IRON AND STEEL BILL (Hansard, 28 June 1949)

HL Deb 28 June 1949 vol 163 cc353-479 353

§ 2.55 p.m.

§ House again in Committee (according to Order).

§ [THE EARL OF DROGHEDA in the Chair]

§ Clause 3:

§ General duty of the Corporation

§ 3. It shall be the general duty of the Corporation so to exercise their powers as—

(a) to promote the efficient and economical supply of the products of the activities specified in the first column of the Second Schedule to this Act, and to secure that those products are available in such quantities, and are of such types, qualities and size;, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest in all respects; and
(b) to avoid showing undue preference to and exercising unfair discrimination against, any such persons or any class thereof in the supply and price of those products, but without prejudice to such variations in the terms and conditions on which those products are supplied as may arise from ordinary commercial considerations or from the public interest.

§ THE EARL OF DUDLEY moved, in paragraph (a) to omit the persons who use those products for manufacturing purposes, and insert "consumers of those products." The noble Earl said: The object of this Amendment is to lay on the Steel Corporation the same duty towards stockholding merchants under this 354 clause as it lays upon them towards persons who actually use iron and steel products. Clause 6 of the Bill, to which we shall come presently, entitles consumers of the principal products of the Corporation and its wholly owned subsidiaries to he represented on a Consumers' Council. The Interpretation Clause, defines the word "consumer" of any products as a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products. Clause 3, as at present drafted, excludes the stockholding merchants—that is to say, the persons engaged in the merchanting of those products. It is surely only logical that there should be consistency between Clauses 3 aril 6. I am sure that it is the Government's intention to bring stockholding merchants within this clause, so this Amendment is more or less drafting.

§ The stockholding merchants, as your Lordships are well aware, are an important adjunct of the industry. They are, in fact, agents for the sale of a great proportion of its products, and it is necessary that their interests should be fully considered. For example, the British Iron and Steel Federation at the present time have a committee, which was appointed a long time ago and of which I happen to be a member, which sits at regular intervals. That committee consults with the stockholding merchants, sees to it that their interests are thoroughly looked after, that they are satisfied, and that their organisation is as it should be, because it is recognised that they carry out a most important function. As I say, this is really only a drafting Amendment, and I hope the Government will accept it. I beg to move.

§ Amendment moved— Page 5, line 4, leave out from the beginning to ("and") in line 5 and insert ("consumers of those products").—(The Earl of Dudley.)

LORD CLYDESMUIR
I would like to support this Amendment. It is difficult to see that there can be any objection to it. The stockholding merchant fulfils a very useful function, particularly with regard to the small consumer. The small consumer who wishes to buy steel in small quantities may have great difficulty in satisfying his requirements quickly; he has to wait until special sizes are being rolled, and that sort of thing. If he could secure his steel from a stockholding 355 merchant, his needs would be readily adjusted. There may be some reason which the noble Lord wishes to advance as to why they have been left out so far, but I have some difficulty in understanding why they should not be put in the same category as other consumers.

§ LORD LUCAS OF CHILWORTH
The noble Earl who moved this Amendment correctly stated the case up to a point. Clause 3 of the Bill puts upon the producers of steel products an obligation to do certain things. One of those things is to meet the reasonable demands of manufacturers. It is to meet the reasonable demands of the persons who use iron and steel products for "manufacturing purposes," the definition of which, in Clause 58, is including the carrying-out of building operations and works of construction or civil engineering and the treatment of products by any process. The clause is designed expressly to exclude the stocking merchant, whereas the noble Earl's Amendment, as he said, is designed expressly to include him. The reason for the exclusion is that the real and effective demand is created by the end user, the manufacturer, not the merchant, whether he be a stocking merchant or whether he is not. The merchant may be dealing with one manufacturer, but the one manufacturer may be dealing with two or three merchants. In other words, the merchant, whether he be a stockist or otherwise, is an intermediary, and intermediaries do not create effective demand.
The demands of intermediaries may be sometimes fictitious—I do not say that in any derogatory sense: they may build up. But the real and effective demand comes from the manufacturer, as defined in Clause 58. Now that I have said that, I would add that His Majesty's Government have no intention of ignoring the work of the merchant—be he merchant or be he stockist—and we ask your Lordships to believe that his interests are fully covered under Clause 6. which states that the "Consumers" Council shall consist of thirteen to thirty representatives of consumers. The definition of "consumer" in Clause 58 is a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products. On my assurance that the interests of the people whom the noble Lord wishes to 356 protect by this Amendment are fully covered—and it would be completely wrong, as Clause 3 is drafted, to include a non-effective person in that demand—I hope the noble Lord will withdraw his Amendment.

§ THE EARL OF DUDLEY
I am very disappointed indeed with the noble Lord's reply. I have been at pains to follow him, but I am quite incapable of doing so. I cannot see why the stockholding merchant should not be included under this clause. The noble Lord says that the reason is that they do not create a demand. Well, if it were not for the stockholding merchant who holds in his stockyard what I might describe as a very large number of bits and pieces which are rolled at odd intervals by the manufacturers, the general demand would diminish very considerably. He performs not only a useful function but an essential function, and his interests need looking after just as much as those of the person who uses the product who, as the noble Lord says, creates the demand. You can argue just as well that the stockholder creates the demand. I do not want to divide upon this particular point, because it is not by any means a vital point—I admit that. But I hope the noble Lord will ask the Minister to give careful consideration to this point between now and the next stage of the Bill. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 3.4 p.m.

§ LORD BALFOUR OF INCHRYE moved, in paragraph (a) to delete "and to further the public interest in all respects." The noble Lord said: As the noble Lord who has just spoken for the Government said, this clause puts upon the Corporation the obligation to meet the reasonable demands of users for manufacturing purposes, and then the clause as at present drafted includes the words: …and to further the public interest in all respects… The purpose of moving this Amendment is to try to find out from the Government a little more about two points: first: what is the public interest, and secondly, who is to interpret the public interest? As the clause is drawn at present it would seem that "public interest" in this context would be a 357 matter of fact and, in the event of a dispute, the courts would decide what was, or was not, public interest.

§ But that is certainly not the Minister's point of view, because during the Committee stage in another place the Minister used words which, I think, show that he himself considers that he should finally interpret the public interest. His words were: …we fully appreciate…that what the Corporation may firmly believe to be in the public interest may, following criticism put forward by interested parties, by the consumers, by the Government, appear subject to reconsideration and amendment. That statement seems to show that the Minister foresees the position of himself, or his successor, being the interpreter of the public interest. That may be acceptable where the Minister is a disinterested party, but in this case the Corporation is virtually, in the final event, the creature of the Minister. It seems wrong to us that the Minister should be able to interpret finally what is the public interest. For instance, the public interest might well be interpreted as requiring the success of the Corporation at all costs, regardless of the effect on privately-owned companies competing in the same field.

§ I think there is an additional objection to the words proposed to he left out. As the paragraph is drawn, the Corporation have to secure such availability of steel as may seem to them best calculated to satisfy both the reasonable demands of the consumer and the public interest. But the two may be in conflict. It might well he that the reasonable demand of the consumers would involve some very heavy outlay which, according to the Minister, would not be finally in the public interest to incur. We fail to see the purpose of these words. We feel that they are ambiguous in that there is no definition as to what is "public interest" or assurance that the term will be interpreted impartially and not by an interested party. We prefer to rely upon the words of the noble Viscount, Lord Hall, who said on the Second Reading: I am sure that in steel, as in other cases, a relationship of trust and confidence against a background of common recognition of the public interest will develop which will transcend any statutory formula. It is because, apparently, the noble Viscount, Lord Hall, considers that a statutory formula is unnecessary, and 358 because we ourselves do not see the purpose of it, that I beg to move this Amendment.

§ Amendment moved— Page 5, line 5, leave out from ("purposes") to ("and") in line 6.—(Lord Balfour of Inchrye.)

§ THE EARL OF BUCKINGHAMSHIRE
As my name appears on the Order Paper in support of this Amendment, I would like to emphasise one or two points made by the noble Lord, Lord Balfour of Inchrye. As this paragraph is drawn, the Corporation must see that such steel is available as may seem to them best calculated to satisfy reasonable demands and to further the public interest. But, as the noble Lord said, it may not seem in the public interest to satisfy users' reasonable demands and, at the same time, try to get new products, because it may not be deemed in the public interest to undertake expenditure to satisfy that demand. It is quite unacceptable that, when the Minister is an interested party, having created a Corporation which, through the companies it owns, is competing with privately-owned companies, he should himself be the judge of what is the public interest.

§ LORD LUCAS OF CHILWORTH
I am very glad the noble Lord. Lord Balfour, prefaced his remarks by saying that this was really an exploratory Amendment. If he had not said that, I was going to express surprise from this side of the House that, after hearing so much during the previous sitting of the Committee about the public interest, noble Lords opposite should want now to leave out from the Bill all reference to public interest. I understand that the noble Lord has put this down only so that he may have an explanation, and I therefore acquit him of any malafides on this point.

§ VISCOUNT SWINTON
I gather that the shaft is directed at me. We are all deeply interested on this side of the House in the public interest. What we are concerned with here is to know how the Government—who apparently are going to be the judges—are going to interpret the public interest. There seems to be growing up a strange new doctrine of l'Etat, c'est moi in the sense that whatever the Government say is the public interest I must be the public interest. It is from 359 that that our, anxiety arises, and not from any question of safeguarding the public interest.

§ LORD LUCAS OF CHILWORTH
The noble Viscount might have allowed me to answer the question instead of doing it himself, because I think I can satisfy the noble Lord, Lord Balfour of Inchrye. The facts are these. The Bill as drafted really takes care—in fact it sets up a structure to take care—of the operations of the iron and steel industry in file home market. If we do not insert here the words in question, the public interest and the interests of the manufacturer and the merchant who specialises in the export market may be lost sight of. We contend that without these words it would be considered that the Corporation's duty with regard to the "reasonable demands" referred to in subsection (1) of Clause 3, finished at the point of the interest of the home producer. I feel certain that is not the noble Lord's intention, and neither is it the Government's intention.
The noble Lord, Lord Balfour of Inchrye, asked me one or two questions. He wanted to know who was to interpret the public interest. The answer is, the Corporation. Somebody has to start interpreting the public interest, and under this clause the Corporation do that. If there is any appeal arising out of a complaint that the Corporation have wrongfully interpreted what is in the public interest, to the detriment of any of the users of the articles specified, then an appeal lies through the Consumers' Council to the Minister. The noble Lord said in effect but can the Minister determine the public interest, since he is an interested party?" Of course he is an interested party. This kind of point has been argued often enough in your Lordships' House. If a Minister responsible to Parliament cannot be entrusted, under the supervision of Parliament, to determine the national or public interest, who can? I do not know, and I should be glad if any of the noble Lords sitting opposite can tell me. Who is there but Parliament to determine public interest? Who but the properly appointed Minister who is responsible to Parliament? That is my answer. I am sure that my reply has been given in such terms as to be as 360 acceptable to the noble Lord as it is to myself.
May I add that he misquoted my noble friend? The noble Viscount, Lord Hall, did not say that a statutory obligation was unnecessary. What he said was that he hoped that public spirit would be paramount—which is a different thing. The noble Lord ended by saying that he would rely on that, since, according to him, Lord Hall had said that the statutory obligation was unnecessary. But public interest has to figure some time in this Bill and we feel that this is the proper place for it to do so that is the reason for the inclusion of these words.

LORD LLOYD
I must make one comment on what the noble Lord has just said. He stated with complete satisfaction and complacency that, so long as the Minister was going to judge what was the public interest, that was all that anybody could require. I dare say that in days gone by the noble Lord would have been right in that statement, because in those days the Minister was an entirely impartial person. He had nothing to do with industry; he was in a perfectly good position to look at such matters from both sides, and to determine what was the public interest. Under this clause it is the Corporation who are to interpret the public interest. But the Corporation are an interested party. If there is an appeal against them it goes to the Minister—another interested party—and he has then to determine the public interest. I must say that I do not find the noble Lord's reply very convincing.

§ 3.18 p.m.

§ VISCOUNT SWINTON
I am sorry if I interrupted the Minister unfairly, but I did not think it was unfair. I should now like to put a question to him. Of course, everybody wants the public interest to prevail in this matter, but sometimes the public interest prevails best when least is done. I think it was the great Lord Melbourne who once said of the Government, "If only they would have the goodness to leave it alone"—or words to that effect. The present Government seem so obsessed with the idea that they are omniscient (as they are certainly omnipresent) that they must interfere at all stages to direct the public life. If these words are in, then the Government and the Minister have to 361 do something. I agree with the noble Lord to this extent, that if there is a real case in which Governmental action has to be taken, nobody can take it except the Government or the Minister —and the Minister must judge to the best of his ability what is the right action to take. If Parliament thinks the action wrong, Parliament will use whatever process is open to it to call him to account. But it is a very long way from that to saying that in every department and every relation of life the Government have to do something—either something positive to direct us what we are to do, or something negative—rather like saying "Go and see what baby is doing, and tell him not to." I am afraid that that is the situation into which we are getting more and more.
What is the value of having these words in at all? We have laid down a number of sensible provisions—that it is the duty of the Corporation to provide all the steel of the different kinds required, to provide it at the best possible prices, to supply so far as is practicable all the consumers of these articles, and generally to conduct their business in the most efficient way possible. Why cannot the Bill end there? Hitherto, business has gone on without a general direction from the Government to do what the Government may believe to be in the public interest. The words in the Bill mean that the Corporation have some special duty, in addition to these special duties that are laid down, which does not arise in the ordinary course of business. They mean that the Minister of Supply or some concatenation of Ministers, will come in with a duty to perform—a duty which they will certainly exercise. That gives them a status which I do not think they ought to have.
Those of us who have been Ministers can recall occasions, time after time, when we had been anxious about something. We have done the obvious thing; we have sent for representatives of the industry concerned, had a talk with them, and action has been taken. But what will happen now, if this specific duty is placed upon the Corporation and the Minister? What does it mean? It means some special supervision—because you cannot put a duty on a Corporation or a Minister without meaning that he has to supervise and take action, either to direct or to prevent something being done which is done in the ordinary course of business. 362 What is he going to do? What then is the idea of public interest? Everybody knows about the broad directives which the Government give, and quite rightly give, to-day in order to secure the maximum of dollar export; but a special clause is not needed for that. That is being done in every industry to-day by the Government, in consultation with the industry, without any statutory provision.
You may want to decide what is to be the output of steel. That can be done under this clause without involving anything to do with "the public interest," because one of the functions of the Corporation it to determine how much steel is to be produced. The Government certainly can give a broad directive—it is all dart of the policy of capital investment, and all the rest of it—and decide what are to be the priorities in the industry, whether steel shall go into power stations rather than into bridges, or whatever it may be. All that is being done to-day by the Government—I will not say perfectly well; that is a matter of opinion, but the Government have ample power to do it to-day, and are able to do it. But these words mean something much more meticulous than that. What would be the Corpora ion's power if these words implying a special duty were inserted? Would they not have power to say: "I think you ought to sell steel to this particular customer"? Suppose that they decided on one particular class of customer—I was going to say in whom they were interested, but I will not put it like that, or I shall be told I am attributing to them some corrupt motive. Shall I say—to whom, because they are their direct employees or the company in whom they have the taxpayers' capital invested., they owe a special responsibility. After all, as we go on with this, and industry after industry comes under Government control, the taxpayers' money is invested.
Then there is the question: Is steel to be directed by the Corporation, possibly on easier terns, certainly with a priority in supply? I ask the noble Lord, would that be "the public interest"? I think that, if you put these words in, it would; and not only would the opinion of a Minister go, but the Minister would have put upon him by this clause a duty to decide whether that was the right thing to do. I very much 363 doubt whether that is wise. I believe that it is much better to leave a few things alone and subject to the broad directives which the Government give today, and which the Government will agree industry most loyally carries out, not to put upon the Minister and the Corporation the specific duty to see whether all their activities are in the public interest. I do not say that I am the "Adam Smith" sort of man who, when everybody is carrying out his business to the best of his ability and a sum of wealth is added to the country, thinks that that is necessarily the best way. My noble friends below the gangway may still have that undiluted view. We in our Party have never shared it. On the other hand, fundamentally, if I have to choose between the old Adam Smith doctrine and the doctrine of meticulous interference at every point, then I am bound to say that I prefer Adam Smith every time. But I should have thought that we had found a sensible compromise here in the practical working of life, that everybody accepts the broad Government directives, and that it was enough to leave the matter there.

§ LORD LUCAS OF CHILWORTH
May I say how much I appreciate the reasonable tone of the noble Viscount's speech? I think it has considerable point —but not now. In an Amendment to which we shall come shortly, when the question of public interest again arises, I think we shall be able to argue upon the lines that the noble Viscount tends to argue upon this Amendment. The inclusion of these words in this context is easy to understand. It is a short point. If I may, I will read paragraph (a) of Clause 3, without the alterations that have already been made, because I have not had time to write them in. Clause 3 says: It shall be the general duty of the Corporation so to exercise their powers as—

(a) to promote the efficient and economical supply of the products of the activities specified in the first column of the Second Schedule to this Act, and to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes…"
By this Amendment, the noble Lord wants to stop there. My contention is 364 that, as this Bill is drafted, it controls the whole operation of the iron and steel industry, and it could be construed that the duty of the Corporation is to satisfy all those requirements for the home user alone, and to exclude everybody else. We say that in the public interest it is necessary to include those persons, both in merchanting and manufacturing, who operate in this country and abroad for the export trade. Perhaps the noble Viscount will forgive my not going further into this point now. It is not from any discourtesy that I do not reply to his other arguments now; it is because I think they are better replied to at a later stage, when we get down to their more positive application.

§ LORD BALFOUR OF INCHRYE
I trust that your Lordships will not begrudge me a few moments upon this important point. There is one further point I want to raise with the noble Lord. In answer to my question, he said that the Corporation would interpret the public interest, but appeal by an aggrieved party lay through the Consumers' Council to the Minister. I am no lawyer, but we have the benefit of the advice of many eminent lawyers of great distinction in your Lordships' House. What I am not clear about is why the appeal should not lie, as a matter of fact, to the courts and be determined by the courts in the event of dispute. It seems to me that that must be so with the Bill as it is at present drafted. On the point of appeal to the courts, may I remind the noble Lord of some words in the Economist on September 18, dealing with this point. The Economist said: The history of freedom is one long list of devices—from trial by jury and habeas corpus to the judges' rules of evidence—based on the assumption that the State cannot be trusted to serve the public interest.…Yet in economic matters the doctrine appears to be accepted that whatever a Minister of the Crown may take it into his head to do is ipso facto in the public interest. It is the danger of that doctrine that we are drawing attention to now. I shall ask leave to withdraw my Amendment if I may have an answer to my first question as to the appeal to the courts, vis-à-vis the Minister.

§ THE EARL OF DUDLEY
May I also ask one question on this point? The noble Lord said that the Corporation would interpret what was in the public 365 interest and what was not, and that consumers had an appeal to the Minister through the Consumers' Council. My noble friend Lord Lloyd pointed out, very rightly, that both the Corporation and the Minister are interested parties. I am at present an interested party and I am being divested, dispossessed, largely because I am an interested party. We, as owners, have been told that we are not fit to interpret what is and what is not in the public interest. We are also told that the Federation are not fit to interpret what is and what is not, in the public interest, because they are interested parties. That applies to the President of the Federation. It applies also to the independent chairman of the Federation, who surely is just as independent as the Minister—and probably more independent than the Minister will be in the future. If we, as owners and through the Federation, are not fit persons because of our vested interests, to say what is and what is not in the public interest, why on earth should the Corporation and the Minister be able to do so when the Bill becomes law? Perhaps the noble Lord will answer that question.

§ LORD LUCAS OF CHILWORTH
I shall he pleased to answer all these questions. On the question that Lord Balfour raised as to the legal possibilities, again I think we had better leave that to a later clause, when I think we shall discuss the matter. There is an Amendment down in the name of the noble Viscount, Lord Swinton.

§ LORD BALFOUR Of INCHRYE
Could you not answer the question now?

§ LORD LUCAS OF CHILWORTH
No, I prefer to answer it then, because it is a very complicated matter, and the question will arise as to what is the legal redress under undue preference. If there is undue preference under an interpretation in the public interest, perhaps we can discuss that. I shall then perhaps have the benefit of some legal opinion from the other side on this point. I can assure the noble Lord that we do not want to burke the issue, but I think it will be better for the convenience of the Committee to discuss it then, instead of having a half-hearted discussion upon it now.

§ VISCOUNT SWINTON
Which Amendment is that?

366

§ LORD LUCAS OF CHILWORTH
It is to page 5, line 13. Both the noble Lord, Lord Lloyd, and the noble Earl, Lord Dudley, have missed out one great point. What I said was that the Minister was answerable to Parliament and Parliament was the last arbiter as to what was and what was not in the public interest.

§ THE EARL OF DUDLEY
The Minister is an interested party. That is not an answer.

§ LORD LUCAS OF CHILWORTH
The noble Earl says that that is not an answer. If Parliament is not a proper authority to determine what is or what is not in the public interest—and the Minister is a servant of Parliament—what other authority is there? Upon that I rest.

§ VISCOUNT MAUGHAM
Since that question has been repeatedly asked, I wish to say—although I may not be right —that in my strong opinion the question is one ultimately for the High Court. It is true that the word "public" is often very difficult to define, but the courts have had to deal with it in correlation with half a dozen words, such as "houses," "places" and numbers of other things. The courts are constantly having to deal with a public "x," and I have no doubt that they will do their best in regard to this somewhat difficult problem.

§ LORD BALFOUR OF INCHRYE
The noble Lord speaking for the Government said that we are going to have a discussion on a subsequent Amendment which will clarify the particular question that I raised. On the understanding that the clarification of the later Amendment embraces also that of the point I have raised in these particular circumstances, I would beg leave to withdraw the Amendment.

§ VISCOUNT SWINTON
Before the Amendment is withdrawn, may I ask this question? I do not really think this matter arises on either the point about decentralisation or the new clause upon which probably the major discussions will take place. I thought we were confined here to the simple question of the interpretation of these particular words, as Lord Maugham has said. The words are "the public interest." The noble Lord, for some reason, has said that if we should allow the matter to stand there, 367 there would be a good deal more point in my argument that these words should not stand in the clause about undue discrimination.

§ LORD LUCAS OF CHILWORTH
I did not say that.

§ VISCOUNT SWINTON
I thought you did.

§ LORD LUCAS OF CHILWORTH
I said I thought they could be better applied to the other argument. I did not say that the other one was not necessary.

§ VISCOUNT SWINTON
I am not sure that I follow this metaphysical distinction. They could, of course, be applied in either case, because the words are exactly the same. But the question about which we want to be informed is not whether it is a good thing that the Minister should or should not do something—that is a matter of opinion. The question is a matter purely of legal construction. If we keep in this clause the words "and to further the public interest in all respects," would the sole judge of that question be the Minister, or would there be an appeal to the courts if a party concerned, thinking himself injuriously affected, said that what the Minister or the Corporation was doing was contrary to public interest? That is not a matter of opinion or of high policy; it is a simple question of legal construction which has been raised by the noble and learned Viscount, Lord Maugham. May we have an answer to that before the Amendment is withdrawn?

§ LORD LUCAS OF CHILWORTH
Yes. I am advised that the qualification in paragraph (a) is this: as may seem to the Corporation best calculated to satisfy the reasonable demands. That means that the decision of the Corporation cannot be challenged in the courts. That is the legal advice I have received—that the position is covered by those words, but that it is slightly different when we come to paragraph (b).

§ VISCOUNT SWINTON
It has nothing to do with the Minister at all then?

§ LORD LUCAS OF CHILWORTH
It has this to do with the Minister: that an appeal can be made by all interested parties to the Consumers' Council, which has very wide powers. If the noble Viscount will look at Clause 6, he will see 368 that they have very wide powers to do anything they may think it proper to do, and they may make representations to the Minister, whether by majority or minority. That is why I said that there was an appeal to the Minister through the Consumers' Council.

§ LORD BALFOUR OF INCHRYE
I thank the noble Lord for the explanation he has given. Frankly, I think it would have been better if the noble Lord had told the Committee earlier that the Bill as drafted gave no appeal to the courts and that the Minister was the final arbiter to whom appeal could be made through the Consumers' Council. I think it would have saved the noble Lord a good deal of time if he had given that answer at the very beginning. It now leaves us with what many of us consider to be the very unsatisfactory position that the Minister is virtually determining the conduct of a body over which he has final authority—namely, the Corporation—and can actually judge in favour of his own particular child. However, we have obtained that answer. We think the position is unsatisfactory, but I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 3.39 p.m.

§ LORD CLYDESMUIR moved, in paragraph (b) to omit "avoid showing undue preference to, and exercising" and to insert: secure that neither the Corporation nor any publicly-owned company shall show undue preference to or exercise. The noble Lord said: We now come to a very interesting point. This Amendment is designed to lay on the Corporation an obligation to prevent the publicly-owned companies, the nationalised companies, from showing undue preference or discrimination. I hope this Amendment will be acceptable to the Government. If it is not, I shall feel that my lack of persuasiveness precluded them from accepting it, because it is in line with the declared intention as announced by the Minister. As Clause 3 stands at the moment, there is in fact no obligation on the Corporation to prevent the publicly-owned companies from showing undue preference. The clause states that: It shall be the general duty of the Corporation so to exercise their powers as—

(a) to promote the efficient and economical supply of the products…and to secure that 369 those products are available in such quantities, and are of such types, qualities, and sizes, and are available at such prices, that may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest in all respects; and
(b) to avoid showing undue preference to, and exercising unfair discrimination against"—

and so on. Now here is the point to which I would draw the attention of the Committee. The Corporation themselves are forbidden to show preference. But the Corporation, except under special dispensation, will not be engaged in productive activities. They may be sitting in offices in Whitehall or in one or other of the stately homes of England, planning, controlling and generally conducting their lawful activities. It is in the country that the furnaces will smelt, the mills will turn and staffs will engage in the operations of buying and selling.

§ I put this Amendment before the Committee as one which is desirable to secure that the intention of Parliament, that there should be no discrimination, shall in fact be carried out. The nationalised companies will all be legal entities, but since under the clause as at present drawn the Corporation are not pledged—I am open to correction about this—to enjoin those companies not to show preference, it is hard to see how the Corporation can be held liable if, in fact, they do show it. The Amendment seeks to lay the obligation on the Corporation to prevent these publicly-owned companies from according undue preference. That is consistent with the statement of intention which was made on behalf of the Government in another place. The point has some back history, for, in another place, on Report, an Amendment was moved rather on these lines and there was a fairly full discussion as to whether the Corporation could be held responsible for a breach by a publicly-owned company of the duties laid on the Corporation. As I read the report, it was not finally determined that this should be so. I therefore raise this matter partly for exploratory purposes and partly with the intention of persuading the Government of the desirability of inserting words on these lines. It is the intention of Parliament that there should be no discrimination, but the Corporation will not be able to ensure that unless it lays on the companies that 370 there should, in fact, be no such discrimination. I beg to move.

§ Amendment moved— Page 5, line 7, leave out from the first ("to") to end of line and insert ("secure that neither the Corporation nor any publicly-owned company shall show undue preference to or exercise").—(Lord Clydesmuir.)

§ THE EARL OF DUDLEY
I beg to support the Amendment which has just been so comprehensively moved by my noble friend Lord Clydesmuir. He has referred to the proceedings which took place during the Report stage in another place. I am not going to repeat what he has already told the Committee, but, as a matter of fact, two further points were raised during that debate and were not replied to either by the Minister or by the Solicitor-General. I hope that we shall get an answer to-day from noble Lords opposite. The first one is this. If the Corporation give an order to a subsidiary company, that they are not to show preference in a particular case, and they still persist in doing so, can a case be brought against the Corporation? The Corporation can say: "We did our best; we gave instructions in this case and no further blame lies at our door." It has not been established that a case can be laid against the Corporation if in fact they did give the necessary instructions to their subsidiary. The other point is whether a contract catered into with a subsidiary can be legally regarded as a contract with the Corporation. I think that those are two important points, although they are subsidiary ones, and I hope that we shall get a reply to them from the Government to-day.

LORD RENNELL
I think there is a great deal in this matter which is very important, especially in connection with what was said last week on the structure of these companies. There was then a considerable discussion as to what the Corporation were intended or entitled to do, and I quoted what the noble Viscount, Lord Hall, said in his opening statement. Other quotations were made by other speakers about the Corporation being essentially a holding company. That being so, if the Corporation are a holding company and only a holding company (the noble Viscount, Lord Hall, gave me an Amendment which confirmed that) it becomes all the more important that the subsidiaries should be bound to do 371 the same things which the Corporation are bound to do. It is very difficult indeed in this context, and in relation to certain other points which are coming up, to see exactly what the procedure is.
The noble Earl said that the Corporation can give instructions to a certain company. If a company is a holding company, it cannot in fact give direct instructions to another company. The procedure by which a holding company exercises its domination over subsidiary companies is an extremely complicated and a rather lengthy one. It might happen that the Corporation gave an instruction which it could not enforce on a subsidiary company except by a rather lengthy procedure and after a long interval, during which damage might be done. It is essential that a subsidiary to a holding company should be bound by the same principle which binds the holding company itself. If this is not the case, the structure breaks down. The matter will be brought up again by an Amendment which stands in the names of the noble Viscount, Lord Swinton, myself and others, at line 13. It is only fair to say now that to bind the Corporation to do something is not ipso facto to bind the subsidiary companies under a holding company to do the same thing at the same time. At the most, it binds them to do it at a long interval of time.

§ LORD LUCAS OF CHILWORTH
I hope I shall not be accused of seeking to make a bid for popularity if I say at once that I am very much tempted to accept this Amendment, if I can do a deal. If I can sink to such depths, I would like to do a deal with the noble Viscount, Lord Swinton, with regard to the Amendment at page 5, line 13. I am hoping to persuade him, when the time arrives, that if I accept this Amendment his Amendment will be unnecessary. Someone has to be the first to make a friendly gesture, and in this case perhaps it is up to me. So I make this offer in the hope that the noble Viscount will put it to the credit side of my account when we come to the Amendment at page 5, line 13. In reply to the point raised by the noble Earl, Lord Dudley, the Corporation's liability is absolute. The fact that they might give an order to a subsidiary which was disobeyed would not let the Corporation out. With regard to 372 the noble Earl's second point, I would point out that a contract with a subsidiary company is not a contract with the Corporation. I do not think I need delay your Lordships further. I will accept this Amendment because it does exactly what Lord Clydesmuir said it would. As has already been stated, if a publicly-owned company showed undue discrimination, proceedings would lie against the Corporation to prevent them from showing undue preference in causing or not stopping the wholly-owned public company from showing undue preference. I hope that after accepting this Amendment, I may have sympathetic consideration when we come to the other Amendment which I have mentioned. In answer to Lord Rennell, may I say that the procedure for controlling a publicly-owned company is simplified by the Ninth Schedule, and the operation would be quite speedy. We accept the Amendment.

§ VISCOUNT SWINTON
I would be content, unless called to account later on, to say nothing. I am always prepared to do a deal in the public interest. I am sure the noble Lord is right to accept this Amendment. But he put to me a rather odd proposition: that he would accept this Amendment if I would withdraw a later one. The later Amendment is purely a question of law —whether the acceptance of the obligation that the Corporation has the duty to prevent preference would make them liable if preference were given. I am prepared to discuss later the need for my Amendment, but I thought it better to put briefly the legal opinion I have been given.

§ LORD LUCAS OF CHILWORTH
Perhaps I should have put my remarks in another way. I should have said, "I hope to persuade the noble Viscount."

§ VISCOUNT MAUGHAM
It seems to me that the present proposal of the noble Lord, Lord Rennell, is important. It is clear that in the Bill as drawn, preference or discrimination as between customers and undue influence relate only to the articles mentioned in the Second Schedule, and we have nothing yet in the Bill which prevents these subsidiary companies, the whole of whose shares are to he held by the Corporation, from favouring one or more customers as opposed to 373 others. I venture to think it is desirable, in order to have the whole thing shipshape and to prevent possible abuses, to accept the suggestion of my noble friend Lord Rennell, which means that there would be one clause preventing discrimination by the Corporation and another clause preventing discrimination by any of the subsidiary companies. There is no other satisfactory way of doing it. I have looked at the Ninth Schedule, to which the noble Lord, Lord Lucas, kindly referred me, and I cannot see there any speedy way by which it is possible for the Corporation as a whole to go down to some business in Wales or Yorkshire and say they must not do so-and-so because it would be discrimination. It is my submission to the Committee, that, without being stopped by any action of the Corporation, it ought to be illegal from the start for the subsidiary companies to give special advantages to certain customers.

VISCOUNT ELIBANK
I do not understand this exchange of Amendments.

§ VISCOUNT SWINTON
There is no exchange.

VISCOUNT ELIBANK
The noble Lord, Lord Lucas, suggested that if he accepted this Amendment, a later Amendment might be withdrawn. I should like to have some explanation.

§ VISCOUNT SWINTON
May I explain? The noble Lord, Lord Lucas, said that he was advised in law that if he accepted an obligation upon the Corporation that neither they nor any of their subsidiaries were to give undue preference, it was unnecessary to put in an Amendment to say that the Corporation would be liable for damages or to an injunction, because, the statutory duty having been imposed on the Corporation, it would automatically follow without any words in the Bill that they would be liable. We will discuss that as a pure point of law when we come to it. There is no bargain. So far as Lord Maugham's point goes—

§ VISCOUNT MAUGHAM
Lord Rennell's point, which I am supporting.

§ VISCOUNT SWINTON
So far as Lord Rennell's point as concerned we have amended Clause 3 to include not only Second Schedule products, but all main 374 activities. If we pass this Amendment, which the Government have accepted, then there will be an obligation not to show a preference in all the things in Clause 3 as amended, which consist not only of Second Schedule activities but other activities of these companies.

§ LORD LUCAS OF CHILWORTH
That is what I understand. But if the noble Lord, Lord Rennell, is not satisfied, I will undertake to have the matter looked into.

LORD RENNELL
I think it is rather an important point, because it is coming up in another context later on. I am not happy that the Ninth Schedule in its present form would produce what the noble Lord has suggested in regard to activities. In regard to this Amendment, I am quite happy, subject to the form being looked into again.

LORD CLYDESMUIR
I thank the noble Lord for accepting this Amendment. I understand that following on the Amendment of Thursday night, the principal products will he included. I hope the Amendment will make a workable addition to the Bill.

§ On Question, Amendment agreed to.

§ LORD BALFOLUR OF INCHRYE moved, in paragraph (b) to leave out "or from the public interest." The noble Lord said: Here again is an Amendment dealing with public interest. I will not repeat the arguments we made in regard to our objection to the interpretation of "public interest" by the Minister. There is a particular difference in this Amendment. In this case the words might be exercised in respect of the export trade. I should like to ask the noble Lord if there is any appeal to the court in this instance, or is the Bill so drafted that there is no specific appeal? If that is so, then it would be possible under the heading of public interest to circumvent all safeguards against undue preference which we are endeavouring to insert by means of these Amendments. It seems to me to be reducing the value of every other safeguard against undue preference if, tinder the heading of public interest, the Minister can determine finally what is or what is not the public interest.

§ Amendment moved— Page 5, line 13, leave out ("or from the public interest").—(Lord Balfour of Inchrye.)

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LORD HAWKE
May I ask the noble Lord who is to reply what is the difference between "public interest" and "national interest"? In this paragraph the words used are "public interest." In the next clause of the Bill, in line 19, we have the words "national interest." In one case we have the Corporation interpreting the public interest and in another we have a Minister interpreting the national interest. Why is there this different phraseology? Are they not the same?

VISCOUNT RIDLEY
I would like to support this Amendment, and I hope the noble Lord will say something on this point. If the words are left in there is a danger that the Corporation, through some of their publicly-owned companies, might exercise a preference in such a way as to damage their competitors, who in fact use the products of a publicly-owned company. It might be said in a particular set of circumstances that it was in the public interest that the Iron and Steel Corporation should have the large majority of the trade in certain products, so that it would be proper that one of their competitors should he sold steel, at whatever stage it was required, at a price contrary to the real spirit of this clause. If the noble Lord can satisfy us that there is no possibility of that interpretation of "from the public interest," that point would be covered. Otherwise, I fear that there may he a Minister who will take a wrong view, or a Corporation which is unduly anxious to secure the largest share of some particular trade, and there would be danger of unfairness to competitors.

§ LORD LUCAS OF CHILWORTH
As the noble Lord, Lord Balfour, has said, we now come to another aspect of public interest. I will start by answering the noble Lord's question. The whole intent of paragraph (b) is undue preference, and if undue preference is shown a case lies in the courts. I would like to discuss this in full when we come to the Amendment of the noble Viscount Lord Swinton. I take it that the same applies to this Amendment as to the last one, in that it is a purely exploratory Amendment as to why we want "in the public interest."

§ VISCOUNT SWINTON
It is a great deal more than exploratory. I have a very definite view about this.

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§ LORD LUCAS OF CHILWORTH
After the noble Viscount has heard me, perhaps he will not be quite so definite. I think noble Lords opposite are ready to concede that a case for undue preference can lie only in the home market. There must be a special case. You must allow the Corporation to show preference in the export market—that is to say, in the export of steel to dollar countries, the withholding of exports from countries which may have war-like or unfriendly intent, and so on. If we did not have these words they could not show that amount of preference in the public interest. But apart from that—here I think the noble Viscount Lord Swinton will join issue with me—it is necessary to give the Corporation some discretion to show undue preference, or what may be regarded as undue preference, in the home market, where it is in the public interest that steel, whether in its raw state or manufactured, should be diverted for the building of power stations or the building of ships as opposed to the manufacture of toys and less essentials. That is why we say it is necessary to have the words, "from the public interest." The Corporation should have that amount of discretion. If they abuse that discretion, and show undue preference which should not be shown, then under the Amendment which I have accepted from the noble Lord, Lord Clydesmuir, there is an action against them. I cannot accept this Amendment for the reasons I have stated: first, that it is necessary for the Corporation to be able to show preference in the export market; and secondly, that in special cases, in the public interest, it is necessary for the Corporation to show preference in the home market.

§ VISCOUNT SWINTON
With great respect—I speak subject to legal correction—I believe the noble Lord is entirely wrong in his conception of what "undue preference" means in law. A prohibition against showing an undue preference does not mean an obligation to charge the same price to every consumer of steel in the country. It does not mean that you have to supply the same amount to a toy-maker and a shipbuilder. It has never meant that. A great many years ago I had a few cases about railway rates. There is a great chain of authority, as every lawyer knows, about what is an undue preference. An undue preference 377 did not mean in the case of railway rates that you could not give one rate for coal and another for silk stockings. Of course you did. A very low railway rate was given for the bulk carrying of coal, and a high rate was charged on luxury goods. That was not an undue preference. It was a preference, if you like, in the sense that the rate for silk stockings was higher per ton or per pound than the rate for coal. What "undue preference" means is this: that when you are carrying coal you must not carry the coal of the Tyne Main Colliery on better terms than you carry the coal of the Lancashire Colliery. It means an undue preference as between people in the same category. I think every lawyer in the House will support that.
If this clause stands without the words about undue preference, there is nothing to prevent the Corporation saying that you ought to try to sell all the steel you can in dollar countries. There is nothing to prevent them saying to their subsidiaries: "You must give priority in your deliveries of steel to shipbuilding and power stations." That is legitimate. What they must not say, under undue preference, is: "In the delivery of steel to a shipbuilder, you shall give it on preferential terms to shipbuilder A as against shipbuilder B." If I may bring the matter a little closer home, the Government are taking over in this Bill a very large number of engineering undertakings. Those engineering undertakings will be buyers of steel. There will be independent undertakings outside doing exactly the same thing—making the wire and the hundred and one things which the Government are going to take over. It is legitimate for the Corporation to say that bridge building shall have a priority in steel delivery, and, I should think, a difference in price in basic steel, over some other type of industry. But what they are not to do is to give to an undertaking which the Corporation own, as opposed to an undertaking which is independent, better or cheaper supplies of steel, or preferential conditions in any respect. Now that is what "undue preference" means in law, in fact and in intention.
It has been said that if the Corporation—because it is the Corporation and not the Minister—consider it in the public interest, they may give a preference to their own nationalised subsidiary as against free enterprise outside. That 378 is exactly what we want to stop and, as the Minister has truly said, the judgment will be that of the Corporation and there is no appeal to the court. If these words are retained, the Corporation will be able to say: "I think it is in the public interest to keep my bridge-building works in work, or my tank works in work, or even my tennis racquet works in work; and, therefore, because first of all I am using the taxpayers' money and, secondly, I am employing the people hope will vote for me at the next election, I am going to decide that I shall give a preference to my subsidiary as against men in exactly the same class of business." That is exactly what this clause is intended to prevent. It is exactly what I thought the Minister was going to prevent when he accepted the earlier Amendment. No answer has been given to the very pertinent question posed by the noble Lord, Lord Hawke, as to what is the difference between "national interest" and "public interest." I suppose that when the Minister decides something it is in the national interest, and when the Corporation decides something it is in the public interest. The Minister has given no sort of reason.
If he will accept my view of what "undue preference" means—it means preference as between like people—it will not in the least stop him ordering the priorities of steel, it will not in the least stop him giving one price for export and another for internal consumption, and it will not stop him from saying how much is to go to export. As the Government accepted in the Transport Act, you must treat industries of the same kind equally, whether you own them or not, and you cannot discriminate. But as between class and class you can discriminate as much as you please. That is the intention of the clause. I speak in the presence of lawyers, and I think I am right in saying that that is what the law of undue preference means. If I am right, then surely there can be no possible purpose in keeping these words.

LORD LUCAS or CHILWORTH
I am sorry, but I still cannot accept this Amendment. There must be the power for this discrimination, and it may well be in the public interest that there is discrimination by the Corporation—

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§ VISCOUNT SWINTON
Between firm and firm?

§ LORD LUCAS OF CHILWORTH
Yes, and if these words were omitted, they would have no defence that it was in the national interest for them so to discriminate.

§ THE MARQUESS OF SALISBURY
Could the noble Lord say anything further about what he means by "national interest" and "public interest"? It is a very vague phrase.

§ LORD LUCAS OF CHILWORTH
I am much obliged to the noble Marquess for reminding me. The reason why I did not reply to the noble Lord—I hope he will not think me guilty of discourtesy—was because I do not think we are dealing with that matter in this clause. If I may say so with great respect, the proper clause on which to ask for an interpretation is the Interpretation Clause. But I am willing to give it to him now. The reason is that "public interest" is a somewhat narrower concept than the "national interest." The public interest might include rather parochial affairs in a particular community, whereas the national interest is a far wider concept. That is the reason, and that is the only explanation. There is no sinister or ulterior motive in it at all.

VISCOUNT ELIBANK
What the noble Lord has just told us about the words "in the public interest" will vitiate the rest of the clause. He said that occasions will arise, or may arise, when it will be necessary to discriminate. Now what arguments can be advanced that it is not necessary to discriminate if these words are in the clause? It is not a statutory obligation. It simply means that the Corporation are in the position to do anything they like in the "public interest," and it vitiates the rest of the clause.

VISCOUNT RIDLEY
May I ask the noble Lord a question? Did I understand him to say in his last answer that it might be, and probably would be, in the public interest for the Corporation to exercise discretion as to prices, with the view to freezing out their competitors—

§ LORD LUCAS OF CHILWORTH
The noble Lord has no right to read into anything I said any such thing. He cannot put such words into my mouth. He knows I did not say it.

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VISCOUNT RIDLEY
I did ask that question when I spoke before, and I thought that was intended to be an answer.

LORD LLOYD
The noble Lord did say that it might be necessary to discriminate between one firm and another in the public or national interest, whichever it was. I wonder whether he can given any explanation or example of what he had in mind? I think it would help the Committee to appreciate the noble Lord's point if he could give an example of where he would think it necessary to do that.

§ LORD LUCAS OF CHILWORTH
I cannot give the noble Lord an example, because so many contingencies may arise. I am hoping—I may not be successful—to persuade the Committee that there is redress when we come to the Amendment upon which we can discuss the whole question as to what action lies against the Corporation when undue preference is shown that should not be shown. I now speak without consulting my legal advisers and, therefore, noble Lords will have to take what I say with that reservation. But if you omit the words "public interest" from this clause, I suggest—and perhaps noble Lords who are more versed in the law will tell me if I am wrong—that we have no defence to say, "This was done in the national interest."

§ VISCOUNT SWINTON
I am afraid that we must divide on this question, but let us be perfectly clear what is the issue upon which we are dividing. Of course, there is going to be a right of action, but that right of action will be because a breach of this clause has been committed. If the words "public interest" are not in the clause, then a breach will have been committed where-ever a preference is given as between two people who stand on exactly the same footing. That is what the law as to undue preference has been for the last sixty years. If these words are retained, however, and the Corporation says: "I decide, as it is my statutory duty to do, because this clause gives me the duty to give an undue preference if I think it is in the public interest," then it would be idle to say, "You are wrong," and go to the court because what would the court have to decide? It would not decide on the merits of the case, whether it was in the public interest. 381 The most you could charge the Corporation with was that they had come to a dishonest decision of what was in the public interest. We had this question in connection with Regulation 18B during the war. The noble Lord says, in effect: "I claim the right for the Minister or the Corporation to discriminate, in what they are pleased to consider to be the public interest, between firm and firm." There you have an absolutely flat issue, and a principle upon which, though I regret it, I think we must divide.

§ LORD LUCAS OF CHILWORTH
Before the Question is put, may I say one word? Noble Lords were anxious that I should give them an example of discrimination, and I am now able to give them one. Take the case of two independent firms—nothing to do with the Corporation—making exactly the same kind of article, let us say generating plant. One is exporting and the other is not. The Corporation shows a preference in the supply of steel to the firm that is exporting. That is in the public interest.

THE MARQUESS OF READING
May I ask one question? The noble Lord took exception to our raising at this stage a distinction between "public interest" and "national interest." I find it rather difficult to know whether the right term in this clause is "public interest" as distinct from "national interest," and whether "national interest" is the right term instead of "public interest" in the next clause. If, as the noble Lord indicated, the Government draw some subtle distinction between these two adjectives, are they prepared -to include in the definition clause in this Bill a definition of the words "public interest" on the one hand and "national interest" on the other?

LORD STRABOLGI
Would it suit the noble Marquess if we were to use the words "public and national"?

LORD HAWKE
I started this hare of national interest and public interest and I feel that perhaps I have a right to comment on the noble Lord's reply. I do not believe he knows the answer. I certainly do not know it, and I should like the noble Lord to obtain the answer from the people who drafted the Bill, because they are presumed to know what every word in the Bill means. If, as I 382 believe to be the case, they admit they have drafted the Bill loosely, without any specific idea and that "national interest" could be substituted for "public interest" in that context, we shall have a situation in which a Corporation set up by Statute is to be an interpreter of the national interest—which is, in my view, entirely outside their scope. All the instances which the noble Lord has given of ways in which preference might be exercised are to my mind examples of what might happen in a planned economy, where the Minister would be giving directions to a Corporation as to how to exercise their functions. I suggest that it is wholly unconstitutional for a Corporation to set itself up as a judge of whether bridges or tennis racquets are more urgently required, and whether exports to one country, or another should have preference over the rest.

VISCOUNT RIDLEY
I should like to ask the noble Lord he will make one thing clear. He has spoken in regard to the supply of products, but I do not think he has said mach with regard to the prices at which products are supplied. My anxiety is the same as that of the noble Viscount, Lord Swinton. I want to be perfectly clear whether or not it is possible for the Corporation at some future date to discriminate between the prices for the supply of certain commodities to an outside firm, on the one hand, and to one of these controlled firms or their subsidiaries on the other. I should like to be satisfied that the words "public interest" in this clause do not mean that the Corporation could maintain that it was right and proper for them to prevent competitors competing with them on level terms.

§ LORD LUCAS OF CHILWORTH
I do not think the Corporation would want to do such things as the noble Viscount suggests. If a situation should arise such as he adumbrates, I should think an action would lie for damages for undue preference, since one firm would pay excessive prices.

§ VISCOUNT SWINTON
How could an action lie if the Corporation said, in effect, "We have decided to do this because in our opinion it is in the public interest to supply firm A, rather than firm B?" There is no appeal against the exercise of this judgment. And in this Bill you 383 are not merely giving the Corporation a power but laying on them a duty to exercise their judgment. There is no possible ground for an action.

§ LORD BALFOUR OF INCHRYE
As this debate has developed it is clear that there is a cleavage in principle between noble Lords on this side and the Government. The noble Lord claims for the

§ Resolved in the negative, and Amendment agreed to accordingly.

§ 4.37 p.m.

§ LORD TEYNHAM moved to add to the Clause: (c) to secure the largest degree of decentralisation consistent with the exercise of the rights conferred on them by the holding of interests in companies.

§ The noble Lord said: In moving an Amendment to Clause 2, I laid stress on the fact that one of the lessons which

384

§ Government a right of discrimination which we on this side feel is dangerous. Without further argument I feel I must say that I regret that I am unable to withdraw this Amendment.

§ On Question, Whether the words proposed to be left out shall stand part of the clause?

§ Their Lordship divided: Contents, 23; Not-Contents 85.

383

CONTENTS
Jowitt, V. (L. Chancellor.)	Amnion, L.	Lucas of Chilworth, L.
	Chorley, L. [Teller.]	Macdonald of Gwaenysgor, L.
Addison, V. (L. Privy Seal.)	Crook, L.	Marley, L.
	Darwen, L.	Morrison, L.
Huntingdon, E.	Foley, L.	Pakenham, L.
	Hare, L. (E. Listowel.)	Pethick-Lawrence, L.
Hall, V.	Henderson, L.	Shepherd, L. [Teller.]
St. Davids, V.	Holden, L.	Strabolgi, L.
	Kershaw, L.	Winster, L.

NOT-CONTENTS
Richmond and Gordon, D.	Hailsham, V.	Clifford, L.
	Lambert, V.	Grantley, L.
Abercorn, M. (D. Abercorn.)	Long, V.	Hatherton, L.
Ailesbury, M.	Margesson, V.	Hawke, L.
Cholmondeley, M.	Maugham, V.	Hindlip, L.
Reading, M.	Monsell, V.	Kenilworth, L.
Salisbury, M.	Ridley, V.	Layton, L.
Townshend, M.	Samuel, V.	Llewellin, L.
Willingdon, M.	Simon, V.	Llovd, L.
	Swinton, V.	Mendip, L. (V. Clifden.)
Buckinghamshire, E.	Templewood, V.	Middleton, L.
Carlisle, E.		Milne, L.
De La Warr, E.	Ailwyn, L.	Milverton, L.
Dudley, E.	Baden-Powell, L.	Monkswell, L.
Fortescue, E. [Teller.]	Balfour of Inchrye, L.	Moyne, L.
Howe, E.	Belstead, L.	O'Hagan, L.
Iddesleigh, E.	Blackford, L.	Rennell, L.
Lindsay, E.	Brand, L.	Ritchie of Dundee, L.
Munster, E.	Brassey of Apethorpe, L.	Rochdale, L.
Onslow, E.	Broadbridge, L.	Roche, L.
Perth, E.	Carrington. L. [Teller.]	Sandhurst, L.
Selborne, E.	Cherwell, L.	Savile, L.
Stanhope, E.	Clanwilliam, L. (E. Clanwilliam.)	Somers, L.
		Strathcarron, L.
Bridgeman, V.	Derwent, L.	Swaythling, L.
Buckmaster, V.	Dormer, L.	Teviot, L.
Caldecote, V.	Dowding, L.	Teynham, L.
Elibank, V.	Ellenborough, L.	Wardington, L.
Falmouth, V.	Fairfax of Cameron, L.	Wolverton, L.
FitzAlan of Derwent, V.	Foxford, L. (E. Limerick.)

384

§ His Majesty's Government might have learnt from previous nationalisation measures was the necessity for as much decentralisation as possible. This Amendment merely lays on the Corporation the general duty to adopt such decentralisation. I do not think that His Majesty's Government can have much difficulty in accepting the principle of this Amendment. On the other hand, His Majesty's Government might prefer to have a full discussion on decentralisation 385 of the control and management of public companies on a later Amendment which stands on the Order Paper after Clause 4. I beg to move.

§ Amendment moved— Page 5, line 13, at end, insert the said paragraph.—(Lord Teynham.)

§ LORD LUCAS OF CHILWORTH
We do not mind where we have any discussion. That is for the noble Lords opposite to choose. We are always willingly acquiescent. As regards this particular Amendment I can tell the noble Lord frankly that we accept it in principle but that there is no necessity for it because its principle is there now. The very set-up of this system by which we keep in existence the identity of the individual firms shows that we require decentralisation as much as possible. But let me be frank. In the interests of the economy of the industry, it may be necessary for amalgamations to take place. That would be a movement towards centralisation. I ask noble Lords to accept that decentralisation can never in itself be an end. The real thing is to see that your administration is good and lines up with the best practices. Although we have had much discussion in this House about decentralisation, I think that sometimes we make a god of it and worship it without fully understanding what we mean. I suggest to the noble Lord opposite that, in the light of the set-up of the industry under the Corporation, this Amendment is unnecessary.

LORD RENNELL
I am surprised at the noble Lord's answer about this because he will recollect that the last time we debated it in Committee, on Clause 2, page 4, line 18, this question of decentralisation was raised and at that time the noble Viscount, Lord Hall, accepted the insertion of my new subsection (3). He said it was consequential on another matter. With respect to him, I do not think it was entirely consequential, but that was his opinion. Lord Lucas also, from the remarks he has just made, accepts decentralisation as a principle. If he accepts that principle, it is my contention that, in order to safeguard the centrifugal tendency in all these nationalised Corporations—and in no place more obviously than in the coal industry—it is essential to put in at this point in this clause, where the general 386 duties of the Corporations are laid down, that one of those duties is to secure the largest degree of decentralisation consistent with the exercise of rights conferred upon them by the holding of interested companies. If it is not put in there, it will always be open to energetic members of the boards and their staffs to try and acquire more and more of the power at present residing in the separate hoards of what will be the publicly-owned companies.
This is not a danger existing only in my imagination, because it is precisely what has happened in the coal industry. It is precisely that development in the coal industry which has occasioned the difficulty which, as the Committee are aware, led to some remarks being made by Sir Charles Reid. And those remarks, in turn, led to the Burrows Report, in which a great deal is said about the necessity for decentralisation. It having been said there, it having been found by experience that it is necessary there, I submit that it is necessary to insert it here, in a clause which deals with the duties and the set-up of the Corporation. It will at least have the effect of stopping grabbers of power, and people who are always interested in running other people's affairs, of which the world is only too full, in all walks of life, from taking advantage of this centrifugal tendency. And it will preserve the Corporation in the form in which noble Lords opposite have said it is intended to be preserved—namely, as a holding company giving only general directions, and not dealing with the day-to-day administration or the day-to-day policies of the companies which compose the group.

§ THE EARL OF DUDLEY
This is a very important point, because if this Corporation is to be successful it must, as the noble Lord, Lord Lucas has admitted, depend upon the continuation of the present system of management in the subsidiary companies which the Corporation will own. These managers are men of independence. In managing their own companies, they have enjoyed under the present system a large degree of personal responsibility vested in them by the shareholders through the boards of directors. Unless they have that sense of personal responsibility, and the sense of security which goes with it, they will not continue 387 in the service of the Corporation when this Bill becomes an Act. Therefore it is most important that the Government should demonstrate to them in the Bill that they are believers in a proper chain of responsibility running horizontally and vertically, in a businesslike way, right down from the Corporation through to the personal management in all departments of the individual firms.
Granted, of course, that there may be amalgamations. We are not denying that that is possible, feasible or even desirable. But I am not satisfied that the Bill as at present drafted shows that a sufficient measure of personal responsibility will be granted to these managers to encourage them to stay on and do their best for the common weal of the steel industry and for the individual companies, although they may be nationally-owned in the future. I hope that the noble Lord will not make such remarks as he made just now, saying that he thinks that decentralisation has been made into a god. That is the sort of thing that is going to put them off and will do a great deal of harm. We say that so far it is centralisation that has been made into a god. That has been adequately demonstrated in the industries which have been nationalised so far.
As your Lordships may know, for some years before the nationalisation of railways I was a railway director, and I still keep in close touch with the railways. I have seen, as all the Committee have seen, without any question of doubt, a very great degree of discontent, discomfort and lack of initiative among all the officers of the railways, due to the fact that under the present system there is not sufficient decentralisation from the top. This is doing a very great deal of harm, and for that reason British Railways are not getting the best out of their officers. I am sure that that will be admitted by noble Lords opposite. I hope they will not make the same mistake here, and that they will draft into this Bill everything possible to show that there will be the widest possible decentralisation from the top, as is given at the present moment under the privately owned system. We have a voluntary organisation, the Federation, which has done remarkable work in knitting together the whole of the industry on a voluntary basis, in creating a 388 very fine spirit, in dictating the policy of the industry in conjunction with the Government, under the control of the Government, and yet giving the widest possible measure of individual responsibility. That is difficult enough in these days, when one is becoming more and more controlled by the Government about purchases, and when there is a definite limit to individual genius in management. I hope that the Government will study that policy, and will accept this Amendment, and every Amendment which gives the widest possible scope in that respect.

VISCOUNT RIDLEY
I think this is important for all the reasons which the noble Earl, Lord Dudley, has just given, and also because of the lack of any instruction anywhere in the Bill as to how the Corporation and the companies are to co-operate. In that respect, this Bill is totally different in structure from any of the nationalisation measures which have been passed, in that, as we have often been told, the Corporation is a holding company and therefore has no direct chain of managerial responsibility or connection with the people who are actually running the businesses. I can see that anything which was put in as a sort of regular framework might very much hamper the Corporation, and might impose restrictions as to how they were to work. One must agree that that is something to be avoided if possible. I think that this Amendment, framed as it is in rather wide terms, but expressing the general policy, cannot be said to specify too tightly what they are to do.
I think I am right in saying that, if you look at the Bill, you will see that the only relationship anywhere described or proposed between the Corporation, as a holding company, and the companies themselves is in the Ninth Schedule, where there are various sections relating to the position and functions of the directors of the publicly-owned companies, including provision for their removal at the instigation of the shareholder—that is to say, of course, the Corporation. That to my mind, is clumsy, and means taking a long way round, as was brought out recently in connection with the matter of actions against the Corporation and the companies. But it is of importance, because there is in the background, behind the relationship between the people in charge of the 389 publicly-owned companies and the Corporation, the knowledge that in the last resort there is a power to remove them without notice. It is true that it has generally been found satisfactory for people to realise that they must work efficiently and competently if they are to keep their jobs. One cannot say that that is not a right sort of feeling. But one might well suggest that there ought also to be more of a feeling of continuity in I his connection.
My own view is that, although the arrangement might be criticised, it should be possible to make it work, provided that we can ensure a satisfied and contended feeling between the two parties. It would, I feel certain, reinforce that feeling on the part not only of the directors of the companies but also of the managers of various departments, if they knew that it was the Government's declared policy, inserted in the Bill, even though in rather vague terms, that the publicly-owned companies should not only be nominally under the holding company but should operate separately. It would also help if it were known that it was the definite policy of the Corporation, laid down by Parliament, that the companies must be interfered with in that respect as little as possible, apart of course from the necessary exercise of overriding powers, and that it was hoped that co-ordination would continue in the same way as it had been carried on in the past between the Federation and various Government agencies.

§ VISCOUNT SWINTON
I entirely agree with almost everything that has been said by every speaker. I think it is almost certain that we shall have to return to this at a later stage of the Bill. The suggestion which my noble friend Lord Teynham made in moving the Amendment is this: that we should be wiser to defer a decision as to the words which we should put into the Bill—we have after all two more stages—or whether it is desirable to put words of a general character into the Bill, until we have been able to test his new clause which stands in the Marshalled List. When we come to that it will give us a chance of testing, by citing examples, how the power of the Minister will work and the alleged independence of the Corporation. As I understood my noble friend, in what he said lie was in no way departing from the 390 view which has been taken of the enormous importance of decentralization—which indeed I gather the Government accept.

§ LORD LUCAS OF CHILWORTH
I gather that the Amendment is to be withdrawn, but I ask for the indulgence of the Committee to enable me to reply to one or two points which have been raised, and in particular to comments made by the noble Lord, Lord Rennell, and the noble Earl, Lord Dudley. Lord Rennell compared the fit-up or the steel industry with the fit-up of the coal I industry, but I say there is no comparison between them. To suggest that what is alleged to have gone wrong in the coal industry must ipso facto go wrong in the steel industry, which of course has an entirely different set-up, does the node Lord less than justice.
With respect to remarks made by the noble Earl, Lord Dudley, I remember him making exactly the same sort of speech with regard to the railways. He suggested that immediately the railways were nationalised they would be bereft of all their principal executives, because the management of the industry would run away. Speaking of the electricity industry, he again said that the management would run away. Nothing of the kind has happened, and I cannot see a single reason why, under this organisation, one responsible member of the management of a company in the iron and steel industry should not carry on more happily in the future than he has done in the past. I base that opinion on just as good grounds as those on which the noble Earl bases the opposite opinion. And at least I have precedent in my favour. Look at what has happened in the case of other nationalised industries. When the noble Earl says he is staggered to-day by the feeling of frustration which has been engendered among the employees of the railways owing to lack of initiative, I reply that there has been more initiative shown by British Railways in the last twelve months than there was during the previous twenty years when the noble Earl played a part in the management. The noble Earl travelling from London to Birmingham can now drink his whisky and soda in a beautiful carriage.

§ LORD BALFOUR OF BURLEIGH
In an old English inn!

391

§ LORD LUCAS OF CHILWORTH
Such arguments as the noble Earl has used in this connection are really not to the point. I am glad that the noble Lord has agreed to withdraw the Amendment.

LORD TEYNHAM
In spite of what the noble Lord has said, I feel that he still accepts the principle of the Amendment and I cannot understand why he will not agree to having the principle inserted in the Bill.

§ LORD LUCAS OF CHILWORTH
Because it is there.

LORD TEYNHAM
However, in view of what has been said by noble Lords on both sides of the House, and as we have down this further Amendment, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 4.58 p.m.

§ VISCOUNT SWINTON moved to add to the clause: ( )If there is any such undue preference or unfair discrimination as aforesaid and loss or damage is thereby caused to any consumer, the Corporation shall be liable to pay to the consumer the amount of the loss or damage. The noble Viscount said: Now we come to a matter on which, for once, we are agreed, except as to what is the law in this connection. It is agreed that there is to be a right of action. I may want to go back at a later stage, and to insert an Amendment in such a form that the action shall be an action for an injunction and damages. It is common ground between us that if undue preference has been extended there should be a right of action against the Corporation, and obviously in that action it would be right to seek the stopping of what has been going on, and damages.

§ The noble Lord opposite said he hoped that I should not find it necessary to proceed with this Amendment, not because it was wrong, but because it was agreed that there ought to be a right of action and because the right of action would exist without the Amendment. I promised to take the best legal advice I could and I have done so. I must say a little about this matter because I have my name to the Amendment. For the Amendment to be unnecessary, this legal proposition would have to be valid: that wherever a statutory duty is laid 392 upon a Corporation, it creates a civil right of action in the person damnified. That is as I understand the argument. I am told that that is quite wrong in law—I am sure the noble Lord is only expounding the law as put to him. I do not ask the noble Lord to take my view of this question, but I have been supplied with what I have been told is the law. If what I have been told is the law is correct, there is no absolute right of that kind. Unless the right of civil action is specific, it depends upon the construction of each particular Act of Parliament; there is no such general proposition as the noble Lord has bean advised exists.

§ The best known decision on that subject, I am told, is a case of Atkinson v. Newcastle Waterworks, where the judgment is the judgment of Lord Cairns, one of the greatest lawyers there has ever been. This is the headnote: The mere fact that the breach of a public statutory duty has caused damage does not give a right of action to the person suffering the damage against the person guilty of the breach; whether the breach does or does not give such right of action must depend upon the object and language of the particular Statute. The case there was this. The law put upon the water undertakers the duty to maintain a certain pressure in their pipes. They failed entirely to maintain pressure in the pipes. Somebody's works caught lire and when he turned on the water to put out the fire, he found there was no water there, or there only was a trickle. The premises were burnt down and he suffered great damage. He said: "There is a statutory duty on the waterworks company to keep up this pressure. That they have entirely failed to do, and, as a result, my premises were burnt down." It was held, on the construction of that particular Act of Parliament, that, though there was a statutory duty on the waterworks, and though no doubt they would have been criminally liable or liable to some penalty on prosecution for having failed to comply with their statutory duty, there was no right for the individual who had suffered by their neglect to recover damages.

§ I do not profess to be a great authority on this subject but I am advised that that is the leading case. At any rate, it is a very difficult question of construction in each particular case whether or not a statutory duty gives a civil right of action. 393 The simple way out, therefore, is this. If it is intended to give a civil right of action, as it is here, then we ought to say so and not leave it to an argument which might easily come up to the House of Lords as to whether in the particular construction of this clause Lord Cairns' judgment should be followed or some other judgment in which a person has succeeded. I beg to move.

§ Amendment moved— Page 15, line 13, at end insert the said subsection.—(Viscount Swinton.)

§ VISCOUNT MAUGHAM
I rise only to say that the law as expounded by my noble friend is, I am quite satisfied, correct. There is no general principle that the breach of a statutory duty occasioning damage gives rise to a cause of action in a particular person, it depends on the true construction of the Statute. It must also be shown that the Statute was passed for the benefit of that particular person, and that is not always the case. What my noble friend says is perfectly right, and if it is desired to have some sanction for the granting of an undue preference or unfair discrimination, it should he stated in the Bill. I would add one word for the consolation of the noble Lord who is in charge of the Bill: that, after all, the proposed Amendment will operate only for the benefit of a consumer who proves that he has suffered loss or damage. It does not follow that everybody is going to get something out of it. It is only if he personally can show that the granting of a particular discrimination has caused him damage that he has any rights. I venture to think that the Government would really not be doing much harm to the Bill or its objects if they assented to the proposed Amendment.

§ LORD LUCAS OF CHILWORTH
I rather sensed that on this occasion we should not have many speakers to this Amendment because it is a very technical legal point, as the noble Viscount, Lord Swinton, has said. I can speak on this only on the advice of the Law Officers of the Crown. I am advised that this Amendment is really unnecessary because the Law Officers of the Crown give me the following opinion. A breach of a statutory duty gives a right of action to individuals who suffer damage as a result of the breach. In this case the statutory duty is on the Corporation to secure the avoidance of undue preference by them- 394 selves or (by virtue of the Amendment which I accepted of the noble Lord, Lord Clydesmuir, to page 3, Clause 5, line 7) by the publicly-owned companies. If either the Corporation or the publicly-owned companies do show undue preference, a claim for damages will lie. Where the plaintiff has actually paid an excessive price for his supplies, the measure of damages would be the amount of the excess. If the plaintiff had refused to take supplies because of the unfair terms offered, or if he had been unfairly deprived of his share of the products in short supply, he could make a claim for losses resulting from the lack of supplies.
That is the opinion given me by the Law Officers of the Crown. I do not know how many precedents the noble Viscount has for his opinion but I have a whole sheaf here to support the Law Officers and I do not intend to take up the time of the Committee in reading them. We on this side are quite satisfied that there is action for damage. As the noble and learned Viscount, Lord Maugham, has said, the person concerned must prove it. As that is the law, we say, why clutter up the Statute Book with unnecessary provisions? The one thing for which your Lordships are always asking is simplification. I ask the noble Viscount, therefore, in view of what I have said, not to press his Amendment.

§ VISCOUNT SWINTON
I will not press my Amendment now, but I am bound to say that, in view of what Lord Maugham has said, I am not at all satisfied with the answer which has been given. I am sure the noble Lord has read out whatever opinion the Law Officers have given lion, but may I take leave to say that, however much respect we may have for the opinion of the Law Officers, they are not able to override a judgment of Lord Cairns? When the case is taken into court no counsel appearing for the unfortunate consumer would be allowed to read out the opinion of the Law Officers, but the people on the other side will certainly be allowed to read and rely upon the judgment of Lord Cairns.
Obviously the statement the noble Lord made at the beginning that, wherever a statutory duty was laid down an individual who suffered damage had a right of action, is undoubtedly too wide—I have not the least doubt about that as a proposition of law. That is exactly 395 what Lord Cairns decided was not the law. It is a difficult question. When you come to consider whether there should be a right of action or not you must prove that the duty was imposed in the interests of a particular individual. Obviously, in the waterworks case referred to, the duty imposed upon the waterworks was imposed in the interest of all consumers. The duty was to maintain a certain pressure in the pipes. They did not maintain pressure in the pipes, yet Lord Cairns held that the obligation had not been passed in the interest of any individual consumer, and therefore a factory owner who had suffered damage by having his factory burnt down was not entitled to succeed in his action.

§ LORD LUCAS OF CHILWORTH
Has the noble Viscount forgotten that the statutory obligation is contained in the first three lines of paragraph (b) and is in specific, and not general, terms?

§ VISCOUNT SWINTON
But there was a specific obligation on the water company to maintain water in the pipes at a certain pressure. There is here a specific obligation not to give undue preference. I will not say that if an unfortunate individual brought action, he would not succeed, but I challenge the noble Lord opposite, in view of what the noble Viscount, Lord Maugham, has said, to say that the individual would be certain to succeed. We want him to be certain to succeed, and if there is any doubt about that, and it is the intention of Parliament that he should succeed, it is not a case of cluttering up the Statute Book, but of putting in it that that is the right of the individual. If I withdraw my Amendment now, it is on the clear understanding that if I am still advised that it is necessary, I will put it down at the next stage.

§ VISCOUNT MAUGHAM
The noble Lord, Lord du Parcq, that eminent judge whose loss we all deplore, in a recent case in the House of Lords said that he hoped very much that when there was any question of a statutory duty imposed by a new Act of Parliament, being intended to give a right of action to people damaged by a disregard of that statutory duty, the Legislature would think fit to insert a clause to that effect in the Bill. I have no objection at all to this matter being postponed to a later date. I think I shall be able to give the Government the reference 396 to this, and when I do so I hope they will abandon this rather hopeless task of proving that the mere existence of a statutory duty gives a right to damages to anybody suffering by its breach. It is absolutely wrong.

§ LORD LUCAS OF CHILWORTH
I am obliged to the noble Viscount, and if I can help him, I will. I will undertake to discuss the point with my noble and learned friend the Lord Chancellor. Both of us have the same object in view—to do what is right.

§ VISCOUNT SWINTON
I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 3, as amended, agreed to.

§ 5.16 p.m.

§ LORD ROCHDALE moved, after Clause 3 to insert the following new clause:

§ Avoidance of discrimination in contracts

§ ". It shall be the duty of the Corporation to secure that neither the Corporation itself nor any publicly-owned company nor any subsidiary of a publicly-owned company shall enter into unfair competition with any other person by offering or supplying to a customer within the United Kingdom any finished product subject to conditions of sale or tender which are not available to such other person."

§ The noble Lord said: During the discussion on the last Amendments a great deal has been said about unfair discrimination and undue preference, and in moving this new clause I hope your Lordships will not feel I am overlapping on what has already been said. I believe this is a different point. In considering cases of unfair competition so far we have been referring to the products of the principal activities of the new organisation which are required for manufacturing purposes. If we look at the Interpretation Clause we find that the interpretation of "manufacturing purposes" includes the carrying-out of building operations and works construction or civil engineering and the treatment of products by any process. I should have thought that under certain circumstances the safeguards that have already been discussed might be inadequate. For instance, there will be in the new organisation a great many engineering firms producing and selling products which in relation to a particular customer could easily be regarded not as something that they require for manufacturing purposes but as a finished product. In such 397 cases the customer could not be classed as requiring these products for manufacturing purposes as defined in the Bill. Therefore, in the view of my noble friends and myself, as a result of that gap in the Bill, it would be possible for unfair competition to he exercised against private competing firms.

§ May I make this clear by giving an example of the sort of thing I mean? Let us take the case of an engineering firm. Let us assume that trade conditions some time ahead get rather more difficult than they are now, and that one of the nationalised engineering firms will find it difficult to keep all their employees fully occupied. Let us also assume that one or other nationalised undertakings, say the Railway Executive, are going to put out to tender a new steel bridge. The engineering firm are desperately anxious to get business. They go to the Minister responsible for steel and explain the position to him. He goes to the Ministry of Transport and as a result the Railway Executive include in the terms for the nationalised engineering firm the term that the carriage of this bridge to wherever it has to go will be free of any charge to the nationalised engineering firm. As the result of that, it is made possible for that engineering firm to offer a lower price, under preferential conditions not available to the other private bridge builders outside the nationalised group. This sort of transaction which I am visualising would constitute, as my Amendment says, unfair competition, by supplying to a customer any finished product subject to conditions of sale or tender which are not available to such other person. I am not suggesting that special terms, such as free carriage, might not properly be included in the terms for tender if they were available to all firms, whether private or nationalised.

§ I can well imagine the noble Lord, when he comes to reply to this Amendment, saying among other things that the term "finished product" is too vague, because what is a finished product to one industry may be a raw material to another. I would accept that criticism as a generality, but in regard to a particular customer I cannot see any difficulty whatever in determining whether he is purchasing at a particular time something that is a raw material or a finished article. I believe this to be somewhat 398 of a new point and, in passing, I would say that as new nationalisation schemes come forward, stretching more and more into industry, these new points, which are not easy, will continually arise. There is a definite gap in the Bill as regards this matter. It is no use saying that the Consumers' Council can deal with this case, because the Consumers' Council can deal only with consumers as defined in the Bill; and the consumer is defined in the Bill as somebody who uses these products for manufacturing purposes. Under no stretch of imagination, in the sort of instance I have quoted, would it be said that the Rail's ay Executive were using that bridge for manufacturing purposes.

§ There is one further point. Your Lordships will see that in this new clause are the words "the United Kingdom." They have been put in to cover the point to which the noble Lord, Lord Lucas, referred on a previous Amendment, in regard to trading transactions that might be taking place with foreign countries where some sort of preferential arrangement might be necessary. I hope I have made the purpose of this new clause clear. I beg to move.

§ Amendment moved— After Clause 3 insert the said new Clause.—(Lord Rochdale.)

LORD LLOYD
I feel that my noble friend Lord Rochdale has explained with extreme lucidity what is perhaps a rather complicated matter. I do not wish to detain your Lordships long. I support the Amendment because I believe it exposes a gap in this Bill. I am sure the noble Lord opposite is as anxious as I am, or anyone else—indeed, he has said so this afternoon—that there should be no undue preference. Undoubtedly as the Bill stands at the moment there could be definite preferential arrangements between the nationalised industries. I do not say for a moment that it would necessarily be so; but after all, when we legislate we legislate just as much against the improbable as against the likely. That is perhaps the most important part of legislation. I feel that this Amendment will fill this gap, anti I believe the Government genuinely desire to eliminate unfair competition of this kind. I support the Amendment.

399

§ LORD LUCAS OF CHILWORTH
I must thank the noble Lord, Lord Rochdale, for being so lucid. He has brought at least a shaft of light into the abysmal ignorance from which I have suffered for some three or four days in trying to make up my mind as to what this Amendment means. While he has lifted the curtain a little, I must say that I am not much further forward. I hope the noble Lords, Lord Rochdale and Lord Lloyd, will be patient with me, because I want them to explain how this would work. I am in as great a fog on this as I was on Thursday night about the Amendment of the noble Lord, Lord Clydesmuir. I then asked a lot of questions as to how it would work, and nobody answered them. I am now going to ask the noble Lords, Lord Rochdale and Lord Lloyd, how this would work, and I hope they will be able to tell me. As I understand it, the principle is to prevent what by the terms of the Amendment is unfair competition in that field of activity in which the Corporation are just one manufacturer amongst all the rest. As a principle, I cannot accept that. I cannot accept that, where the Corporation are just one manufacturer in the free field, where there is no restriction of entry, you should put the Corporation into a straitjacket into which you are not prepared to put any of the other private firms. I may be wrong about it, but if I understand the principle behind this Amendment, it is quite unacceptable.
With regard to the details as to how it would work, the noble Lord, Lord Rochdale, mentioned locomotives and bridges. But the products which fall within the scope of this Amendment range from nails—probably the lowest form of manufacture—to locomotives and bridges. How would it work? I have worked out a large number of propositions on this, and I will quote one to your Lordships. As the clause is drafted, any price now quoted for, say, nails to a particular individual must be quoted for an indefinite period in the future to anybody else, thus effectively preventing any rise or fall in the price of nails. Once a price has been fixed the Corporation cannot quote any other price. It would be an intolerable burden, would it not, for the Corporation to have to inquire from 250 publicly-owned companies, and their subsidiaries, and to have to report to all the others, 400 and keep up a machine for telling everybody, how much they had quoted for nails. It may not be the intention of the noble Lord that it should work in that way, but that is how I understand it would work. By implication, the Corporation will have to advertise that they are prepared to enter into similar contracts with anybody else for an indefinite period in the future. Once a price has been quoted by one publicly-owned company, or any subsidiary of a publicly-owned company, it will ipso facto be binding on all the others for an indefinite period. That is the logical effect of this Amendment.
The noble Lord has explained the reason for the insertion of the words "the United Kingdom." I will take once again the question of nails. A merchant may buy tons of nails, of which some will be supplied in the United Kingdom and some will be exported abroad. Are you going to give the Corporation and the publicly-owned companies the right to examine the books of every merchant, to see at what price he sells those nails, in order to ensure that there is no unfair discrimination or unfair competition? If he does sell some abroad, is there to be a preferential price? These are some of the ways in which I think this Amendment would work. If noble Lords will forgive my saying so, it is absolutely impracticable. If the noble Lords who have put down this Amendment will sit down and work out all its operations I am sure they will come to the conclusion that it is unworkable, and they will not desire its insertion in the Bill. I will end in the way I started, by saying that I may be all wrong. The Amendment may cover the point which the noble Lord, Lord Rochdale, had in mind, but it will sweep into its net all these other things. I feel certain that it is not the intention of the noble Lord to freeze for evermore the price settled in one quotation.

§ VISCOUNT BRIDGEMAN
I agree entirely with the noble Lord, Lord Lucas, that my noble friend's remarks, when introducing this Amendment, threw a ray of light upon this Amendment, which is a little complicated in itself. I had hoped that that bright ray would have lasted long enough to guide the noble Lord opposite in his answer. But, unfortunately, as we got to the end of the noble Lord's speech I began to feel the fog coming down again. Now may I try once again 401 to clear the noble Lord's mind? First of all, two of the more important words in this Amendment are "unfair competition." What we had in mind—and I think the noble Lord, Lord Rochdale, explained this clearly—was that the Corporation, because of their close connections with nationalised industry which the private firms had not, might be able to arrange matters in such a way as to secure preferential terms which would not he accessible to competitors in the private trade and, therefore, be able to offer their products on advantageous terms to the people accepting the finished product. That was my noble friend's contention. But may add this? It is not completely fantastic, because there were certainly two cases during the war of nationalised firms who managed to arrange for the cost of their carriage inwards and carriage outwards to be borne by the Ministry of War Transport. I will give the noble Lord the names if he wants them.
Now we come on to the second of the major points which the noble Lord, Lord Lucas, made. It was that, if this Amendment were accepted, it would result in prices being frozen for evermore—I think those were his words. I do not share his fears, and I do not for a moment agree with that. The reason why I do not agree is this. In almost any industry I can think of there are trade associations, and one of the normal businesses of trade associations is surely to see that all firms in the same industry "play ball" together; prices are fixed and regulated, not for evermore but so that at any given time there is no unfair competition, and if it becomes necessary to alter a price it can be so altered. The trade associations have been doing that for steel, and so has every other trade in the country. Therefore, if it can be done as part of the normal organisation by a large number of industries in the country, surely it can be done here. There is no need to indulge in some of the fears in which the noble Lord opposite has indulged, and I hope I have done something to dispel them.

§ LORD LUCAS OF CHILWORTH
I have appreciated the noble Lord's difficulties, but I suggest that this is not the way out of them. I see what he wants to cover, but I am suggesting that in trying to cover that he is covering thousands of other things which he has no intention to cover. That is how this will work. In spite of what the noble 402 Lord, Lord Rochdale, said, I still maintain that the proper action here is through the Consumers' Council. If the noble Lord will look at the constitution of the Consumers' Council and at the interpretation of "consumer" he will see it says: 'Consumer,' in relation to any products, means a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products. A manufacturer would be his own merchant If he is selling bridges he becomes a merchant.

LORD ROCHDALE
I did not quote the case of anyone merchanting a bridge, but of the Railway Executive who were going to buy a bridge and use it. The Railway Executive could not possibly be said to be using the bridge for manufacturing purposes or—the further point that the noble Lord mentioned—using it for merchanting purposes.

§ LORD LUCAS OF CHILWORTH
But I still maintain that the real course of action for the noble Lord is through the Consumers' Council. The noble Viscount mentioned trade associations. We do not want to draw too many red herrings across this but I would draw his attention to an admirable Report just published by a Committee set up by my right honourable friend the President of the Board of Trade. And perhaps we would agree about the cast-iron rigidity of prices that has come through operations of trade associations. But what this would mean, in effect, is this: that if a publicly-owned company, or any subsidiary of a publicly-owned company, once gave a quotation for anything from nails to locomotives, ipso facto every other public company and subsidiary company wound have to quote the same price. That is what it means. I know the noble Lord does not intend it to mean that, but that is what it does mean.

LORD HAWKE
Does, "condition of sale or tender" mean price?

§ LORD LUCAS OF CHILWORTH
If it is the same class of tender, the same quality of product, the same number of articles, it has to be quoted at the same price by everybody, right through the organisation.

LORD LLOYD
The noble Lord will forgive my interrupting. Perhaps I am very stupid, but I do not quite follow. 403 As I understand it, I agree with him that possibly this Amendment is not properly drawn. I do not think it is. But what we envisage is not a question of price, because there will be some general control of prices, and prices will probably be so close that there will not be a great deal in it. The whole point is that the nationalised concern will have a "pull" by something which does not come into the price at all—something behind the scenes, such as the example my noble friend gave. That, as I understand it, is the point of this Amendment. I do not quite follow the noble Lord. That is what we are trying to prevent, and I do not see that his argument deals with that point. Perhaps I misunderstood him.

§ LORD LUCAS OF CHILWORTH
The noble Lord did. I am not quarrelling so much with what the noble Lord is trying to do, but I am saying that he is trying to do something which is not workable. Let us read the words of his own Amendment: It shall be the duty of the Corporation to secure that neither the Corporation itself nor any publicly-owned company nor any subsidiary of a publicly-owned company shall enter into unfair competition with any other person by offering or supplying to a customer within the United Kingdom any finished product subject to conditions of sale or tender which are not available to such other person. That means that everybody has to be quoted the same price for 100 2-inch nails, for a dozen nails or for 10,000 tons of nails of the same quality.

LORD ROCHDALE
I am sorry if I have put the noble Lord, Lord Lucas, into a fog. I am sorry that he takes the line he does, although I agree with Lord Lloyd that we have here an extremely difficult matter to cover. It is a definite gap in the Bill, and if the wording of this Amendment is not right I should be the first to try to get it right, seeing that there are difficulties as regards drafting. In a moment I shall ask leave to withdraw the Amendment, but there are one or two things which the noble Lord, Lord Lucas, said on which I should like to comment. In the first place, he said we were trying to put the Corporation into a straitjacket, to the advantage of other manufacturers. But the purpose of the Amendment is just the reverse, for it would put the whole of the industry, 404 nationalised or not nationalised, on an equal basis, so that all firms would operate subject to the same conditions of sale or tender. The other point is this. I still do not agree with the noble Lord that the Consumers' Council can do anything here to safeguard the cases I am raising. That, to my mind, is a weak point in the noble Lord's argument. With regard to his example of nails, I think it was a rather unfortunate example, because it was just on the half-way line between what might be, and normally would be, a product used for manufacturing purposes and also which, in certain circumstances, would be considered a finished product. However, this is a difficult point. I am going to ask leave to withdraw my Amendment now, but I hope I have shown that there is a definite gap in the Bill as it stands. Perhaps, before the Bill has passed through your Lordships' House, we may be able to light upon the right solution. I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 5.43 p.m.

§ Clause 4:

§ Powers of the Minister in relation to the Corporation

§ 4.—(1) The Minister may, after consultation with the Corporation, give to the Corporation directions of a general character as to the exercise and performance by the Corporation of their functions (including the exercise of rights conferred by the holding of interests in companies) in relation to matters which appear to him to affect the national interest, and the Corporation shall give effect to any such directions.

§ (7) The report made under the last preceding subsection for any year shall set out any direction given by the Minister to the Corporation during that year unless the Minister has notified to the Corporation his opinion that it is against the interests of national security to do so or the Minister accepts the contention of the Corporation that it is contrary to the commercial interests of the Corporation to do so.

§ LORD TEYNHAM moved to leave out subsection (1). The noble Lord said: On behalf of my noble friend Lord Swinton I beg to move this Amendment. Subsection (1) enables the Minister to give a general direction to the Corporation on matters which in his view affect the national interest; and this Amendment has been put down with a view to discovering how it is intended that the Minister should in fact exercise the 405 powers given him by the Bill. In the first place, I should like to know how the Minister can determine what is the national interest when he is virtually the owner and controller of the Corporation. The national interest cannot be determined by an interested party. In times of stress and depression there is hound to be a tendency to decide in favour of the Corporation, as against the independent units. During the Second Reading I and many other noble Lords endeavoured to make it clear that the present structure of the industry enabled the Minister to give impartial treatment in the national interest. According to this subsection that will not be possible in the future. It is a calamity that the basis on which such important directions could have been given has now been swept away.

§ Little thought seems to have been given as to how the Minister is to exercise his powers under this clause, and I hope that the noble Lord will be able to give us some information on this very important matter. I should like to know what is meant by the phrase "directions of a general character." Would they be directed to the level of iron and steel prices, for instance? As your Lordships know, under the present system the broad policy on prices has been determined by a public board which has responsibility to the Minister. There has been on this board representation by labour, by management and by the consumer. Now, of course, there will be a Corporation with a vested interest. I hope we shall hear from the noble Lord a fairly full analysis of the type of direction which the Minister may give. I beg to move.

§ Amendment moved— Page 5, line 14, leave out subsection (1).—(Lord Teynham.)

§ THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)
There cannot be any ambiguity as to the purpose of this Amendment. Clause 1 provides the Minister with powers similar to those in the provisions of previous nationalisation Acts. The fundamental feature of the Government's policy in regard to nationalisation is that the new public bodies shall be free to manage their affairs and deal with their day-to-day matters on commercial lines, with the minimum of interference by Ministers or 406 their Departments. Nevertheless, the Government must be able to ensure that the operation of the industry conforms in matters of broad policy to the national interest as interpreted by the Government of the day; and subsection (1) of this clause is designed accordingly. There will be consultation with the Corporation before any general direction is given in any way whatsoever, and it is expected that the power will be used only in exceptional circumstances. I think that that meets some of the points in the noble Lord, Lord Teynham's mind.
Matters on which the Minister might feel it his duty to intervene will be decided by informal discussion between him and the Corporation. The general relationship between the Minister and the Corporation is in similar terms to the corresponding provisions in the coal, transport, electricity and gas industries legislation. There was much discussion, and there were many questions, on this point when these earlier nationalisation measures were passing through this House, but, despite all that was then said, I am told that there have been few or no general directions under these powers yet issued by the Ministers who are charged with the responsibility of looking after the nationalised industries. His Majesty's Government see no reason why the same relationship should not apply to the Iron and Steel Corporation as applies to the other nationalised industries. So far as is seen, there is no evidence that the present relationship in the nationalised industries is working badly on the whole. I will not accept certain statements which have been made by noble Lords that nationalisation has failed because of difficulties which have arisen. I think that on the whole the transitional period of nationalised industries has worked very smoothly, considering the great changes which were brought about in the change-over from private to national ownership. I am satisfied in my own mind that the same smooth transition will take place in connection with this particular industry.
His Majesty's Government recognise that no Board can do its job if it has always to consider what, if any, action will receive Government approval; and general directions must be very sparingly used. A safeguard against abuse is first, consultation, and secondly, the publication of directions by the Ministries responsible for them. The power of 407 Ministries in connection with nationalised industries, as I have already pointed out, has been questioned, and there have been many authorititive statements made in another place in relation to this matter. I should like to refer briefly to what the Lord President said in reply to a Parliamentary question on December 4, 1947. He said: A large degree of independence for the boards in matters of current administration is vital to their efficiency as commercial undertakings…the Minister would be answerable for any directions he gave in the national interest, and for the action which he took on proposals which a board was required by Statute to lay before him. It would be contrary to this principle and to the clearly expressed intention of Parliament if Ministers were to give information about day-to-day matters in this way.
The noble Lord asked what type of directions the Minister is likely to give. It might be a requirement that the capacity of the industry should be expanded or contracted to some global figure—a principle of that kind that it is in the national interest—or that priority of supply in time of shortage should be given to some particular group of consumers, say, for heavy electrical plant, coal-mining machinery, ship-building, or Colonial development. There are statutory provisions made in the Bill itself as to the type of direction that the Minister can give. I would ask noble Lords not to be so very suspicious of the Minister and the Corporation in relation to this measure. I am sure that they will be governed entirely by the public interest or the national interest—put it in which way you like. I am convinced that this Bill would be almost unworkable if the Amendment moved by the noble Lord were carried. Therefore, I cannot accept it.

VISCOUNT RIDLEY
Upon this Amendment, I was a little concerned to hear the noble Viscount who has spoken for the Government say that he felt it would make the Bill unworkable, because the present system of control of the iron and steel industry by and on behalf of the Minister is a voluntary one, and it has been agreed that it works well. So far as that goes, I would say that in this Bill one should try to keep 408 the relationship between the Minister, on the one hand, and the Corporation (as it is to be) on the other, as near as possible to the present terms of relationship. But the noble Viscount also quoted two cases in which he thought that direction might properly be given. One was in estimating and deciding upon the total capacity of the industry. Here, again, I would say that the plan produced by the Iron and Steel Federation and later approved by, I think, the Minister of Supply envisaged a certain capacity and was arrived at voluntarily on behalf of the industry with the help of the Government. It was submitted to the Iron and Steel Board (as it then was), which was composed of Government representatives, and various other interests who were then called in to help them. So upon that score I doubt whether there is any need for direction to bring about alteration in the size and capacity of the industry. Further, the noble Viscount quoted the necessity for putting the users of steel for different purposes in various degrees of priority. But we have been familiar with that for some considerable time during, and also after, the late war, by a system of control of the products exercised under Acts other than the Bill we are now considering. So, it would seem to me that we could well continue that system under the new method of ownership of the industry.
I feel that a direction given under this Part of the Bill would be very difficult, as there follows a little later in the Bill a provision that the Minister must lay before Parliament a report of the directions which he has given. Of course, that leads to discussion on such matters in either House of Parliament. It raises the very difficult question of Parliamentary control of the nationalised industries. A number of questions have been asked and suggestions made in Parliament which often have appeared to me, on reading about them, to go far too much into detail. It would seem to me very important that Parliament should not concern itself with the detailed running of the industry. Indeed, I think that the noble Viscount, Lord Hall, said something to that effect when he spoke. I feel that the power to make a direction and the necessity of laying directions before or reporting directions to, Parliament, and the opportunities there are for 409 Parliament to debate them, would, although perhaps it is not intended, inevitably lead to a situation where this industry as well as others would, as a result of certain things which may be done, become more and more discussed as a political issue. I would deplore that very much indeed.
The proper thing for the Minister to do is in effect to abrogate to the Corporation his ownership on behalf of the public. Let them act as the holding company. Let them run the business. Let him be, as he now is, the arbiter, as it were, between the industry on the one hand and the public on the other, expressing the public interest or the national interest in certain overriding needs and conditions—not as representing the owners of the industry, but as the head of a Department which is responsible for the administration not only of this industry but also of other matters of public policy.
Further, there might be some difficulty in the very fact that the Minister must consult the Corporation before making a direction. He may make directions on prices, terms, conditions of supply and so on, affecting products made not only by the Corporation and their subsidiaries, but also by others. It would at least give rise to some doubt in the minds of the outside manufacturers whether they were not being put in an unfair position. The Minister must consult the nationalised part of the industry before making such directions and is not necessarily bound to consult the unnationalised part of the industry which is engaged in that particular part of the trade. So, in interfering in one way or another, in regulating price or quantities, and so on, it would seem far better that the Minister, on behalf of the public, should deal both with the Corporation and with the unnationalised outside manufacturers as the occasion arose. Therefore I think that direction would not be really applicable.

§ THE EARL OF DUDLEY
I was very disappointed that the noble Viscount was not a little more explicit this afternoon in regard to the general direction which the Minister is to give to the Corporation than the Minister of Supply was in another place on the Third Reading debate. This is what he said: 410 I hope that the Minister, whoever he may be, will not be forced to give any directions to the Corporation, but that the Corporation will in consultation with the Minister, carry out broadly the requirements of the Government in the interests of the public as conceived by the Government of the day…It may well be that the Government will tell the Corporation that the total capacity of the industry in a number of years should be so much…it may well be that the Corporation will want the views and directions of the Government on a matter of major importance of that kind. That is a very woolly answer, if I may say so; but it is no woollier than that which the noble Viscount has given us here this afternoon. We really ought to know specifically what these general directions are likely to be.
It is all very well for the noble Viscount to say "You must always trust the Minister; he is the person who is able to interpret what is in the national interest and what is not." That is really all nonsense. We cannot trust the Minister. We would not trust a Socialist Minister of Supply any more than noble Lords opposite would trust a Tory Minister of Supply or a Communist Minister of Supply. Directly politics and vested interests enter into these things, then suspicion comes in right away, and it is as well to have the thing laid down in black and white on businesslike lines. Indeed, as other noble Lords have pointed out, there are important matters which must be decided by the Minister in his general directions—for instance, what shall be the level of iron and steel prices; what shall be the future level of iron and steel production; in what areas and in what products are reorganisation and development in the industry to take place; what shall be the policy of the industry towards overseas and particularly European steel industries; and what import and export policies the industry shall adopt. All those and many other questions of supreme importance must he decided by the Minister of the day in general directions to the Corporation. In future they will all contain an element of politics and of vested interest. The Minister will have a vested interest as representing the Government, the owner of the steel industry. It is very natural that we should want to know what these directions are to be, and that there should be suspicion in our minds in regard to them.
The noble Viscount has told us that so far very little direction has been given 411 to other nationalised boards. It is difficult to believe that. The Minister is obviously in constant and close touch with the chairmen and directors of these boards—particularly with the chairmen—and in ordinary conversation he is giving indications of what his desires are, certainly on a political and a vested interest basis. When you are interpreting the national interest you cannot be 100 per cent. in the national interest; you cannot be 100 per cent. in the interest of everybody in the country; somebody has always got to suffer. We want to know who will suffer; who is likely to suffer; what are these directions which the Minister is going to give, and against whom will they react.
As other noble Lords have pointed out, hitherto all these matters of supreme importance have been decided by public bodies representing the Government—the Import Duties Advisory Board, the Steel Board and the Ministry of Supply during the war. We have acknowledged that they were the right people to interpret what was in the national interest and what was not; but they were not people with any political or vested interest. The position is going to be very different in the future. I hope that before we go any further the noble Viscount will be a little more specific in regard to the general directions which are to be given, because we regard it as highly dangerous that the Minister should have these powers of direction without embodying them in the Bill or without our being told what they are likely to be.

LORD STRABOLGI
I share with the noble Earl distrust of all Governments. It has been said by the Chinese, I think quite truthfully, that there are two sorts of government—good government and bad government, and in their own country they have never had a good one yet! I am waiting to see whether that is equally true of this country or not. But, despite my sympathy with his feelings about the Government and Ministers and bureaucracy generally, I consider that to leave out subsection (1) and to give the Minister no powers of general direction would be nothing but syndicalism. There is much to be said for syndicalism. The noble Lords opposite want it, but they have no mandate from the country for it. There is a mandate for Socialism, and 412 that is entirely different. A Minister responsible, in the first place to the Cabinet and then to Parliament, must have a general power of direction to the Corporation administering this vast, intricate and highly important industry in the national interest. It cannot be left entirely to the Corporation. If the Minister is of the kind that Lord Dudley is afraid of and that I am sometimes afraid of—one who gives unreasonable directions—then obviously the Corporation have their remedy; they can resign. There would be a public outcry at once, and I expect the Minister would go. But to leave out subsection (1) makes chaos and nonsense of the whole Bill.

§ THE MARQUESS OF SALISBURY
I think noble Lords opposite are, to some extent, banging at an open door, because my noble friend, Lord Teynham, in the speech with which he introduced this Amendment, made it perfectly clear that it was exploratory and that we did not intend to insist upon it. All we were trying to find out was what were the general instructions the Minister could give. I do not think it is unnatural that we should feel the type of anxiety which has been expressed in the speeches of the noble Lords, Lord Ridley and Lord Dudley. After all, under this Bill the Government are setting up a Corporation with very wide powers, and there is a Minister with even greater overriding powers. It is perhaps natural that Parliament should wish to know in what circumstances those powers should be used, and what should be the relationship of the Corporation to the Minister.
I think that the Amendment was an essential one to extract some statement on this subject from the spokesmen of the Government. I was disappointed, as I think the noble Earl, Lord Dudley, said he was, that the statement was not more explicit. I recognise the difficulties of the Government in giving every possible case in which the Minister might be expected to exercise these general instructional powers, but I thought we might have heard a little more. To a certain extent, my mind was relieved by what I heard. There was, at any rate, to be prior consultation with the Corporation, and I think so far as possible a measure of agreement that the powers were to be used only in exceptional circumstances. One or two cases were 413 instanced in which they could be used, such as where questions of the expansion of the industry 'through a long-term policy, and so on, were contemplated.
If the final instructional powers of the Minister are limited to matters of that kind and you are going to have this unfortunate plan at all, I think it would form a defensible and perhaps even essential part of that plan; and therefore I would not agree that any instructions from the Minister should be ruled out altogether. I do not believe that would be practicable.
At the same time, I think that what we have heard only indicates the extraordinary difficulties into which the country and the industry are going to get by the very fact of nationalisation. Up to now we have had a scheme for the iron and steel industry which worked perfectly well, one in which the Minister was not an interested party. Now he is an interested party he is the employer of a Very large part of the industry. In those circumstances, some people, especially those who are not going to be swallowed up, are anxious to know what his position is to be vis-à-vis their own. It is right that they should know and, therefore, I feel that all the elucidation we can get on this subject (and we have not had very much yet), is a very proper subject for the Government to embark upon in this House.
I was a little troubled by something which was said by the noble Viscount, Lord Hall. As I understood him, he said that, on the whole, he thought that nationalisation had worked extremely smoothly up to now—during what he called the "interim period." I am afraid that I do not know what the "interim period" is or how long it is going to last. If the noble Viscount regards the present condition of the nationalised industries as working extremely smoothly, I think his view is one which will hardly be shared by any independent-minded persons. So far as I know, there has been no considerable increase of production and there has been no reduction of costs. In fact, I think that costs have increased in every industry which has been nationalised. And unfortunately—and this I think is most important to all of us, to whatever Party we may belong—the spirit has not improved. If noble Lords will look with an unprejudiced eye at the incidence 414 of strikes and industrial troubles at the present time they will find, I think, that they have arisen to a large extent in nationalised industries. No great strikes have occurred in the cotton industry, the agricultural industry, the textile industry or any of the great industries which are still in private hands. It is the transport industry, and the coal industry, which have received the benefits of nationalisation, which seem still to be—indeed to be even more—disturbed than they were before.
It is natural, therefore, that when it is proposed that any great industry should be given the same benefits, Parliament should inquire what is to be its structure, with a view, if possible, to avoiding some of the unfortunate results which have occurred in industries which have already been taken out of private hands. That is the justification for introducing an Amendment of this kind. I do not in the least regret that my noble friend put it on the Paper. I believe that it has achieved its result. We never intended to cut out any connection of the Minister with this scheme under this clause. Having had an explanation, I am sure that my noble friend will now be ready to withdraw his Amendment.

LORD TEYNHAM
I say at once that I never had any intention of pressing this Amendment. I agree that the Minister should have powers in relation to the Corporation. We have been endeavouring to find out exactly what those powers are. Our endeavour has not been very successful, but we have been given certain information. I still feel that little thought has yet been given to the powers of direction by the Minister and how they are to be exercised. We may have to return to this matter at a later stage, but in view of the assurances given by the Minister on this Amendment, I beg leave to withdraw it.

§ Amendment, by leave, withdrawn.

§ 6.12 p.m.

§ VISCOUNT BRIDGEMAN moved, in subsection (7) to leave out "his opinion" and insert "that he is satisfied." The noble Viscount said. We now come to a slightly different shbject—namely, the Report which, under Clause 4 (6), the Minister is obliged to lay before each House of Parliament. This is important, because it is going to provide the annual 415 opportunity for each House of Parliament to discuss the state of this industry, if this Bill becomes law. Therefore, we want to see that the report is as complete and informative in all respects as it can properly be. We want to make sure that the Minister does not have statutory authority to leave out anything which cannot properly be left out. I am sure we shall all agree how important it is that a Report such as this shall present a true picture of the iron and steel industry and that those subjects which are excluded are subjects only of a minor character.

§ Here in subsection (7), which is where the Amendment lies, there is what we on these Benches think is rather an easy let-out for the Minister. The subsection states that the report shall set out: any direction given by the Minister to the Corporation during that year unless the Minister has notified to the Corporation his opinion that it is against the interests of national security to do so… Is "opinion" a strong enough word? Personally I do not think it is. I think it is in the interests of everyone that the words here should be the words which we have put down, their purpose being to ensure that the Minister is satisfied; not merely that he forms perhaps a quick or light opinion but that he does not exclude anything on grounds of security until he is absolutely satisfied that it is necessary. I move this Amendment with a certain amount of joy, because on one or two occasions before I have in this House had to say how wrong I thought it was that alleged considerations of national security should be allowed to cover up national inefficiency. I say it again now. I feel that the Minister ought not to be authorised to leave out any direction on grounds of national security unless he is satisfied up to the hilt that that is the right thing to do. For that reason I beg to move this Amendment.

§ Amendment moved— Page 6, line 23, leave out ("his opinion") and insert ("that he is satisfied").—(Viscount Bridgeman.)

LORD HAWKE
Only a short time ago the noble Viscount, the First Lord of the Admiralty, said that publication was the best safeguard we had that directions should not be too frequently given to this Corporation. We now come to the clause 416 which gives the Minister a let-out from that safeguard. In other words, our safeguard has now gone. I would have your Lordships note, too, the appearance of words which have an almost painful familiarity. We have had "public interest" guiding the Corporation, "national interest" guiding the Minister, and now we have "national security" guiding the Minister. The only thing that is missing is "national health"—I cannot find that anywhere in the Bill. These grandiloquent phrases are absolute bunkum; they mean completely nothing. What is really meant is that some mere human being, perhaps a rather puzzled and nervous man, thinks that is the best thing to do at the moment, and covers his tracks by maintaining that it is for the "national interest," the "public interest," or the "national security."
Anyone who has had anything to do with Whitehall knows that a peculiar psychology exists there in respect of security. Civil servants, if left to themselves, will always take the line of least resistance. If a question of publication arises, the line of least resistance is always not to publish. Any excuse which can be adduced to suppress publication of anything is always eagerly seized upon because, on balance, you are less likely to get into trouble by not publishing than by publishing. Of course experienced Ministers know all about that, and on receiving advice from their Civil Service advisers not to publish will immediately return to the charge and demand their reasons. In practice those reasons will generally turn out to be non-existent or remarkably thin. A strong Minister who rules his advisers will not become a puppet. But we are by no means certain that this Corporation are always going to be guided by a strong Minister, and these words inserted in this Bill will make quite certain that the Minister will not just curl up and lie down on receiving the advice of his officers which he will inevitably receive—that it is better for national security reasons not to publish—but will return to the charge and, I maintain, will generally win. For those reasons I wish to see these words in the Bill.

LORD GIFFORD
Noble Lords on all sides of the House know that the words "national security" have been used as a convenient smoke-screen very many times. As my noble friend Lord Bridgeman said, 417 it is an easy let-out. I think we ought frankly to admit that it has probably been used by Ministers of all Parties, not only the Party of the noble Lords opposite. As the noble Lord, Lord Hawke, said, it is sometimes on the advice of a civil servant, whose words to the Minister, to put them in a nutshell, might be: "Better not." I can recall a number of occasions in this House when criticism has been levelled at the abuse of the words "national security." in the last few years that criticism has been levelled a great many times. I do not profess to be an expert on the English language, but I do think the words proposed in this Amendment, "that he is satisfied," tend to make the Minister more careful before admitting grounds of "national security" than does the use merely of the words "his opinion." I hope, therefore, that the Amendment will be accepted, so as to prevent the frivolous use of this age-old excuse, "national security."

§ VISCOUNT HALL
I must say that I can see little difference between these words and the words which the Amendment seeks to substitute, but I was asked to justify these words. They are contained in the Coal, the Transport, the Electricity and the Gas Acts, and, in the interests of consistency, we felt it was desirable to have similar wording in this very important measure. If the noble Lord would withdraw the Amendment, however, I would be quite prepared to consider whether we can accept the words which he suggests and put them in at the Report stage.

§ VISCOUNT BRIDGEMAN
I think the noble Lord has made a very fair offer, in view of what he said just before making it. I entirely accept his suggestion and, on the understanding which he has given, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 4 agreed to.

§ 6.23 p.m.

§ VISCOUNT SWINTON moved, after Clause 4 to insert the following new clause: . If the Corporation requires any publicly-owned company to enter into a transaction which the Board of Directors of that company considers the company ought not for technical or commercial reasons to enter into, the Board shall have the right to appeal to the Minister: and the Minister after consultation 418 with the Corporation and the Board shall give his decision which shall be binding on the Corporation and the Company. The noble Viscount said: In this new clause we come to a important Amendment, and I think your Lordships generally agree that this would be the most convenient occasion to argue the relationship between the Corporation and the companies, and the power of the Minister, and to test whether decentralisation is going to be a reality.

§ The avowed intention of the Government is that the companies shall retain their initiative and their independence of management. The Government spokesmen have frequently said how important it is to maintain the familiar names under which British steel and British steel products are sold all over the world. But the reputation which those names carry has been made by the initiative and by the independence of the firms, and those names will maintain their value and their repute only if the initiative and independence of the firms themselves maintain their reality. In order to maintain that reality the boards of these individual companies must have a real measure of independence: and not only must the boards have that independence but they must know, and have confidence, that they are in fact independent. It is very important to give them that security in fact and that confidence in feeling. After all, if this Bill goes through, the Corporation becomes the sole shareholder in every one of these companies. That means that the Corporation can remove from office, at a moment's notice, if it so pleases, every single director of every board of management. The Corporation, as sole shareholder, can call upon its nominee to go through a motion of special resolution and can then remove the whole of the directors.

§ The Bill, of course, puts upon the Corporation very positive duties. Clause 3, as we have passed it, says that the Corporation is to promote the efficient and economical supply of the products of the activities specified in the Second Schedule. That has now been extended—and I think rightly extended—to other principal activities. It has also: to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best 419 calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes. Those powers and duties are given to the Corporation, but the people who have to carry out the powers, the people who have to carry out those duties, are not (if what the Government contend is true) the Corporation itself, but the individual companies and their boards.

§ Now as I see it, the problem is how we are to reconcile the powers and duties of the Corporation with the independent initiative of the companies? We have had statements to-day to show that the companies shall have their individual responsibility and their independence. I find that rather difficult to reconcile with the statements which have been made by the responsible Minister. I will quote only one of them, and I think I am entirely in order in quoting it because it is a very important statement of Government policy and intention. I am bound to say that I think statements, such as that to which I am going to refer, if they are left alone and the Bill is left with no amendment, will go far to undermine any feeling of confidence which may exist in individual companies. The Minister said, and I think it is where the case is most clearly stated: By far the most important duties which we impose upon the Corporation are those derived from the power which it will possess as sole shareholder in those companies, to order, broadly speaking, their affairs"— "to order their affairs": you cannot have much more interference with the independence and initiative of a company than to say "I am going to order your affairs"— to see that there is re-organisation and rationalisation, and to carry out those economy measures we have talked about on previous occasions. In that responsibility the Corporation will have full powers over these companies—not in matters of detail, of course, in which it will not want to interfere—but in all matters of general importance. We can, surely, logically give these duties only to this new body which we are setting up under this Bill and not to the various subsidiary and sub-subsidiary bodies with their continuing directorships, whose shares the Corporation are to hold. Then, after elaborating a little further, the Minister went on to say: This Corporation will be responsible for carrying out the duties which are imposed upon it, and it will have to see that the various companies whose shares it holds carry out the 420 general duties which Parliament imposes, though these will be implemented, of course, through the companies whose shares it holds.

§ If I may go back for a moment to the past, when the Minister was entirely independent and the steel companies had real independence an admirable working partnership was achieved by the iron and steel industry and the Government and the Iron and Steel Board. The industry worked out a full development scheme, in accordance with the broad policy of the Government and up to the amount at which the Government thought steel production ought to be fixed. In the old days the Iron and Steel Board worked admirably on prices, and this happened because the companies retained their independence of management and initiative. It was in consequence of retaining that independence of management, policy and experience that the most practical plan of development was produced. I am not the only one to make that claim for the plan the steel industry produced: the Government themselves stated that they could not fault it in any single point. Indeed, it is the plan which will be carried forward, whether this Bill goes through or not.

§ Under the new system the Corporation has, and must have, a general control of policy, but that ought to be on the broadest possible lines. I agree that the Corporation will have to say what is to be the total productive capacity of the steel industry; but it must have a broad policy of export and internal sales. If the Bill remains unamended it will be the Corporation which will fix basic prices—though I hope that at a later stage your Lordships will think fit to re-establish an Iron and Steel Prices Board. If we are to have a Corporation I do not see how it can possibly be a holding company and do nothing else. Some powers it must have, and in Clause 3 we have given certain powers. The problem is going to arise in the execution of those powers which have to be carried out by the individual companies. A wise Corporation will undoubtedly maintain the closest consultation with the company boards, but it is in execution, which is the essential function if management is to be genuine, that conflict may arise.

§ I am not talking theory on this. Let me cite a couple of examples where conflict may easily arise. The Corporation 421 decides that the steel industry is to be expanded, and selects a particular company for expansion. The company may think that the plan is thoroughly wrong. They would not be challenging the broad policy that steel production ought to go up from 17,000,000 to 18,000,000 tons, or whatever it may be, but they might be genuinely of the opinion that it was economically, commercially and socially wrong that the expansion should take place in their works. What is more, suppose that the Corporation, as under the Bill it would undoubtedly be entitled to do, went further than giving a general direction to this company to expand and laid down how it should take place. The experienced board of directors of the company might then say they entirely disagreed on technical grounds with the plan which the Corporation had instructed them to carry out. What is to happen in such a case? Is the company board to be overruled by the Corporation without any chance of appeal to anybody? If they are, we are going to get hoards of "Yes men," boards who are not boards but merely executive agents of the Corporation.

§ Let me take another example which not only may rise but which is almost certain to arise. As the Leader of the Opposition said, it is this kind of thing which shows the danger of this Bill, which has not been thought out. The Corporation will be bound to consider the technical and commercial results of all the 94 subsidiaries and to compare the ways company A and company B are managed. The Corporation may consider that out of the varying methods of companies A, B, C and D, the method of company D is much the best. To-day the companies compete with each other, and events disclose which is the best method, technical or commercial, to adopt. Moreover, it may be that the right method for company A is not the right method for company B. This passion for uniformity is not altogether wise. The Corporation may tell companies A, B and C to carry out the practice of company D. It may be that under Clause 3 the Corporation has not only the right but the duty to do that, if they think that the method of company D is likely to give better results than the practice of the other companies, but the boards of the other companies may point out that they have all along known of company 422 D's method. They may say that they have found by practical experience that it is better to work their own way, which in the past has enabled them to show profit. Dorman Long would not say that their method would be right for Guest Keen, any more than Guest Keen would say that they could leach Dorman Long to do their job. They say that both know how to do their own job. Who is to decide?

§ Is there to be an appeal? I am not citing merely an imaginary example. Monopoly tends to uniformity in practice. It is possible to lock at what has happened in existing nationalised undertakings. I am not going to argue now whether or not they have succeeded; but what has been the experience in transport and in coal? There has been uniformity where before there was diversity of practice. In the case of the Railway Executive we begged that use might be made of local knowledge, local experience and local initiative. That is not happening in the railway system. It is true that seven or eight—I do not know how many—regional boards have been set up, but they have no individuality. Each of these boards has an officer who is a representative of the central Board. It like the Treasury system of having a Treasury official bedded out in each Department. There are representatives of the Corporation bedded out in the regional boards. There is, of course, complete uniformity.

§ The same criticism is true of the coal industry. I believe that even the Government would agree that they have gone too far in uniformity in the control of coal. They do not want to get rid of the regional boards and set up area boards with real powers, but they are not at all happy about the uniformity which is being enforced from the centre. I am quite certain that that risk of uniformity is there. I would say this. Even if the Corporation were right every now and again in their judgment (as they might be) that this practice was better than that, in this tremendously diversified industry, which is taking over not just the making of iron and steel but an infinite variety of finished products, I am certain that the danger of uniformity is far greater than the counter value of diversity.

§ I do not think I have put that difficulty unfairly, and I am perfectly certain 423 it will arise. I think it ought to be faced, and the policy and practice ought to be laid down in the Bill. Therefore, with my noble friend Lord Layton, I have put down this Amendment. It is carefully worded and is confined to particular things which a company is told to do. I have used the word "transaction," as your Lordships will see. It does not deny the general right of the Corporation to give broad directives to the industry as a whole. The Amendment reads: If the Corporation requires any publicly-owned company"— that is the technical name under the Bill for the companies to be taken over— to enter a transaction which the Board of Directors of that company considers the company ought not for technical or commercial reasons to enter into, the Board shall have the right to appeal to the Minister; and the Minister after consultation with the Corporation and the Board shall give his decision which shall be binding on the Corporation and the company. The Amendment is confined to cases where the Corporation order a company to do something. I have omitted the converse case which ought to be dealt with—namely, the case where a particular company which is supposed to have its individuality of management, wishes to do something which it thinks commercially sound, and is restrained from doing it by the Corporation. In that case I think there is also a case for appeal to the Minister. An Amendment on these lines recognises the position and the rights of the Corporation, but equally it recognises and states what are the rights and duties of the companies. It makes the Minister the final arbiter. There must be a final arbiter, because there must be finality. Something ought to go into this Bill on these lines. I am sure the working will be more harmonious and more responsible, the results more satisfactory and disputes less frequent if the situation is clearly stated and provided for on the lines which I suggest in this Amendment. I beg to move.

§ Amendment moved— After Clause 4 insert the said new clause.—(Viscount Swinton.)

§ LORD LAYTON
This Amendment has been put down to raise what I believe to be a major question of principle—perhaps the major question of principle in the whole of this discussion. There are 424 two views as to the future of the iron and steel industry under this Bill. One is that the provisions of this Bill are the thin end of the wedge and it is only a question of time before the iron and steel industry of the country becomes over-centralised and stratified through that over-centralisation; the other is that it is possible, even in a nationalised industry, to retain the elasticity, the independence of initiative and the internal competition which will keep alive an industry such as this, and so enable it to take the great place which it obviously should take in our economic development. Many quotations could be given from the discussions in Committee in another place, and, indeed, many statements have been made in this Committee in the course of this debate which show that the second is the aim which His Majesty's Government desire to attain. Without qualification, I accept that view. There is, in other words, to be "nationalisation new style" through the keeping alive of the units. That new style is based upon a partnership between private industry, with a limited independence, and Government ownership.
May I repeat that, so far as I am concerned, I do not depart in any way from what I said on the Second Reading debate—namely, that the ideal relationship between an industry such as this and the State is not one of ownership. But if there is to be ownership, then it is more than ever necessary—and, incidentally, very difficult—to work out a suitable relationship between the State and those who carry on the industry. From that point of view—and I want to submit this with all the force at my command—this Bill is woefully deficient. Part I deals with the Corporation and its powers, Part II deals with the financial arrangements for taking over the companies, Part III deals with the units left out, Part IV with finance, and so on, but there is no group of clauses in this Bill which sets out the responsibilities, the duties and the functions of the operative units in the iron and steel industry of the future. It is that that is missing. It is like a partnership agreement which only one of the partners signs, or a marriage in which only one side takes the vows. It should be a two-sided arrangement. That is the concept. But in this Bill one side is left completely out.
It may be said that since the publicly-owned companies are registered limited liability companies there is a certain 425 security for them in the Companies Acts and in their own Articles of Association. That seems to me quite unsound for two major reasons. In the first place, this relationship between the State and separate units is one which is quite unsuitable to be dealt with in the Joint Stock Companies' Acts. These Acts deal with the relationship between a large group of shareholders and the board of directors, and so on. In many cases there are Articles which prescribe a three-quarters majority on certain matters and this may act as a protection to the Board. The Companies Acts place shareholders in a supreme position. That system has worked well, because in practice the shareholders rarely act as a 100 per cent. unit. That is why the Companies Acts, as such, are not suitable to this set-up of a State-owned industry. But even if they were suitable in their provisions, the Companies Acts would give no security of the kind that I am trying to envisage, for the simple reason that the Corporation, because it owns 100 per cent. of the shares, can at short notice entirely alter the Articles of Association. For those two reasons the Companies Acts are in no sense a security for the independence and continued existence of the units.
It is said again that we must rely upon the commonsense of the Minister. That has been mentioned several times in this debate. But we are legislating not for the tenure of office of existing Ministers, however long that may be, but for many years ahead—even for decades. Quite apart, however, from whether Ministers are wise or not, the most important reason why something is absolutely necessary for the protection of the independence of the units in this industry is that already given by my noble friend Lord Swinton, the tendency, under a set-up of this kind, for the management to become "Yes-men," and for undue misgivings to be applied throughout the industry. For those reasons, I would strongly press upon the Government that if for any reason they find the Amendment unsuitable or they disagree with it, they should endeavour to put into this Bill certain clauses defining the responsibilities, the functions and the duties of the independent units.
I think there should have been a separate Part to the Bill, as I have already said, but something may be done if specific Amendments are inserted. This Amendment is one of them, and it is on 426 this Amendment that the question of principle arises as to whether you are ready to define the powers and functions that are, in fact, to be left to the independent units. This Amendment is concerned with things which the companies are ordered to do or not to do. I mentioned in the Second Reading debate how important it is to secure the maximum of independence for the units, and for them to be able to act contrary to authority, because it is the backing by individual concerns of their technical opinion, or their opinion in some form of administration or production, against current authority, which produces progress. Therefore, I want to see something in some form or another giving an appeal to higher authority on such questions.
Another point which I hope to raise on Clause 12 is concerned with a further aspect of this same issue—namely, the security of tenure of the boards. If you are going to give individuals power to back their view against the majority opinion, you must give them a run for their money to prove their case. Therefore, something in the nature of security of tenure is vi[...]al. There are many other issues of the kind which will arise in the course of this Committee stage. I support this Amendment because it raises this general principle, and I again urge that the Government should consider it sympathetically from the point of view of embodying something like a charter in the Bill on the functions and responsibilities of the individual units.

§ [The Sitting was suspended at three minutes before seven o'clock, and resumed at a quarter past eight.]

LORD RENNELL
The noble Lord, Lord Layton, has pointed out, as did the noble Viscount, Lord Swinton, who moved this Amendment, that it specifically limits the question to matters of a technical and commercial type. It is arguable, even if the principle of this Amendment were accepted, how far the right of appeal against the Corporation by boards of directors of publicly-owned companies should go. I know that it has been deliberately limited to transactions which are entered into for commercial and technical reasons. I am going to put it to the noble Viscount that there are several reasons which might make it desirable to extend the right of appeal against the Corporation, if I may 427 so call it, on the part of the boards of publicly-owned companies. I can conceive, as I am sure your Lordships can, a board of directors receiving a direction or advice from the Corporation to act in a certain manner—for instance, in regard to prices of a particular product—which the board of that particular company might consider injurious. If, under the wording of this Amendment, they would be precluded from having the right of appeal on such a matter, I suggest that there may be good reasons for not limiting the right of appeal to technical and commercial matters.
There is another point which I think is important, on which I wish to appeal to the noble Viscount. Turning back for a moment to the vexed question of discriminatory practices, suppose, for instance, that one of these companies was producing a particular thing on which it was directed by the Corporation to follow a certain price policy, while at the same time it might be within the knowledge of the directors (it might, indeed, be on their conscience) that if they were to follow that line it would be extremely injurious to a third party. That is not necessarily a matter which would come up to the Corporation through the Consumers' Council. It is the sort of technical information which might reside only in a board of directors and which had been used in producing that particular sort of thing. Sections of it might be known only to that board of directors. I suggest that that is an extension which might properly be considered if this clause is redrafted, or if at a later stage the Government propose in their own Amendment to incorporate this important principle that Lord Layton has mentioned. Possibly there will be more than one clause, perhaps a group of clauses. Lord Layton spoke of the duties of publicly-owned companies. We must also consider their right to pursue their policy within the framework of this scheme if the decentralisation of which we have heard so much this afternoon is really to be carried into effect.

LORD TEYNHAM
I should like to emphasise one or two points on this question of decentralisation. When referring recently in another place to the personnel of publicly-owned companies the Minister of Supply used these words: 428 Indeed, on the morning after the vesting date the only difference for them"— that is, the directors of the companies— will be that the ownership of the securities will have changed hands. I suggest that, on the contrary, there will be a great difference—certainly with a board of directors of these publicly-owned companies. I suggest that there is bound to be a tendency for the Corporation to attract power to itself. We have seen it happen in other nationalised industries, and it is bound to happen in this one. One of the first things that assuredly will happen is that the management of the various companies will feel that their personal responsibility has become somewhat lessened, and that all difficult decisions and so on will have to be referred to the Corporation. I suggest that this Amendment will strengthen the responsibility of the boards of the public companies. This tendency towards weakened responsibility which I have mentioned cannot, of course, be entirely checked, even under the policy of decentralisation, but I think it may be mitigated to a certain extent by this Amendment. That is one of the weaknesses inherent in all nationalisation measures. I hope that His Majesty's Government will consider acceptance of this Amendment.

§ 8.22 p.m.

LORD CLYDESMUIR
Before the noble Viscount replies I would like to give an illustration of the type of case which I think he might bear in mind, where it might be positively helpful to the Government that an appeal should lie to the Minister beyond the Corporation. Suppose that the Corporation was of a mind that the steel industry should be extended on new sites. I have in mind a place where there has been a plan or a proposal, which has never come to fruition, for extending steel works to entirely new sites, near deep water, away from the existing steelworks, the existing towns and the existing coal fields. None the less, technically there are some arguments for establishing new steelworks there. Before such a project is launched, is it not desirable that there should be an appeal to the Minister above the Corporation, because such a proposal would give rise to great social effects as well as to great difficulties. It should be considered on those grounds too.

429

§ VISCOUNT HALL
If I may, I should like to express my gratitude to the noble Viscount, Lord Swinton, and to the noble Lord, Lord Layton, for the agreeable way in which they introduced this Amendment. I wish their speeches conformed with the Amendment on the Order Paper, or that the Amendment on the Order Paper conformed with their speeches. I am not going to say that I disagree with the spirit of much of what they said—that is, that there should be the building up or the retaining of the relationship which has existed and still exists between all sections of this great industry. The noble Lord, Lord Layton, after referring to the provisions which are made in this Bill for the relationship between one section and another, particularly stressed that he wished that it was possible to have certain clauses included in the Bill which would deal with the points which were raised during the course of his speech. I wish that it were possible to legislate to deal with the relationship between employer, manager and work-people, but I doubt whether it would be possible to put into legislation that which he and I—and I am sure, from his speeches, the noble Viscount, Lord Swinton, also—would like. I wish I were not quite so pessimistic, but after long experience of the relationship between employers and employed I often wish that we could do something to bring about such a relationship as that which has been referred to. But it is very difficult, and I hope later to deal with it a little further.
The noble Viscount, Lord Swinton, dealt with the question of decentralising so far as possible this important industry, or retaining the units as they are now in the form of decentralisation. While it is true that on an earlier Amendment it was suggested that the question of decentralisation would be raised on this Amendment, I think it is also true to say that my noble friend Lord Lucas dealt with the question of centralisation then, and it is very difficult for me to add anything to what he said. On the general question of decentralisation, and indeed on the question of human relationship, I should have thought, as the noble Viscount, Lord Swinton, rightly said, that a wise Corporation would do everything possible not only to retain the relationship which exists at the pre- 430 sent time between all sections of the industry, but to strengthen it.
I see no reason why we should not have that wise Corporation. It would be a very stupid Corporation if it started off or at any time worked on the basis that it was not to retain, from the workman up to the manager and from the technician up to the director, the relationship which exists at the present lime. Indeed, that was the purpose of trying out this new type of nationalisation to which Lord Layton referred. It is a new type of nationalisation. It indicates that the Government have not a fixed mind as to the form nationalisation should take, and in this case, as has been repeatedly pointed out, the Corporation is to be a holding company, and so far as possible the separate units will be retained with that supervision which a holding company must always have over the companies under its control.
I believe I go very far in guaranteeing security of tenure to everyone who is employed in industry, but security of tenure in this as in any other industry, and, indeed, in every walk of life, however generously minded the management may be, depends upon the ability, the personality, the integrity and devotion of the individual directors, management and workpeople who are employed in the industry. As Lord Layton rightly said, it is true that we are dealing with one Minister at the present time, and the first Corporation to be appointed might be the type of Corporation which Lord Layton and, indeed, the noble Viscount, Lord Swinton, would themselves appoint as the Corporation for this industry. But I am hoping that there will be a change in the relationship in industry at the present time. As was mentioned, strikes have taken place in nationalised industry. If we nationalised every industry in the country, there might of course be small strikes, but not strikes similar to those which we had immediately after the conclusion of the 1914–1918 War.

LORD CLYDESMUIR
Not in the steel trade.

§ VISCOUNT HALL
No, not in the steel trade, I agree. It is quite true that the steel trade was exempt, but that was not 431 so in other industries where conditions and relationships were not quite so happy. If we could have legislated then to bring into other industries a relationship such as that which existed in the iron and steel industry, and if the Government had been a little more tolerant than they were in that matter the possibility is that we would not have had the trouble which we had in those other industries. I repeat that I am convinced that the Corporation which will be appointed to deal with this industry will have in mind and, indeed, will act in accordance with, the spirit of the speeches which have been made by noble Lords. In my view that is the only way to get the best out of this industry.
I am bound to deal briefly with the Amendment as it appears on the Marshalled List. It proposes to bring in the Minister to judge and settle internal disputes in the Corporation's affairs.
As the Bill is now drawn, I think it is most unlikely that disputes will arise. If the Amendment is embodied in the Bill and the Bill becomes an Act, I think it will offer every encouragement for not only directors but others as well to exercise the right of appeal. You just cannot limit it. Indeed, the noble Lord, Lord Rennell, suggested that there should be an extension to the terms of the Amendment as it now appears on the Marshalled List. He was followed by the noble Lord, Lord Clydesmuir, who also suggested that there should be another Amendment. In the event of directors having this right of appeal to the Minister, what is to prevent a technician having the same right of appeal? What is to prevent the manager, or a workman who has been directed by the manager, having equal rights with the director? It is impossible to prevent such extension. It is inevitable.
Disputes frequently do arise between shareholders and directors, and the Companies Act, as Lord Layton rightly said, makes elaborate provision to ensure that the will of the shareholder shall ultimately prevail. In this case, the Corporation will be the shareholder and the intention of the Bill is that the will of the Corporation, qua shareholder, shall prevail. His Majesty's Government can see no reason why there should be any special provision to protect a company director 432 if he finds himself in dispute with his shareholder, or to give him the special right of appeal which the proposed new clause would provide. The Government's attitude to the Bill is quite clear. They intend that full responsibility shall be placed on the Corporation and that a Consumers' Council shall ensure that the consumers' interest is always before the Corporation and the Minister. In the background the Minister will act as custodian of the national interest with a right to intervene on matters which he has discussed with the Corporation on the recommendation of the Consumers' Council. I think it would make the position of the Minister almost untenable if he were called upon to have to act as art arbitrator in disputes between the Corporation and the directors of any section of the industry. It is for that reason that His Majesty's Government, I am afraid, cannot accept the new clause which is now proposed.

§ VISCOUNT SWINTON
With great respect, the Minister has really not directed his attention to the Amendment which is proposed. He has said 'some words with which no one in this Chamber will disagree, as to the desirability of good relations in industry. He paid a deserved compliment to the relations which have subsisted in this industry for forty years and more. I join with him in that, but it has nothing whatever to do with this Amendment. This Amendment does not deal with labour relations in any sense or form. Let me read it: If the Corporation requires any publicly-owned company to enter into a transaction which the Board of Directors of that company considers the company ought not for technical or commercial reasons to enter into, the Board shall have the right to appeal to the Minister; and the Minister after consultation with the Corporation and the Board shall give his decision which shall be binding… The Government then say: "Well, but if we gave you that then everybody would have a right of appeal to the Minister." They say that any technician who did not like the way the business was technically conducted would have a right of appeal. But there is not one word about that in this Amendment.
The Government say that any director who did not like something could appeal to the Minister. That is not the proposal in this Amendment at all. Do let us 433 direct our attention to what the Amendment provides. The Amendment provides for one thing, and one thing only: that where the board—not a technician, not a single director, but the responsible board of directors—of one of these companies (which on the ministerial asseveration is to have a wide measure of initiative and independence) feels an honest and sincere difference of opinion with the Corporation on something which the Corporation orders it to do, that board (and obviously it must he a majority of the board) may appeal to the Minister. Then the Minister, after he has discussed the matter with the Corporation who gave the order, and with the responsible board of the company objecting to it because it is either technically or commercially unsound, gives a decision.
The Government say that that provision is quite impossible. Why is it impossible? They say it is because the Corporation must possess the power that any holding company has. What do they mean by that? I agree that if you take the ordinary type of holding company in industry (any large corporation has a number of wholly-owned subsidiaries) what the holding company, the owning company, says, goes so far as the subsidiaries are concerned. But the subsidiaries of that company are agents to carry out a policy. Here the Government have said that they are to give a great independence of management and initiative to the companies. They have said that they want to try a new method by which the Corporation becomes merely a holding company (I do not understand how it is to be done) and the initiative is to rest with these companies and their expert boards of managements who have made the companies' names famous in the history of the steel industry. But what power are the companies given?
Under this Amendment we give them a power. In any issue which arises, where there is a perfectly honest difference of opinion between the board and the Corporation on whether something is technically or commercially sound, we say that there should be a right of appeal; the Government say, "No right of appeal. The Corporation is the sole judge." The Minister said that he does not believe that that sort of difference will arise. But I know that it will; not because there is a desire for friction 434 between these great companies and the Corporation, but because in technical and commercial matters we always find genuine differences of opinion. Let me take an analogy—that of the Chiefs of Staff and the Minister of Defence. The object of having a Minister of Defence is not merely to co-ordinate the Chiefs of Staff but, where there is a difference, to have someone who, subject to the Prime Minister and the Cabinet, can take the decision. As I know, in matters of defence we find genuine differences of opinion between the defence Ministries. The worst thing that can happen in a case like that is to reach the lowest common denominator of compromise. What we want is the highest common factor of efficiency. But we shall still have differences.
The choice is perfectly plain. We can, if we wish, say, as the Minister has now said, that the Corporation is to have absolutely unfettered power over every one of these publicly-owned companies and their boards; that however honest the difference may be the view of the Corporation is to prevail, and there is to be no appeal, and that even the Minister is not to be consulted. It is just as I thought: we are asked to put them in exactly the same position as the smaller subsidiaries of any great operating company. That is one way of doing it, and the Minister justifies it by saying that the Corporation must have this power because they are the shareholders. In ordinary companies the shareholders have this power, but there is all the difference in tie world between 300,000 shareholders and one shareholder. In the first case there is a chance of the directors fighting the case. What chance is there for a company board to present a case against one shareholder who can remove them?
We are back to a perfectly clear principle, and I am glad the debate has made it so abundantly plain. The Government commended this Bill to us in the first instance by saying that they were going to preserve the independence and initiative of these companies. We have taken the acid test on a grave matter of executive policy. Where the board of companies like Dorman Long or Guest Keen take an honest opinion that is diametrically opposed to the view of the Corporation, what is to happen? The Government say clearly that the view of the Corporation holds, and that there is no right 435 of appeal to the Minister. If that is the intention, then we know exactly where we stand. The independence and initiative of these companies is worth nothing. As I suspected from the start, we are back to what the noble Lord, Lord Layton, was so anxious about—the complete, centralised control, not in this case of a homogeneous industry like the transport industry (if that can be called homogeneous) but of the most variegated pattern that has ever been put under a nationalisation complex. As I see it, this is the clearest possible issue of principle. If the Government answer is that there can be no second thoughts upon this matter, but that it must be the Corporation, and the Corporation alone, who can give the orders and there can be no appeal from the Corporation, then I think we must divide.

§ LORD LAYTON
I have no reason to complain about the intention of His Majesty's Government in this matter. In that I agree with the noble Viscount, Lord Hall. But, like the noble Viscount, Lord Swinton, I have the impression that the reply did not really meet our point. I do not, however, propose to follow the comments of the noble Viscount. I rise only to comment on one aspect of the reply of the noble Viscount, Lord Hall, when he spoke about putting the Government in the position of shareholders. There is really all the difference in the world, for the reasons which I gave. I would refer again only to the second of those reasons—namely, that the Corporation are in a position to abolish the Articles of Association and substitute new ones overnight. Therefore, the Articles of Association are really no protection at all. My point is this. If you are going to set up by legislation something which governs the general status and functions of these subsidiaries, or publicly-owned companies, as we have to call them, then the only place to put that protection is in this Bill. The final safeguard for all such companies is in what we say in this Bill, and nowhere else. As it stands, the whole of the Companies Acts, so far as they concern the iron and steel industry, can be swept away the day after the vesting date.
I also tried to point out the reasons why, in fact, the Companies Acts work to-day, although they give tremendously dictatorial power to the shareholders. 436 The system works because in fact shareholders do not act 100 per cent. together, and that makes an enormous difference. But there is the case of the 100 per cent. subsidiary, which is very widespread in common practice. My own business concerns are in the form of a holding company and two separate wholly-owned subsidiaries. Not necessarily always, but as a rule, if you have wholly-owned subsidiaries management becomes one and indivisible. If the Corporation become the 100 per cent. owners of these concerns, I fail to see how you can avoid their becoming, in fact, the managers, unless you legislate to the contrary in this Bill. That is why I would again urge His Majesty's Government to put into the Bill something to preserve the independence of the subsidiary companies. May I add that with regard to 100 per cent. owned subsidiaries, a specific problem arises in private industry. In a number of cases competition is preserved by specific instructions or by directions from the superior board, which give independent rights and responsibilities to such subsidiaries. What we are asking is that His Majesty's Government should put their minds to the problem of deciding what are the functions of these 100 per cent. subsidiaries and not leave it to go by default.

VISCOUNT RIDLEY
I had not intended to speak on this Amendment, because as it is worded I do not feel that it would meet the needs that were so well expressed by the noble Lord, Lord Layton. I consider that there is a tremendous gap in this Bill between the transfer of ownership to the Corporation and the point where it becomes the guiding and controlling power of the companies themselves. I feel that this Amendment, as worded, would interrupt the chain of responsibility between the Minister, representing the public as owners, through the Corporation, down to the directors of the companies, by giving to the boards of the companies the right of appeal to an authority above those who are their guides.
I have thought very carefully as to how an Amendment could be put into this Bill in order to meet the point that I feel is in the minds of the noble Lord, Lord Layton, and the noble Viscount, Lord Swinton. It seems to me that unless something can be done to define the 437 relationship between the two parts of the organisation, it will be impossible to make this Bill work. That, in brief, is the main objection to this Bill which distinguishes it from the other nationalisation measures. The thing which makes for responsibility and freedom of judgment in the management of companies, whether large or small, is the fact that those responsible have to bear the responsibility for the financial success as well as for the commercial and technical success of the undertaking. By this Bill, the financial responsibility is removed from those who are in charge of the company.
As one who has been for some time a director of a steel company, I have been trying to visualise what in fact would be the atmosphere in which one would try to conduct the business under the arrangements proposed in this Bill. I entirely agree that it is a matter of working out some form of relationship between a Corporation and the company, but nevertheless I cannot see how one could ever develop as a separate, decentralised, independent company with a real sense of responsibility, unless there was the actual test of the financial success of the undertaking. Having removed from the companies the financial test, the standard of how successful they have been, it seems to me that we need quite a different kind of test of success. In order to keep in the industry people who have experience and knowledge of companies of this kind we need some sort of— I will not say guarantee, but something to make them feel that it is the intention of the Government (which I do not doubt to be sincere when they say they wish to keep the companies independent) to allow them to operate as independent units, competing one with the other within the framework of what is best. I do not think that, in that position, one would wish to appeal to a Minister and by-pass what is in effect the shareholder of the company who is expected to look after the business.
I do not think people would be entirely happy or would have a real feeling that they were doing a proper job of work under the Bill as it stands, and I strongly support the plea made by the noble Lord, Lord Layton, that some attempt should be made to put into the Bill a piece of machinery or even a suggestion as to how the actual business between the two parties is to be done. It is a matter 438 of personal relationships. It is a matter, I think, of the building up of a new relationship between the Corporation and the companies. The noble Viscount, Lord Hall, said it was a matter of sustaining the personal relationship. I would point out that there is at present no relationship of this kind in existence However, I appreciate what the noble Viscount meant when he said that, because I think he is probably using the analogy of the relationship between the Government, through the Ministry of Supply, and the Iron and Steel Control, later the Iron and Steel Board.
I suggest, therefore, that although this Amendment does not seem to me to be a workable one, there is a real need for something to say how the thing is going to work. I cannot suggest where it should be put in the Bill, but unless something of the kind is put in I believe that, however genuine is the intention of those who are responsible for it, the Bill will be a disappointment to those who will be responsible for the setting up of the Corporation and also to the members of the Corporation themselves. There is inevitably a strong tendency for anything which is operated for and on behalf of Government in any form to draw itself into the centre and to become an over-centralised machine. The noble Lord, Lord Lucas, has said that we are perhaps rather over-emphasising that point, but in practice I believe it to be an important one; and I believe from the speeches we have heard from the Government side today, that noble Lords there appreciate that point as well as we do. But I still submit that there is nothing in the Bill to prevent what is an inevitable tendency, and there is a need to define a working arrangement between the Corporation and the company. I strongly support the suggestion made by Lord Layton that something should be done, even now, to put in some piece of machinery which would satisfy those who are most intimately concerned.

§ 8.57 p.m.

§ THE MARQUESS OF SALISBURY
I feel that this is a particularly technical Amendment in which it is difficult for a layman to intervene, and I shall not speak at great length. But I rise to find out exactly where we stand, because we cannot go on debating indefinitely each 439 Amendment. We have had a charming and persuasive speech from the noble Viscount, Lord Hall, but I felt, as I think my noble friend Lord Swinton has said he felt, that it missed the point. It seemed to me rather like a man who fires a gun which makes a beautifully mellow bang but which was unfortunately aimed in the wrong direction, and therefore did not hit the mark. The purpose of this Amendment, as I understand it, has nothing to do with industrial relations—important though we all agree those are. It is really, as I think the noble Viscount, Lord Ridley, has just said, to avoid the danger of over-centralisation. That is a danger because, as I think is generally admitted, in the great majority of cases over-centralisation means over-standardisation. The Government have clearly aimed to avoid this in the structure of this Bill, because they have left in existence the structure of the original companies.
There are cynics who say that the Government's reason for that was that people would buy the products of Dorman Long or of Guest, Keen and Nettlefold, but are much less likely to buy the products of a National Steel Corporation. Perhaps there are some noble Lords in this House who would agree with that view. I do not propose to put it forward myself. I think it is a genuine attempt on the part of the Government to keep diversity within this great new project. But at the same time, as I think the noble Viscount, Lord Swinton, has already pointed out, that diversity must be a reality; it must not he a sham. As I understand it, the diversity that has existed hitherto has arisen from the fact that they are independent companies with independent histories, traditions, processes, methods of thought and so on. I take it that the Government still wish those to exist. It may well be that the central, standardised Corporation will fall foul of those independent views. Yet, as I think the noble Lord, Lord Layton, said in his original speech this evening, it is the holding of independent views that makes for progress.
That is the purpose of this Amendment. I do not want to labour the point any further, but I do not think it is a point to which the Government have yet addressed themselves. If they are willing 440 to consider the matter further, I shall be willing to recommend to my noble friends that they should postpone a definite decision until a later stage. If, on the other hand, the Government have definitely come to the conclusion that they cannot allow any appeal by the boards of these public companies against a decision of the Corporation, then they had better say so and we will vote on the point. I am certain that, if the Government would come some way to meet them, my noble friends would be ready to see whether, even if the Government cannot accept this Amendment, some other alternative method of producing the same result could be devised. They would be willing to give the Government a breathing space for further thought. But, if the Government have made up their minds, and the Minister has made up his mind, that he cannot allow an appeal by the boards of these public companies to the Minister against decisions of the Corporation, then I hope the Government will tell us, so that we shall know where we stand and can decide what to do.

§ VISCOUNT HALL
I am not in any difficulty in relation to this matter because I can see the differences between this side of the House and the opinion expressed by the noble Viscount. Lord Swinton. I am not suggesting anything other than that we have to face realities, because there is set up in this Bill a structure of organisation which has been before the public for eight months. Indeed, it was only yesterday, I understand, that there was placed upon the Order Paper this Amendment which brought up the ideas which have now been advanced by the noble Viscount, Lord Swinton. As regards the Amendment on the Order Paper, I think the noble Viscount. Lord Ridley, the noble Lord, Lord Clydesmuir, and the noble Lord, Lord Rennell, were themselves rather dissatisfied with its terms. They wanted the Amendment so expanded that it would bring in others who would have a right of appeal from other matters.

LORD CLYDESMUIR
Just to correct a misunderstanding, my short intervention was to illustrate the type of rather wide issue that I thought might be referred by the Corporation to the board of a company, where it would be desirable that there should be an appeal beyond 441 the Corporation. That was the only point I raised.

§ VISCOUNT HALL
Yes. That was outside the technical or the commercial matter and was very much wider.

LORD CLYDESMUIR
I think it might arise out of a technical matter.

§ VISCOUNT HALL
It was wider than the terms of the Amendment.

LORD CLYDESMUIR
If I used that expression, I apologise. I did not intend to use it.

§ VISCOUNT HALL
That was the impression I gained. However, I do not for a moment think that there should be any ambiguity or misunderstanding between us. Here is this Organisation provided under the Bill for the management of this industry. It has been stated, both in another place and here, that the intention and desire of the Government is that these separate companies shall remain in existence, but that the Government are becoming a shareholder and the industry is to be publicly-owned. I was impressed by the desire expressed by Lord Layton in relation to the points which he put, but so far as the Amendment on the Order Paper is concerned it would be wrong of me to mislead the Committee by suggesting that we could accept anything of the kind contained in the Amendment. I do not want to hold out any promise to the noble Marquess, Lord Salisbury. He mentioned that we might like to look at this again, but it would be wrong for me to mislead him by suggesting, that if we looked at it again it would bring about any change with regard to the proposal for an appeal by one section of the industry to the Minister through the Corporation. That would be impossible, and I am afraid I cannot go beyond what I have said.

§ VISCOUNT SWINTON
I am not wedded to the particular form of my Amendment. It is true that I put it down only yesterday. On the other hand, I hope the noble Viscount does not think that everybody has been satisfied with this conflict of interest for six months. We have not; we have all been very worried about it. The real point, however, is that this is an attempt to reconcile the authority of the Corporation and the alleged independence of the companies. I do not know 442 whether my Amendment is the best way of doing that, but at any rate it would have that effect, because it gives them a certain measure of independence. Lord Layton said he did not wish to go further than I do, but that he is equally anxious. He has said, "If you do not like this, can you give us any other means in the structure of the Bill to guarantee the independence and initiative of these companies?" If the noble Viscount, Lord Hall, said "I will come to you with a proposition which will do that in a different way," then I would gladly withdraw this Amendment and consider the Government's proposition. But if he proposes, as in fact he has to-day, a mere negative, and says that as between the Corporation and these companies, which were intended to have a measure of independence, the Corporation must always be supreme, that the view of the Corporation must always prevail, then I say the issue is plain: that in fact those companies will have no independence at all.

§ VISCOUNT HALL
Far be it from me to adopt an unreasonable attitude in relation to this matter. At the same time, it would be wrong for me to lead the Committee to think that it would be possible for the Government to accept an Amendment on these lines. If the noble Viscount will withdraw the Amendment I and my colleagues will be prepared, without any commitment whatsoever, to meet him and others to discuss this matter.

§ VISCOUNT SWINTON
I accept that. I appreciate that the noble Viscount has held out little hope, but I would like, if possible, to reach some kind of agreement by consent and with good will. We shall not necessarily have to debate the whole of this again on the Report stage. There is great anxiety in many quarters of the Committee that there should be, in one way or another, some guarantee of the independence of these companies. I think it might be of value that, even with little chance of success, we should try to find whether there is some better way of doing this. Even if the Government do not agree with us and say: "We do not like this, but we think this is better than what you are proposing at the present moment" that, in our view, 443 will be an advantage. In the circumstances, I feel that I would like to go into discussion and, on that understanding, I will withdraw this Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 5 agreed to.

§ 9.11 p.m.

§ Clause 6:

§ Appointment of Consumers' Council and committees

§ (10) The Council shall, with the approval of the Minister make rules with respect to the quorum, proceedings, meetings and determinations of the Council and any committee appointed by the Council, and copies of the minutes of the proceedings of the Council, except proceedings at meetings called under subsection (7) of this section, and of the proceedings of every such committee shall be sent to the Corporation.

§ VISCOUNT FALMOUTH moved, in sub section (10) after "Council" (where that word occurs a third time) to insert: and with respect to the attendance of the public and Press at any such meetings. The noble Viscount said: As your Lordships know, Clause 6 deals with the duties of the Consumers' Council, and I think there is no doubt whatever that the Consumers' Council, if it is to work effectively, will have to be regarded as an extremely important body, in view of the various aspects of the industry and the complaints which will have to be considered. Subsection (10) of this clause deals with the rules that shall be made by the Council for managing their business. The subsection directs that: The Council shall, with the approval of the Minister, make rules with respect to the quorum, proceedings, meetings and determinations of the Council… It might be desirable that on certain occasions the public and the Press should be admitted to those meetings. I can conceive that very great interest might be taken in matters there discussed. Quite probably, it would be important to the whole industry that the reasons why certain lines were followed, or certain decisions taken, should be made available to the general public. It is not suggested by the terms of the Amendment that it should be compulsory for the Council to allow the public or the Press to attend their meetings, but by the terms of the Amendment the Council would, if 444 they so desired, be able to do so. As the Bill is drawn, it appears that on no account, even if they so desired it, would the Council be able to admit the public or the Press to any of their meetings. I beg to move.

§ Amendment moved— Page 8, line 23, after ("Council") insert ("and with respect to the attendance of the public and the Press at any such meetings").(Viscount Falmouth.)

§ LORD WOLVERTON
I rise to support the Amendment which has been so ably moved by my noble friend Lord Falmouth. I do so because I think it is important that the Consumers' Council, of which we have heard a great deal tonight, should be able to make rules and regulations as to whether or not the public and the Press should be admitted to their meetings. As my noble friend has said, the Amendment is drafted entirely in a permissive and not in a mandatory way. The Amendment leaves it entirely to the Consumers' Council whether they shall admit the public and the Press or not. I feel that it should be clearly stated whether or not the Press and public should be allowed to be present at these most important meetings because, as we have been told during the two days on which we have been debating this Bill, the only protection of the public is via the Consumers' Council. Where matters of importance are being discussed at the meetings of the Consumers' Council it is most important, in my humble opinion, that the public and the Press should be admitted. Therefore, I support the Amendment which has been so ably moved by my noble friend.

§ LORD LUCAS OF CHILWORTH
I hope to persuade the noble Lords that this Amendment, if I may say so with respect, is entirely unnecessary. If they will examine subsection (10) of this clause they will see that it is left entirely to the Council to determine the way in which their proceedings are taken that means whether they are to be public or private. I hope that the noble Lords will agree that it is far better to leave this to the Council, and that there may well be confidential matters to be discussed at these meetings. There may be competitive secrets discussed. Surely you do not want them, without the consent of the Council, to he blazoned to the public. It is not in the interests of 445 the industry. My advice is to leave it as it is in Clause 10, where there is provision for the Council to make rules which allow for the attendance of the Press if it is desired that the Press shall enter; and if the Council require their proceedings to be heard at any other stage behind closed doors, it is for them to say. Leave it to them. That will be better than having anything, statutory, implied, or otherwise, that they must admit the Press.

LORD LLOYD
I am sorry that the noble Lord has not seen fit to accept this Amendment. As my noble friend, Lord Wolverton, pointed out, it is purely permissive. The point at issue is this. We have been told over and over again that the Consumers' Council is the only protection for the consumers in industry, and I feel that it is very important that the public should know how these nationalised industries are being conducted. It is very important that the public should have drawn to their attention what is going on in the conduct of businesses in which they are all shareholders. This Amendment does not compel the Council in any way whatsoever, and I cannot, for the life of me, understand why the noble Lord cannot accept an Amendment which merely expresses the desirability of having the Press, when possible, at these meetings and which leaves the whole matter ultimately to the decision of the Consumers' Council.

VISCOUNT FALMOUTH
I am very sorry that the noble Lord cannot see his way to accept the Amendment, but I understand from what he said that there will be nothing to prevent the Consumers' Council making rules with regard to the admission of the Press if they choose so to do.

§ LORD LUCAS OF CHILWORTH
That is correct.

VISCOUNT FALMOUTH
With that assurance I ask leave to withdraw my Amendment.

VISCOUNT ELIBANK
Before it is withdrawn, may I ask how many members there are on the Council?

§ LORD LUCAS OF CHILWORTH
If the noble Viscount will read the clause he will see that there are not less than 446 fifteen nor more than thirty persons to be nominated by the Minister, and two members of the Corporation, and it is not less than fifteen nor more than thirty members on the side of the consumers. It is in the first subsection of Clause 6. The noble Viscount will see it clearly set out there, and I am certain that he can read it and save me wasting the time of the Committe.

VISCOUNT ELIBANK
I had hoped that the noble Lord would do that for me.

§ Amendment, by leave, withdrawn.

§ Clause 6 agreed to.

§ 9.18 p.m.

§ VISCOUNT SWINTON moved, after Clause 6 to insert the following new clause:

§ Appointment of Iron and Steel Prices Board

§ ".—(1) The Minister shall, within a period of six months after the general date of transfer, by order establish an Iron and Steel Prices Board (hereinafter in this section referred to as "the Board").

§ (2) The Board shall consist of the following members—

(a) an independent chairman, appointed by the Lord Chancellor and being a person having legal or accountancy qualifications or such other qualifications as the Lord Chancellor may consider appropriate;
(b) a member appointed by the Minister to represent the interests of the Corporation and its subsidiaries as producers of specified products;
(c) a member appointed by the Minister to represent the interests of producers of specified products other than the Corporation and its subsidiaries;
(d) a member appointed by the Minister, after consultation with the Iron and Steel Consumers' Council, to represent the interests of consumers of specified products;
(e) a member appointed by the Minister to represent the interests of workers in the iron and steel industry; and
(f) such additional members, not exceeding two, as the Minister may from time to time appoint, for the consideration of any particular matter.

§ (3) No person who is a member or officer of the Corporation or a director or officer of any subsidiary of the Corporation shall be qualified to be appointed or to be the chairman of the Board. The members of the Board shall not at any time include more than two persons who are members or officers of the Corporation or directors or officers of any subsidiary of the Corporation. No person who is a member of the Commons House of Parliament shall be qualified to be appointed or to be a member of the Board.

447

§ (4) In this section the expression "specified products" means iron or steel products of any of the descriptions set out in the Tenth Schedule to this Act and such other descriptions as may be specified in an order of the Minister made under subsection (9) of this section, and the expression "iron or steel products" means products wholly or mainly composed of iron or steel.

§ (5) It shall be the duty of the Board to consider:

(a) any representation, which may be made to them by the Iron and Steel Consumers' Council or by any other person who appears to the Board to be a person affected or representative of the interests of a class or classes of persons affected, with respect to the prices at which or the terms and conditions on which all or any of the specified products are sold or supplied by any producer or class or classes of producers of such products;
(b) any matter which may be referred to them by the Minister for consideration, including without prejudice to the generality of the foregoing, a review of the prices at which and the terms and conditions on which all or any of the specified products are sold or supplied by any producer or class or classes of producers of such products; and
(c) any proposal for the making of an order under subsection (9) of this section specifying other descriptions of iron or steel products for the purposes of this section.

§ (6) When the Board have considered any such representation or matter or proposal as aforesaid, they shall make to the Minister a report thereon containing such recommendations if any as they think fit.

§ (7) Without prejudice to the exercise of any powers conferred by or under any enactment other than this Act, on any Minister of the Crown or Government Department, the Minister may from time to time, on receiving a recommendation in that behalf from the Board, make in accordance with that recommendation an order for controlling the prices at which and the terms and conditions on which all or any of the specified products may be sold or supplied by any producer or class or classes of producers of such products.

§ (8) Any person who contravenes or fails to comply with the requirements of an order made under subsection (7) of this section shall be guilty of an offence under this Act and shall be liable—

(a) on summary conviction to imprisonment for not more than three months or to a fine not exceeding five hundred pounds or to both such imprisonment and such fine; or
(b) on conviction on indictment to imprisonment for not more than two years or to a fine not exceeding whichever is the higher of the two following amounts—

(i) One thousand pounds;
(ii) Three times the amount of any benefits derived by him from the offence;

or to both such imprisonment and such fine.

448

§ (9) The Minister may from time to time on receiving a recommendation in that behalf from the Board, make in accordance with that recommendation an order specifying a further description of iron or steel products for the purposes of this section:

§ Provided that the Minister shall not make such an order with respect to any description of iron or steel products, unless it appears to him that at least one third by weight of the iron or steel products of that description supplied in the United Kingdom are supplied by the Corporation and its subsidiaries.

§ (10) The power conferred by subsections (7) and (9) of this section shall be exercisable by statutory instrument and any such statutory instrument shall be subject to annulment in pursuance of a Resolution of either House of Parliament.

§ (11) The Board shall, as respects each financial year of the Corporation, make to the Minister a report on the exercise and performance by the Board of their functions during that year, and the Minister shall lay a copy of every such annual report before each House of Parliament, together with a statement of any action which has been taken by him in that year in consequence of any recommendation made to him by the Board.

§ (12) The Minister and any producer of the said products shall provide the Board with all such information and other assistance as the Board may reasonably require for the exercise and performance of their functions under this section.

§ (13) The order made by the Minister under subsection (1) of this section establishing the Board shall provide for such incidental or supplementary matters as appear to the Minister to be necessary or expedient to provide for the purpose of giving full effect to this section including provisions—

(a) as to the procedure of the Board;
(b) requiring the Corporation to provide for the Board such officers and office accommodation as appear to the Minister to be requisite for the proper exercise and performance of their functions, subject to the approval of the Treasury with respect to the number of such officers; and
(c) for the payment by the Corporation of such remuneration and allowances to the chairman and other members of the Board and to their officers as the Minister with the approval of the Treasury may determine."

§ The noble Viscount said: I am afraid I must now trouble the Committee with another matter of cardinal importance. This is a proposal to re-establish an Iron and Steel Board to fix prices. It will be universally admitted that one of the most successful pieces of organisation that we have had in industry was the control of prices in the iron and steel industry. From the moment the industry was given a protective tariff, its prices were controlled by the Import 449 Duties Advisory Committee; that control was continued in the war by the Iron and Steel Control, and ultimately under the Iron and Steel Board, which did excellent work. There is therefore a long, cumulative, expert, experience in price control. That control has covered the primary products of the steel industry and a number of secondary products. What is most important is that it has covered all the firms who are making those products, whilst leaving clear those activities which are engineering rather than steel-making. Therefore, I submit there is a strong prima facie case for retaining what has worked so well.

§ The fact that this Bill is creating a vast monopoly which will not be subject to the Monopolies Act, as none of the Government monopolies is, makes it all the more important that this body should be established. There is another reason for such a Board. In the past price control has covered every firm, large and small, in genuine steel making. To-day, by this extraordinary Bill, the Government are taking over part of the steelmaking industry and an enormous number of other things as well, but leaving out a large part Of what is genuine steelmaking, with the result that the old coordination which worked so well over many years and the old control which extended through the whole steel industry go by the hoard. We can see from one or two cases how the thing works. There are cases where the majority of production is left in private hands; cases where the distribution is roughly half Government and half private; and cases where production is anything from 80 per cent. to nearly 100 per cent. Government owned. Sixteen per cent. of the output of light sections and bars is privately owned. Eleven per cent. of tin and turned black-plate is privately owned. In these cases, Government control of prices would probably be effective. Then we come to the middle cases, to steel forgings, where 56 per cent. is privately owned—practically half and half. Steel wire is almost exactly half and half, 51 per cent. being privately owned. Then we Come to the other extreme—steel drop forgings are 91 per cent. privately owned, and iron castings 80 per cent. I think I have said enough to show how varied this is, how unequal any control exercised by the Corporation must be, and how 450 important it is to have some control which is universal over the price structure.

§ We shall be told that there is the Consumers' Council. I do not think that that is an adequate answer. To begin with, there has to be a complaint by somebody, and, as the noble Viscount, Lord Elibank, elicited, it is to be composed of thirty-three people, most of them with no expert knowledge. That is not a body to conduct the careful inquiry, which is partly metallurgical, partly commercial and partly actuarial, into what is a proper price structure. Look at the complexity of it. I am not exaggerating; I take the Minister's own words. First, the Corporation are charged with fixing such prices as appear to them to be best in the public interest. Of course, these prices will cover only the firms they control. Then the Minister says that he is setting up an elaborate system of consumers' committees. One thing I can agree is that it is elaborate. Then: The consumers' committees and various sub-committees which will no doubt be set up will be able to check prices, put forward their views, and if they consider certain prices or the whole range of prices are ranged so harmfully would tell the Minister. But that is not the end. Then: The Minister after consulting the Corporation"— who have already been in on the consumers' council— and taking such advice as he (the Minister) thinks advisable, including consulting accountants, or anyone he thinks fit, can tell the Corporation after he has duly considered the matter that the whole price structure must be reviewed. Your Lordships will note that it is not "fixed," but "reviewed." So we approach this thing, I imagine, through committee, through sub-committee, through consultation with the Corporation, through calling in the accountants, through calling in somebody else who may have a view upon the matter, and through further consultation with the Corporation. I should think that would take a year. And after that there is no decision, but the Minister may tell the Corporation that they ought to review it. I remember Mr. George Robey, in one entertaining monologue, after someone had been rude to him, said: I said, 'Desist!' Well, apparently after all this has been I gone through (and I call to mind another 451 phrase of George Robey's, used in another connection: "The Minister has forgotten what he came for") he will say to them "Desist."

§ Is that really an alternative to the practical Prices Board which has worked so well? It has been a small, expert body, with wide knowledge of the industry and its trade. It need not be large. Actually the last review of steel prices was conducted by this Iron and Steel Board with a very small staff, and I understand it was a very successful review. Then the alternative argument is: "We do not need this and the Consumers' Council." The Minister says that the Corporation is obliged to take account of the public interest. If that is a conclusive answer why have a Consumers' Council at all?

§ Do not let us argue this merely on theory. What has happened, in fact, over the Consumers' Council and prices? Take the case of coal. There the Government agreed to set up an industrial section of the Consumers' Council for industrial coal. That was a comparatively simple matter. Has that had the faintest effect upon coal prices? It has not had a vestige of effect. What has happened? It has been sitting there, and the Coal Board have raised the price of coal twice, at least, to industrial consumers. I do not believe—the noble Lord, Lord Pakenham, will correct me if I am wrong —that on either occasion the Coal Board consulted the consumers' council on coal before they raised the price. Did they?

THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)
I will make my speech in due course.

§ VISCOUNT SWINTON
I hope that when the noble Lord does make his speech he will tell us. So far as I have been able to ascertain—I may be wrong —the Board never consulted the industrial consumers' council. Certainly if they did consult the industrial consumers' council, it had no effect, because we can hardly suppose that the advice was: "Please raise the price of coal"—4s. in the one case and 5s. in the other. That has been the value of consumers' councils in a much simpler industry. The Steel Board carried on with a small staff, and were able to make their review. What is more, prices were based on the cost of efficient firms, and it is very desirable 452 that that should be continued, whether the firms are in the nationalised complex, or whether they are outside it.
Now let me take your Lordships briefly through the proposition. Would your Lordships look at the very long Amendment—it has to be long; it is a new clause—on page 3 of the Marshalled List? It says that the Minister, within six months, is to set up a Steel Prices Board; that there is to be an independent chairman appointed by the Lord Chancellor with legal or accountancy qualifications, or such other qualifications as the Lord Chancellor considers appropriate; that there is to be a member appointed by the Minister to represent the Corporation and its subsidiaries, and a member appointed by the Minister to represent the interests of producers, other than the Corporation, of specified products. Obviously that is right, because the Board will be dealing with a number of products, some of which are under the control of the Corporation, and some of which remain in private hands.
Then there is to be a member representing the consumers. That was found to be necessary with the Steel Board, and it worked very well. There is to be a member appointed to represent the workers in the iron and steel industry—the Government will not object to that— and also such additional members, not exceeding two, as the Minister may from time to time appoint, for the consideration of any particular matter. That body would consider not only prices —which is certainly necessary—but would also consider terms and conditions of sale and supply. They must have that power, because unless the Board were able to consider terms and conditions of supply, any company could create terms and conditions which would make nominal prices ineffective. This body would be able to act either on a representation by the Consumers' Council—I want that liaison—or by persons affected. Certainly I think a wise Minister would follow the practice of the past ten years. He would say to the Board: "Now take these basic products and make a review, and make your recommendations as to prices." That power is given. I cannot conceive that a wise Minister would not exercise it at once. Under the Amendment, although the Minister may act on the recommendation of the Iron and Steel 453 Prices Board, the Board cannot act against him.
The products covered by this Amendment—because it ought not to cover the whole of the vast number of things taken over by the Government—are set out in the proposed new Schedule which your Lordships will find at the end of the Marshalled List. I will not go through that Schedule in detail, but I will explain in a sentence the justification for it. It is a list of steel and steel products which are at the present time subject to control, although all of them may not he in a control order. We provide that the Minister may by order add to that Schedule, if he thinks it necessary, but only on the recommendation of the Irma and Steel Board. Then we provide that all producers—whether it he the Government Corporation or the independent producers—must supply information. Any order covering prices wilt of course (as it has done in the past, but would not do under the present Bill), apply equally to the Government Corporation or its subsidiaries and to the independent producers.
The Amendment also contains the necessary provision for offices and staff for the Steel Board to work in. Finally—I ant not sure whether this follows the present practice or not; I think it does, but it is certainly desirable—there is the provision that this Board should make its annual report to Parliament. Both from the experience of the past, and from all that has been disclosed in the debates on this Bill in the present, I submit that there is a plain proved need for the re-establishment of the Iron and Steel Prices Board, or something very like it, which has worked so well in the past. I beg to move.

§ Amendment moved— After Clause 6, insert the said new clause.—(Viscount Swinton.)

§ 9.35 p.m.

LORD TEYNHAM
I should like to emphasise one or two of the main points made by the noble Viscount, Lord Swinton, and perhaps add one or two new ones. The object of this Amendment is clear. It is necessary because the Consumers' Council is not a suitable piece of machinery to advise the Minister on prices. But perhaps the main reason is that in the absence of access to costs it would be impractic- 454 able for that organisation to make any specific recommendation at all. It was argued by the Minister in another place that an iron and Steel Prices Board would duplicate the machinery already set out in the Bill; but this is not so, since the Consumers' Council, if it has no access to costs, cannot make any specific price recommendations. But as the Bill is drawn, the Minister would, in fact, still have to keep some kind of organisation in his Department—a price-reviewing machinery—in order to advise him in case of conflict of opinion. If this Amendment is accepted it would not entail any further duplication such as would occur as the Bill is already drawn. There is no question of interposing any new and unnecessary intermediary stage between the Consumers' Council and the Minister. What is proposed is a Prices Board which will fulfil a function which the Consumers' Council cannot fulfil as at present organised. The present Prices Board gives the Minister power to control the prices of iron and steel.

LORD PAKENHAM
May I interrupt on a point of elucidation? The noble Lord says that this body would not be interposed between the, Consumers' Council and the Minister. I suppose it is intended that quite often, at any rate, the Consumers' Council should act through this Board. Is it the intention that that would be only occasional, or would it always happen? I am thinking of subsection 5 (a) of the Amendment.

LORD TEYNHAM
It is not an unnecessary intermediary stage; it is a very necessary stage. That was what I intended to convey. As the Bill is drawn, co-ordination on price control would entirely disappear, and we have yet to, hear any satisfactory reason for that disappearance.

§ 9.38 p.m.

LORD RENNELL
I entirely support this Amendment. I do not think this proposed Board is an unnecessary body, and it perpetuates a form of price control with which I have always found myself in agreement—as have the noble Viscount, Lord Swinton, and the noble Lord, Lord Layton. I believe, indeed, that it is one which has recommended itself entirely to the iron and steel industry. The reason why the present scheme for a Consumers' Council does 455 not meet my point of view is that the Consumers' Council can deal only with the products of the Corporation itself. You would therefore have to have two parallel pieces of machinery. As the Bill is drafted, the Consumers' Council would go to the Corporation and the Minister in respect of the Corporation group products. There would be a separate power for the Minister, under the existing Supplies and Services (Transitional Powers) Act, to fix prices of the products of the privately-owned companies which are not in the group, and which in certain cases amount to anything up to 99 per cent. of the category of products.
It seems to me administratively very cumbersome, to say the least, to have two different sorts of machinery—the Consumers' Council in respect of the Corporation's products and some other mechanism (in which I am not clear where the Consumers' Council comes) whereby the Minister would fix the price of products produced in the iron and steel trade by concerns which are not in a group of the Corporation. So I think that a single body to cover the whole of the iron and steel trade would obviously be a simpler way of doing it, and would have the great advantage of perpetuating something which has been accepted by the public, by two Governments and, above all, by the industry itself. By a common admission in the industry and elsewhere, it has worked well.
The Iron and Steel Board have received commendations, not only from Government Departments, consumers and the companies now engaged in that trade, but also from spokesmen of His Majesty's Government. It cannot properly be said that it is a cumbersome device—to create or perpetuate something which has worked well and which provides a single channel and a single method of dealing with the whole of the iron and steel production in this country, rather than to have for the various products the two sorts of machine that have been discussed earlier. Consequently, although I myself am not entirely in agreement with this proposal, I must say that I can see little argument against it, either from the point of view of the administrative machinery or from the point of view of public opinion in all sections that are connected with the trade.

456

VISCOUNT ELIBANK
I wish to support this Amendment as a practical and an essential one. I cast my mind back to the first Consumers' Council that was ever appointed in this country. It was attached to the Food Ministry in the First World War. That Consumers' Council was only an advisory body to the Minister, who had another body which fixed prices and so on. The Consumers' Council merely expressed dissatisfaction or satisfaction—generally dissatisfaction— with what was being done. Since this Government have come into power, they have adopted consumers' councils as if they were the alpha and omega of everything that could be done in the way of fixing prices, whereas personally I cannot see how the Consumers' Council, without the technical and practical knowledge which they ought to possess in order to fix prices, can fix prices and give satisfaction.
The noble Viscount, Lord Swinton, has already stated what has happened in the case of coal. The price of coal has been advanced two or three times. What recourse have the unfortunate consumers, whether they be domestic consumers or industrial consumers, in regard to those prices? I cast my mind back to the electricity position before nationalisation took place. There we had an Electricity Supply Committee, which was a body of three or four technical men, who were the arbiters of price. If there was any discontent on the part of the consumers, the local authority or anyone throughout the country, their case was referred to that small technical body with technical representatives, who understood the whole case and gave their decision with knowledge of what they were doing. How can this Consumers' Council, who have no technical knowledge, have any opportunity of coming to right conclusions on these matters? In electricity, we have had our charges raised within the last few months by 30 per cent. They were raised before that. What recourse have we? None; we have to pay. We have no one to whom to appeal. If only we had had this Committee which we used to have, we could at any rate have put our case to them. To-day we are told that the Consumers' Council will look after this, and that if the Consumers' Council do not look after it then the Minister will. What does the Minister know 457 about it? He knows nothing except what he is advised—and advised under the Act by the Consumers' Council, who know nothing.
I suggest that this is a very important Amendment. There are any number of different sizes and kinds, and so on, in iron and steel, and you cannot possibly have these prices arranged by a Consumers Council. It is a very technical subject indeed, and it is of immense importance to the manufacturers that they should be able to obtain the particular types, classes and sizes of steel which they require. No Consumers' Council will he able to arrange that. The Board which is proposed by my noble friend is a practical one, a Board that would have experience and all the technical information at its disposal; it would enable this industry to be maintained, under the extraordinary situation which this Bill is going to produce—I do not want to enter into that now—at any rate with some measure of success. Unless this Board is appointed I do not see how that is possible.
With regard to the railways, I am not sure whether the Railways Rates Tribunal has been abolished or not, because it is difficult to follow all these peregrinations and perambulations of the different nationalised industries. But, there again, I assume that that rates tribunal is still alive. Why is it still alive? If I am right it is because it deals with a very important technical subject with which a Consumers' Council could not possibly cope. For that reason, and for the general reasons which I have advanced, I strongly support the Amendment which has been moved by my noble friend, and if the Government will not accept it, I will gladly follow him into the Lobby in order to put it into the Bill.

VISCOUNT RIDLEY
I would like to support this Amendment, and I hope the Government will accept it as being a necessary part of the machinery. It does not seem to me to conflict in any way with the Consumers' Councils. I have some views about the usefulness of those bodies, as I think have many noble Lords, but I do not now want to go into a discussion as to how effective they are for protecting the consumers. It seems to me perfectly clear that, as the Consumers' Council is envisaged in the Bill, it is incapable, in the first place, of 458 exercising any influence over producers who are not owned by the Corporation or its subsidiaries and, in the second place, by the wording of the Bill, it must cover only certain of the products of the public companies themselves. This. Amendment perpetuates the kind of system which is at present in operation, and I would suggest to the noble Lord who is to reply that probably the most important part of subsection (5) of the Amendment is paragraph (b) which deals with the periodical reviews. This has been the custom in the industry, provided first of all by the Iron and Steel Control and then the Iron and Steel Board, acting on information supplied mainly—in fact, I think entirely—through the Federation.
I would not like it to be thought that a system of that kind will mean the institution of a large amount of machinery because, as I think the Committee know, there is a very effective system for ascertaining from the larger makers the costs of all production of all the different types of ordinary primary products. So that the information is there. There is a regular system of taking the costs of producers who have plant of certain categories, those, for example, who have low costs because they have modern plant, and so on. It is possible, with a system of this sort, to encourage those who have brought their plant up-to-date and can produce more cheaply than others who have not made the same progress in that way. But however that may be, it seems to me that there must be some system for setting a level of prices, both for the publicly-owned companies and other privately-owned ones.
In this connection, I think this is important because, unless I am wrong, this is the only part of the Bill in which there is provided adequate control of the intermediate products sold by the publicly-owned companies to other manufacturers who process them further. Consumers of that kind must, I think, be satisfied that they are receiving for the same money the same qualities and types of steel as the publicly-owned companies themselves are receiving from the other publicly-owned companies. I do not think that the Consumers' Council is well constituted to deal with such a question so efficiently as it car, he dealt with by a thorough review of this kind, based on the actual costs of producers. Under 459 this system, it can be done in advance. The Consumers' Council must act when there has been some trade arrangement which is thought to be unsatisfactory. This proposal perpetuates the system of doing it in advance, and I suggest that it is a great deal simpler than it might appear at first sight. Also there is not likely to be any overloading. This Amendment would probably perpetuate the existing system by using some of the staff who have been working, perhaps, for the Iron and Steel Board or the Iron and Steel Federation. The Consumers' Council, I take it, would be a very small body which would deal with particular individual plants. They would not cover the whole range of products which I think should and which I believe could adequately be covered under this proposed Amendment.

§ 9.53 p.m.

LORD PAKENHAM
There are many occasions when one can feel sympathy for Amendments that are put forward, even in the case of controversial measures of this kind. There are other occasions on which one can feel no sympathy for the Amendment but much sympathy for those who are charged with recommending it to the Committee. This, undoubtedly, is one of the latter occasions. The noble Viscount not infrequently says that a particular Bill is what he calls a "bad Bill." We do not take any offence at that at all. But we do take leave to assure him that, on this occasion, he has put forward what is, in our view, a bad Amendment. Let me speak more precisely—in our opinion this is a very bad Amendment, an appalling Amendment. It is, if I may say so, the weakest Amendment that has ever flowed from the noble Viscount in the last three and a half years. Perhaps other members of the Committee can remember weaker Amendments which have come from the noble Viscount in that period, but I cannot remember any off-hand. Frankly, we hope that when the noble Viscount and Lord Rennell have appreciated the situation in this matter, they will be ready to withdraw their Amendment, and I shall attempt to show them why we feel that it is so bad. The noble Viscount and others (I think the noble Marquess, Lord Salisbury, among them) often do us the courtesy of suggesting that a measure put forward from this side is not really in conformity with our own 460 ideas, but is imposed on us by backwoodsmen, by extremists or people of that kind. It never happens to us but we can only assume that it has happened to them on this occasion, because frankly I cannot imagine that the noble Viscount, who is undoubtedly a very skilled student of legislation, could take any pride in the Amendment he has put forward to the Committee.
This Amendment adds no protection to the consumers and interferes sadly with the task of the producer. The noble Viscount—and I must say this because he has repeated it often—twice the other day, June 23, said: I really must protest, I am here not to speak for a few producers, I am here to speak for the consumer. Later he repeated that sentiment and said: I am talking for the consumer in this Bill; I never talk for anybody else. Well I will try to demonstrate that this Bill does not help the consumer—I can see from the fact that the noble Lord applauds a slip of the tongue with such colossal relief that he is in a bad way this evening, but that is all the consolation he is likely to extract. I would like to correct that remark for the benefit of the OFFICIAL REPORT and say that this Amendment does not help the consumer, whereas it does interfere sadly with the producer.
Three parties will have a responsibility for seeing that the price system under the nationalisation of iron and steel conforms to the public interest, and I am astounded that the noble Viscount should wish to add yet another piece of bureaucratic red-tape—as he would be the first to describe it—to this elaborate set-up. I wish I had his eloquence. If he were at this Box he would make nonsense of this Amendment. He would reflect on the whole thing, the overlapping—he would be good for an hour—because already we have these three parties. Under Clause 3 (a) the Corporation is required to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interests in all respects. And they are also required to avoid undue price discrimination. Meaning must 461 be attached to those words. The noble Lord is content to assume that the eminent gentlemen who will compose the Board of the Corporation will have no regard for the public interest at all. I think that most of these people will be business men. I have no power tonight to hold out any inducements, but they will be men of the stamp of the noble Earl, Lord Dudley—eminent gentlemen of that kind. The last thing I am doing is attempting to reach any composition of the Board, but eminent gentlemen who thoroughly understand all these matters will he instructed to observe the public interest and I decline to believe that they will in fact ignore that instruction; I am sure they will honour it very carefully.
The Corporation, therefore, will be a body composed of highly responsible, full-time experts, and they will be under a statutory obligation to follow a price policy calculated to serve the wider interests of the whole community. My first point is that there is no reason to think that this proposed body would be any more competent than the Corporation itself to perform price-fixing tasks. Indeed, there is every reason to think they would be far less competent, and they would have far less responsibility. However, it may be said that the Corporation, in spite of its statutory tasks, would inevitably be biased in favour of its own sectional interests, and it may be argued that some outside check is necessary. I certainly do not exclude that possibility, but the Minister is there himself to watch the public interest in this as in other matters. While we have not a statutory responsibility in civil aviation, I perform a task of this kind in relation to internal civil aviation rates, and I understand perfectly the kind of duty that falls on a Minister.
I beg the Committee not to treat the Minister as though he were inevitably a creature of the Corporation, whose sole interest would be in securing the maximum profit for the Corporation. I know that noble Lords opposite exclude such a possibility, but there might even be a Conservative Minister some time! I understand their reasons for assuming the contrary, but miracles happen, even in the best regulated countries. Whether we have a Labour, Conservative or Liberal Minister, it would be his task to blend the interests of the Corporation and steel industry with those of the com- 462 munity at large. If he cannot do that, if that is not his purpose, then there is no point in having him there at all. It is the whole burden of our case that the Minister is capable of performing a function of that kind.

VISCOUNT ELIBANK
Will the noble Lord say who is going to advise the Minister to do this—the Corporation or who? He will know nothing himself.

LORD PAKENHAM
Even Ministers have at times acquired a little knowledge, with the help of their experts, and I do not see any reason for giving the Minister a kind of blank cheque of ignorance.

VISCOUNT ELIBANK
Perhaps that would be so in regard to steel.

LORD PAKENHAM
We do this very thing in civil aviation. We discuss rates with the Corporations. In the case of steel that is what the Minister is doing at the present time. Speaking with the greatest respect to the noble Viscount, who added to the volume of language on the side of his Amendment much ponderosity but who hardly amplified the argument, I really feel that the Minister could do just as well in the future what he is doing at this moment while we are speaking here. The noble Viscount will forgive rile; I do not intend to be personal in any way. It is the whole burden of our case for nationalisation that a Minister can observe the public interest and can intervene where necessary in the public interest. If we did not believe that, frankly we would not be in favour of nationalisation of iron and steel. I agree with one thing that fell from the noble Viscount, Lord Elibank—it is very important. It is very important because if this Amendment were carried it would wreck the Bill. I am not making any allegations about motives. I am only saying that if it were carried, then goodbye to the nationalisation of iron and steel. It would be unworkable.

§ THE MARQUESS OF SALISBURY
I never heard such rubbish!

§ VISCOUNT SWINTON
Absolute nonsense!

LORD PAKENHAM
The noble Marquess intervenes without rising and says it is nonsense. No doubt he will speak and amplify that point in more comprehensible language. I say that the Bill 463 would be completely unworkable. Noble Lords can sit on the Front Bench opposite and say "Rubbish" and "Nonsense"; that does not make a very deep impression.

§ VISCOUNT SWINTON
Perhaps the noble Lord will explain why a system that has worked admirably for the last ten years over the whole steel industry would wreck the steel industry.

LORD PAKENHAM
I know the noble Viscount has already made fifteen Second Reading speeches denouncing nationalisation. That is perhaps not far from the truth.

§ VISCOUNT SWINTON
The noble Lord has become very cheap.

LORD PAKENHAM
The noble Viscount "dishes it out," and occasionally—just occasionally—I feel he ought to take it. We have put up with a great deal from the noble Viscount on this Bill.

§ VISCOUNT SWINTON
That does not worry me.

LORD PAKENHAM
The noble Viscount feels an inner detachment which is not revealed in his outward demonstrations. The Minister will intervene in the public interest where necessary, with the help of his expert advisers. Prices are already calculated to promote the public interest. Nevertheless, we have thought it right in every other nationalisation measure that the interests of the consumers should be protected through a Consumers' Council. As the Committee are already aware, though I should like to place it on record again, the question of the price of the products of any of the principal activities of the Corporation and publicly-owned companies can be raised on the Consumers' Council, and on any representation arising from such circumstances the Minister is empowered to issue a specific direction. That is an important provision. But T feel there is some genuine misapprehension if noble Lords think that the Consumers' Council is supposed to fix the prices. Clearly, they would intervene on behalf of the consumers where they thought the prices were unfair, but it would not be for them to fix the prices.

§ VISCOUNT SWINTON
Hear, hear!

LORD PAKENHAM
I must ask the noble Viscount to enable me, at any rate, 464 to make my points; otherwise I feel that this conversion of his for which I am still looking is hardly likely to take place this evening.

§ VISCOUNT SWINTON
I was agreeing with the noble Lord.

LORD PAKENHAM
It is a great thing to be carrying the noble Viscount even for so much of the journey. Perhaps he was getting restive about the question he put. He was anxious for an answer to the question as to whether the Coal Consumers' Council were consulted before the National Coal Board raised their prices. I understand, in fact, that the National Coal Board were in touch with the Industrial Coal Consumers' Council before they increased the prices. I hope that answers the rather insistent questioning of the noble Viscount.

§ VISCOUNT SWINTON
That shows how effective it was.

LORD PAKENHAM
I have heard the word "cheap" used from the other side, and what is sauce for the goose, I suppose, may be applied to the opposite. I am bound to say that the suggestion that the raising of coal prices was entirety wrong, and that an effective Consumers' Council would have stopped it, hardly seems worthy of the noble Viscount. He knows that if he had been responsible it is almost certain that he would have endorsed the rise in prices, and it has nothing to do with inadequate protection of the consumer. There is the machinery.
There was one special aspect on which the noble Lords, Lord Rennell and Lord Ridley, laid great stress—namely, the question of the competition of independent producers. In the great majority of cases the Corporation prices will set up effective competition with them. There may be a few cases where that is not so, and in the immediate future they can be controlled under the Supplies and Services (Transitional Powers) Act. Taking the long view, and without wishing to dogmatise, I do not see why noble Lords should suddenly be so keen to restrict the prices of private enterprise. I do not see why they should say it will all be lost if private firms are not restricted. I would suggest that it may not be necessary for all time to restrict these producers. I say this in all seriousness. I have tried to think how this would all work in regard to nationalised industry in relation to last 465 year. I am sure that to set up price machinery of this kind, as a kind of fifth wheel on the coach, in order to deal with the point raised by the noble Lords, would be most unwise. As I have said before, and I repeat in all solemnity, I believe it would go far to make this measure unworkable.
I believe this Amendment would make the task of the producer infinitely difficult and I do not believe it would add to the protection of the consumer at all. While reiterating tributes which the noble Viscount repeated to us—and why should he not?—that have been paid him on previous occasions for his constructive work on these nationalisation measures, I invite him, overlooking any remarks of mine that may have seemed to verge on the personal and putting all that aside, to ask himself whether this proposal would really help the iron and steel industry, and I ask him to withdraw this very misconceived Amendment.

LORD CLYDESMUIR
The noble Lord has, as usual, delivered a pleasant speech which we have all enjoyed, but he has been singularly unconvincing. Though he used a wealth of more extravagant language than usual, he failed to meet the essential points made by my noble friend who moved this Amendment. He described this as a particularly bad Amendment—in fact as the weakest that had emanated from this side for some time.

LORD PAKENHAM
For three and a half years.

LORD CLYDESMUIR
I am obliged to the noble Lord. The time is more limited than I thought.

LORD PAKENHAM
I was not here before.

LORD CLYDESMUIR
The noble Lord said it would interfere from the start with the task of production, that it would give no protection to consumers, and that it was bureaucratic red tape. I should have thought that if any two things were satisfactory about the iron and steel industry in this country it was the machinery for the fixation of wages (who criticises that?—certainly not the noble Lord) and the machinery for the fixation of prices. For years past the steel trade has held that there should be fixation of prices, and if nationalisation was neces- 466 sary in order to bring about a change in that machinery, surely the noble Lord has come to a pretty pass to have to urge such an argument. Is it because in a nationalised industry such machinery cannot work, or is it because such machinery in itself is bad? It cannot be that such machinery is bad, for it has been proved to be good—in fact, it works.
Let me analyse a few objections which the noble Lord made to the Amendment. He said that the Consumers' Council could do all that was necessary, but he also admitted that the Consumers' Council was not there mainly for the purpose of fixing prices but for dealing with complaints after prices were fixed. There is all the difference in seeing that your horse is well looked after in the stable and in catching him after he gets out. There is all the difference between what the recent Prices Board have been doing, fixing a fair and just range of prices after a careful review of costs, and with the best advice possible, and allowing the Consumers' Council to hear complaints and do their best to settle them. There is all the difference in dealing, with the situation beforehand and dealing with it afterwards. Indeed, the noble Lord will find that point of view hard to maintain, and, if for no other reason, I think the Amendment should be accepted.
There is another reason which I think makes it important that the Amendment should be accepted. The noble Lord will he aware that many products are not wholly owned by the Corporation or the nationalised companies. Of light sections and bars, for example, 16 per cent. of the total output is privately owned; of bright steel bars 76 per cent. is privately owned; of cold rolled strip 27 per cent. is privately owned, and of steel drop forgings and steel castings a very high percentage is privately owned. How can the Consumers' Council deal effectively with the prices of those sections of the industry which they do not control? I put that question because it puzzles me how, in the absence (if machinery such as exists at present through the Steel Board, that wide range of prices will be dealt with.
I earnestly urge upon your Lordships that this Amendment is not a wrecking Amendment. It is wrong to say that this Amendment would wreck the Bill. It is 467 not intended for that purpose, and it is sincerely conceived with the wish so far as possible to perpetuate machinery which has been tried and proved and found to be in the country's interest. I do not think your Lordships would wish me at this late hour to continue to speak, but I suggest that the noble Lord in his speech —although he very eloquently defended the point of view that this machinery was unnecessary—failed to convince the Committee that the system which is at present working satisfactorily would wreck the nationalised steel industry if now introduced; and I hope my noble friend will press the Amendment.

§ THE EARL OF DUDLEY
The noble Lord, Lord Pakenham, described this Amendment as the worst Amendment which he has heard the noble Viscount, Lord Swinton, move in many years.

LORD PAKENHAM
Three and a half years.

§ THE EARL OF DUDLEY
I can only say that the speech that the noble Lord has made—the noble Lord who started his career in this House with so much promise—is the worst in manner and matter that I have heard from the Front Bench for some time, and I was very disappointed to hear it. The noble Lord said, amongst other things, that this Amendment would interfere sadly with the task of production. This Amendment is asking only for the continuation of an organisation which has been in being for several years past, and has helped to increase the production of the iron and steel industry to its present high level of upwards of 15,000,000 tons a year. How the noble Lord can base his argument on that evidence, I cannot see. If it does not interfere with the task of production now, why is it going to interfere with production in the future.
The noble Lord said he was surprised that private enterprise on this side of the House advocated this form of Government control. I would remind him that the British Iron and Steel Federation has always advocated Government control and has, indeed, always welcomed it. If this Bill is not put on the Statute Book we shall continue to advocate Government control. This is not a piece of bureaucratic red tape; it is what the industry have, without question and with- 468 out complaint, acceded to for many years past in conjunction with the Government. The noble Lord knows well that all the costs of the industry have in recent years been submitted to a Committee headed by an extremely able Glasgow accountant, Sir Andrew Macharg, who, after close consideration of the cost—the cost of the efficient plant, not of the inefficient plant—advises the Government (or latterly the Steel Board) what their prices should be. Those prices are accepted by the industry without complaint or question. That has worked successfully, and has seen the industry built up to its present high level of efficiency. What can be the objection in the noble Lord's eyes? How can he say that this is going to wreck the Bill or the industry or interfere sadly with the task of production? The thing is absurd.
Several noble Lords have referred to the fact that a great many of these products are controlled at the moment. In fact some of them are not fully controlled at all. The remainder of them are controlled merely under the transitional powers which the Minister has. The very essence of the word "transitional" is "temporary," and therefore these powers are not going to continue for ever. That will mean that a large number of the iron and steel products which will be produced by privately-owned companies will not be controlled at all, and will not be subject to the Minister or the Corporation when these transitional powers have been lifted. Therefore it is a retrograde step that the Minister is recommending, because whereas the Government-owned products will be controlled, in due course the remainder of the products will not be controlled at all. I feel that the noble Lord has made a very bad shot indeed in his speech, and I hope my noble friend who moved the Amendment will press it to a Division.

§ LORD PETHICK-LAWRENCE
In the very brief intervention which I propose to make on this Amendment, I rise only to make one observation. It has been the common theme of nearly all the speeches that have been made in support of the Amendment that the machinery of the price-fixing committee was thoroughly successful and that it achieved the purpose of fixing a price agreeable both to the consumer and to the pro- 469 ducer, I do not pretend to any expert knowledge of the iron and steel industry of any kind, and I may be quite wrong in what I am going to say. My only reason for speaking at all is that I was the Chairman of the Public Accounts Committee of the House of Commons for several of the latter inter-war years and the first year or two of the war itself. Among other things, we had before us the question of the amount of production and the prices of iron and steel. As I have said, I do not know enough about the industry to be quite sure, but I formed the impression, as a chairman of a committee can only form an impression rather than have absolute knowledge, that the Iron and Steel Trades Prices Committee were unable to "deliver the goods," and for this reason: So far as I could judge, the country wanted more iron and steel produced than the existing machinery of the producers was able to supply.
There was a resistance—I will not put it higher than that—to the extension of iron and steel production in other quarters than the quarter in which it was produced. That being so, the price fixed, to which the Iron and Steel Trades Price Fixing Committee had to append its signature, was a price that would keep the worst and most inefficient production in being. That was the price they were obliged to fix because otherwise the shortage of steel existing at that time would have been further accentuated. That price was most agreeable to the efficient steel producers because, by their great efficiency, they were able to make a good profit at that price. But the idea that the Price Fixing Committee was a satisfactory concern was not, in my opinion, at all correct, from my view of the situation as Chairman of the Public Accounts Committee.
Let me say why I agree with the Minister in thinking that this Amendment is contrary to the spirit of the Bill. It was because of the failure of the producers of iron and steel in the inter-war years to meet the demand at a reasonable price that inside our Movement the opinion strengthened and strengthened that the time had come to do away with this Price Fixing Committee and to substitute nationalised iron and steel. It is because of that opinion, formed during those years, of the inadequacy of that Committee, that this Bill is being 470 discussed in this Committee to-day. Therefore, to attempt to hitch the old machinery, which in cur opinion failed, on to the new machinery being proposed in this Bill to-day, is to wreck the Bill, as my noble friend in front of me said—not in the sense that this Amendment would kill it, but that it would reverse the change which His Majesty's Government are seeking to introduce through this measure.

§ VISCOUNT SWINTON
Out of courtesy to the noble Lord, may I say two words in reply before we go to a Division. First of all, if it is right that the control of prices is highly desirable over the private industry side, then fiat is a reason for having this Steel Board, because otherwise there would be no control over those prices at all. In the second place—I do not know, but I accept from him the impression the noble Lord formed in the day s about which he was talking—those were days before the Iron and Steel Board was established. Therefore, the noble Lord is not comparing like with like. What I can assure him is the position to-day—and I am sure that the Government spokesman will confirm it—in regard to the prices which the Iron and Steel Board have fixed, or which the Iron and Steel Board have regulated and the noble Lord's own Minister has fixed, is that the prices have been fixed after the most careful actuarial calculation, based not on what the inefficient firm would do, but on the efficient practice.

§ 10.25 p.m.

§ THE LORD PRIVY SEAL (VISCOUNT ADDISON)
I venture to intervene in this debate for a few minutes to support our objection to this Amendment. The noble Viscount has described what has lately been done by the Iron and Steel Board. I think it voluntarily passed out of existence. It is unfortunate that it did, but that is the position. The Board is, not operating now; the work is being done otherwise. But apart from that, I want to draw attention, first, to the fact that it. is an unreal picture that has been drawn. The Iron and Steel Board was functioning in an industry that was an independent, privately-managed industry, run for private profit—I am not complaining; but that is the fact. What is now put forward is an entirely different set-up. There is proposed a Steel Corporation which will be the owner of 471 all steel shares and which will have relation—I hope a satisfactory and a good working relation—to the steel companies whose shares it will have acquired. That will be in existence. That will be the machinery. The duties of the Corporation have engaged our attention for a good many hours, and therefore I need not repeat what they are. It will be the business of the Corporation, in concert with the companies, to deliver steel at prices satisfactory to the user of steel.
This machinery in the Bill is also reinforced by the existence of the Consumers' Council, which will receive complaints and representations, and so on, on the very wide scheme of operations already discussed. It is now proposed to put into this machine a separate, independent Board. My noble friend Lord Pakenham said it would make the whole thing unworkable, and in a few minutes I shall try to convince the Committee that that is the case. You have to imagine this Board being projected into the set-up of a Steel Corporation, a Minister and a Consumer Council. You project into that machinery this new body. What is this body, and what is it going to do? In the first place, as the noble Viscount proposes, they will receive any representation, which may be made to them by the Iron and Steel Consumers' Council or any other person who appears to the Board to be a person affected, and so on, with respect to the prices at which or the terms and conditions on which all or any of the specified products are sold or supplied by any producer… This is the body which is to sit on these great matters. It is to be the determining body as to price, conditions of production and all the rest of it. If that is the case, what in the world is the Corporation doing! What are these separate companies going to do? This body is sitting somewhere in the hierarchy, disconnected from all the rest of the machinery except the Minister. It is to cater for the production and all that set-up, and the terms and conditions on which all or any of the specified products are sold or supplied by any producer… It is going to do partly the job of the Steel Corporation, partly the job of the Consumers' Council, and partly the job of the companies themselves.
472 What is this body to do then? They will make a report to the Minister. Here is one of the gravest features of this Amendment. If one looks at the bottom of subsection (6) one sees these words: …they shall make to the Minister…such recommendations if any as they think fit. That is what they will do. They do not consult the Corporation; they are not obliged to consult the Corporation, or the Consumers' Council, or the firms or anyone else. Having heard their case in their own way, and according to their own sweet will, they are to make recommendations to the Minister—not to the Steel Corporation, which has to do the job. What can the Minister do? He can refuse absolutely to take any notice of their recommendations—that is the one comfort there is in the Amendment. The Minister can refuse to do anything at all. But if he does anything on a recommendation he must make in accordance with that recommendation an order for controlling the prices at which and the terms and conditions on which all or any of the specified products may he sold or supplied by any producer or class or classes of producers of such products. In one sense, the Minister has no option. He can say: "I will have nothing to do with it at all"—which, being a sensible man, he certainly will do—but otherwise he has no option. He has to do exactly what the Board tell him; he has to put their recommendations into an order. That order will be approved or disapproved by Parliament, it is true. The only body of persons in this realm who will be able to say "No" to this Board, if the Minister is short-sighted enough to accept the Board's report, will be Parliament. And that is recommended to us as a workable arrangement! I confess that I have never heard anything more grotesque in the whole of my life. It is completely absurd. It would make the work of the Corporation, of the Consumers' Council, of the companies and of the Minister completely impossible.
I will carry the matter further. On what principles are this omniscient and all-powerful body to make their recommendations? is there anything to guide us? Nothing. We have had some disparaging remarks made—rather to my surprise, I may say—but I have sat quietly listening, to them, as an old Parliamentarian, with some idea that afterwards I might remind some of my noble friends 473 opposite of what they have said. But never mind that now. We have been asked to shut out of this Bill the reference to public interest. I think the public interest should predominate over every other consideration. That is my idea. Putting, the question in another way, whose prices are the Board going to fix? They can fix anyone's prices.
If you look at the opening part of this Amendment you will see that they can fix the prices not only of firms coming under the Corporation but of anyone else as well. Which prices are the Board going to fix? Are they going to fix the price of the Steel Corporation's product higher than the price of the product of Mr. Jones, who is in competition with the Corporation? There is no guidance in this Amendment at all. So far as I can see, there is nothing to prevent this: Board fixing the price of the Corporation's product at a different level from the price of someone else's product, either to the advantage or the disadvantage of that other person. There is no guidance on that point in this fantastic scheme which is here put forward. If we are going to set up a body so powerful that only Parliament can control them, and the Minister, if he does anything at all, has to accept what they recommend just as it is, then surely we ought to have some knowledge of what principles are to guide this Board M their deliberations. But there is not a word about that here. They might well make the work of the Corporation completely impossible. I see that I have got a note here—it was used by another noble Lord—that there was a fifth wheel to the coach; that is an old-fashioned phrase with which we are all familiar. There are various wheels to this coach—the Minister, the Steel Corporation, the Companies, and the Consumers' Council, and it is now proposed to make a fifth. As a matter of fact, it would be a brake on every wheel. The thing more or less will not stand a critical, fair-minded examination for five minutes. I hope sincerely that the House will have nothing whatever to do with it.

§ 10.36 p.m.

LORD GIFFORD
I want to make one very short observation about something that the noble Lord, Lord Pakenham, said. He said that the function of this Board was quite unnecessary, because it 474 was the job of the Minister. He went on to say that in his own Ministry he, as Minister of Civil Aviation, can quite well keep control of the fares of the Corporation. I think he is right. In such a matter as fares the non-technical man can keep control, but it is an entirely different thing to say that a Minister can keep control of the prices of thousands and thousands of different steel products. It is quite impossible for a Minister to keep any control over the thousands upon thousands of the different steel products that this Corporation is going to produce.

§ THE MARQUESS OF SALISBURY
I am not going to intervene for long in this debate. It has been in some respects rather an unfortunate one, because the very good humour which has prevailed throughout the Committee stage was, I am Yen/ sorry to say, temporarily ruffled. There were two speeches from the Front Bench—one from the noble Lord, Lord Pakenham, who started angrily, and another from the Leader of the House who got angrier as he proceeded. Of Lord Pakenham's speech I do not want to say much, except that the less we remember it the better. Nor did I think it was entirely logical, if he will allow me to say so, because first of all he attacked the proposed Prices Board, as being a spare wheel: he pointed out that there was already in the Bill, as indeed is true, the Minister, the Corporation, the companies and the Consumers' Council—and the last was certainly one of the wheels. Then he went on to say that the acceptance of a further wheel beyond the four which he considered adequate would wreck the Bill. I had never yet heard that a spare wheel would wreck a car. I know it is not always necessary to use it, but in case of emergency or calamity it is often very valuable.

A NOBLE LORD
All five at once?

§ THE MARQUESS OF SALISBURY
Moreover, to pass that ridicule of the machinery, both noble Lords ignored the fact, which was pointed out with perfectly good humour by several of my noble friends, that this machinery has already been used with perfect success.

§ LORD ADDISON
Not at all.

475

§ THE MARQUESS OF SALISBURY
Allow me to conclude my remarks. It was the Iron and Steel Board which was used with complete success. I think I am right in saying, although I am speaking entirely from memory, that Sir Andrew Duncan said on the Second Reading in the House of Commons that there never was any complaint against the operation of the Iron and Steel Board; and that statement was never contradicted, so far as I know, by any member on the Government Bench. I am sure that the Government have recommended a Consumers' Council as an alternative in perfectly good faith. I am not an authority on this but—

§ VISCOUNT ADDISON
I must interrupt the noble Marquess there. The Consumers' Council is not the simple alternative to the Prices Board. It has duties and responsibilities which the Bill also gives to the Corporation.

§ THE MARQUESS OF SALISBURY
I realise that, but it was said that the existence of a Consumers' Council was one of the factors that rendered this Prices Board unnecessary. Let me put it in that way. I do not think that statement has any substance because, as your Lordships are well aware, the Consumers' Council does not come in until after the prices are fixed; the prices are fixed first and then, if there is a complaint against the prices, the matter is referred to the Consumers' Council. The whole purpose of this Board, as was the purpose of the Iron and Steel Board, would be to consider these matters before the price was fixed at all. At present the Minister has to consult this very highly-powered Board and they make recommendations to him, but he is not hound to accept them. I believe he nearly always has accepted them, and the result is that the number of complaints with which the Consumers' Council will now have to deal will be reduced, if not largely eliminated. Under this proposed new Board, which is founded on the Iron and Steel Board, the combined experience of producers, consumers and workers would be called into play at that early stage.
The noble Viscount the Leader of the House quite properly pointed out that there is a Corporation—and we must not forget the Corporation; but I do not think the Corporation entirely fulfils the purpose for which this Board is needed. 476 The Corporation is in effect the employer, in second remove perhaps, because there are the publicly-owned companies, but it is in the nature of an employer. This proposed new Board would be an independent body, representing the producers, consumers and work-people and, clearly, would be a much wider and more comprehensive body than anything which exists under the Government scheme. The noble Lord, Lord Pethick-Lawrence, who made a serious contribution to the debate, said he remembered his experience and it gave him the impression that the fixing of prices at that time was not a fair one from the point of view of the consumer. I think I am right in saying that that was before the war.

§ LORD PETHICK-LAWRENCE
Up to the first year or two of the war.

§ THE MARQUESS OF SALISBURY
At any rate, prior to the bringing into existence of the Iron and Steel Board. Then prices were fixed by order of the Minister of Supply, acting through the Iron and Steel Board. That machinery was not in existence at the time about which the noble Lord complained. I think it is possible that there was a weakness in the machinery at that time, but that is not the situation with which we have to deal now. The noble Viscount the Leader of the House dealt with many of the details of the proposed new Corporation. It was about that that he became so angry. As he went from one point to another, I could see his face getting scarlet with wrath, and when he reached the zenith he made a definite misstatement in the height of his excitement. He said that the recommendations of the Board were bound under the Amendment to be accepted by the Minister.

§ VISCOUNT ADDISON
No, I did not. This is very important. I did not say anything of the kind. What I said was that the Minister had two alternatives: either to refuse to accept them at all—and, in my view, if he were a sensible man he probably would—or to put them as they were into his recommendations. He could not alter them. He had either to accept them en bloc or refuse them completely. That is true. It is in the Amendment.

§ THE MARQUESS OF SALISBURY
That may be true, but it does not mean that the Minister has no alternative. He I obtains the advice of his experts. I can- 477 not agree with the noble Viscount I the Leader of the House that if the Minister were a sensible man he would turn them down. I think it is typical of this Government that they do not lake any advice from anybody. That is one of the reasons why they are in such a dreadful mess at the present moment. I suggest that if they were wise they would consider the recommendations of this Board.

§ VISCOUNT ADDISON
Do I under stand that the noble Marquess is contending that the Minister should be in a position either of refusing the recommendations of this Board altogether or of having to accept them en bloc, with no ability to change them? Is he really recommending that to a responsible Minister?

§ The MARQUESS of SALISBURY
I am recommending to the Government—

§ VISCOUNT ADDISON
It is in the Amendment.

§ THE MARQUESS OF SALISBURY
The Leader of the House must allow me to speak. I have listened to him, and he must listen to me. This Amendment recommends, and I recommend, exactly the same procedure as was adopted during this extremely successful period.

§ VISCOUNT ADDISON
It used to be an Act of Parliament.

478

§ THE MARQUESS OF SALISBURY
It was a procedure which made statutory a system which has been operated with complete success. The Leader of the House went so far as to say—I was pleased and surprised—that he greatly regretted the departure of the Iron and Steel Board. He ought to be delighted that it should be re-created. However, I do not think it much good our continuing to debate this subject. It is obvious that we do not agree. We regret, and rather resent—I do not say this in any offensive sense— that this Amendment should have been treated as if it were contemptible, ridiculous and fantastic. There have been a whole "hierarchy" of terms of abuse thrown at this Amendment. It is not an Amendment to laugh at; it is a serious Amendment. It seeks to recreate machinery which long experience over a very difficult period in our history proved to be effective and successful. I do not say that the Government must necessarily for that reason accept it; there may be a genuine difference of view about it. But we believe it to be an essential safeguard, and it is for that reason that we: propose to include it in the Bill. Therefore, I am afraid, in spite of what the noble Viscount the Leader of the House has said, we have no option but to go to a Division.

§ On Question: Whether the proposed new clause shall be there inserted?

§ Their Lordships divided: Contents, 65; Not-Contents, 24.

479

CONTENTS
Aberdeen and Temair, M.	FitzAlan of Derwent, V.	Hindlip, L.
Cholmondeley, M.	Long, V.	Kemlworth, L.
Reading, M.	Portman, V.	Layton, L.
Salisbury, M.	Ridley, V.	Llewellin, L.
Townshend, M.	Simon, V.	Lloyd, L.
Willingdon, M. [Teller.]	Swinton, V.	Mancroft, L.
		Moyne, L.
Buckinghamshire, E.	Aberdare, L.	O'Hagan, L.
De La Warr, E.	Ailwyn, L.	Polwarth, L.
Dudley, E.	Amulree, L	Rea, L.
Fortescue, E. [Teller.]	Balfour of Inchrye, L.	Remnant, L.
Halifax, E.	Belstead, L.	Rennell L.
Howe, E.	Carrington, L.	Ritchie of Dundee, L.
Iddesleigh, E.	Cherwell, L.	Rochdale, L.
Munster, E.	Clanwilliam, L. (E. Clanwilliam.)	Roche, L.
Onslow, E.		Sandhurst, L.
Rothes, E.	Clydesmuir, L.	Schuster, L.
	Dc L'Isle and Dudley, L.	Stamp, L
Allenby, V.	Derwent, L.	Teynham, L.
Bridgeman, V.	Gifford, L.	Tweedsmuir, L.
Buckmaster, V.	Hailey, L.	Waleran, L.
Elibank, V.	Hatherton, L.	Wardington, L.
Falmouth, V.	Hawke, L.	wolverton, L.
NOT-CONTENTS
Jowitt, V. (L. Chancellor.)	Chorley, L. [Teller.]	Marley, L.
	Crook, L.	Morrison, L.
Addison, V. (L. Privy Seal.)	Darwen, L.	Nathan, L.
	Hare, L. (E. Listowel.)	Pakenham, L.
Huntingdon, E.	Henderson, L.	Pethick-Lawrence, L.
	Holden, L.	Piercy, L.
Hall, V.	Kershaw, L.	Strabolgi, L.
Stansgate, V.	Lucas of Chilworth, L.	Williams, L.
	Macdonald of Gwaenysgor, L.	Winster, L.
Ammon, L. [Teller.]

§ Resolved in the affirmative, and Amendment agreed to accordingly.

§ House resumed.