one idea is somehow or other to get a Bill through the House of Commons authorizing a Communist dictatorship, and nationalized industry will be a long step on the way. There is absolutely no limit to the promises which the Communists make to achieve their object and there appears to be equally little limit to what the electorate will swallow, so long as first, last and all the time, they are promised plenty of other people's money.


Will the noble Lord explain why the electorate did not swallow the Communists on a larger scale at the last election?


I do not think I quite follow the noble Lord, who is endeavouring to start another subject in the middle of my speech. I can hardly be expected to carry on with his theme.

One fine day we shall wake up and find that a snap Division in the House of Commons on a Bill, disguised as a Money Bill, has given the Communists the pretence of a legal right to establish a Communist dictatorship with about as much justification as there was for the cession of Heligoland, the Irish Ports and the Suez Canal.


Might I ask my noble friend who ceded Heligoland?


I have nothing to do with that. I belong to no political Party. I believe that the late Lord Salisbury ceded Heligoland. There are no flies on our Communist boys, but our democrats are completely covered with them. Weak finance is the Achilles heel of democracy, and seldom fails quickly to lay it in the dust. Nationalization would put the Government in a position to conceal the true financial position of the various industries taken over, and would put off the crash until their successors are in office. The only way in which nationalization could produce more income for distribution, combined with shorter working hours, is by a very large increase in efficiency and mechanization. The Government's aim is the redistribution of income. I notice there is not the slightest objection to that on the Government Bench. Does the noble Lord, Lord Pakenham, dislike that?


I do not imagine that the noble Lord wishes me to interrupt him, but I will certainly answer that question at any time.


The noble Lord interrupted me to ask a question, and I think I am quite entitled to ask him a question.


Since the noble Lord—


Order, order.


The Government's aim is the redistribution of income. Nationalization would no doubt give them firmer control of finance but, exactly in the same way as with private industry, would depend upon greater efficiency to produce better results. Meanwhile speed in recovery is of first class importance to us, and nationalization could hardly fail to cause delay on account of difficulties in the changeover. The Government are going all out in a policy of redistributing income which can do little to effect the purpose they ought to have in view—the raising of the average standard of living. To do this it is absolutely necessary largely to increase production, which is a very different matter. It is perfectly obvious that the working classes, far from accepting this necessity, have not even begun to understand it. They are all asking for much more and offering to do much less. And it is absurd to suppose that a Government, which promised them all they are asking for, will, when it becomes their employer, be able to induce them to work much harder—one of the things they particularly wish to avoid. Increased efficiency, which might perhaps do the job, has nothing to do with nationalization. In these circumstances any wise Government would postpone nationalization indefinitely.

3.48 p.m.


My Lords, the reasoning of my noble friend who has just sat down, if I have detected it rightly, is that there should be no flies on any of the noble Lords who sit opposite. My conviction satisfies me with certainty that on many of them there are no flies; their ability is beyond doubt. My impulse in intervening to-day is motivated by the hope that I might have the good fortune to conjure up, in a few intelligent words, the picture of a plain business man who returns to this country after several months' absence. Since I came back I have moved a good deal among business men in the North of England, in Scotland, in the Midlands, as well as in London. Everywhere, I must say, I have come up against a sense of frustration and disappointment which is being experienced at the present moment. It is difficult, on coming back after an absence, to dismiss from one's mind the deduction that this is in no small way connected with the Government's policy of the moment.

There are many noble Lords in this Chamber who were in responsible positions after the last war and will have fresh in their minds the fact that there was no absence of difficulties after the termination of hostilities in that war. But the point is: Was that entirely the fault of the Government, or was it because of over-riding conditions of doctrines which they were pursuing? It is from the doctrines which are being followed at the present moment, that this sense of frustration arises. Those doctrines differ very much from those we have hitherto known, and with that thought in mind one feels that my noble friend the mover of this Motion had good reason at this stage to make his appeal to the Government to postpone their policy of general nationalization. I have a belief that many of those who are members of this present Government have at various stages of their careers themselves entertained lively doubt as to the wisdom of collectivism as against individualism, and I think that many of them, with experiences fresh in their minds, from their I daily routine tasks during the period they have been in office, are now beginning to have definite doubts whether efficiency is likely to come more readily from collectivism than from individualism.

The point, I repeat, that I seek to make is that there is found about the country to-day a sense of frustration and disappointment with the daily routine task of business administration, which undoubtedly comes from these doctrines and philosophies. My noble friend emphasized a fundamental point, that goods can only be sold abroad at the price that the consumer will pay, and there is no reason to believe that collectivism will produce goods more cheaply than individualism. It never has done so anywhere else, but perhaps the present team in office, with their colleagues in another place, may produce this time what has not been done before.

The noble Lord, Lord Geddes, whose speeches in this House are always such a joy, more particularly because in the main they range over a wide range of philosophy, and then come back to the particular point on which he is speaking, chose to-day to follow another course, of giving a pertinent illustration as a business man of the reasons against the policy which my noble friend the mover of this Motion is suggesting should be postponed. I suspect that the real problem at the moment in the mind of the Government is whether they shall limit this to capital goods or whether it shall apply to consumer goods, because, quite logically, nationalized production of consumer goods for a country that must have the world as its customer just cannot work. It is impossible to make it work on consumer goods, and a large part of our national balance of trade comes from consumer goods. Is not the real object of the Government the substitution of collectivism for individual, private or risk-taking enterprise? They dislike the idea that profits shall accrue to individuals instead of to the State. My noble friend Lord Cherwell dealt very effectively in his speech last week with the question of the export trade of the country as a whole, and he gave a very good lead on that point of consumer goods. I do hope that my noble friend who is going to reply for the Government will not omit, among the reasons he will give, the degree to which he feels that collectivist production can effectively be applied to consumer goods as against capital goods. I have listened in the past to many speeches of his and I am familiar with the easy way in which he grasps that particular point.

If one proposition is that the collectivist regulation must supplant individualist effort, I put forward to the House the reflection that the Government themselves have insufficiently indicated what sort of a policy shall be followed by the bodies they aim to establish as the regulators of these trades which are to be nationalized. As one who has now had a long experience of the Central Electricity Board, I am going to put forward to my noble friend the suggestion that, if the Government must pursue their policy of more and wider nationalized regulation, the Central Electricity Board will serve as a good illustration of collective regulation, under the authority of Parliament, carried out by commercial enterprise, regulated so that there may be no profits, but without incurring the credit of the State. The Central Electricity Board are among the largest, if not the largest, consumers of coal in the country. One sees with some amazement the naive candour of the Minister of Fuel and Power, who, having with a life-long persistency recommended the nationalization of coal, now finds himself in the happy position of having to implement it, and has to admit in Parliament that there are doubts as to whether we shall have enough coal, whether we may not have to substitute oil consumption for coal consumption. There is a good deal of humour in that, and one must admire the candour with which he spoke.

But let us reflect. If public utilities are to convert from coal-burning to oil-burning, what would be the position in another war when we would be dependent more on native fuel? You cannot change over the thermal-power raising arrangement from coal to oil, or from oil to coal at will. If the national organization for production of electricity should fail, the whole supply of electricity for the country would be imperilled. Following Lord Geddes's example, may I just turn for a moment to transportation. Is it believed that if transportation were nationalized, including marine transportation, there could be collaboration with other nations that do not adopt that policy? I do not suspect that the United States are going to nationalize their mercantile marine. With regard to com- munications—my noble friend has visited the United States and knows it well—can it be said that anything that can be put up collectively by a Government pledged to nationalization can improve the service of Western Union on the North American Continent? There is a clear-cut example of private enterprise against a nationalized industry.

My noble friend the mover of the Motion laid emphasis on the Liverpool futures market. Can anything be really more surprising than to suggest that the elimination of the Liverpool futures market is going to lessen speculation? Anybody who has been in the textiles trades knows that the hedging on future commitments on a futures market is the surest way to avoid risk, not to impose it. It is an elementary fact which any man who has been in business the world over must know, and I challenge my noble friend who is going to reply for the Government to deny the fact that the United States, with all their experience in cotton, are going to insist that there shall anyhow be a means whereby the futures market can be hedged.

It is a singular fact that on this question of the doctrine of collectivism against private enterprise, it should so happen that of two of the three great Powers in the world to-day outside the British Commonwealth, one should be collectivist and the other should be an individualist or risk-taking private enterprise country. Would my noble friend suggest that there is greater freedom or liberty of the individual or the Press in the collectivist country than in the individualist country? Do the voters in this country want to lean towards freedom or regulation? If it be freedom, I advance the statement that the United States gives the better field in which the individual may exercise his choice and enjoy the privileges of freedom than does the leading collectivist country, Russia, at least so far as Press reports (and they are meagre) give us to understand.

If you look around the world, leaving out Europe, is it not true that the part of the world which shows the greatest progress at the present time is the western hemisphere? In what part of the western hemisphere, north or south of the Isthmus of Panama, is there any evidence of a drift towards nationalization or collectivism as against individualism? It is a curious thing that that part of the world in which there is the greatest freedom and the greatest opportunity for the individual, is dedicated wholeheartedly to private enterprise and is absolutely and resolutely opposed to collectivism. Travelling as I have done so recently through great parts of the United States and Canada, speaking with business men of all kinds, I have found—and there is no doubt about it—that there is a vehement distrust of Russia, a distrust of Russia because she stands for a doctrine which is the antithesis of that for which the North American Continent stands. There is a conviction that the collectivist policy is not one which would produce the prosperity that has obtained in the United States under individualism.

As regards the loan, may I say that I personally would have thought, listening to all the debates in this House, that there was less urgency and less need for this country to be anxious about the loan, because it is much more in the interest of the United States to give us a loan than it is for us to get it. It shows a curious philosophy, however, that the moment when we seek favours from Washington should be the moment chosen by the Government to announce the extension of nationalization to the steel industry. That is the very thing about which the United States have the greatest misgivings. Would the noble Lord in his earlier career readily have lent money to individuals in business who followed ethics and practices the exact reverse of those which he believed to be correct? I think it is natural that there should be misgivings throughout the United States in granting great loans to countries where the Government induce a drift the exact opposite to that in which the people of the United States confidently believe. For that reason I am going to appeal to my noble friend. The noble Lord who moved the Motion said he could not hope his eloquence would have any influence on the Government in modifying their course. I will make an appeal to the noble Lord that he will at any rate give definition to the limits to which the present policy is to go, in the hope that the sense of frustration and doubt which has been set up in the minds of the capital goods industries may be freed at least from the minds of those in the consumer goods industries?

I close with this note. Do any of your Lordships remember many Englishmen who, poor, have gone out to the United States and made great fortunes, contributed their great gifts and talents of organization to private enterprise, and, dissatisfied with private enterprise, have returned to this country? I have spent a large part of my life in the United States, going backwards and forwards three or four times a year over a period of years. I never yet met anybody who came back from the United States because he was dissatisfied with private enterprise. We saw in the Press yesterday the name of a man to be respected—that of Maurice Wilson. We know what great service he gave to this country, and how, after the sad death of the lamented Arthur Purvis, he was put in a prominent position in Washington. He brought to the use of the State talents, experience and achievements. He rose from a poor boy in a most humble situation to a position of great responsibility and power in the sphere of private enterprise, and yielded great service to the State. He surely was a disciple of private enterprise.

4.8 p.m.


My Lords, I have great sympathy in many ways with the noble Lord who proposed this Motion. He shows a great love of liberty, a love no doubt which he gained in his start on the Liberal Benches, where so many on this side of the House also started. It must be a sign of the times that we now sit so far apart. However, after stating that which I am sure is the truth—that those on this side of the House have an equal love of liberty with him—may I say that there our sympathies with him end. I do not think we can agree with him much further. I am not going through a catalogue of all the nationalization questions which have been raised. Your Lordships would not expect it from me. After all, I am one of the younger members of this House, and by no means so competent to speak on each of the individual items as many noble Lords, both on this side of the House and on the other.

This debate seems to me to bear an extraordinary resemblance to one which we had last week, when from the Opposition side of the House we were exhorted to economize, and then not told in what direction. We are now told to give up nationalization, we are not told of what, and to remove controls, we are not told which. There is not a noble Lord in the House who would not greatly object to our economizing in some of the things which were mentioned last week. There are many noble Lords on all sides of the House, including the Conservative Benches, who approve of the nationalization of certain industries, and we have already heard from a large number of speakers that they approve of certain controls. We thus see that none of these things are ills on their own.

Some speakers seem to think that the controls which now exist, and in fact all the controls, were inflicted on this country by a Labour Government as a sort of bad joke. It was nothing of the sort; they were all put on by a Coalition Government, predominently Conservative, for reasons of efficiency. They were put on because in a very grave state of the country we could not afford the inefficiency which existed in certain industries. They were imposed for that reason and for none other.

There were, of course, certain controls which were imposed for the sake of military security, but most of those have gone and the one or two which remain could, I am sure, be justified by the military spokesmen. I do not know the reason for them, but no doubt the War Office does. The other controls which remain are there for a very good reason indeed, and some of them, I hope, will be made permanent. Take, for example, the abolition of the futures market. We have heard from the Opposition side of the House some remarkable statements on this topic. There are on these Benches at least two textile men, Lord Darwen and myself, and we seem to hold a very different opinion of the futures market to that held by Lord Barnby. I can produce a great many technical men in the textile trade who, although not supporters of the Government, were very glad when the futures market was abolished. I went down to the City on the day when the futures market was abolished and I was met by various textile men who, one after another, said, "We are not supporters of the present Government, we think you are making some very great mistakes, but you have done a good thing to-day."


Will the noble Lord permit me to interrupt? Is a South American buyer of cotton goods who buys alternately from the United States and England and who wishes to hedge his future contracts, to be denied protection? If so, is he not likely to look after his own security and to hedge them on the New York market or wherever it is possible to do so?


No doubt the buyer in other countries will hedge them in such countries as he sees fit.


This country will lose the commissions.


There is no doubt that the buyer in this country is, on the whole, well pleased with the position.


That is open to question.


I will leave the matter open because I know I shall never convince the noble Lord. Let me turn to some of the controls which we have been told are such horrors. I have got a most amusing piece of evidence here from a source which I am sure the noble Lord, Lord Teviot, will accept as being worthy of credence, namely, the City editor of the Evening Standard. In the City column a couple of days ago he wrote a short paragraph on the subject of the de-zoning of transport. The controls which imposed zoning of transport in certain distribution industries were removed, and no doubt there was great joy as every business returned to its pre-war state which, as we are told by noble Lords opposite, was more efficient. This is what the City editor said about it: The recent de-zoning of a number of food industries has been followed by such a sharp increase in individual transport and distribution costs that the companies are getting together to see what can be done about it. In every case the negotiations are proceeding with a view to pooling transport along wartime lines. There followed a long list of very well-known companies which were proceeding to pool transport, and the paragraph then announced that they were forming a company to carry on the pooled transport precisely as was done during the war. It was said that the new company would be worked along similar lines to the wartime biscuit delivery pool, which was estimated to have saved the biscuit industry more than£100,000 a year in transport charges. In other words, it was more efficient than private enterprise, which presumably was thus inefficient.

The paragraph went on to point out that that saving was effected chiefly by the reduction of almost a million gallons a year in petrol consumption. That represents a great saving of dollars and no doubt something very nice to add to the basic ration. That does not seem to be quite in accord with some of the speeches we have heard to-day, but there it is. I doubt if anybody will question the authority of such a well-known paper as the Evening Standard in this matter.

I might add something which all your Lordships know to be the truth, and that is that this sort of thing is not uncommon now in the City papers. Matters have reached the stage where city firms, which originally got into a panic whenever a Labour Government so much as blinked an eyelid, now take a second look at everything which the Labour Government does. Then there is a shout of joy, up go the share values, and everybody is happy. I think that that is quite sufficient comment on these controls and also, in many ways, on the nationalization problem, because, mark you, my Lords, whenever the nationalization of anything has been announced it has very seldom been followed by a drop in the share values of the companies affected. The City is full of hard-headed men who know their own jobs very well and who, although they are not necessarily all politicians, know what is good for their businesses and what is bad for them. They may be panicked temporarily. On first hearing of a measure they say, "Oh, this affects us, it may mean disaster," and they are cautious for a day or two, but when they have had time to turn the matter over in their minds, and perhaps to sleep on it, up go the share values. I am no financial expert, but let me reassure noble Lords opposite by saying that if you want to know whether the present Government is leading this country financially to disaster or not, you will find a very much better indicator than any you will get from any side of this House if you read the Stock Exchange lists.

4.20 p.m.


My Lords, we have listened with great interest to the charming speech with which the noble Viscount has just delighted us. I always expect originality from him, but I was a little surprised to find that the source of all wisdom was the Stock Exchange. I did once hear the saying that the stockbroker was a man who knew the price of everything and the value of nothing. No doubt the hereditary tendency in that direction is still so strong, the old Adam is still so strong in him, that affection for the Stock Exchange is even greater than his affection for the Mother of Parliaments. I was also a little surprised at the non sequitur in the argument, as I understood it, although I am sure the information in the journal he quoted was quite correct. Several firms decided it would be a good thing to pool their transport resources, and they did so. Surely it had been done very often before; a good many of us did it long before there were any controls. But why on earth when firms make these mutual arrangements should that be used as an argument in favour of nationalization? I should have thought it was a perfectly good illustration of the fact that people know very well how to look after their own business and get their own transport run as efficiently as possible without troubling the State to add to its already clogged-up machine and add still further to a colossal National Debt.

I propose to argue this subject entirely without heat. I think that this Motion, introduced in such an interesting and informative speech by the noble Lord, Lord Teviot, affords convenient opportunity for us to carry a stage further the debate so ably initiated by the noble Lord, Lord Cherwell, a week or so ago on our economic prospects and our economic conditions. These debates as the Lord Chancellor said yesterday, are of very great value. They are objective, well-informed, dispassionate but sincere. Those I think are the qualities of the debates in this House. Indeed there is no subject or group of subjects to which your Lordships can more properly direct your attention than the restoration and expansion of our trade, which is as vital to us as the winning of the Battle of Britain or the winning of the war. We must succeed in maintaining and increasing that trade, and increasing and maintaining it at a greatly increased level in the difficult times after the easy market has ceased, when anybody can sell anything at any price. This is not the critical time; the critical time is going to come upon us in a few years when there ceases to be a sellers' market and when the full force of competition is open in every market. Then indeed unless we can succeed in increasing our trade we shall lose the peace; our standard of living will decline and the very essentials of life, food and raw materials, will be at stake. We are all pledged to maintain full employment and social security. Nobody wants to go from that. We are as much a party to those policies as anybody. But employment and social security depend on trade, which is the basis of all.

We have undertaken, rashly perhaps, that if the loan goes through we shall enter upon the Bretton Woods arrangements five years earlier than we had ever contemplated. We shall then be bound subject to the ten per cent. margin long before the authors of the plan had contemplated we should be. Whether this early freedom of sterling is going to be possible will depend entirely on whether we can increase and maintain our trade in the countries of the world. We won the war by a united effort, by a complete pooling of effort and ideas, approaching every problem, strategic, economic, scientific and industrial, without prejudice, seeking only the best solution. I say in all sincerity, and indeed this was the key of the speech of the mover, that we should approach that not only by words but by action. I say quite frankly that I have no preconceived prejudice about nationalization one way or the other. I care only about what will be the results upon which our very livelihood depends. I am sure the State has got to play a great part in planning, in guiding and where necessary in directing or controlling, but they will only plan effectively if they do not try to do too much.

One of the reasons why plans are a handicap, as the noble Lord, Lord Geddes, in his extraordinary revealing speech made plain, showing it seems to me why so much of what is called planning is a handicap rather than a help, is that instead of trying to give broad lines of policy, broad directives, which can be settled in consultation with those who know most about industries and markets, there is an attempt to command every platoon and to direct everybody how to do every element of their business. The result of that is not only frightful delay and frustration but it means that nobody has time to think or to consult, and you do not get that wise direction and planning you should get from Governments and from the very ablest men you can bring into your combined plan. With the best will in the world that is why you are paving the road to Hell with your good intentions. You are trying to do the business of everybody and only getting in your own way. I say that with deep sincerity.

I do not want an uncoordinated scramble. That makes as little appeal to me as does nationalization, but I do want if I may for a moment or two, following on what has been said by others, to put to the Government that they have got to prove their case because there are, as I see them, practical difficulties and dangers in nationalization. The noble Lord who is going to reply will shortly, if his Bill goes through, run the whole of a nationalized business. He will take the complete business into his own hands, and very few people are going to have any say in it. I will pass now a little to detail, and deal not with generalities but with the specific things which really are the matters which I think trouble us and upon which these grave issues have to be decided.

If you have some uniform domestic monopoly like water, it is a perfectly simple matter to nationalize it. Broad and large, all water is the same, and it is produced in the same way—you either pump it out of the ground or you get it from a watershed. The technique of purifying it is much the same everywhere, and it passes through pipes of the same kind to give the same kind of services to those living in the areas which are served by the water undertakings. No one would suggest that that is not a sensible thing to have done by a municipality, though, perhaps, even in a matter like that it is well not to have the undertaking too large. But that sort of thing really has no bearing on the very varied trade of this country. I do hope that the noble Lord is not going to tell us that nationalization is planning; it is nothing of the sort. Nationalization may be a good thing or a bad thing, but it really has nothing whatever to do with planning. Planning is working out the method of obtaining concrete results. It is not who is to own an industry, but how that industry is going to function that is the real test to be applied in connexion with nationalization.

Nationalization means changing ownership at the expense of the tax-payer, and with an addition to the National Debt. When you say: "I have nationalized," that in the first instance is what you have done. But what ought to be the aims of industrial policy? I take it that they are twofold. The first aim is to give service to the community at home, and to give goods and services in plenty as cheaply as efficient production can supply them. And efficient production does not mean low wages. On the contrary, it means efficient production per man hour, and the way to that is not through low wages any more than it is through meticulous State control. Your other objective is to sell abroad where, after the first few easy years, everything will depend on price, quality and service. We depend on export trade as no other country in the world depends on it. Russia can live within her own borders, letting nothing in that she does not want to let in and letting out nothing that she does not want to let out.

The United States does only a fraction of its business in the form of export trade. It used to be put at something like eight per cent. in the past; I do not know what it is to-day. But this country lives by its export trade, and infinitely varied that trade has got to be. It must be done in every market in the world. You will only get that trade held and increased by not merely meeting demands in the markets of the world but by anticipating what the demands of the markets are going to be and being ready, before the other man, to give supplies. That involves not only great knowledge of markets but quick and bold decisions and the taking of risks. This demands the qualities which by their very nature it is hardest for civil servants to display. Indeed, when the Civil Service is functioning properly, that is exactly what a civil servant ought not to be asked to do; certainly he is not trained to do it.

Success depends too—I think everybody will agree—to a great extent, on the size of the business. There is no hard and fast rule about this. The tendency in the past, I think, has sometimes been to make businesses too large, but you cannot lay down any arbitrary rules. One thing you can say with certainty, and that is that the more varied the trade the more difficult it is to assess the correct size of a business. A State monopoly embracing the whole of a great industry must be too large. It will be said: "We realize that, and when we nationalize industry we shall set up a whole lot of sub-businesses." That will not work because the State centre is going to control those sub-businesses. Now I am not talking theory on that point. I justify it to the House—and I hope that the Minister will answer—on the legislation which, as the Government have drafted it, is already before Parliament.

Take the coal industry. The most vital questions in that industry, questions on which success or failure, profit or loss depend, are, in terms, reserved to the Minister for ultimate decision. And when you come to the noble Lord's own child—perhaps I ought, more accurately to call the Civil Aviation Bill his step-child, the paternity I gather being a bit in dispute, or at any rate his adopted child—there you have a much more glaring example. Every plan for every service which is going to be instituted, such questions as whether you run at 10 o'clock or 10.30 to Paris, all expenditure, all estimates, the creation of a reserve fund, how that reserve fund is to be applied, all matters of finance, indeed every single activity in that business is to be subject to the direct control of the Minister. Plans of every service which is to be run have to be submitted to him, and he can object to any particular item in a plan.

It is no use talking loosely about State ownership and business control as if all nationalization means is that you buy up an industry and then appoint somebody else to run it. I always felt sure that it would not work that way, and you have only to look at these Bills to see that it will not. The directors of these companies, the directors of the noble Lord's Civil Aviation Company—if his Bill goes through in the form in which he has produced it—are not going to be independent people running their own concern with any discretion at all. They will be nothing more than subordinate civil servants, and so they must be in any nationalized industry. That, it seems to me, constitutes the inescapable dilemma which you get in nationalization. Parliament is asked to provide the whole of the money and underwrite the whole of the losses where other people were willing to go in and run businesses without any subsidy at all.

The State is to take over businesses, and underwrite the whole of the losses. Then quite inevitably, for it is the Parliamentary system, Parliamentary control will have to go on. That means that the Minister is responsible to Parliament. That is the dilemma. I believe that the necessary Parliamentary which a responsible Minister who is involved in dealing with these hundreds of millions of pounds must exercise, is completely inconsistent with the independent business management upon which success, or failure in a company depends. I have seen no answer to this problem from any quarter, and I sincerely hope that the Minister will try to give us an answer to-day. So far as the public are concerned, provided you put your tariff high enough—though I thought you were going to reduce tariffs—then no doubt, however costly the business may be, you may be able to keep the home market. But the wretched public here will have to take what nurse gives. The public overseas will not; they will go elsewhere.

You can say in this country that nobody must come into a business except the State, but you cannot say that in the overseas market. Nothing but sheer efficiency and service will work there. The loss in ordinary enterprise—if loss there is—falls on the people who have made the venture. Under the new conditions, it must fall upon the State, upon the taxpayer in fact. Instead of taxing profits, which heaven knows we are doing highly enough to-day, the State under nationalization becomes responsible for losses, which are borne by the people. The State is responsible for subsidizing every loss and every mistake. And of course, losses will be made in industry. One of the hardest things in business is to know when to cut losses. You must do it wisely, but naturally there will be anxiety to avoid losses and because of this you will get down to a dead level of mediocrity. One of the hardest things about State business is that in the effort to avoid loss you do not dare to take the risks which might cause a loss but which are the finest ways in which business is built up.

Then there must be delay in reorganization. Everybody who has ever been concerned in amalgamation knows that delay is inevitable. It always takes the people at the top a long time to get the new combined organization going. That delay is worth while if you are going to get good results from a business amalgamation. But how much more time will be taken in reorganization when a whole industry is taken over, and you have not the least idea whether the people will be willing to go on with it or not? That delay is inevitable, and as I said a moment ago, the State machine inevitably gets clogged up. It is already clogged by the tendency to try and do everybody's job.

I want to deal with one other argument. It is one which it is perfectly fair to ask us to meet. I do not think that it can be met by a plain assertion on one side or the other. I am not going to talk about the wickedness of the profit motive. The noble Lord would not talk such nonsense. He knows that when a cooperative society makes a good profit it is declared "in kind," but not in cash. But what does it matter whether you get a dozen eggs or a cash "divi"? The whole advertisement of the cooperative societies has been "divi" The torch of the cooperative society is to declare a good "divi" I cannot see why it is right for cooperative societies to declare a good dividend but iniquitous for private enterprise to do so. The Chancellor of the Exchequer would be in a very different position if we were all making losses to-day, and nobody was making a profit. I will leave aside that completely futile argument, but there is the argument, and it is a fair one, that labour will be more contented in the nationalized industry. I wonder.

It is said that everybody will work much harder. I do not want to score a debating point, but take the case of the coal industry. It is on the verge of nationalization, because of course the Bill is going through; everybody knows that. But has it produced such an immediate and extraordinary effect in the coal industry? Let us be perfectly frank about it. There are a great many people working extremely hard and steadily in the coal industry. They are the people who have been longest in it. Absenteeism is not amongst the old workers; it is almost entirely among the younger men. Incidentally, unless you can get rock-steady attendance in this industry—and I am sure this will be accepted as true—the whole, or a great part, of the value of mechanization goes, since effective mechanization in coal mines depends upon steady work all along the line. I am not saying that to score a debating point, but the noble Lord must admit that at any rate in this classic example, where relations have been difficult and there has been bitterness to overcome, it does not seem that the prospect of nationalization is producing any magical results.

After all, what does a worker in industry want? Quite rightly he wants efficient and human management. He wants steady employment and good wages. He wants the opportunity to get on and the right to change his job—the right to "sack the boss," as it used to be called. I believe my noble friend will agree that that is one of the most cherished rights of the worker. The worker will not be able to do that in a nationalized industry. He will have the same boss. In addition to what I have said, I think the worker wants something more. He wants knowledge of the business, to be satisfied that it is well run. I think we all want to see works councils, which have done good work, doing a great deal better work still. We want to see them become a meeting ground on matters of common interest—much more than on some local complaint within the industry—and on the problems of the business. If a business is being well run, the workmen will not wish to come in and change the way it is being managed.

But they want to know, and they have a perfect right to know, what the plan is, just in the same way as in "Infantry Training" it was laid down that everyone should have sufficient knowledge of the general idea to carry out a particular operation. Field Marshal Montgomery won his battles by putting into practice that principle. I think that is quite a possibility and it ought to be a commonplace in the partnership of industry. You do not need nationalization in order to get it. It does seem to me that you have a very great danger in nationalization where you make the Government the direct employer, no longer the conciliator or independent arbiter but the judge in their own court. Inevitably you make every strike, every dispute, something very near a political dispute. And certainly, as far as I can see, every strike becomes a political strike. In this nationalization legislation particular care, I observe, is taken to reserve the important labour issue for the decision of the Minister. Inevitably in a nationalized industry, particularly if it is an industry on which many other industries, which gravely affect the life of the community, depend, the Minister becomes directly involved. Difficult issues, if the Minister takes them to the Cabinet, become a Government decision. It is a terribly dangerous situation to go on multiplying in industry after industry. It seems to me it is entirely contrary to all the great system of trade unions, industrial negotiation and industrial conciliation that has been built up. All that is put in jeopardy by these plans.

What I have said may be rather disjointed. I have taken a problem here and a problem there; yet I think that is the practical way in which these essentially practical matters have got to be discussed, and I have tried with deep sincerity to put what I believe are really the crucial problems, and what are the tests which ought to weigh with us, whatever our politics, because, if it is not too hopeless to say so, I wish this thing could be lifted outside and above all questions of Party politics or theoretical considerations. These great trade and industrial matters are things that most vitally concern us, and if we take a wrong step, and if we do not get the right solution, it is not only our standard of living that suffers, but it is the very life of this country which is in jeopardy.

4.52 p.m.


My Lords, I would like to associate myself with the compliments paid by previous speakers to the noble Lord, Lord Teviot, for the sincerity of the terms in which he moved his Motion. We recognize that he spoke from a great sense of responsibility and sense of duty in these matters, but I hope he will forgive me for saying that his speech was really couched in terms of unrelieved gloom which I am happy to think is not shared at all by the country at large. He will also perhaps not mind my pointing out that, while he said his speech was not made in any hostile terms, he proceeded to say that the policy of the Government would bring a crisis on the country, would impede recovery, would cripple industry and inflict suffering on our people. If these remarks indicate a lack of hostility on the noble Lord's part, I can only say I hope I never shall incur his hostility. He sounded very, very dreadful indeed. The noble Lord, however, was quite right in thinking that his appeal to the Government will not succeed. While we had Conservative Governments in this country we had to expect Conservative measures at their hands. We have now got a Labour Government. We took our policy to the country at the General Election; the country endorsed our policy and returned us to power, and the country will now expect Socialist measures from the Government which it returned.

When I look at the terms of the Motion I am bound to say that I feel it might have been drafted by one of those foolish creatures at the Court of King Canute who suffered from the delusion that it was in man's power to tell the tide, which was coming in, to go out. The tide is coming in and the noble Lord will not be able to make it go out. I took careful note of the questions which he put to me, and I think I may fairly say in the case of his speech, and in those of other noble Lords, that it will be found that the remarks I have to make do answer in the main the specific points put to me. There is one exception to that, in the case of the noble Lord, Lord Geddes. I hope the noble Lord will accept my apology for having had to leave the House for a few moments while he was speaking, but it was due to a telephone call which I could not refuse to take. I had rather short notice of the two points which the noble Lord raised, and the best information that I can give at the moment is as follows. First of all, with regard to the question of copper, last year the producers of copper were afraid of a surplus in world production. The world's supply position would have been in balance with demand but for the strike in the United States at the present time. With regard to blister copper, the tonnage to which reference was made is relatively small. The consumers now are getting what they want from the Ministry of Supply, and the small tonnage of blister from the company in which the noble Lord is interested, is going to the Continent to be refined. With regard to the point which was made about the Rhodesian Railways, these railways serve three separate territories—the self-governing colony of Southern Rhodesia, the Protectorate of Northern Rhodesia, and Bechuanaland. The question of action with regard to the railway system is primarily one for the Governments of these three territories, and the United Kingdom Government are accordingly awaiting the view of these Governments before coming to any conclusion on that matter.

With regard to the objective quoted in the Motion—the objective is that this country may take its proper place in the markets of the world—there can be no difference of opinion on that point in this House. The change in our conditions brought about by the war has made an expansion of the export trade essential. That is common ground between us all. I wish to emphasize the point that an enlargement of our share in world trade is a fundamental feature of the Government's economic policy, and in the detailed measures which are the subject of the present Motion the Government have had the needs of the export trade constantly in mind. The Party opposite may disagree as to the efficacy of these measures which we have taken to achieve the end we have in mind, but not even Lord Teviot could say that in taking these steps we are ignoring or minimizing the needs of the export trade.

With regard to our nationalization proposals, some of our critics appear to be under the illusion that the socialization of industry is an untried and dangerous experiment which, if it must be tried at all, should only be carried out in some small unimportant field. These critics for some reason known best, and only, to themselves seem to think that, if they prove that the industries which the Government propose to nationalize are of fundamental importance to our national economy, they have in some way scored a heavy point against the Government's proposals. There are two observations I should like to make about this line of argument. First, we have in fact a very consideraable experience of public ownership of services and industries, much of it, I am happy to say, initiated by Conservative Governments. Apart from direct State administration, as in the case of the Post Office, we now have a wide and varied experience in the use of public boards, in the Central Electricity Board, the London Passenger Transport Board, the British Broadcasting Corporation, the various dock authorities and so forth.

Secondly, the Government is fully aware of the basic character of the industries which it is bringing under public ownership. That is exactly the reason why that is being done. The rest of the industry in this country depends very largely on the industries and services which are being brought under public ownership—coal, gas, electricity, transport, iron and steel. British industry in the future will depend upon an efficient functioning of these fundamental services and industries. That is why they have to be rescued in certain circumstances from the state of inefficiency into which they have fallen, and put on a planned basis and developed in the national interests alone. It is precisely because they are so fundamental, and because the Government believe that only under public ownership will they function efficiently, that the plans are now being worked out which will be placed before the present Parliament.

Nationalization is not an end in itself, and the Government has, at no stage, taken a general decision to nationalize industries, as is rather mistakenly implied in the noble Lord's motion. The Government fully accept the position that nationalization ought not to be carried out on political or doctrinaire grounds. What we want is the maximum industrial efficiency. Each industry has been looked at on its merits and each decision has been taken on the ground that public ownership, in the circumstances of the individual industry, would give the most efficient and economic results. What is the record of so-called private enterprise in the field which is now being covered by nationalization? Take the coal industry. In the twenty years between the wars every possible alternative to nationalization was explored. Mechanization was attempted, but, as the Reid Report points out, it was wrongly conceived. Amalgamations were regarded as a panacea, but in the comparatively few cases in which they were effected no outstanding progress in technical efficiency was achieved. Mining royalties were nationalized, but again the Reid Report makes it clear that this step alone could not appreciably affect the efficiency of the coal industry, because coal leases in force at the time of transfer continued in force, unaltered except by the change of lessor. Throughout this period of twenty years between the wars, the efficiency of the British coal industry relative to that of its Continental competitors was falling back. The noble Lord, Lord Teviot, in the course of his remarks, said that it was wrong to accuse industry of incompetency. He said that we had always been able to stand up to competition, although a little later he spoke about other nations going ahead more rapidly. The fact is that the coal industry is one of several industries which had fallen into a state of inefficiency, and, because it had done so, it is the case that some of our foreign competitors were going ahead.

The only alternative which has been put forward by the Opposition in the case of the coal industry is a vague and ill-defined system of dual control which could hardly fail to have the disadvantages both of private enterprise and Government control, and this without any real countervailing virtues. The fact of the matter is that the system of private ownership in the British coal industry has shown itself incapable of adjustment to the needs of twentieth century technique. Technical backwardness is a fundamental feature of British coalmining to-day, and what is needed to cope with it is an entirely new spirit in an approach to the problems of the industry. Finally, there could be no possible hope of securing the full co-operation of the miners, which is on all sides admitted to be essential to the successful running of the industry, without nationalization. The noble Viscount, Lord Swinton, referred in particular to the coal industry and the question of output. Now I readily admit thaw output is not yet up to what it was twelve months ago, but the fact is that output per shift and per man has gone up, particularly during the two months of January—


I was referring to absenteeism.


Absenteeism has declined.


Would the noble Lord explain, in those circumstances, why the Minister of Fuel and Power told us the other day that we were going to start next winter with a very much worse coal situation than the last?


The two statements are quite compatible. I am not in any way controverting what the Minister of Fuel and Power said. No doubt that is the case. I am merely quoting the fact that output has gone up and absenteeism has declined, but I started my remarks by saying that output is not yet up to what it was twelve months ago.

Now in the field of transport, before the outbreak of war, proposals were put forward that a degree of regulation should be put on road transport in order to equate its position with that of the railways. Then the railways asked that the position should be dealt with by freeing them from control. Those were what were called the "Square Deal" proposals. The Royal Commission on Transport had agreed that there should be co-ordination with the various transport services, but unfortunately it had been unable to agree how this co-ordination should be achieved. The outbreak of war saw the essentially uneconomic organization of the railways and road services in relation to goods traffic still in existence, and the future full of doubts and difficulties May I read to your Lordships in that connexion what Lord Leathers, then Minister of War Transport, said in a debate in your Lordships' House in October, 1943? These were his words: In my view these proposals"— that is, the recommendations of the Transport Advisory Council on the Railways' "Square Deal" scheme— failed to reach the root of the problem, and indeed both the Transport Advisory Council and the then Minister regarded them as merely a stop-gap arrangement. Even if it should be proper in the post-war circumstances to proceed with the 'Square Deal' proposals, I am firmly convinced that some more radical solution has still to be found, although I am not yet able to bring forward any precise suggestions. The Government agree that some more radical solution has still to be found, and in due course will come forward with its precise suggestions. The noble Viscount referred to our proposals to bring civil air services into public ownership. This has recently been very fully dealt with in another place, and we have already debated the matter several times here, and before very long it will come up again, when the Civil Aviation Bill comes before your Lordships. For that reason, great though the temptation is to me as Minister of Civil Aviation, I do not intend to dilate on that subject this afternoon. I would remind your Lordships, however, that between the two wars there were twenty years during which the capitalist machine had full scope, and it did not do much for civil aviation. Indeed, the situation drifted into such a position that even a Conservative Government in 1939 carried through legislation to bring all our major international air services into public ownership. With such a background, and in the present circumstances, when effective air transport organizations could only be built up with a maximum of Government assistance, it is not surprising that His Majesty's Government have decided that our air transport should pass into public ownership.

Those are the reasons which have operated in the minds of His Majesty's Government in deciding upon these policies, and it is therefore quite wrong—and it is done with a deliberate political malice—to paint a picture of the present Government as wantonly interfering with basic industries which were pursuing the even tenor of their successful ways, organized on private enterprise lines. The prewar position of all these industries was unsatisfactory. Drastic changes were needed if we were to maintain our place in the world and to safeguard the standards of living of our people. As a result of the war these industries were necessarily placed under a considerable measure of State regulation and control. The war-time arrangements cannot continue, and changes have to be made either in the direction of a reversion to some form of private enterprise with a considerable measure of State regulation, or in the direction of public ownership. When noble Lords opposite enlarge upon the dislocation which the change to nationalization will involve, they ignore the extent to which fundamental changes have to be made in any event because of the existence of war-time arrangements and organizations and because the prewar facilities were often unsatisfactory. Much has been said about the need for nationalization in the interests of economic efficiency. The Government has made its nationalization proposals in each case on the grounds of economic efficiency in the national interest.


Including iron and steel?


I am coming to iron and steel later. The noble Lord, Lord Teviot, would, I am sure, also claim to have the national interest at heart. I do not say this of the noble Lord, but I do very often meet people in life who, by some strange coincidence, find that the national interest coincides with their private interests. There was a time, I think, in the early days of the Evangelical movement when a saying got into the air about "philanthropy at 5 per cent." Any of the apostles of national interest would regard 5 per cent, as very poor interest indeed. It is a remarkable coincidence how their views on the national interest and their own private interests appear to coincide.

Before I look at the circumstances of individual industries, there is one particular point which I should like to make. The basic industries which are to be nationalized are all industries which require very considerable capital expenditure, partly because of leeway that has got to be made up, and partly because they use very large quantities of capital equipment which must be replaced in the ordinary way. Enormous sums are involved at the present moment. The State can borrow money much more readily than the private owner and can ensure that capital resources are made available cheaply at the right time and in the right places. I do not propose to say much about coal or about gas and electricity. We shall shortly have the Coal Industry Nationalization Bill in this House and that, I think, will afford a more appropriate opportunity to discuss the merits of the Government's proposals. In view of the past history of the coal industry, I think that some noble Lords sitting opposite are perhaps not quite so inclined in their hearts to disagree with the Government's remedy.

As to the gas industry, in the days of the Coalition Government a Committee was appointed under the Chairmanship of Mr. Geoffrey Heyworth to investigate the future organization of the industry. If the noble Lords will look at the composition of that Committee they will see that it cannot be said that it had any predisposition towards Socialism, but it reached the unanimous conclusion that for reasons of economic efficiency it was necessary to bring the gas industry completely under public ownership. In the case of electricity, the control of generation was nationalized and placed under the Central Electricity Board by a Conservative administration.


If the Minister will forgive my interrupting, the Central Electricity Board is not nationalized. Money raised by the Central Electricity Board is raised in the open market without any State guarantee.


I said in the case of electricity the control of generation was nationalized and placed under the Central Electricity Board by a Conservative Administration.


It was not nationalized.


The Government now propose to take the logical step of bringing distribution as well as generation under public ownership. This will enable electricity distribution to be organized in units large enough to secure all the benefits of large-scale organization. Once the decision to nationalize has been taken, it is possible—


The Minister says the Government is going to take the distribution of electricity and put it under a nationalized scheme merely for logical reasons—not for the reason of making it more efficient, but for logical reasons. Am I right?


This is one of those cases where logic and efficiency happen to go hand in hand.


That is no answer.


The decision of the Government will enable electricity distribution to be organized in units large enough to secure all the benefits of largescale organization. Once the decision to nationalize has been taken, it is possible, in this expanding and vital industry, to determine the right size of the units for electricity distribution from the point of view of the efficient organization of the industry in the public interest and without regard to accidental factors such as the haphazard development of local authority undertakings and private companies. In regard to transport, by bringing under national ownership the railways and the long distance road haulage services, the efficient organization of goods transport by road and by rail can at last be achieved.


May I ask the noble Lord a question on road transport? Do they need any further capital at all and have they not proved themselves to be a most efficient industry?


In the case of road transport, I cannot answer the question whether they require more capital at the present moment, but capital expenditure is certainly required in the case of the railways. The case of cotton has been referred to at some length. We learned during the war that it was possible to organize the bulk purchase and distribution of cotton under a national system with complete efficiency. We found, not as a matter of theory but on the basis of practical experience, that the bulk purchase of cotton in this way will enable supplies of cotton to be obtained at least as economically and with greater certainty and regularity than by reversion to the pre-war arrangements. It is true that we may lose the foreign exchange earnings of the pre-war cotton market, which my right honourable friend the Chancellor of the Exchequer has calculated to be£1,000,000 a year at the maximum, but in the more stable conditions which we shall secure we shall gain more from the steady and increased flow of cotton exports than we shall lose from the foreign exchange earnings. As to iron and steel, I do not propose to engage in a detailed argument on the Government's iron and steel proposals.


We were not aware that the Government had any proposals as yet.


Where ignorance is bliss, 'tis folly to be wise. I am surprised to find that the noble Viscount does not know that we have any proposals. There is shortly to be a debate in another place devoted entirely to this subject and there is a Motion on the Order Paper in this House for a debate on the subject in June. I think that will be a more suitable opportunity for the iron and steel question to be dealt with. At any rate let me this afternoon dispose of the completely nonsensical suggestion that the Government is nationalizing the industry first and thinking about the matter afterwards.

A NOBLE LORD: That is exactly what has happened.


It is deliberately erroneous to suggest that the Government have either no ideas as to the extent the industry should be nationalized, or are resolved to nationalize some part of the industry without having regard to the effect of splitting integrated concerns into parts. The Government, before it reached its decision, satisfied itself that there were definable sections of the industry which ought to be brought under public ownership with a view to their more efficient operation. It is necessary to discuss with the industry questions of the sections on the borderline and the fixation of the exact boundaries, having regard to the relation of the different sections of the complex structure of some individual firms. These questions are intricate and complicated, but they do not affect the merits of the Government's proposals.


I am sure the noble Lord will want to give the House accurate information. Is it not a fact that the Government fully approved a plan proposed by the industry itself, and that the industry was perfectly prepared to finance the whole of that plan? If those statements are correct, then how can he say that it is on grounds of efficiency that the Government desire to nationalize this industry?


I think we had better have a special debate on this subject and on this subject alone. I can say this regarding the Federation's Report, that only the other day I saw that one large firm did not agree with it and differed from it. That was the South Durham Steel and Iron Company. They said they did not support the Report, that it would require some modification, and that if the proposals were carried out dislocation of a large body of labour at West Hartlepool would result. I am quoting from The Times. Now with regard to the organization to be adopted for each nationalized industry, which has again been touched upon this afternoon. The exact arrangements made will depend on the circumstances of each industry, and the need for flexibility will be fully borne in mind. The field for what one may call a "Post Office" organization is obviously limited. The more common type of organization will be the National Board, but this in turn admits of many variants and some industries may be better run on a regional basis. The Government has already made it clear that the bulk purchase of cotton will be run from Lancashire and by Lancashire men skilled in the subject. For all these industries the Government are determined to get the best technical ability available and to make full use of it.

On this matter of general nationalization which is, I think, in the noble Lord's mind, and I feel was also occupying the attention of the noble Lord, Lord Barnby, because he was speaking about consumer goods industries being nationalized, in November last the Government indicated the scope of its nationalization plans. The only industry which was then left open to doubt was the iron and steel industry, and an announcement in regard to iron and steel has now been made. In regard to other industries, the President of the Board of Trade specifically stated that if the necessary standards of efficiency were achieved the Government did not intend to nationalize the cotton spinning, weaving and finishing industry. At the same time it was specifically stated that shipping would not be nationalized. Where, therefore, there has been any element of doubt about the Government's intentions during the course of the present Parliament the Government have been at pains to make the position clear. The statement made in the course of the debate in this House on the 8th of May that British industry stood in a state of shivering apprehension about its future is simply untrue. The Government of course, as they recognize their duty to British industry to be, have been at pains to make the position clear.

Now about controls. The figures I shall give later do not suggest that our export industries are labouring under any very serious restrictive controls and regulations. Fully recognizing the vital importance of building up our export trade far beyond pre-war levels, the Government have given industry a vigorous and positive lead in this field, with results far beyond anything that could have been achieved in the absence of such assistance. The very extensive relaxation of controls made possible by the termination of the war and the alleviation of many shortages has been carried out in a manner designed to give export production every possible facility and encouragement; and a large proportion of the regulations which remain have this object particularly in view. May I remind your Lordships of the comprehensive series of export targets which have been readily agreed between the industries and the Departments concerned? These, although not controls in the strict sense, have provided a most valuable basis for export recovery, by establishing a proper balance between the needs of the home market and the need for exports. Those targets have provided the thousands of firms concerned with definite programmes to work to; and this has made it possible to avoid shortages of raw materials and other components of productions which would otherwise have been bound to hold up the expansion of output required. In some cases it has been necessary to make the fulfilment of export targets a condition of such assistance, but by and large the industries concerned have welcomed the Government's lead and are voluntarily implementing the very ambitious targets to which they have agreed, despite the tempting character of easier and more profitable markets at home.

In the field of controls proper, particular importance attaches to the Government's price stabilization policy. In face of the unsatisfied demand on every side, a judicious mixture of voluntary and statutory price controls has secured a comprehensive measure of stability throughout the price structure of economy. There is no doubt that this stability has been and remains a vital condition of orderly reconversion at home and a rapid build-up of sales abroad. An inflationary rise of prices which would certainly ensue if this structure of price controls were relaxed more rapidly than the alleviation of particular shortages permits, would not fail, surely and swiftly, to undermine our competitive position in foreign markets. Not only would it disorganize the smooth course of reconversion at home and produce a scramble for the goods we must export, but it would create a fundamental disequilibrium between British and foreign costs, which would in turn gravely handicap our long-term export prospects, and reproduce the chronic difficulties of the export trades in the between-war years. The machinery by which the many raw materials still in short supply have been allocated to industry is a very good example of the way in which particular economic controls have been adapted to the needs of the export programme. The allocation process has effected a most economic disposal of scarce materials, and has served to ensure that after the urgent requirements of the home market have been met, as much as we could reasonably spare of all materials in short supply are devoted to export work. Direct controls of manufacturing activities have been very greatly curtailed in recent months, and are now focused very largely upon those primarily domestic lines—such as textiles and furniture—where the policy of fair shares for consumers at reasonable prices has necessitated standardization and regulation. The relaxation of labour controls has been carried very far indeed, and there are few export industries still subject to the Essential Work Order. No less than three-quarters of a million workers have been added to the expert labour force in the past twelve months, without requiring any active direction of labour.

Now let me refer to those export figures which I mentioned earlier in my speech—the acid test whether the noble Lord who moved the Motion is right in saying that a fear of nationalization or the clammy hand of Government control is preventing British industrialists from securing their rightful share of world markets. At one time during the war our exports were reduced to little more than 30 per cent. of their pre-war volume, but by May and June of last year, they had risen to about 45 per cent. Since then they have slightly more than doubled in volume, and the current rate of export is already above 90 per cent. of pre-war. From July to December of last year the average value of our exports was£36,000,000 a month; for January the figure was£57,000,000; for February£60,000,000; for March£67,000,000; and for April the figure will be slightly higher still. I am not yet able to quote it exactly. This is a very promising rate of progress, and latest man-power returns give good ground for believing that it will continue.


May I ask, do those export figures include fictitious exports, like exports to U.N.R.R.A. and N.A. A.F.I.—and to the troops, abroad?


I am informed that the answer is: Yes, they do, but the percentages remain the same throughout. The percentages are unaffected. The total number of workers engaged in the production of manufactured goods for export at the end of February was estimated at just over 1,50,000—which was already above the pre-war figure of about 1,000,000, and considerably more than double the figure for mid-1945. At the end of March this figure relating to workers engaged in such production had risen to about 15 per cent. or 20 per cent. above pre-war. May I hasten to say, having quoted these figures which I regard as very satisfactory, that we are not yet, of course, in sight of our longterm objective of a 75 per cent. increase in volume, but we can at least claim, with the help of a seller's market overseas, that we are making very good progress towards it.

This is my presentation of the Government's case. I fear that it has been a far too lengthy one, but I have indeed had a great deal of ground to cover, and much that I would have liked to say, much which bears out the arguments in the case I have been putting forward, I feel compelled to omit in order not to trespass too long upon your Lordships' time. That is a part of the Government's case. Our policy of nationalization, we believe, will ultimately put the basic services on which British industry depends upon an up-to-date and efficient basis. We shall spare no pains to secure that end. We believe, further, that such economic controls as remain on the rest of British industry are the minimum necessary under present conditions, and that so far from clogging the export drive, they are assisting in a positive and helpful way. In proof of this I submit the rising curve of our exports with which I have dealt in detail. My Lords, I realize the depth of the objections which are felt by many noble Lords opposite to the nationalization proposals of the Government, and to many other points in the Government's policy. There are many unpalatable lessons which have to be learnt in these days by those who, in the past, have been fortunate in enjoying—I do not say abusing—the privilege of great possessions, and the ultimate aim of our policy, the redistribution of the national wealth, will undoubtedly, as I say, leave many unpalatable lessons for some people in its train. But, my Lords, former things have passed away, and I sometimes regret to find that there are so many people who like to sit in a corner seat in a first-class carriage, with their backs to the engine, always looking at what they feel is the beautiful landscape they are leaving behind. I wish that some of them would change their places, sit facing the engine, and begin to look at the world into which we are progressing. And how very much better still if they would get up on to the engine occasionally and do a little of the work!

I would end by quoting the words of the Prime Minister, which he used quite recently, concerning the aim and ultimate objective of our policy. The Prime Minister said: We of the British Labour movement believe that in foreign as well as home affairs we should direct our policy in accordance with a definite principle, the Socialist principle, in which we believe. We are seeking to build up in this country a system of society in which there shall be freedom from want. We are seeking to join with others in extending that freedom from want all over the world, but we also seek to give to all peoples freedom from fear. That is the ultimate aim of the Government's policy, and we believe that the proposals for nationalization of our basic industries that we are now putting before Parliament will conduce to that end, because they will conduce to the greater efficiency of the industries concerned, and, therefore to the national well-being.

5.38 p.m.


My Lords, I came here this afternoon without the remotest intention of inflicting a speech upon your Lordships. But some of the things which the noble Lord who has answered for the Government has said about the efficiency of the British railway system I feel ought not to be allowed to pass without contradiction. I hope therefore that the noble Lord opposite will allow me to have just three minutes of your Lordships' time before he winds up the debate. The noble Lord who spoke for the Government said that he founded his case for nationalization on the record of efficiency of the industries concerned, and he proceeded to draw for your Lordships a picture of each industry in turn. He included the railways, as I understood him, as being among those industries which had been markedly inefficient. That is a position which really cannot be allowed to pass unchallenged, because I believe—and I have been connected with one of the great British railways for some years—that it is totally contrary to the facts.

The actual position of the railways before the war was that, handicapped by obsolete legislation, they had been struggling to put their house in order, and to secure proper co-ordination of transport. I claim that the record of the railways during the war is proof of the complete efficiency of the British railway system, and I hasten to say, of course, that I am not referring to the managements only. The tribute which I pay is to the staffs just as much as to the managements. The task which was carried out by the British railways during the war was one which, I think we shall all agree, provoked the admiration of the whole world. I claim, in a sentence, that British railways are, and always have been, the most efficient in the world.

I desire to be perfectly fair and am quite prepared to admit to your Lordships that there may have been a time thirty or forty years ago, before the rise of the great road transport industry, when the railways were not, perhaps, as wide awake as they might have been. But, after the last war, faced with the challenge of the road industries, the railways, I claim, not only put their house in order, but rose to a greater standard of efficiency than any other railway system in the world. It is hard that the noble Lord should say that the decision to nationalize the railways was taken on the grounds of efficiency. Some of the railways, instead of paying away money which they might have paid in dividends, took thought for the future.

The extraordinarily efficient state of the lines and rolling stock of our railways, which I make bold to say brought this country through the war, was achieved as a result of the policy of the managements, ably seconded by the devotion of the staff. My noble friend on the Government Bench quotes Lord Leathers and says: "Some more radical solution must be found"—that was to the recommendations of the Transport Advisory Council. I do not know whether my noble friend intends to enlist Lord Leathers as an advocate of nationalization; I do not think he meant to go as far as that. I do not wish to detain your Lordships any longer, but I must protest emphatically against any idea that British railways are inefficient.

5.42 p.m.


My Lords, before winding up this debate, as I am entitled to do, I would just like to endorse heartily what my noble friend who has just sat down said about the railways, and particularly about the railway servants. Noble Lords who travelled about the country, particularly at the time of the "blitz," will pay tribute to the engine drivers and the workers at the great London railway stations which were targets for the enemy. I believe the Government are to give the miners£1 to mark V-day. I can assure noble Lords that if anybody has earned recognition for splendid work in very dangerous conditions, it is the railway servants. They are entitled to recognition perhaps more than anybody, and I hope the noble Lord will put it to the Government that the railway servants should get an extra£1 to have "a drop of something" on V-day.

Every time I have raised the question of economics, or something worrying the nation, I have been called a man of gloom. It came again to-day. I knew it would come, sooner or later. Reading the report of last week's debate, I gather that my noble friend Lord Cherwell was also accused of being gloomy. If that is a result of our expressing our views on the facts before us, then the situation is more gloomy than I would have expected. The noble Lord, in his reply, rather criticized me for being hostile. I can assure him that the spirit behind everything I said was to give what I genuinely believed was justified—friendly advice. I knew it would not be accepted, of course, but I hoped he would consider it as friendly advice. Socialist measures must be a success, and up to now we do not know whether they are going to be a success. There is evidence from various statements made by Ministers at different times that they themselves are a bit anxious as to whether these measures are going to be a success or not. I instanced various quotations from speeches made by most important Ministers, including the Minister who is managing coal affairs.

The noble Lord who spoke for the Government tried to cite the Post Office and the B.B.C. as instances of satisfactory nationalization. Really, my Lords!There is no competition there. Both the Post Office and the B.B.C. have a complete monopoly. They have not to enter into competition with other businesses here and abroad; and that is a point I would emphasize to the noble Lord. Supposing nationalization takes place in a certain industry and some little firm evolves some idea which the proprietor does not want nationalized with his firm. Will this man be permitted to produce goods at a lower price than that for nationalized goods, or will he be shut down altogether? Progress has been made in this country, and prices of commodities have been kept down, through such small firms. We all know of cases where men have started in little back shops and have built up their businesses into enormous concerns operating throughout the country. Is that to be stopped? Are this enterprise and these abilities, which are found in all classes of life, to be prevented from functioning any more? It looks as if they are.

Surely, the iron and steel industry cannot be accused of inefficiency. The industry did a great work in the war; it did a great work before the war. With regard to the mines, I was a miner myself as a young man, and I know enough of the coal formations of this country to know that a great deal of the coal industry cannot be mechanized. The formations in this country are not like the American coalfields, where they have enormous reefs on a pretty well level dip into which they can put cutting machines and get out thousands of tons of coal quite easily. Here, where levels and conditions vary, it is a difficult question, not comparable with other countries. It seemed to me, my Lords, that in his reply the Minister was all the time fashioning his arguments on war conditions. But war conditions will not apply to peace conditions.

In the war you had the one customer—the State. Everybody else was cut out. When we get back to real peace conditions, and we shall before long, it will be a very different thing if all these great industries are nationalized. The noble Lord referred to civil aviation. Before the war, aviation was gradually improving, here as well as elsewhere. But naturally the war, with its enormous increase in development, improved the situation afterwards. I do not see why private enterprise should not receive the benefit of that. After all, civil aviation was built up by private enterprise firms, those great firms which produced the aeroplanes. All they did was to get the orders and build the planes, profiting by the experience of the war.


Is there not some confusion on that? We are not proposing to nationalize the aircraft industry.


Oh, I see. Aircraft firms, then, will be able to carry on on their own without interference from the Government?




That is very interesting. I did not appreciate that. A most unworthy thing was suggested by the Minister—I have heard it said before, but I did not expect it from him—when he said that when the interests of some people on this side of the House were affected, they altered their views. I am sure he did not mean that.


I did not say that. The noble Lord must be accurate in his quotations.


If the noble Lord will read the report of his speech—


If the noble Lord reads my speech he will find that I made no such charge as he alleges.


I am very glad to hear that, but I took a special note, and I think in the report of his speech it will be found that there was just that suggestion.




We have had it thrown at us on this side of the House—


The noble Lord must not go on labouring a point with regard to something about which I informed the noble Lord I did not say.


I accept what the noble Lord says.


You are not accepting it.


I am sorry if I misunderstood—


So am I.


I hope that I shall find that I did misunderstand him.—apologise most humbly—


I accept it.


—if I misunderstood him. With regard to the question of money, we know that the iron and steel industry on its own was prepared to put up£168,000,000. I understand that the road transport industry does not want any financing at all. I am sure that Cable and Wireless did not. I am quite certain that they would have carried on, and would have been able to effect the necessary improvements which have now stopped because of this nationalization plan. The noble Lord must not be angry with me with regard to this matter, because I am perfectly genuine—just as much as he is in his views. Let me deal with another matter. Am I right in thinking—the noble Lord will inform me if I am wrong—that Hull has its own telephone system?




Hull has never had its telephone service nationalized. I understand that in Hull, the telephone service is cheaper, and indeed is, in every way, comparable with the national system. I fail to find anything in what the noble Lord has said that proves that nationalization wherever it has been tried has revealed itself to be effective and to the general benefit of people in other parts of the world.

The noble Lord said: "We are not going to nationalize shipping" Why not? If nationalization is the right thing, why not nationalize shipping? Why not nationalize the weaving industry, if it is the right thing? If it is going to be of benefit, why not do it? There are certain things which I do not understand with regard to this general policy of nationalization. Why leave out anything, if it is so good? The noble Lord told us of the success with regard to exports. He admitted, however, that the export figures include everything that has been sent abroad, the contributions to U.N.R.R.A., all the money necessary to provide goods for our troops all over the world, and so on. We have got a buying market in the world. At the present time anything which we can produce we can sell. As my noble friend Viscount Swinton said it is later on, when other people begin to wake up, and when fierce competition begins that I fear we shall fail with nationalized industries.

Naturally, I am not going to divide the House on this question. However, I do feel that we have had an interesting debate. I consider that a great deal of interesting and, I hope, useful information has been given to the Government. I want them to realize that we are perfectly genuine in our feelings of apprehension with regard to the future. Although I cannot agree that the Minister has made out a case at all for nationalization, nevertheless, I must go on and try to help my country in the way I think best. This Motion was one of the ways by which I have tried to do it. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.