NATIONAL BOARD ADMINISTRATION.

HL Deb 26 November 1947 vol 152 cc938-90

3.6 p.m.

LORD TEYNHAM

rose to call attention to the administration of the National Coal Board and other national boards; and to move for Papers. The noble Lord said: My Lords, I placed this Motion on the Order Paper with a view to putting forward certain ideas and suggestions in relation to the Coal Board and other national boards and certainly not to advance any kind of destructive criticism. Your Lordships are, of course, well aware that public corporations which these national boards control are a compromise between management by private enterprise and management by a Government Department or municipal authority. They are also vastly different in size and shape, and it is quite impossible to have any form of sterotyped control. We have the example of the Port of London Authority, the board of which is composed of representatives of the interests concerned. Again, we have the different examples of the Air Line Corporations with Boards which are not composed of men of sectional interests. There is, of course, the outstanding example of the London Passenger Transport Board where the Board are appointed by a group of trustees. I believe this was done in elder to get away from any possible political interference with regard to the appointments and the method is one which, in some ways, I do not think is at all a bad one, even to-day.

The responsibilities of these boards which I have mentioned pale into insignificance when we come to look at the Coal Board or perhaps the Transport Commission and quite a different structure for these Boards seems to be required. If we examine the broad policy of nationalization, we are immediately faced with the difficult problem of maintaining some form of centralized control either through functional executives at the top or through a policy-making body. With these vast industrial organizations which are now being set up, I do not believe that functional boards can in fact meet the case. I think facts are slowly emerging which indicate that one of the main reasons for the present difficulties in the coal fields is the lack of decentralization and autonomous control. It would appear that the Minister of Transport was not unmindful of these difficulties when setting up the Transport Commission. He see up a policy-making body rather than a group of functional executives as in the case of the Coal Board.

The members of functional boards are, by the nature of things, I suggest, rather inclined to get immersed in departmental responsibilities and are, therefore, unable to take an all-round view of the position of the industry. In addition, there is always difficulty in selecting for public boards suitable persons who have both administrative ability and high technical knowledge. Your Lordships will remember that in the case of the Electricity Act some fourteen area boards were set up which are in fact public corporations with independent legal existence, whereas, in the case of the National Coal Board there are eight divisional boards, and below them some 50 area boards with only delegated authority. I have little doubt that His Majesty's Government have already begun to feel that the Coal Board is not perhaps all it should be in its composition, and that a policy-making body rather than a group of functional executives is necessary for very large and diverse undertakings. A functional board is bound to have the effect of bringing too much to the top for decision at board level, whereas a policy-making body would encourage decentralization which I feel is of the utmost importance for a large nationalized industry with many ramifications.

The nationalization of a large industry is bound to be a great experiment, and in the case of coal its success is of paramount importance. We dare not fail to produce this coal, which more than any- thing else will get us out of all our difficulties and tribulations. It is for this reason that both Parliament and the country are day by day becoming more concerned about the coal industry and its success or otherwise under its new régime. The Minister of Fuel and Power in another place recently objected to criticism of the administration of the Coal Board, on the grounds that when the Board was set up it had been agreed on all sides that the Minister should not interfere with its day-to-day management. I do not dissent from that view at all, which can, of course, be held to apply to other nationalized Boards. On the other hand, however, I would remind His Majesty's Government that the nationalized coal industry is a monopoly and a great experiment, and it is therefore right and proper that Parliament should have a full opportunity of ascertaining the general state of affairs in the industry at any time, which can be done only if adequate information is supplied. I suggest that in the case of the coal industry this information has been somewhat deficient, and for this reason it has been difficult for Parliament and the country to appreciate what has been done and is to be done by the Coal Board.

We do not want a series of iron curtains let down upon our nationalized industries which may obscure all that is good and some things that are bad in the conduct of these industries. I feel that the fullest possible information should be given, to prevent ill-founded rumours growing up to the detriment of any industry. It may be argued that the proper time to discuss a nationalized industry is when the accounts are presented to Parliament. On the other hand, it must be remembered that many months may elapse from the end of the financial year before these accounts would become available to Parliament, and a great deal may have happened in the industry which may be of great public importance. But I certainly do not suggest that Parliament and the Minister concerned should interfere with the day-by-day management of a nationalized industry. In some cases it may well be difficult to draw the line, but no doubt by experience we shall be able to arrive at a suitable compromise.

I should now like to refer to the general activities of the Coal Board. We are still in the dark as to production costs for coal during the last nine months during which the Coal Board has been operating, whereas in the past monthly figures were obtainable. We have heard of numerous Press conferences having taken place, and from time to time a little information has been given out on the long-term plans of the Coal Board. We have heard of certain pits which are to be sunk in a new area and perhaps it would not be out of place to state that some of them had already been planned by private enterprise, and work had begun on them before the industry was nationalized. I do not mention this in any Party spirit, but because it is vital that we should have a far-reaching plan for increasing our coal production at the earliest possible moment, and the country should be told the full extent of the plans, the estimated figure of production, and what steps are being taken to increase the labour force. During the last three months the labour force has been decreased by over 3,000 men, and it may well be that foreign labour could be successfully employed in new areas on a large scale. I am sure we were all glad to see an announcement in the Press recently that displaced persons from Europe are to be asked to volunteer for the mines, and I hope His Majesty's Government will be able to confirm this report.

It is unfortunately true that new coal areas cannot be developed very quickly because of delay in preparation of the sites and other matters, but the country would like to know that a determined effort is being made to overcome all obstacles and speed up new development. The coal target for this year, as your Lordships are aware, is some 200,000,000 tons, but it seems somewhat doubtful if even this figure will be reached, although there are signs that increased output is being maintained. The five-day week has not yet been paid for by an equivalent increase in productivity, and output per man shift is still lower than it should be under the increase in mechanization. And we have in fact seen recently in the Press a statement that there is going to be some juggling with the figures of the coal year by which returns will operate for 53 weeks instead of 52.

But the fact remains that in 1941 the mines were producing more coal with fewer men than they are to-day. The target figure for 200,000,000 tons will include, approximately, 10,000,000 tons of open-cast coal, and if the target is reached the output of deep-mined coal per wage-earner for this year will be 266 tons, whereas in 1941 it was 295 tons. If we dare to look at the year 1937, it was: hen 304 tons! In fact, if the production of coal by the man-power in the industry today was on the same basis as in 1941, the output of deep-mined coal would be over 210,000,000 tons, and if the present open-cast figures are included, 220,000,000 tons. I realize that many of the men in the industry are newly trained but, even so, the difference is still too great. I am sure, however, that our best wishes and congratulations go out to the miner in Glamorganshire who is reported to have mined 120 tons of coal in a five-day week and has broken the previous record by at least 40 tons.

We must of course budget for a much larger figure than 200,000,000 tons and must think of targets of at least 230,000,000 tons, in order not only to cover home industries and domestic use but to allow for export which will earn us dollars and revitalize our trade and industry. We have heard of the figure of 249,000,000 tons by 1951, but how is it to be reached? I should like to ask His Majesty's Government what are the long-term and short-term plans of the industry; what steps are being taken to implement the Reid Report; and what steps are being taken to open up new coal areas. I do hope His Majesty's Government will give Parliament the fullest possible information covering their plans for the present and future.

I should like to refer for a few moments to the Coal Board and its composition. I think that a great many of the troubles in the coal industry may be traced to its present organization. During the passage of the Coal Industry Nationalisation Act through your Lordships' House it was urged by many noble Lords on the Benches behind me, and by Members of another place, that the Board should be a policy-making group rather than a board of management. From a recent statement by the Chairman of the Board, it would appear that he, too, favours some form of reorganization which would encourage decentralization. The present members of the Board are, of course, all eminent men in their respective spheres, but they are really acting as departmental heads. From them flows a steady stream of directions, descending by way of the divisional coal boards, with parallel executives, right through to the coal areas and thence to the unfortunate individuals, the mine managers.

In fact, it has been said that the mine manager of to-day is unable to superintend the driving of a tunnel underground because he has to spend most of his time driving a tunnel through his paper work which mounts day by day upon his desk like a slag heap. I have little doubt that this mass of directions and requests for information would be greatly reduced if the coal areas were permitted more individual initiative and control, and, what is more, the country would get more coal. The mine manager's job is, of course, largely one of production, and he cannot plan successfully if all the time he is being worried by paper work and innumerable visitations from Coal Board officials from different levels.

And what is the position of the miner in this great organization? It has been suggested in some quarters that frequent debates and questions in Parliament on the coal situation tend to have an adverse and unsettling effect on the miner. I would suggest, however, that it is quite the contrary. The miner likes to know that sustained interest is being taken in his industry and, therefore, he is all the more ready to give of his best if he knows that his interests are being looked after and not relegated to the pigeon-holes of bureaucratic control. I am sure that if the miner himself can be given confidence in his local administration, that will go a long way towards preventing unofficial strikes which this year have cost us over double the loss of coal sustained last year. It must be a system which is quick and efficient in dealing with disputes, and perhaps the means may be found through the joint consultative committees.

I think we must be quite frank about this matter. The miner feels, rightly or wrongly, that he has had a raw deal over nationalization. He has been led to believe by agitators that he would have more control of the industry but, to his dismay, he is beginning to realize that everything is much the same, and perhaps a little worse. The same officials are controlling him, his boss is more remote than ever before. He undoubtedly feels a certain frustration when local difficulties arise and when matters cannot be settled until reviewed by a higher authority, which may be many hundreds of miles away from his district. Conditions vary so much in different areas that I think it is essential for area managers to have as much personal authority as possible to settle grievances locally. I would suggest that it is essential to get a form of executive control which is integrated at each level in order that decisions can be taken on the spot without continuously referring to a higher authority. There is little doubt that at present there are five different channels of executive control which have been set up right through the industry, so that at each level there are five different officials, each responsible to a different official above him.

Your Lordships will no doubt recall that the Coal Board comprises, in addition to the Chairman and Vice-Chairman, two production directors, two labour directors, a finance director, a marketing director and a scientific director. Each director, other than the Chairman and Vice-Chairman, acts in a dual capacity. Not only are they responsible collectively for policy but also as executive heads of departments. Below the Board there are, of course, the divisional boards in which the same lay-out has been produced. Then one comes to the areas which are under general managers, who preside over committees of departmental heads. Below the areas again are pits, each under a pit manager. I would suggest that it was a basically wrong conception to have introduced committee management at the area level. Vigorous leadership, administration and efficient management of production can come only from personal control and full executive responsibility, and this responsibility should be vested in a single individual, the general manager of the area.

I would suggest that, in place of the existing committee, the area general manager should have a technical staff under him and that his relation to the divisional board should be similar to that of the colliery company general manager to his board of directors. He would then look to the divisional board for matters of policy and other matters beyond the range of his decision. The present form of bureaucratic control right down to the pit manager would then, I think, cease, and no longer would orders converge on the pit manager from the different departmental heads. I have little doubt that all-round efficiency would be increased and lead to contentment in the industry.

Above all, I suggest to His Majesty's Government that the National Coal Board should become a policy-making body assisted by part-time members who would bring fresh minds to the scene. I am sure your Lordships are not unmindful of the terrific task which has been set the Coal Board in the taking over of more than 800 different undertakings, which had to be accomplished in five and a half months between the passing of the Act and the vesting date. There is no doubt that this short period has been a great handicap to the Board. I should like to quote an extract from a letter recently published in The Times under the name of the Chairman of the Board, in which he sets out the position very clearly indeed. He said: The task which history and Parliament have set the Board is to compress into months an organic development which needs decades. Such an assignment is probably unique in the industrial history of this or any other country. No wonder we are having difficulty in the coal industry. But, somehow or other, we have got to make this huge organization work smoothly and effectively. I hope that His Majesty's Government will seriously consider strengthening the Board as I have suggested, and, by degrees, transform the Board from a functional authority to a policy-making body, with decentralization as much as possible at all levels.

There is one other aspect of the nationalization of the coal industry to which I should like to draw your Lordships' attention for a few moments. I think it is true to say that the Coal Board has over a million acres of land vested in it, and it is, therefore, the largest landowner under the Crown. In addition, they own brickworks, power stations, foundries, saw mills, wagon repair shops, rolling mills and many other ancillaries, all of them under the direction of the Board. In many cases, no doubt, these ancillaries are essential for the proper functioning of the coal mines as a unit, but many of them are quite unnecessary for this purpose. It cannot, of course, have been easy for the Coal Board to take over and plan the operation of all these diverse assets, and I suggest that a great deal of time must be spent on the organization and control of these assets rather than on the production of coal, which should be the primary concern of the Board. I think the efficiency of the nationalized coal industry would be increased if these and other diverse assets were disposed of as soon as possible so that undiverted attention can be given to the all-important problem of coal production.

Although we, on this side of the House, do not consider that nationalization is the best form of controlling the industry, nevertheless now that it is an accomplished fact we are anxious to make it a success because on the success of this industry depends the whole future life of the country. If we do not produce the coal from the pits in sufficient quantity and in a reasonable period of time, the country may sink to a bottomless pit from which there may be no recovery, and it behoves all men of good will to do their utmost to make this industry a success. No doubt there have been good coal-owners and bad coal-owners in the past, and it is, therefore, all the more necessary to ensure that the new coal-owners are the best that care and forethought can provide. I hope all those engaged in the industry will forget the bitterness of the past and look forward to a prosperous future, with every man giving of his best, which I have little doubt will be forth-coming if the right leadership and personal responsibility are diffused right through the industry. The battle of winning coal will be more than blood, sweat and tears; it may well be the battle against unemployment, starvation, and want, with all their attendant miseries. Without coal our industries and export trade will decline and the vicious spiral of industrial deflation will descend upon us with ever increasing speed until we are enveloped in disaster.

I earnestly implore His; Majesty's Government to make use of the best brans in the country in this matter, and to lend their assistance to the strengthening of the Coal Board and the divisional boards and the reorganization of the main Board as a policy-making body. Not only must we provide for home industries but our goal must be 30,000,000 tons at least for the export market; and then we shall begin to see the silver lining in that dark cloud that hangs above us to-day, and happiness will return to this sorely-tried country. I beg to move for Papers.

3.33 p.m.

LORD MARLEY

My Lords, I am sure that the House will welcome the opportunity provided by the noble Lord, Lord Teynham, for discussing this matter. I am sure also that the public will welcome the noble Lord's Motion, because they are aware now as never before of the importance of coal, both for home industry, for domestic use and, as the noble Lord said, for export. Furthermore, as a result of a number of statements along the lines of the thoughtful, informative and constructive speech made by the noble Lord, Lord Teynham, the public have recently shown themselves to be experiencing a certain amount of anxiety with regard to the composition of the National Coal Board. The noble Lord dealt partly with the Coal Board and partly with coal getting. I could have wished that he had dealt along similarly thoughtful lines with coal utilization. It would have been as much outside the terms of his Motion as is coal getting, but it would have completed the three main aspects of the problem he has presented. It is not my task to deal with coal getting or to reply in any way to the noble Lord. I am speaking only as a back bencher, putting to some small extent, perhaps, the viewpoint of the man in the street.

I have no desire to criticize the work of the National Coal Board, though I am a little concerned at its composition. It is true that if one studies the Reid Committee Report, and examines the twelve conclusions to which that Committee came, one finds that the nationalization of the industry and a structure not too different from that of the National Coal Board appear to meet each of their recommendations. In any case those recommendations point inevitably to national ownership of the coal industry. The inheritance of bad conditions in the past was sympathetically referred to by the noble Lord, Lord Teynham, when he hoped that under the new modern conditions we would forget the sufferings, the miseries and the dangers of the past. And that, of course, is the real justification for the nationalization of the industry—to enable these sad histories of the past to be forgotten. It is true that many of the men engaged in the industry are older men who cannot forget, but we want the younger people as they come in, by proper organization and proper development, to be able to build up in their minds a new feeling for the service that they are able to render to the country.

It is interesting to note that the conditions inherited by the National Coal Board have been publicized recently in the extraordinarily interesting speeches made to American Congress by the Ambassador and by Mr. Harriman. They have called attention to the inheritance by the National Coal Board—to use their own terms—of a dilapidated estate with a squalid history, the indifference of private owners who refused to invest capital, and the recruiting of large numbers of miners during the war which left the industry deficient in those able to get the coal. They also referred to the inherited prejudices of the miners, to which attention has been called this afternoon. These then are facts which will be accepted by everybody. We may concern ourselves to-day only with the composition of the National Coal Board, and the question posed by the man in the street might well be: Is the National Coal Board the best type of organization to carry out what the noble Lord wants, and what every one of us wants—namely, an efficient, a productive, and a prosperous industry?

As representing the man in the street, I would call attention to certain criticisms that have been made, and I am certain that the Government welcome thoughtful, constructive and sympathetic criticism because it helps them. The first thing to which I would call attention are the speeches in another place of Colonel Lancaster. These have all been thoughtful speeches, and they have been constructive, and in particular I was impressed with the speech he made on July 17. It was unfortunate that under the conditions which govern debates in another place there was no time to deal with the gravamen of his criticism of the composition of the National Coal Board. Colonel Lancaster is a man of great experience, and he said that in his opinion the framework and organization of the National Coal Board were not such as would enable the task to be solved. He said that there had been set up a great industrial empire, that coal was an industrial problem; and he suggested—as did he noble Lord, Lord Teynham—that the National Coal Board consisted of a board of management composed of functioning executives, lacking experience of administrative organization. I do not know whether this is the case or not. I cannot tell; I am not an expert in this. But I am quite certain that when such criticism comes from informed quarters a good many ordinary people in the country would like to be reassured that this matter is being carefully considered along the lines I have suggested.

The same sort of criticism was made of the work at divisional level and at area level. This was reinforced on the following day by a thoughtful leader in The Times commenting on the debate. In that leader it was stated: The present system of organization contradicts some of the fundamental principles of sound industrial management. Again, I do not know., But that is what The Times said. It would be well, I submit, to have a reassurance in regard to this sort of widespread criticism. In support of my last point upon this, I would quote from a speech by a well-known and extremely thoughtful consultant on industrial management, Colonel Urwick. He has recently been acting as Chairman of a Committee, appointed by the Minister of Education, which has published a Report on Education for Management, and I think it may be said that he is recognized as an authority on this aspect of an industrial organization.

According to a report of his speech which was published some two months ago he said that the National Coal Board's composition violated almost every principle known to modern management. Again, I do not know whether that is so. It may be that he was speaking at a not very responsible assembly—the Liberal Summer School. I have nothing to say against the Liberal Summer School because it gave the Colonel the opportunity to attack the Liberal industrial policy and, incidentally, the Conservative Industrial policy, as well as the Coal Board itself. He said something that was certainly of a constructive nature—that there was need of inspiring leadership at each pit, a man to live among and with the men, to heal the wounds of long and bitter controversy and to explain what in fact was happening under the new organization under which they were working. I cannot help thinking that that is a very sound line to take in an industry like coal-mining. So many men are working entirely on their own and alone in distant parts of underground workings, and, therefore, will be helped if they know exactly what it is they are working for as regards not only themselves but their pit and the country as a whole.

The noble Lord, Lord Teynham, has referred to an article in The Times by Lord Hyndley. It appeared, I think, last month. Lord Hyndley pointed out a very important factor to which reference was not made—namely, the success of the National Coal Board in developing conciliation machinery. The present Chancellor of the Exchequer has underlined the immense importance throughout industry of industrial morale and of consultation at every level. It would seem that the National Coal Board has been exceedingly successful in developing conciliation machinery at every pit and, generally speaking, the machinery of joint consultation at every level. Of course, Lord Hyndley again pointed out that there had been a very limited time in which to make great changes. He said: No one should expect that changes so far-reaching, carried through under the pressure of so great an urgency, will be effected smoothly and without setbacks. As regards mechanization, to which reference has been made and to which the National Coal Board has devoted very particular attention, it is, I think, well to remember that we are not specially concerned with coal-cutting machinery, or with pneumatic picks either, for that matter. What is far more important is the supply of conveyor belts of every kind and the necessary re-designing at suitable collieries to enable the conveyance of coal by mechanical means to be proceeded with in the most economic and rapid way. It should be the aim so far as possible, if pits are not too deep to have direct belt conveyors to the surface instead of using shafts. There may be areas where that is possible. My own experience was that there are mines in this country where the system always employed was that the coal was brought up in what were called "levels"—namely, slopes, carrying the coal trucks to the surface.

This will be an expensive undertaking. We have recently heard of another American observer ever here who has estimated that this re-equipment with conveyor belts will cost—and I was horrified to hear it—something in the neighbourhood of 100,000,000 dollars.

We have not got 100,000,000 dollars available, but—who knows?—it may be decided in the interests of increased exports from this country, and in the interests of the reconstruction of Europe, that that 100,000,000 dollars should be found from some other source. I would urge only that we may have an open-minded examination, a sympathetic explanation and an answer to the criticisms we have heard. If modification is necessary it should be carried out so as to enable the industry to work smoothly and satisfactorily and to provide for the needs of this country and of the world in matters of reconstruction which are so vital in view of the devastation of the last war.

3.47 p.m.

VISCOUNT KNOLLYS

My Lords, my justification for intervening in this debate to-day which, although it is primarily about the National Coal Board, also includes other national boards as well, is my own four years' experience as chairman of one of the great public corporations—British Overseas Airways Corporation. During that time I had, I think I may say, rather exceptional opportunities of seeing the working of a public corporation under very varied conditions. I served during the terms in office of three Governments, all of different complexions. I had the great pleasure of being able, also, to work under no fewer than four different Ministers who were concerned with civil aviation, two of whom I am glad to see in this House to-day. There could be another, who was here recently. It was certainly an education to me, and I hope that at times I was able to pass on what had been learnt under previous administrations to whoever happened to become Minister from time to time.

There are only one or two points which I wish to make to-day, and they are purely practical ones relating to the general question of administrative problems in a public corporation. I would refer to a particular point in connexion with the composition of a board which was mentioned in its relation to the National Coal Board by the noble Lord who opened the debate. He was speaking about the problems and difficulties, the advantages and disadvantages, of a functional board as opposed to others. In my experience, where we had a board composed almost entirely of part- time members except for the chairman and managing director, we seemed to avoid some of the obvious difficulties which arise where effective heads of departments on a board bring all their difficulties to that board. It seems most effective to have a board composed of those with outside experience and knowledge and a smattering of those who are working whole-time. In my case we had three out of a comparatively small board.

I would like to refer to two problems which have not been touched upon yet. How can one give these boards really effective responsibility? How can one give them reasonable freedom of management and so a proper chance to make a success of the great responsibility thrust upon them? As to the objectives and what we want to aim at, I wish to quote a distinguished opinion which has been written by someone who has studied the question of public corporations for a very long time and has been closely connected with them. He sets it down very effectively. After referring to the question of the proper care of the public interest, he says: "The Board must have autonomy and freedom of business management. It must not only be allowed to enjoy responsibility; it must even have responsibility thrust down its throat." That seems to me, from my experience, to be most important. The author is someone whom I am sure we will all take as a great authority—Mr. Herbert Morrison, the Lord President of the Council. It was written in an extremely interesting book on the subject of the socialization of transport which I think he wrote shortly after he became concerned with the London Transport organization. That is an ideal I am sure all Ministers would like to see in practice.

I know how good have been the intentions of Ministers in trying, so far as possible, to avoid any interference with management while carrying out their very proper responsibilities, but circumstances have sometimes been too much for them. According to the rules of the game as it has to be played, it is inevitable that sometimes there should be interference. There is no criticism implied in that, but it is a fact. We appear to get to a position in which those responsible for public corporations have responsibility without proper authority. That means that rather half-hearted attempts at action are made because there is a break away from the normal method of achieving action after policy has been decided upon. In ordinary business, the normal procedure is that the planning is done by the executive and put up to the board of directors for their consideration and, after consideration, for their decision. Then in the ordinary way action immediately follows and is made effective by the executive. In public corporations, such as those I have seen, there are so many other people concerned, so many other interests to think of, so many other departments to be consulted, that the stage after the board itself has come to a decision, which is consultation with the Minister on matters of high policy, takes up too many weeks and makes a long gap before the matter comes back to the corporation and effective action can be taken.

That is serious in the case of any public corporation, but it is even more serious in the case of one dealing with affairs overseas in the international field. Take one particular instance, a very swift moving and dynamic industry such as our British air transport industry, which is working in a highly competitive international field. Very direct and effective leadership is needed for an enthusiastic staff. You must find some way of choosing the right people for the job, giving them full responsibility with wide terms of reference, and then leaving them to carry out their task, while from time to time (but not every month) reviewing what they have done. Then if the responsible Minister comes to the conclusion that the job has not been well done, he can sack the board and in particular the chairman.

The second point I would like to make is the very difficult one of how we can get proper accountability of a public corporation department. We have new problems, a new type of organization, a new animal altogether, and I feel that we should find new types of solution to these particular problems. During the four years I was with a public corporation we were, and I think we still are, groping towards the right way of doing it. There must be Parliamentary questions and debates, but when these are constant, as they have been in the past—debates which have taken place at any time which a particular person who was interested thought was a good one, Parliamentary questions which have covered matters of only ordinary day-to-day importance—they are not only not helpful but, I assure your Lordships, are discouraging to proper work in any organization. They are most disturbing to proper administration and above all—I emphasize this—have the worst possible effect on the staff; and it is on the staff, on the rank and file, whether it is an air line or the coal industry, that the success of an undertaking depends.

But we must find some way of accounting properly to Parliament and I wonder whether there may not be a way in the use of existing machinery. The affairs and finances, problems and successes, of public corporations come before Parliament in two ways: on the Estimates Committee and on the Public Accounts Committee. We ought to try and find for the public corporation an equivalent of the ordinary annual general meeting of shareholders of an ordinary public company. If we can find a way in which, once a year, questions can be asked or results can be probed, and avoid weekly, monthly or quarterly inquests, we shall in the end provide just as full information to Parliament, without the disturbing effects that occur under the present system. If the Public Accounts Committee could be the body which took the place of the Annual General Meeting, I think it would cover a great many of these difficulties.

I would make another point very specifically. The people really responsible for the success or otherwise of one of the corporations should have the opportunity, so far as practicable, of making their own case to, as it were, their shareholders. The chairman or the chief executive ought to go with the accounting officer of the Ministry, who is bound to appear before the Committee. I have found from experience that it is very difficult to do everything second-hand; one has no real personal contact with those to whom in the end one is responsible. However well briefed the Minister or the permanent official may be, he cannot give so full and complete an answer on questions which are bound to arise when results are being looked at and questions of all kinds are being put. I believe that the kind of machinery which I suggested has actually been used in the particular case of the U.K.C.C. I think my noble friend discount Swinton may be able to confirm whether that was a successful method or not. There is a precedent for it, and I would put that forward as a constructive suggestion. We are still rather groping in the dark as to how to deal with a new problem, and I feel sure that a debate like this, with the suggestions which are put forward from all parts of the House, will really help us to get some of the answers, and gradually we shall be able to evolve a technique which will not only make these public corporations much more efficient but will retain the proper control which Parliament must have over them. We shall then be able to prove once again that this country has a particular kind of genius for finding the solution to new problems of Governmental administration.

4.1 p.m.

LORD HUTCHISON OF MONTROSE

My Lords, I would like, first, to thank the noble Lord who introduced this Motion. I think it as well that we should discuss the administration of the Coal Board and, of course, we cannot dissociate the regional coal boards from the Central Coal Board. It will serve to disabuse the minds of some of us at least on some of the fallacies which we have noticed in the newspapers and elsewhere. The Coal Board have been in being for less that a year, and considering the enormous organization which that Board and the regional boards have had to set up in order to carry out administration, I do not think, looking at it dispassionately, that they have done a bad job of work. It may be said that some of our better mines, well-equipped, well-managed and well planned ahead, would probably have been more efficient and produced more coal under private ownership. That is my personal view, and the view of a great many of us. Nevertheless, although I dislike nationalization, I feel that now the Act is on the Statute Book we must try and make it work as best we can, and I am sure everyone interested in the coal industry wishes the Government success. In forming boards of this nature it is only natural that there should be misfits, but I hope those misfits will gradually be eliminated.

The vast amount of capital involved in the coalfields of the United Kingdom, and that which will have to be spent over a long period of years in the development of our coal areas, will necessitate the closest and most careful consideration, not only by the National Coal Board but by the regional boards. The regional boards are concerned with the pits. Those are the boards who are going to get the coal. In the area with which I am acquainted in Scotland the regional board functions well. The chairmen of the various sections of that board are men who have devoted their lives to the coal-mining industry. Speaking from what I have seen, I can say that in that area the regional board is doing well, and, from what I hear, it is not being unduly interfered with by the Central Board in London. The responsibility for getting coal rests with those regional boards. The policy as to development will undoubtedly come from the Central Board in London, after careful consultation, of course, with the regional boards and those responsible in the regional boards for development.

Here I would like to point out that in the crisis which confronts us, the only cure is more coal. If we are going to sink new pits, or have such a policy laid down as the one in the Reid Report, then we have to consider the man-power involved, and the material which will be required in those sinkings. New sinkings have been begun on plans prepared by private enterprise, and those plans will be developed slowly. It takes from five to six years before a modern pit can be developed. Therefore, to meet the immediate crisis, it may be necessary to go slow on sinkings and develop only a part of what ultimately will be undertaken by the Coal Board.

The next point I want to make in regard to administration is on the question of output. We are glad to see output going up and I think if we are lucky we will get sufficient output to allow us to export coal in a small way. Without exports this country economically will be in a very difficult position. On the question of output, I do not believe the Coal Board and the Ministry of Transport are sufficiently knit together to deal with the transportation and carrying of coal. In a first-class modern pit to-day, the coal comes up one shaft and the machines and men go down another. The coal comes up in large hoppers; it is tipped on to great moving vans, and these moving vans pass along to the screens and the washers, and from the washers the coal goes into the trucks below. If those trucks are not forthcoming the pit stops. An ordinary pit can get the output and put it on to the bing, hut in the well-developed modern pits you must have wagons. It has recently been pointed out in the Press, and it has been referred to by Ministers in another place, that this shortage of wagons is a very serious problem. Your Lordships may remember that during the coal crisis last year I ventured to suggest that a great deal of the difficulty was due to the lack of wagons and transport.

Further, there is the great difficulty of unloading those wagons once they are full of coal. All our terminus arrangements for the handling of coal are poor and, if I may say so, they are not up to the standard which they ought to reach. I think that mechanization could be advantageously introduced in dealing with the unloading of wagons. If mechanization is used for that, it will save man-power and there will he a quicker turn round in the wagons. At the same time, you will avoid the lack of haulage of coal such as helped toward the breakdown last winter. This will work more and more to the advantage of the coal industry when exports restart. The coal crisis of last year was foreseen, but unfortunately it was not dealt with, and of course we had an extraordinary period of bad weather this year. I think that, so far as one can foresee, the administration have met that difficulty and we are not likely now to go through another coal crisis in this country. Until we have a better output of coal and get our export market going again, however, we shall not he in a very happy position economically.

There is another point in relation to our administration which I do not think has been pursued sufficiently vigorously, and that is the local touch between regional boards and local authorities. What miners want now more than anything else are good houses. A great many of the new pits have not sufficient houses, and we cannot attract the extra man-power which we need in some of the mines unless we have houses for the men to live in. Carrying that further, there is the development of new pits, such as those in Comrie, Rothes and Dysart. We cannot move men from derelict areas of coal into the new pits unless there are houses for them. The regional board should have the very closest touch—working committees if necessary—with the local town planning authority, the county councils and other boards who are now dealing with the productions of these houses.

Another point concerns the repair of wagons. Anyone who goes round the country will see on many of the small railways—such as those between Ayr and Edinburgh—thousands of coal wagons. When one asks what they are doing there one is told that they are for repair. They are moved and taken to the repair yards where they are slowly being dealt with. Cannot something be dons to speed up the repair of those wagons? It would not use up the same amount of material as new wagons. At the same time, the more derelict wagons could be broken up and the parts used for repairing others. I am told that this is quite feasible and should be done. If that were done it would immediately produce a larger stream of wagons into the coal area to be used for the transportation of coal.

The Coal Board cannot function properly unless they have the closest personal touch with the pits. With the miner it is the personal touch which really matters. The miner is a human being; he is a grand fellow. Look at the work he did during the war. Anyone who served with miners, either in the recent war or the 1914-18 war, knows what splendid service they gave. If they are properly led they will do anything for the country, and I feel that the regional board must do everything possible to keep up that personal touch with the pits. No two pits are alike, especially with our various seams and dips of seams. What may suit one pit certainly will not suit another. One of the troubles in Yorkshire was that it was thought that all the pits in the area were the same. Individual pits require individual treatment; and that treatment can be assured only by the personal touch between the regional board and the pit concerned. Once the men know there is somebody on the board who takes a personal interest in the pit, and will listen to what they have to say, they will work much better. I do not want to delay the House any longer, but from the bottom of my heart I hope that the administration of the Coal Board and, the regional boards will be the success they hope.

4.15 p.m.

LORD ROCHDALE

My Lords, if I read aright the intention of my noble friend Lord Teynham he has introduced his Motion this afternoon not to discuss the pros and cons of nationalization as such but, accepting the position as it is to-day, to try and draw certain lessons, so that those industries which are already nationalized, and those that are shortly to become nationalized, may be given a better chance, and may work all the smoother. I hope, therefore, that I shall not be misunderstood if I approach this subject with a simple analysis of the main differences, as I see them, between a nationalized industry and an industry operating under private enterprise.

As I see it, with the privately operated industry there are three straightforward criteria which can indicate the standard of administration. First, satisfied customers or clients; secondly, contented and keen employees and, thirdly, financial strength and stability. So long as those three criteria apply together, then I suggest that that industry has not much wrong with it. I suggest that the same three criteria could quite easily be applied to one of the nationalized industries. But of course there is one big difference. With a private firm lack of financial stability will ultimately lead to financial difficulties and, if allowed to go on long enough, to bankruptcy. But with a nationalized industry ineptitude on the part of the management may possibly be concealed by extravagant financial methods, concealing the fact that what the customer is getting and the conditions the employees are getting are not so good as they ought to be. Any form of extravagant financial policy cannot possibly be accepted in any sphere of industry to-day.

At present there are only a limited number of nationalized industries, but there are a considerable number of others, as your Lordships well know, which are to follow shortly: transport, electricity, gas, and, we are given to understand—we are not quite sure—iron and steel. Those industries together are bound to form a formidable part of the industry of this country, and it seems to me of the utmost importance that the success or otherwise of their administration must be kept in the limelight of public scrutiny, with a view to arriving at some gauge of efficiency comparable to the three criteria which I mentioned earlier for private firms. That, to my mind, is obviously where the difficulty is going to arise. It is a difficulty to which the noble Viscount, Lord Knollys, in a most interesting speech, referred; and it is a difficulty which gives a sound explanation of the reason why my noble friend Lord Teynham introduced his Motion this afternoon.

The last thing one wants, it seems to me, is for management of nationalized industries to be subject to a host of snoopers or informers. One does not want them to be open to continued public criticism on matters of details, about which the public obviously cannot have the full facts. Something better than that is required, and I suggest some sort of automatic barometer which may be left alone when it is rising or at "Set fair," but subject to constant tapping when it is falling or at "Stormy." He would be a brave man indeed who tried to offer, or thought he had to offer, an easy solution to this very great problem and I should be the last to attempt to do that. But I do believe that whatever the solution is, it lies, as other noble Lords have mentioned this afternoon, in a far greater degree of decentralization. Decentralization alone, however, is not enough. It must be coupled with the most careful selection of men and women to fill executive posts right down throughout the hierachy.

If we take as an example the workings of the National Coal Board, one hears a number of criticisms, both in the Press and elsewhere, purporting to come from all shades of opinion. All these criticisms—or a very large number of them—appear to result from decentralization and also from reports of all the usual troubles which one associates with an over-centralized bureaucratic control. To an outsider like myself it is obviously impossible to know to what extent these criticisms are justified. A reported speech of the noble Lord, Lord Hyndley, Chairman of the Coal Board, made on July 12 and reported in The Times, has already been referred to today. In that speech he referred to these criticisms. Your Lordships may remember that he said they were unfounded. He went on to give assurances that decentralization would be pushed to the farthest limit compatible with safety.

One welcomes that statement, but I must admit that I am not entirely reassured. If I can assume that Lord Hyndley used the word "safety" not in the technical sense, as applied to any particular industry, but in the sense of implying the maximum efficiency, then I would suggest, with the very greatest respect, that he put the cart before the horse; I do not think he will get the maximum efficiency without a substantial degree of decentralization. Leaving that point, I still doubt whether all those criticisms which we have seen and heard are entirely ill-founded. After all, there is no smoke without fire, and these criticisms accord very well with what we have been led to believe for so long was the accepted policy of the Party to which His Majesty's Government belong. And they accord very much with the attitude of His Majesty's Government towards private enterprise—namely, to have more and more centralized direction by means of innumerable controls from Whitehall. After all, these two things are no more than symptoms of the same fetish, the fetish of centralized control. It seems to me that so long as centralization is the watchword—and there are, of course, indications that the Government point of view is changing on this matter—not only will it act as a strait-jacket on the efficiency of go-ahead and versatile executives, driving some of the best men elsewhere, but it can also all too easily act as a cloak, I might even go so far as to say, for inefficiency.

We all have different views on the nationalization of this industry, or of others. I personally have not disagreed with all cases, though I have disagreed with a great many of them. But if we are to have nationalized industries at all, then the sort of structure at which we want to aim is that, within a national policy and a national framework of direction, there should be a considerable number of independent units—at any rate independent to the extent that, judged by the three criteria which I gave earlier for private enterprise, the management of each unit will stand or fall by its own efforts or results. Of course that produces a number of difficult consequential problems. I do not know, for instance, what might be the position with regard to accounts under the present Acts. It is possible that they may have to be looked into. It also raises this problem of incentives, for managements in particular. I know that to many people, mention of he word "incentives" conjures up only one idea—money incentives, profit sharing, piece rates, bonuses and so forth. But of course, valuable though that form of incentive is—it has provided valuable results in private industries and may well provide useful results in nationalized industries—it is not the only form of incentive; and it is about other forms of incentive that I want to say a word now.

Just as to a craftsman pride in the completion of a skilled piece of work is a very definite incentive (though one that is bound to become rarer with increasing mechanization), so on managerial levels, which is what I am primarily concerned with at the moment, freedom of action of a manager to be able to put his own ideas into practice and to see them develop in his own mind, is one of the most powerful incentives possible. Many of your Lordships will have had this experience and I hope will agree with me on that point. If such a manager fails, then he has to pay the penalty. But there is a saying which I always like, that "Nothing succeeds like success," and if he succeeds not only will that success develop his own imagination, versatility and ability to improve and think out other valuable new schemes, but it will also become infectious and will stimulate all those around him—with obvious good results. But so long as a high degree of centralization exists, management on the intermediate and lower levels will inevitably be confined in their activities between narrow limits, so that instead of the imagination and initiative of hundreds of thousands of individuals throughout the country being drawn upon, initiative will be confined largely to a comparatively small number of people at the top; and the enthusiasm which springs from that initiative will be able to affect only a relatively small number of people working round those at the top.

I should like to approach this same problem of centralization or decentralization from another aspect. I hope no one will misunderstand me if I say that there is in the country to-day a certain lack of discipline, which we all know in industry has evidenced itself by absenteeism, un- official strikes and so forth. I know that I am treading on delicate ground here, but I hope that your Lordships will accept it when I say that I mention this in no sense of criticism. I am not saying it in any critical sense, and I have no doubt that there are many unsettling circumstances. There is the obvious one, the after-effects of war. There are the economic conditions in the country generally, and other circumstances. In any case, I would be the last to criticize unless I had the full details of each case in front of me to enable me to decide for myself. But one thing of which I am absolutely certain on this point is that any tendency towards lack of discipline will not be minimized by the knowledge that all too often local managers may not have complete authority to deal on their own with points as they arise. So long as it is known that those points have to be referred back for agreement, which may or may not be given and which, in any case, will probably be long delayed, and so long as it is known that management at a particular level may even be by-passed (which is worse still), respect for management, which I suggest is the absolute essence of all successful undertakings, must inevitably deteriorate, with the result that any tendency towards lack of discipline will be encouraged.

That, to my mind, is one of the most cogent reasons for aiming at a policy of decentralization. The impression I have, so far as the National Coal Board is concerned, is that even at the divisional levels management is far too remote. Of course, an active policy of decentralization will bring with it many other consequential problems. Clearly it could be overdone if the whole of an industry is to run really smoothly. I think it is only fair to state that until those at the top have had considerably more experience themselves, we shall obviously not get the maximum degree of decentralization that we hope ultimately to see. After all, it is no more than a human tendency to try to avoid decentralizing until you yourself know exactly what the machine which you are controlling can do. It is that which will make men hesitate to give their subordinates a maximum degree of individual responsibility.

That brings me to the last point I want to make. One thing above all others seems to me to be paramount if we are to get a high degree of decentralization, and that is that, in all the nationalized industries, too much stress cannot be put on the task of the selection and the training of men and women for executive positions. Unless those in the higher positions have the utmost confidence, not only in the ability of their subordinates but also in their knowledge and understanding of a common doctrine, they will obviously hesitate to decentralize to the maximum extent. I believe that these relatively young nationalized industries have something to learn from the older three Fighting Services so far as the training and the selection of those in executive and staff positions are concerned. Important as technical experience obviously is, administrative experience is equally important. There must be a very careful balance between the two.

Therefore, I should like to conclude by asking His Majesty's Government two questions. I must apologize to the noble and learned Viscount who is going to reply for not having given him notice of these questions. The first question is: What is being done about the selection and (to use a word I learned from the American Forces during the war) "indoctrination" and training of individuals, both men and women, who are destined to fill executive posts in one or other of the nationalized industries? The second question is: What is being done, independent of any particular industry, to collect, analyze, and study the general lessons of administration and organization that are being learned to-day, in order that they may be available and handed on to those in other nationalized industries as they come into being, so that they, in turn, may work more smoothly and provide the nation with more satisfactory service?

4.37 p.m.

LORD HAWKE

My Lords, I must first state an interest, for I have a connexion with a British enterprise in Brazil which formerly used considerable quantities of Welsh coal., I was in that country recently, with the result that I did not have the privilege of listening to your Lordships' debate on the economic situation; but on my return I read the debate with interest, and I noticed that the noble Lord, Lord Rennell, gave it as his opinion that foreigners were losing confidence in the financial administration of His Majesty's Government. Almost at the very moment when the noble Lord was saying those words, I was hearing at first hand from Brazilians of high authority that they were, in fact, losing confidence in sterling. However much one disapproves of the handiwork of the late Chancellor of the Exchequer, sterling is our currency and not his, and therefore Britons abroad must rush to its defence. Investigating the reasons for this lack of confidence, I found that it was alleged that sterling would not buy goods; it would buy only promises of distant delivery.

If this were true, it would be a serious matter, because no country battling with inflation can afford to see unrequited exports shipped. Sterling will, in fact, buy goods for fairly reasonable delivery, but those goods are mostly in the category of semi-luxury consumer goods. Governments are rather like governesses: they are very fond of seeing that their charges buy those things which they think are good for them, the spinach and cod liver oil of heavy goods rather than the sweets of more meretricious consumer goods, and nobody can deny that for heavy goods the deliveries are still very distant. There is one form of consumer goods, however, which Brazil and nearly all South American countries would be only too pleased to buy to-day, and that is coal, for, in buying coal, not only would they relieve their dollar situation, but they would also be getting a better product. Before the war, Brazil used to take about 1,500,000 tons of British coal. If we could ship any appreciable fraction of this today, we should speedily restore the confidence in our currency which is so necessary for a big importing country like ourselves.

Coal, to-day, is a better shipment than gold. If we have the gold and can send it out of the country we give the recipient power to buy what is already in the world. If we send coal out of the country we are adding something to what is already in the world, and it not only relieves the American economy from having to sustain far too big a proportion of world trade, but it also adds to our prestige abroad. I believe that His Majesty's Government hope and intend to ship coal in 1948, but I fear that that coal may, under the Marshall Plan, be all destined for Europe.

Undoubtedly, it will be a godsend to Europe but, inasmuch as sterling is already a hard currency in most of the countries of Europe, if will not be doing a very great deal to sustain our credit. It seems to me it would be more satisfactory, if we could, to make a point of sending some coal, at all events, to South America, where our credit is in question.

Some people may say that if we can ship coal to Europe under the Marshall Plan we will get dollars with which we can sustain our credit in South America or elsewhere. But there is a psychological side to this question. One of the facts that South Americans, and I believe other nationalities as well, do not understand is why we are not digging more coal, and I do not think they will have faith in our currency until they see more British coal arriving at their ports. I had to answer many searching questions on the subject of our coal output. My answers were a blend of the arguments we hear from both sides of your Lordships' House, but I found that one of my arguments—I hope it was a right one—that owing to the war we were behindhand in sinking new pits to replace the ones that were worn out, came as something quite new to South Americans and North America as who are otherwise extremely well informed people. If it is a fact that we are sinking all these new pits, why do we not tell the world so? Every Government Department has a most expensive public relations organization which has its ramifications, through the Embassies, to the uttermost parts of the world. If we have this organization, why do we not tell the world, especially in those places, where they think our economy is dying because our coal industry is moribund?

Another point I wish to raise is that I believe there is a danger in this new-fashioned idea of allocating this and allocating that on the international scale. I wonder whether geography, currency, and political convenience do not sometimes play too much a part, and quality too small a part, in these decisions. It may seem very convenient on paper to allocate coal from a certain coalfield to so and so, but if that person has to burn 50 per cent. more than he would do if he got the coal he wanted, it may not be so economic in the end. To send coal from America which arrives at its destina- tion as powder, if that coal is to be burned in the grate of a moving locomotive, is obviously hideously uneconomic; but that same coal used for different purposes can give perfectly good results. It may be very economic to ship coal from the United States to Europe for certain purposes and, at the same time, send out coal from this country to South America for other purposes. On balance what coal there is in the world would be doing a better job. I give His Majesty's Government another slogan to add to their enormous collection—"Fit the coal to the job, and not the job to the coal."

4.47 p.m.

VISCOUNT SWINTON

My Lords, I think that the House will agree that my noble friend has served a real public purpose in initiating this debate to-day, not only because the subject is one of very great importance but because it has given rise to a well balanced and informed debate. I am sure the Government would in no way criticize the character of the debate so far, and I hope I shall not give them any cause for criticism in the words I want to add in summing up. It is particularly important that we should debate a matter of this kind since it is impossible, as has been said by more than one speaker, for Parliament to check or criticize the detailed operation of the national boards from day to day. We should consider the general lines on which they are organized and operated, because if the structure or the system is wrong the operation just cannot be right.

I was greatly interested in the suggestion the noble Lord, Lord Knollys, made. One of the inevitable difficulties in nationalizing an industry is to reconcile the responsibilities of the executives of that industry with Ministerial and Parliamentary control. That is one of the reasons why I dislike nationalization. It is not the only one, but I am not going to argue the case of nationalization to-day. However, the keenest advocate of nationalization will not deny that he is faced with that very acute difficulty, and every Minister who has to answer to Parliament for the consequences of one of these great nationalization Acts immediately finds himself up against it. I have no doubt myself where, broadly, the balance must lie. I am quite certain that the Minister cannot, and should not, make himself responsible for the day-to-day business of the company. That must be the job of the board of directors and the executives. If you have, a bad Minister, you should do your best to get rid of that Minister, but that is not so easy because he is supported by a body of shareholders with a vested interest. If the Minister or Parliament thinks that the board of a nationalized undertaking is a bad board, the answer to that is not for the Minister and his Department to try and do the job of the board and the company; the answer is to get a different board of directors to administer the business.

It is very easy to say that, and to say that the Minister is responsible for policy. But where does policy begin, and where does it end? You cannot put these things into watertight compartments. There is policy and there is executive action, and whether a policy is good or bad depends upon the result of the action by which it is carried out. Therefore, one of the inevitable difficulties with nationalization is that, while you may say that the Minister is only responsible for very broad questions of policy, and that the board is responsible for everything else, policy and executive action do not fall, and cannot fall, into these watertight compartments. Then how are you to give Parliament the necessary control without harassing the Minister—though I do not mind harassing ministers; it is a popular hobby—with questions which, indeed, he is not, and ought not to be, in a position to answer?

The noble Viscount, Lord Knollys, has made what I think is an extremely practical suggestion. It is that these corporations should appear before the recognized Parliamentary Committees—the Committee on Estimates and the Committee on Public Accounts. The Committee on Estimates has the task entrusted to it by another place of looking into all projects which are to be brought into operation in the future. The Public Accounts Committee conducts, on behalf of the House of Commons, an inquest into the past. It does seem to me that this would be a practical way of meeting the just desire of Parliament to have a form of control which is careful and informed but, at the same time, not too meticulous and too interfering. I entirely agree with the noble Viscount that the people who must appear before the Public Accounts Committee are the chairman and the necessary executives of the corporations. That, I think, is obviously desirable on estimates, though it may be said that the Minister is more concerned with estimates of the future because under these Acts he has to approve of the expenditure before they reach the Estimates Committee. I think it would be desirable. I would be sorry to sit as chairman of the Estimates Committee and not to have the chairman and managing directors of the board present But when you come to the Public Accounts Committee conducting an inquest, as it would be, on broad lines, into how the business has been run, the Minister is the last person who should be asked about that because, ex concessis, it was not his business to run it, it was the business of the chairman and the executives. That I believe does afford a possible way out.

The noble Viscount was right when he cited the example of the United Kingdom Commercial Corporation. I think the practice began to be followed after I had ceased to be an active chairman, but I remained (I was asked to do so) nominal chairman, although I was occupying a post as Minister elsewhere. There you had a body in respect of which policy was settled by Ministers in consultation with the chairman of the company, but where the board of the company had absolute and complete discretion to carry out the whole policy. That was the agreement and I must say that during the whole time that I was there and the time of my successor, too, it was most loyally honoured by the Treasury and by Ministers. We were not interfered with at all. I think we made a good job of it. The Treasury found us capital. It varied from time to time as we repaid bonds or took out more. I think we were operating with Treasury capital of something like £75,000,000 and had a turnover in our peak year of something like £160,000,000.

I believe that when figures of that kind were involved, even in a war, Parliament had a right to say something about it. We never produced any estimates. I do not think that there was even a token vote. I am not sure; I suppose the Chancellor of the Exchequer was the Minister who could be asked Questions about it; but Parliament was very considerate and I do not think it asked many. That was an indication that it was satisfied with the way the job was being done. But I thought that Parliament ought to be able to make its inquiry; and that therefore the Public Accounts Committee should go into this matter. Ministers did not appear before these Committees; there were gentlemen called "accounting officers" who appeared, usually the Permanent Secretaries of the Departments. The Permanent or Deputy Secretary of. the Treasury appeared and, as was right seeing that the bulk of the inquiries were directed to them, the chairman and the appropriate managing directors also appeared. I think that worked satisfactorily. Therefore I hope—I do not think the Government would wish to pronounce on the matter to-day unless they have had an opportunity of considering it—that the Government will carefully consider the proposal of my noble friend Lord Knollys. So far as I can see, it is one which ought to be welcomed, and would be welcomed, by both Houses of Parliament.

Now I wish to turn—for I do not desire to go into great detail about this board or any other board—to some of the major questions. In particular, I want to invite an expression of the Government's view and an answer with regard to two difficulties which any nationalized monopoly running the whole of a great industry has to face and to try to solve if it is not to fail. The first is the difficulty of size. Everyone who has knowledge of business knows that perhaps the most difficult and, possibly, also the most important question you have to consider in any enterprise is whether it is too big or too small. To put it another way, what is the right size for efficiency? I think everyone would admit that, judged by all practical standards of business and administration, the units of these corporations are too large. I am not dealing now with the air companies. They are not very large. I am not going to argue whether you should have more competition with them or not, but they are certainly not of a size to be too large for convenient management. But observe that that business compared with coal and transport is really very small. It is a difficult and intricate business I grant you, but there are three air corporations whereas for the whole of the coal industry of the country with all its mass of ancillaries and millions of acres of land and all the rest of it, you have a single corporation—just the one. The same is true also in regard to the whole of trans- port; for all the railways and all those other systems of transport now to be added, you have one body. That is on the question of size.

The second question which I would like the House to consider is: How can you get comparative and competitive standards of efficiency in a single monopoly? Let me again turn to the question of size which I think is the fundamental difficulty. If a business is too large for efficiency there is one obvious way—it is done regularly in the business world—of curing it, and that is to split it up into convenient economic units. Again, on this problem of size, I have already referred to the railway companies. Would anyone to-day deny that the existing railway companies for efficient management are quite as large as they ought to be? I think that probably I know the reasons for linking the lines and for the way in which the L.M.S. and the L.N.E.R. have been dealt with. It may be that the arguments in favour of those amalgamations outweighed other considerations, but if anything I would say the L.M.S. and L.N.E.R. are to-day too large for efficiency.

But observe what we have done under the Act of Parliament. We have taken the four railway companies, each of which, as the House will agree, is large enough by itself and some think is too large, and we are lumping them into a single unit, to which we have added the whole or a large part of road transport, docks, a lot of hotels, some manufacturing businesses and any waterways which the railway companies did not already own. The obvious answer to a fundamental difficulty of that kind is to split it up. You cannot do that under nationalization. Then how can you minimize it? Are the Government going the right way to work about this? I have been reading, and I would commend it most sincerely to all members of the House, an extremely interesting address delivered by Sir Arthur Street, the Deputy Chairman of the Coal Board, on the organization of public corporations. He speaks obviously with great authority and though he was speaking, as they say in diplomacy, a litre personnel, we can, I presume, take what he says as the gospel and no doubt at the same time as the practice.

I find a good deal in his address which runs counter to my practical experience and which I think your Lordships, when you read it, will think contrary to yours; but there is one proposition he makes which I can whole-heartedly endorse. Judging by the mess the Coal Board got into—he puts it more courteously than that—he says that the busy bees had to make honey before they had their hive. Perhaps my paraphrase is different in sense, but he added that "the Government would be wise to have all the organization and system ready throughout an industry before they take it over." He says quite frankly that this could not be done in the case of the Coal Board as they had to pass a Bill at once and set up the organization at the same time. It was a pretty tough job and I am not quite sure that they have solved it. What I would like to ask is whether that has been done in the case of transport. If it has, what is the organization going to be under this new Transport Act? What will be the system of decentralization? How far is regionalization to go and what delegated responsibility is there to be? That is enormously important. I do realize what a frightful job the Coal Board have had to do, but I do not think their best friends would say that they have been completely successful in decentralization, either in securing local responsibility, local knowledge and experience, or in getting that personal touch which, if difficult, is so important. I should like to know how far the Coal Board really intend to decentralize responsibility.

I know Sir Arthur Street sets it out that there is appointed an area general manager for all the pits in his area. The noble Lord, Lord Hutchison, in his interesting speech, said he found that in Scotland the regional board has a pretty free hand and is allowed to do the whole job. I am bound to say I have had quite different accounts from some other regions. But in describing what is devolved upon the area general manager, Sir Arthur Street, after saying he is to be responsible for the pits in his area, goes on to say he has specialisits in finance and administration sitting with him and together they have to produce the collective wisdom for the management of the region. I am all for collective wisdom, but when you come to management some one person must have the power of decision, and I want to know who has that power of decision. Is it the manager? I do not believe it is. Sir Arthur Street says the management is collective. Management cannot be collective. You cannot have a trinity of people commanding an army; you really cannot. It was tried, as the noble and learned Viscount the Lord Chancellor will remember, in the First World War in the East. There was the Levant Base with three Commanders-in-Chief, which gave rise to an entertaining and ribald paraphrase of the Athanasian Creed. Nobody ever said that was a model on which to conduct a campaign. Whether it is a fighting service or a business, however much you want collective wisdom, someone's word must go, otherwise things do not get done. I think evidence shows that the centre is over-loaded with details and it is bound to get overloaded with details unless it devolves responsibility. Also I am afraid it is trying to impose a sealed pattern.

The only thing on which I did not go all the way with Lord Teynham is that I thought he made too much of the separation between policy and action. He said that he wanted a policy board. I do not think it is quite as simple as that. You cannot separate policy and action. Policy issues in action and the board which makes policy must also have the general control and direction of action. It must direct and must also delegate. My experience is that probably the best board—and again there is no sealed pattern for this—is a board which is partly composed of executives and partly composed of men of general experience. I do not think that by having two or three managing directors on a board, each broadly responsible for one big sector of business, you are unnecessarily overloading the board with functional duties, if you have good managing directors who are capable of taking a decision themselves and capable of delegation to subordinates, and who bring to the board only matters of major policy. But I am quite sure that the central board should not attempt to impose a sealed pattern on regions and districts. I am afraid there is to-day a tendency of that kind. The regions ought to be encouraged to try out their own ideas, and make their own plans, and they cannot do that if the centre tries to enforce a sealed pattern upon them and stifles their initiative. If I do not offend, I would say: Give as much free- dom as you possibly can within your monopoly.

I turn now to the second essential, which is so closely linked to the other. How can we have comparative and, so far as possible, competitive standards of efficiency? Here, I am bound to say, I find Sir Arthur Street informative but rather alarming. With the traditional loyalty of a good civil servant (and I yield to no one in my admiration not only for the integrity of the Civil Service, which is so often spoken about, but for its general competence) he implies that the civil servants are good people to run these corporations. His argument is that they are selected in their youth from people who think clearly. I am not quite sure that they are. They are selected in their youth from people who are successful at passing examinations. Frankly, that is not the same thing.

With the approval of the trade union movement, I abolished the system of examinations for entry into the Colonial Service and substituted a system of careful selection (no nepotism; no "jobs for the boys," or anything of that sort) which is still working well. I do not think that because people can pass examinations they are necessarily the most suitable for a particular job. Sometimes the people who come to the top in the Civil Service are not the people who get the Double Firsts; certainly that is true in business. I wonder if the noble Lord, Lord Dukeston, could inform us how many of the general secretaries of the unions obtained their position by competitive examination, and how many obtained it because their mates thought them the best men for the job. Personally, I think the process of careful selection has a good deal to be said for it. Sir Arthur Street goes on to say—and this I find most alarming that all the people who are doing the same job must necessarily have the same pay. If one man is better than another you cannot pay him more, because you would have to put up the pay all along the line. That is the Civil Service practice, and probably no other system could be worked in the Civil Service. But it is not that which makes the Civil Service a good service.

I do not know how that fits in with what I think is now generally accepted as good economics, and, indeed, good Socialism—at any rate, good patriotism —that people should be paid by results, and that increased emoluments should be given to the person who gives good results; in fact, that the reward should be linked with the effort. Sir Arthur says the right way to deal with that man is to promote him. But there may not be promotion. In the Civil Service they are all more or less the same kind of jobs. I know that Departments vary, but it is the system of Civil Service administration. In industry the position is entirely different. If you have an absolutely first-class man on production and there is a job with a higher salary open in your sales department, it is no good taking the production man and putting him into the sales department in order to give him an extra £200 or £300 a year. There may be no other avenue open to him, but, surely, what has been done—and it has worked well—has been that if you wanted to keep in his job a man who had done very well and made money (it does not matter if it is for the taxpayer or the shareholder) you gave him a bit more because he had worked well.

I go on to what I must say is a very strange suggestion on how the national boards are to be made more efficient. Sir Arthur Street suggests that an independent board (another board) should be set up to audit the activities of the national boards from the point of view of business efficiency. Surely, to audit their own efficiency is the first job of the directors of each national board. Inspired by this theme, Sir Arthur proceeds to go even one better and asks whether possibly it does not point to our needing a new corporation. Not only a new board, but a new corporation and a new Minister!

LORD QUIBELL

No.

VISCOUNT SWINTON

He does, indeed. I thought it would shock the noble Lord; it has woken him up. It is about time he went on one of these boards. There is no escape from this. Sir Arthur says: Does this point to the need for a corporation appointed, say, by a Minister of Socialized Industries, to co-ordinate the work of all the corporations? A new Minister, a new Board, and a new corporation to co-ordinate!

Consumers' councils, I think, are going to be useful, but not to relieve these boards of their first duty, Sir Arthur says, rather naïvely, that they are needed to influence the boards to adapt to the requirements of the public the nature and kind of goods and services supplied. Ordinary businesses regard that as their primary function, without the need of having a consumer council to tell them. They have one very good reason for doing it, that if they do not supply the consumer with the kind of service and the kind of goods he requires he will go to somebody else who will.

That incentive cannot be applied here, because once the whole business is nationalized there is nowhere else to go. But, surely all this is terribly unreal—at least, I hope it is not going to become a reality. Is not the way really quite different? Should we not encourage initiative and diversity, and not be afraid of rewarding a good man according to his deserts? Give the local men real responsibility, and encourage them to try out their own ideas. By all means let the Central Board watch and compare the results, and pool the experience. That is one of the things it is there for. But let the Board also remember that the same plan is not necessarily the right plan everywhere and at all times. What may appear at the centre to be a uniform business, in fact has great variety depending on local conditions.

I am glad this is agreed, but I believe there is a great tendency to centralize and to send out these sealed pattern instructions from the centre. I shall be delighted if I am told that it is not so. I shall be delighted to hear that the practice is to be real delegation of responsibility and a real chance to these people to do their own jobs. I am perfectly certain that if we are to give the best to our customers, and the boards are to get the best out of their staffs, we must not seek to impose this uniformity upon them. I am certainly not inventing these complaints about uniformity. I hope that it is not the intention to impose it, and that it will certainly not be the practice. Acts of uniformity are unsuited to the variety and to the vigour of the British race.

5.22 p.m.

THE LORD CHANCELLOR (VISCOUNT JOWITT)

My Lords, I am only too glad that we have had this debate this afternoon, and I think we are all very grateful to the noble Lord for putting his Motion down. It is a matter of the utmost importance. We are all now, all His Majesty's lieges, sharing in this concern. We are all vitally interested in its success, and I myself think it is not too much to say that our chance of getting through the very grave economic problems which confront us to-day depends primarily on our being able to solve our coal problem. If we cannot solve that problem we cannot get through. If we can solve that problem, as I believe we can, then I am satisfied that we shall get through.

Therefore, this is a matter of the very greatest importance, and as I think has been exemplified in our debate to-day, I hope that an institution like the National Coal Board will be, as it were, taken out of Party politics altogether. We are all concerned in making this thing a success, and we must judge it fairly on its merits. We must not judge it by preconceived ideas, and I hope the noble Lord, Lord Teynham, will forgive me if I say that there were passages in his speech which made me think that he had applied the old adage: "Give a dog a bad name and hang it." He did not seem to like the Coal Board very much. Indeed, parts of his speech reminded me of a kind of Commination Service. The noble Lord made this statement: "No wonder we are having difficulty to-day in the coal industry." We were having difficulties in the coal industry—

LORD TEYNHAM

May I interrupt for one moment? My reference to that was merely because the time of five-and-a-half months between the passing of the Act and the vesting date was insufficient to allow the Coal Board to do their work properly.

THE LORD CHANCELLOR

I think when the noble Lord reads what he said—because I wrote it down at the time—he will find the plain suggestion that the present difficulties of the coal situation were due to the faulty structure of the National Coal Board. I am not suggesting for one moment that the National Coal Board is the best conceivable structure. I am not suggesting for one moment that they have not made mistakes—I am sure they have. A wise man differs from a foolish man not in not making mistakes—they both make mistakes—but in the fact that the wise man profits from his mistakes and puts them right. I have no doubt that the National Coal Board will develop and profit from the mistakes which they have made.

Having said that, I think it right to do what the noble Lord, Lord Hutchison of Montrose, and also, to some extent, the liable Lord, Lord Marley, did, and point out that the Coal Board has done a very remarkable job of work. May I just remind you of what they had to do? The Organizing Committee was set up in mid-July of 1946, and they had to build up an organization before the vesting date, which was the end of 1946. They had to take over something like 1,000 pits, over 800 colliery companies employing some 700,000 men, with a multitude of ancillary assets such as foundries, brickfields and the like; and they had to do all that in five-and-a-half months. Bear in mind that the coal industry in this country had been organized for many years in twenty-five districts corresponding roughly with the principal coal fields, and that district organization of miners and mineworkers had been the method of negotiating wages and conditions. Since 1921 the financial results of the industry, on which wages depend, had been ascertained district by district. All that organization was swept away. The Coal Board were put there and all the organizations under them, district organizations, pit organizations and group organizations, were swept away. There was a tabula rasa and the Coal Board, in this five-and-a-half months, had to construct an organization from the top to the very bottom.

What is remarkable is not that they have made mistakes—I do not know what the mistakes are, but I am quite certain they must have made some—but that they have managed the turnover so efficiently, and that so little dislocation has in fact taken place. They started in their earliest days after the vesting date with the severest winter we have ever had. I think the noble Viscount, Lord Swinton, said that they got into a mess. Let us be fair about this. At any rate the mess was not of I heir making.

VISCOUNT SWINTON

That was not at all the suggestion. I said that they ware landed in a mess.

THE LORD CHANCELLOR

That is quite fair. So long as it is made quite plain that it was not their fault in any way.

VISCOUNT SWINTON

No.

THE LORD CHANCELLOR

They then had put upon them the five day agreement, which obviously would give rise to difficulties, and since then they have had the recent plan for the temporary increase in working hours. Their problem was to take immediate steps to increase the output and, of course, the long-term steps, which I will discuss presently. The immediate problem of output, as the noble Lord, Lord Marley, rightly said, is an exceedingly difficult one because it depends very largely upon electric motors and belting, both of which are in very short supply. That makes it impossible, or at any rate difficult, to introduce conveyors instead of the existing tubs.

But when all these things have been said, let us look at what they have done. Let us take what I think is generally regarded as the most important figure: that of output per man shift. In the First World War, between the years 1915 and 1921, the output per man shift fell 25 per cent. and it did not reach the prewar standard until 1927—that is, it only reached the pre-war standard nine years after the end of the war. In the recent war, 1939-1945, the output per man shift fell 15 per cent., but it began to rise slightly from the end of the war, and the month before last we reached the pre-war average, that is to say 1.14; and last month it was 1.13. The problem is to hold the output at that figure. Let us recognize the fact that we have reached it in one month—I agree always a favourable month, but we have reached it—and that is a very striking comparison with the First World War.

Look at it from another aspect—namely, the numbers employed. When the Coal Board took over on the vesting date the number of men employed was 692,000. By July, 1946, the number had gone up to 720,000. Since then it has dropped, because the Bevin boys went out, to 715,000. It has now gone up to 716,000. It looks as if the decline has been arrested, and the recent figures show the number going up again. With regard to recruitment, this is organized by the Ministry of Labour in conjunction with and the co-operation of the trade unions concerned and the Coal Board; and your Lordships will have seen that Mr. Bowman, the well-known trade union leader, recently announced that they had decided to give places to 30,000 European volunteer workers. That is a very satisfactory thing, and it shows that the previous distrust between the two sides of the industry is beginning to give way to new treatment.

Having paid that tribute to the work of the Coal Board, let me look at the organization as it is. First of all there is the Minister who has, under the Statute, to give directions of a general character and who is, as the noble Viscount, Lord Swinton, rightly said, responsible for the general efficiency of the Board. I quite agree with the noble Viscount if he comes to the conclusion that if the Board is inefficient it is the Minister's job to alter it and get a new Board. He is responsible for these things. Subject to these powers of the Minister come the Board. I entirely agree with everything that has been said: it is to my mind of the most fundamental importance that the Minister should not interfere in the day-to-day working of the concern; that must be left to the Board, who are responsible for commercial management.

The noble Viscount, Lord Knollys, in a most interesting speech, quoted some observation which I thought so admirable that I wondered where it came from. It turned out to be an observation of Mr. Herbert Morrison. He said that not only must they take responsibility but if they hesitate to take responsibility it must be thrust down their throats; and with that I entirely agree. I do not think it will be necessary to thrust it down their throats, but if we put it fairly and squarely on their shoulders I do not think they will hesitate to take it. But let us be clear that we agree that it is their responsibility and not the responsibility of the Minister. If it were otherwise, if you were to have detailed interference, the Board would have to justify their every action to Parliament through the Minister. I entirely agree with what the noble Viscount, Lord Knollys, said; I believe that if we get into the way of asking Parliamentary questions on details it will not in any way make for efficiency.

The Board consists of a chairman who has no executive duties, a vice-chairman who has no executive duties, and seven functional members of the committee who, of course, have executive responsibilities. It is rather analogous to the Cabinet; we have in the Cabinet some members who have no Departmental responsibilities and some who have. I will say something before I sit down about the desirability of having functional boards of this sort. It must obviously depend on the nature of the work which the board has to do. So immense was the task which the Coal Board had to do in a short time that I do not think there was any room for part-time people who were giving part of their activities elsewhere, but I by no means preclude the possibility of any future for them. It may be desirable to have part-time directors as well as full-time directors at some future time, but at the moment I think it would be quite impracticable.

Then we come to decentralization. Having put the responsibility for their proper sphere of operations fairly and squarely upon the shoulders of the National Coal Board, I agree with all that has been said: they must decentralize. That is essential. The noble Viscount, Lord Swinton, suggested that the organization was too big. I quite agree; and the fact that it is so big makes it absolutely necessary that we should have a system of decentralization. The powers are not statutory powers. The National Coal Board appointed eight divisional coal boards. Each of these boards has its chairman and its deputy chairman, having executive responsibility, and each has four executive members—labour, production, marketing, and finance. The areas vary in size. There are some in South Wales with 200 pits; in some of the areas in the North-West they have only 70, and in Kent only 4. This shows, I think, that the National Coal Board, in setting up these organizations, were alive to the fact that a sealed plan is a quite hopeless conception on which to work. Therefore in their proper sphere these divisional boards must have full responsibility for their functions.

Under these Divisional Boards there are some 49 areas. These areas vary in size; some have as many as 60 pits, some have only 8 pits. I think it is fair to say that each area is a considerable undertaking, exceeding in size a unit which might have been managed in the old days by a company under some general manager. Each area is under the responsible management of a single individual—the area general manager. It is quite true that he is advised and assisted by area officers for each of the main functional divisions, but the area is the main operating unit in the industry, and the area general manager has full powers and, indeed, duties to take decisions in regard to matters properly pertaining to the area. Then below the area there is another system with regard to the groups of pits. The pits, sometimes an individual pit and sometimes a group, are under an agent; sometimes they are under sub-areas. Where there are no sub-areas the agents report direct to the area office.

We really want to come down to something concrete here, because of the things which are being said. The noble Lord, Lord Teynham, said, if I understood him a right, that the agent in charge of a pit cannot drive a tunnel underground without having to perform the more difficult task of driving a tunnel through a mass of papers to get permission to drive the tunnel. My information is that that just is not true. I entirely agree that it is essential that the man on the spot should be able to have authority to give instructions on these matters without referring elsewhere. Therefore, in each of these stages, it is essential to have authority to do those things which properly pertain to that function. Criticism has been made in another place that the chairmen of divisional boards who are selected for their administrative experience—

VISCOUNT SWINTON

The noble Viscount said that an area manager had really complete authority to do those things with regard to the working of the pits. Does that mean that, where he thinks it is necessary to have something done, he can spend the money, or has he to go to higher authority?

THE LORD CHANCELLOR

I assume that he must be able to spend the money. The answer is that supplied to me by the Minister, and it seems to me that he could not do that unless he had authority to spend money. Everything he does roust involve a certain amount of money. He has always to act with common sense. If the general manager of an area were to embark on some exceptional or very costly expenditure, he would obviously refer to a higher authority. In all these matters you cannot get away from the rule that common sense must dictate what you do, and it is difficult to define common sense.

VISCOUNT SWINTON

I hope what you say is the case.

THE LORD CHANCELLOR

Colonel Lancaster criticized the chairmen of the divisional boards who were selected for their administrative experience on the grounds of lack of technical experience in the industry. He criticized area managers on the ground of lack of administrative experience, though they had technical experience of the industry. It is for that very reason that you should combine both administrative experience and technical knowledge, and we maintain that by our system we have brought together those two requirements.

Let me give you an illustration in considering the conciliation machinery. There, the Coal Board have devised a machine, and we have now an agreed machinery to settle pit disputes. A question may arise in the pit as to the rate per ton to be paid to piece workers on a particular seam. That is settled at the pit. If it cannot be settled by agreement, then it is referred to the pit disputes committee. On the other hand, you may have disputes which concern something larger than an individual pit. You may have a dispute which concerns a division—such, for instance, as the timing of holidays in Yorkshire, which governs the whole Yorkshire coalfield—or, you may have national issues, such as the question of a national minimum wage. If it is a pit matter you have your pit machinery; if it is a divisional matter you have your divisional machinery; if it is a national matter you have your national machinery; and those matters can all be settled without going to higher authority. I claim that that is a very good and workable system. Of course, the national matters would have to be settled by the National Reference Tribunal; but, in fact, no dispute has yet reached the National Reference Tribunal, because disputes have been settled by agreement.

I pass now to another matter, the relations between the Board and their workers. Far transcending the narrow issue of terms and conditions, there is machinery for joint consultation, and I believe this to be a matter of the first moment., I think it is absolutely essential that a new spirit should spread through this industry and that the workers should realize that they are just as much concerned as anybody else in the satisfactory functioning of the industry. It is essential, therefore, that there should be educational activities, that each side in the industry should learn and begin to understand the problems of the other side in the industry, that there should be summer schools—there was one, for example, at Cambridge this year—in order to show the workers what the management are up against, and equally to enable the management to realize what the workers are up against.

Therefore, you must have some system of public relations. You cannot give detailed information about all their activities at frequent intervals. That is properly the subject matter of the annual report, and we have not reached the stage where there has been an annual report. The form of the annual report is to be approved by the Minister, as the Act provides, and when we receive the annual report in this House and in another place we shall have a very full discussion on it, because we shall be in a much better position to know what is being done and to see how our concerns are being conducted. In the meantime, both the noble Lord, Lord Hyndley, and Sir Arthur Street have made their addresses—I do not at all complain that Sir Arthur Street appears to have been thinking aloud, though I should not, as at present advised, subscribe to his thoughts—and periodic public statements have been made.

Let me say one more word on the question of decentralization and centralization, to try to make it plain. It is, of course, necessary—and I believe it was one of the troubles from which the industry suffered before—that more decisions should be taken at the top. I think that general standards should be laid down at the top. I think—and we all know it, because the Reid Report has told us—that both the quality and the quantity of mining engineers were altogether insufficient, and their technical requirements were not up to the mark. Certainly we shall all agree that the work done in the way of labour relations had been very poor. Any large concern run by private enterprise, if it is well conducted, would have far better arrangements for welfare than one found in the coalfields. We must try in these public enterprises to copy the best features of private enterprise. Those standards and those principles must be laid down from above, but, as I have said, when you have laid down those principles, decentralization is essential. You must allow the people below freedom to experiment—to try new ideas, new methods, new techniques. It is quite wrong to think that the enthusiasm of a few people at the top can be trusted to permeate downwards unless you also have the enthusiasm and ideas of the people at the bottom permeating upwards. You want the two streams to meet.

I would call your Lordships' attention to this. The noble Lord, Lord Hyndley, said this on November 12. I am quoting from an article of his which appeared in The Times: All these who are afraid that the country's coal industry is being run by a top-heavy organization may be assured that the principle of decentralization will be pushed forward to the utmost limit, compatible with safety. And, although I have heard vague statements that this is not being done, I have no evidence to show that that policy is not being carried out; and I will give your Lordships a perfect illustration of the way in which it has been carried out. Your Lordships will remember that, when final agreement as to extending working hours was reached, there was a question as to whether it should be done in one way or another, either by Saturday shifts or alternative Saturday shifts or by an extra half an hour. The Coal Board, having got the agreement, left it entirely to the various divisional boards to fix that up, and the divisional boards were perfectly free to make what arrangements they liked in their own divisions.

So, my Lords, I would say this and I hope it is of some satisfaction to you—that decentralization is to be the rule, and centralization is to be the exception. The exceptions—and you will remember that more often than not the exception proves the rule—are such things as this. In regard to development we have an immense task, and we have insufficient materials to carry out that task. If, therefore, you were to allow each individual district, or area, or pit, to work out its own scheme, and try to get from the inadequate stocks the plant, appliances and material necessary for the implementation of those schemes, you would have absolute chaos. So from the centre they have had to work out their projects. I can tell your Lordships that by the end of this year—that is in a month's time—there will be one major reconstruction project in each area. We hope that twenty such projects will be began in the year 1948, and we hope thereafter that there will be ten more in each year during the following eight years; that is to say, one hundred for the whole programme. As Lord Hutchison warned us just now—and obviously he spoke from a knowledge of the industry—do not let us think we are going to get quick returns by this. As he said, each project, of which there are one hundred, may well cost on an average £3,000,000, and may take at least six years to complete. It is a long-term proposition, but, on the other hand, it is a proposition which we have to face because, unfortunately, as the Reid Report said, where they had no plan we found the old system had not worked.

Then one other matter must be governed from the centre, and that is to build up the system of training, education and research. As I said before, the shortage of skilled mining engineers, which was recognized in the Reid Report, is one of the greatest handicaps which we have to meet to-day, and we must build up, by means of education and training, a better and more adequate system than we have. We must try to get, as I hope we shall in due course, a number of people with both administrative and technical qualifications who will be able to help in the running of industry in years to come. So we have to combine direction from the centre in some cases with decentralization and, if I might give an illustration which might appeal to the noble Lord, Lord Teynham, when Lord Tovey was in command of His Majesty's ships; in the engagement which finally ended in the sinking of the "Bismarck," you will remember that he got information from the Admiralty, who gave him all the latest information as to its whereabouts and summoned up the necessary forces. Lord Tovey said this in his dispatch which was published in the London Gazette on October 14 of this year: The accuracy of the information about the enemy supplied by the Admiralty, and the speed with which it was passed, were remarkable, and the balance struck between information and instructions passed to forces out of visual touch with me was ideal. And that is what you want to keep in mind in any efforts you make. You want to keep a balance between information and instruction, and I hope we shall be able to do that.

We have not heard to-day criticisms about over-staffing. I have a lot of figures about that, and I could have shown to be utterly ridiculous such statements as that the "Coal Board cost you 8s. 4d. a ton," whereas in fact the figure is 1s. 3d. as compared with 1s. 2d. before we had nationalization. Now, Lord Swinton asked me a question: How can you secure efficiency in a monopoly? Of course, that is a very real problem. In the old days, before we had the joint stock company which is said to be the only thing the lawyer ever invented, we used to have a number of small enterprises competing with each other. If one was very inefficient it was knocked out of business and was closed down, and all the people who worked for that particular concern were thrown out of work. Gradually it was discovered that this was not a very efficient way of doing business, and the organizations tended to grow larger until you had great organizations in the hands of private enterprise, such as I.C.I. and other organizations you may be able to think of, which, in spite of the fact that they sometimes cover large areas and are not subjected to competition, have managed to achieve efficiency.

I speak as a child in this matter compared with Lord Swinton, but my belief has always been that we cannot attach too much importance to accountancy. I believe myself that cost accounting is, comparatively speaking, in its infancy to-day, and that the accountants have a very great contribution to make in keeping industry up to date and efficient. Notwithstanding that, there is not the full competition that there was in the days of small businesses.

Is it desirable to have functional boards? I would answer that question in this way: You cannot either give a Yes or a No to that; it depends on the nature of the undertaking and the task which it has to perform at any given time. For myself, if we reach days of comparative leisure when the organization is going along fairly comfortably, I think there is much to be said for having non-functional boards; but the matter is obviously one which depends upon all sorts of considerations and, for my part, at the present time I do not think you could possibly do without functional boards.

Then the noble Viscount, Lord Knollys, made what I thought was a most interesting suggestion about the possibility of the Public Accounts Committee looking into these matters. But the accounts, which are to be audited, your Lordships will remember, by an auditor appointed by the Minister and not by the Comptroller and Auditor-General, will have come before the Public Accounts Committee, and the Public Accounts Committee are perfectly entitled, of course, to send for the finance officer of the corporation or, indeed, for anybody else in the organisation, or anybody they like. I do not think it would be fair, or right, to assume that they would necessarily want, or indeed should be given, a lot of detailed information about day-to-day working. But in regard to the more important matters I certainly think that they would have a right and would make their investigations. I consider that the suggestion made by the noble Viscount is an interesting one, and I will pass it on to the Minister. On broad lines, I think that something of the sort he has suggested might prove useful. Further than that I cannot commit myself. The primary responsibility, of course, of the Public Accounts Committee must be concerned with the accounting officer of the Minister. The Public Accounts Committee have the right—

VISCOUNT SWINTON

I am sure the noble and learned Viscount the Lord Chancellor would appreciate that, in this case, the Minister is in no way responsible for the detailed work of the company, and so his accounting officer could not answer. Only the accountants who have full knowledge of the business could do so.

THE LORD CHANCELLOR

So long as it does not involve detailed investigations, which would be undesirable, I dare say that on the broad general principles something might be done on this line. I want your Lordships to realize that the Government do not approach this matter from the point of view that they have conceived a perfect plan and that they are not going to alter it. It is not our view that we are committed to a set pattern or anything of that sort. We hope to learn by experience. If we find that the shoe pinches somewhere we shall see if we cannot alter the shoe. We shall not rest satisfied that everything is for the best, but shall endeavour constantly to make improvement as we go along. If a man is satisfied that everything is for the best he is generally in rather a dangerous state of mind.

The noble Lord, Lord Rochdale, asked me two questions. One was about training schemes. I hope that I have already answered him by what I have said. I have told him that that is a responsibility of the centre, with the approval of the Minister, of course. The Act so provides, and that matter is very much in hand at the present time. Then the noble Lord wants a study made of the lessons of management of nationalized industries generally. As I have just been saying, I very much hope that we shall continue that study, that we shall not be so foolish or so proud as not to be able to learn by experience. I am certain that we shall find there are improvements which we can make, and where there are we shall undoubtedly make them. We shall learn from the other national industries.

That concludes what I have to say. I hope that I have answered most, if not all, of the questions which your Lordships have; raised. I do not think that on this matter we are very far apart. We have certainly this in common. This is your Lordships' concern and my concern and the concern of all His Majesty's subjects. It is a matter of vital importance that it shall succeed. We have not only to get the coal but to get it at a price which will enable us to sell our exports abroad. If we cannot do that we shall be in very great trouble. The only way we shall do that is not by reducing the standard of living of the men who win the coal but by introducing more efficient organization. In spite of the fact that they are paid a decent wage—and we have to pay them a decent wage to attract them to this industry—by very efficient organization we shall, I hope, be able to cut down costs so as to be able to sell our coal to manufacturers at prices which will enable them, in their turn, to sell their goods in competition with the rest of the world. That, I know, is the object which the noble Lord has had in mind in moving this Motion and I am grateful to him for having moved it and thereby giving us the chance of having this debate.

6.5 p.m.

LORD TEYNHAM

My Lords, I am sure that we are all very grateful for the excellent way in which the noble and learned Viscount, the Lord Chancellor, has replied to this debate and for the amount of ground which he has covered in so doing. I feel that we have had a very interesting debate and many helpful suggestions have been put forward by (among others) my noble friends Viscount Swinton and Viscount Knollys. There was a slight difference between my noble friend Viscount Swinton and myself, but I think it is very small. I certainly have no objection to a National Board combining functional and policy control, provided that the functional element does not override the policy-making body. I was glad to know that the noble and learned Viscount, the Lord Chancellor, fully accepts the principle of decentralization in the coal industry. That is something which I feel to be of the utmost importance. In view of the very full explanations and assurances which have been given by the noble and learned Viscount, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.