Lords Sitting of 24 May 1949

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
  UNIVERSITY OF NOTTINGHAM BILL
  Read 3a, with the Amendments, and passed, and returned to the Commons.
  OLDBURY CORPORATION BILL [H.L.]
  Read 3a, and passed, and sent to the Commons.

  COMMUNIST DIPLOMATIC MISSIONS
  2.35 p.m.
  LORD VANSITTARThad given notice of his intention to ask His Majesty's Government the following Question:
  [Whether the activities of the assistant Polish military attaché in the spy net covering this country have been considered in connection with the recent exposure in this House of the universal manner in which Communist diplomatic missions are occupied in espionage; and to enquire whether the organisation of these cover-organisations will in future be more closely investigated.]
  LORD STRABOLGI: My Lords, I rise on a point of order. I am sorry to stand between the noble Lord and the House, but I believe it is understood in our Parliamentary practice that sweeping assertions against diplomatic Missions accredited to His Majesty are discountenanced. I hope therefore that this Question will be ruled out of order.
  LORD VANSITTART: My Lords, despite the intervention of the noble Lord, I rise to ask the Question standing in my name.
  THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, the case in connection with which the name of the assistant Polish military attaché has been mentioned is still sub judice. I therefore regret that His Majesty's Government
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  have nothing to say about it at present. With regard to the second part of the noble Lord's Question, the attitude of His Majesty's Government towards Communist diplomatic Missions was made clear in the debate which took place in your Lordships' House on December 1, 1948, and I have nothing to add.
  LORD STRABOLGI: My Lords, may I ask my noble and learned friend whether he cannot add something about this general assertion against diplomatic Missions representing in this country Governments with whom His Majesty is in friendly relation.
  THE LORD CHANCELLOR: My Lords, as the noble Lord knows, I am in no position of authority in this House; I am in merely the position of any other member. It would be for the Leader of the House and the Leader of the Opposition to agree amongst themselves upon the principle involved.

  SUNDAY ENTERTAINMENTS ACT, 1932 (RURAL DISTRICT OF WYCOMBE ORDER)
  LORD AMMON: My Lords, I beg to move that this Order be approved.
  Moved, That the Order made under the Act by the Secretary of State for the Home Department, for extending section one of the Act to the said area, be approved.—(Lord Ammon.)
  On Question, Motion agreed to.

  IRON AND STEEL BILL
  2.39 p.m.
  Order of the Day for the Second Reading read.
  THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, I beg to move that this Bill be now read a second time. There is general agreement that this Bill is not only of the greatest importance but is, to say the least very highly controversial. I cannot claim, as many noble Lords can, that I have had any practical experience or intimate knowledge of this industry, although for many years I have been closely associated with a sister industry—coal. My association with steel is that my home is within a short distance of the district where iron was smelted for

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  at least a hundred years before the arrival in Merthyr Tydfil in 1760 of John Guest, an ancestor of the noble Marquess, Lord Wimborne. It is interesting to note that in those days iron was smelted by wood fuel, and John Guest, with those who followed him, quickly exhausted the available supply of wood and discovered the heat-giving qualities of coal. They therefore married iron and coal, and laid the basis of an industry which thrived in South Wales for something like one hundred and fifty to one hundred and sixty years.
  So, my Lords, this Bill deals with one of our oldest-established and vital industries, for without steel the economic life of Britain would collapse. No trade of any importance could be carried on without it. Almost all our capital equipment depends on steel. The steel-using industries account for nearly half the value of our exports, and the proportion has increased considerably since the war. Not only our prosperity but our security and influence in world affairs will depend largely on whether we can produce over long periods cheap steel in ample quantities, not only for our own use but for export. The purpose of this Bill is a real endeavour to bring about this end, and it may be described as a continuation of the development of our basic industries which is a natural sequence to the process of the industrial evolution which has been in progress here for some fifty years or more.
  In my own industrial life I have seen private and limited liability companies, which were the development from strictly individual and afterwards family ownership, developed into large combines or amalgamations by federation of employers. This evolution was inevitable, and it can be claimed that it has served well the nation, the industrialists and the workpeople; and it has led to substantial economic and financial improvements in all the major industries of this country and in the nation itself.
  It would be unrealistic to pretend that this development should stop here, and that there is no room for further improvement. The Government, in their realistic outlook, have taken courage to proceed to what is the next natural stage in this evolutionary process by bringing under public ownership and control the coal, electricity, gas and transport industries,
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  which, it is admitted, are as important to the nation as is steel. This Bill deals with iron and steel. It is interesting to note that at the time of the Industrial Revolution this nation was, and continued to be, the leading iron and steel maker in the world, and for almost a generation after the inventions of Bessemer, Siemens and Thomas, was the leading producer in steel. That lead was held until 1890, when America led, with Germany coming into second place a few years later. From then on the relative importance in the world of the British iron and steel industry declined, while other countries went ahead, not only in size but in economy of production, with larger output, smaller fuel consumption and lower overhead costs.
  In the light of the historic development of the industry in this country, it is now generally accepted that a degree of cartelisation or monopoly of control is required in the iron and steel industry if it is successfully to meet its obligations. Indeed, this was not denied by all Members who participated in the debate on this Bill in another place. Since the depression in the post-war period after the First World War, a large degree of monopoly has, in fact, been set up. In 1932, when this country adopted a protected economy, the steel industry became one of the first candidates for special support, which it was given on the understanding that the industry would be re-organised and fully equipped. The leaders of this industry recognised that its salvation must come through strong collective action, and to this end the new Iron and Steel Federation collaborated with the Government, through the medium of the Import Duties Advisory Committee. In this collaboration, the Federation undertook the fixing of prices, the regulation of the home markets, the purchase of raw materials, the subsidisation of high-cost production and the allocation of exports in accordance with an international quota.
  The Steel Federation, with its influence, became a producers' combine, primarily concerned with the producers' interest. When a private monopoly control reaches a magnitude such as that of the iron and steel industry, and thereby obtains its power to influence the interests of a large portion of our main industries and the strategic requirements of the State, it is not right that such a situation should be

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  perpetuated. In the interests of the nation and of the consumer, Parliament must be able to control an industry so vital as this. It is not a question between uncontrolled private enterprise and national ownership but between the private and public ownership and control of a vital industry. May I, at this point, pay my tribute to the work of Sir Andrew Duncan, who has been seriously ill but who, I am pleased to learn, is now on the road to recovery? Fifteen years ago, he became the first independent Chairman of this very powerful Iron and Steel Federation—a position which he has held continuously since then, apart from periods during the war when he became a member of the Government. The debt which the British steel industry owes to Sir Andrew is recognised on both sides and by many people in the country.
  Now that we are planning our economic activities, we must be able, so far as certain basic matters are concerned, to plan ahead for production. The whole of our capital investment programme, and our programme of investment overseas—including the Colonies which take a large part of our export business—depends upon supplies of suitable qualities and quantities of steel, and we must be able to plan ahead this most important of our economic activities. If we cannot do so, we shall be driven, in a changing world situation, to rely upon the reactions of an industry largely controlled by private enterprise which may again demand restriction on markets, high prices, international cartel agreements, high tariffs and import restrictions as a condition of making the necessary supplies available to those countries which require them.
  At this point I must refer to the important position of steel in relation to the strategic situation. We cannot again leave it, as we did before the last war, to the chances of the interests of any other than the State to determine whether or not we shall have adequate capacity, suitably located, to meet our defence needs. In the early days of our sea power, the Navy itself had to be transferred from some system of private ownership to the State, and in the interest of national safety for the State it was found essential not only to control and finance the Royal Navy itself but to own and work naval dock
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  yards. That policy has developed, and a large proportion of the equipment and munitions, not only for the Royal Navy but for the other Services, are manufactured and financed by the State. So to-day it is essential for our defence needs that the State should own a large part of the steel-making resources of this country, so that we can be assured that the defence position is always safeguarded.
  There are only three ways in which this industry can operate. It is conceded on all sides that a return to unregulated, uncontrolled private ownership is completely out of the question. The memories of the inter-war years are still fresh in our minds. There must be no return to those conditions, when output was only one-third of what it is at the present time, when unemployment in this industry was 42 per cent. as compared with 21 per cent. for industry as a whole, and when employers were almost bankrupt. The second suggested plan is that the industry should remain under private ownership, tightly organised within the Steel Federation, leaving it to wield an immense influence on British industry as a whole—and, indeed, on the State itself—and to remain a vast monopoly or cartel possessing great powers over the economic life of the nation, but without any responsibility. It is true that the responsible leaders of the industry suggested that the Government should continue to exercise through some such machinery as the Iron and Steel Board such influence over the Federation as might be necessary. My right honourable friend the Minister of Supply pointed out during the Second Reading of this Bill in another place that the Government made it clear, when the Iron and Steel Board was set up, that it was not intended as anything more than a stopgap, and was wholly unsuitable as a permanent method of control.
  I was interested to read an article in The Times in October last, dealing with the Steel Federation and steel production generally. The article asked, How did monopoly-cum-supervision (the Steel Federation plus the Import Duties Advisory Committee) work? It said that, in so far as the comparatively brief experience during the war allowed judgment, the new system worked only imperfectly. The capital investment of

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  the period had continued, apart from the Corby venture, to do singularly little to promote the use of cheap home ores, more integrated production, better-balanced facilities for the use of imported ores to the best advantage. My Lords, I will follow that with another quotation from a different source, a source which I think in the main would be unfavourable to this Bill. The State Department in Washington, in a report published last year, said that although steel is one of the foundations of British economy, the basic plants had for a number of years received inadequate maintenance and little modernisation. At the end of the war, the industry as a whole was inefficient by contemporary standards, although a small amount of new capacity was highly efficient.
  I am not going to base the case which I shall submit to your Lordships on the question of the efficiency or otherwise of this industry. I make no charge that the industry is inefficient, for I have knowledge that in the main the present management of the British iron and steel industry is good; but it will be admitted that a substantial proportion of its plant is out of date and inefficient. The proportion estimated by the industry itself, when it brought forward its development plans in 1945, was over 30 per cent., or about one-third of the total industry. It must be admitted, of course, that this situation is partly due to the inability of the industry to re-equip itself during the period of the war, but it is also partly due to the failure adequately to modernise the industry during the inter-war years. Noble Lords will be aware of the high estimated cost to bring about this modernisation and re-equipment. The estimated cost of the original plan in 1945 was £168,000,000, stepping up to £200,000,000. That sum would now have increased considerably—say up to between £250,000,000 and £260,000,000. Indeed, for the financing of the new steel plant in South Wales, advances amounting to no less than £35,000,000 are now being made by the Finance Corporation for Industry over and above the share and loan capital of £31,000,000 which the company issued, making a total of £66,000,000 for this one plant alone. It is interesting to note that more than 50 per cent. of the total cost to this company comes from the Finance Corporation for Industry.
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  New steel plant is costly to install and while, owing to war conditions, some companies may now be able to finance the re-equipment and development which is required, others in addition to the South Wales company have had to obtain assistance through the Finance Corporation for Industry amounting to over £15,000,000. So long as private owners have to raise large sums, and there is some risk that the finance would not be found from private channels—that is, at a reasonable rate—sectional interests will remain in possession of the industry. That is a very good reason why the industry should be taken over in the form provided by this Bill, for the Government must be certain that the finances necessary for complete development are made available. While there should be little doubt about the completion of the current development plan, on the merits of which we are all agreed, it is in the next and subsequent stages, when the first urgent improvements have been carried out and the farther stages for re-organisation of the industry have to be settled and implemented, that the sectional interests of the multiple owners may stand in the way of further re-organisation. His Majesty's Government are of the opinion that to reorganise and to equip the industry properly and so get the maximum efficiency out of it, a single owner must replace the many, and that single owner must give undivided allegiance to the State.
  Noble Lords will see from what I have said that what divides the political Parties and many others who are interested in not only the production of steel but also the national economy, is the important question: By whom and for whom shall this industry be directed? Shall it be by the nation or the private companies? We maintain that there is but one answer to that question—that is, the present Bill.
  The main purpose of the Bill is to transfer to public ownership the companies specified in the Third Schedule. This will be done by transferring their securities from the present holders to a public Corporation which will be known as the Iron and Steel Corporation of Great Britain. It will own all securities of the major companies in the sections of the industry responsible for the production of iron ore, pig iron, ingot steel or the hot rolling of steel. These are the activities defined in the Second Schedule.

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  The Corporation will consist of a chairman and not more than ten and not fewer than six other members, all appointed by the Minister from among persons having the special qualifications referred to in subsection (2) of Clause 1. The clause lays down the conditions under which membership of the Corporation shall be held, and provides for the Minister to report to Parliament the remuneration to be paid to them.
  The powers of the Corporation are defined in Clause 2. This clause was substantially amended by the Government on Report in another place to meet criticism of the original clause during the Committee stage of the discussion on the Bill. As the clause originally stood, the Corporation would have had the sum of all the powers contained in the Memoranda of all the publicly-owned companies. It was never the Government's intention that the Corporation itself would be actively engaged in the manufacture of iron and steel; the intention was that the Corporation should be a holding company, controlling the policy of the underlying companies through its shareholdings in them. Following discussion in Committee, it appeared that this intention could be more clearly expressed, and the clause now represents a substantial advance to meet the views of the Opposition.
  In one important respect the Bill differs from previous nationalisation measures; the operating companies are not themselves disturbed and it is through them that the Corporation will normally work. In all previous measures a new chain of responsibility had to be forged, and this inevitably meant some dislocation. In this Bill the only immediate, but important, change will be the introduction of a new single shareholder, and this will secure the transfer of power with the minimum of dislocation. Naturally the Government build on their experience, and the present Bill reflects their flexibility in approach and their recognition that differing industries cannot be pressed into a common mould of organisation. We wish to preserve much of the structure within the steel industry and we hope that all in the industry, including the directors, who are willing to co-operate with the Corporation will remain.
  The Corporation will become the sole shareholder of practically every company that on the average of the years 1946 and
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  1947 produced more than 50,000 tons of iron ore, more than 20,000 tons of pig iron or 20,000 tons of ingot steel, including alloy steel, or shaped more than 20,000 tons of steel by hot rolling. The 20,000 tons figure means that the larger part of the industry, responsible for 90 to 100 per cent. of its basic products, will be brought in. The smaller concerns who make mostly specialised products, will be left outside, though they can come in later by agreement if they so desire. The total number of firms scheduled for transfer is ninety-six, representing the main producing undertakings in the basic sections of the industry. Along with these companies are 150 wholly-owned subsidiaries, and so for the purpose of the Bill there will be about 250 companies that will become publicly owned. There will in addition be about fifty companies which are not 100 per cent. subsidiaries but which are controlled by one or more of the 250 firms.
  The general duties of the Corporation are defined in Clause 3. This clause was also amended in another place. It reflects a fair measure of agreement with the interests representative of the consumers of steel, although the Government recognise that in discussing relatively narrow points, those representative bodies have not departed from their basic objections to the Bill. The Minister's powers of direction of the Corporation will, as in previous nationalisation measures, be limited to those of a general character in relation to matters which appear to him to affect the national interest. Specific powers of direction are contained in other parts of the Bill, but the generality of the relations of a nationalised iron and steel industry to the State will be on all fours with those of the other nationalised industries. 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. Consumer interests are protected by the provisions of Clause 6, which I understand reflects a full measure of agreement with the representatives of the consumer interests.
  In Part II of the Bill is defined the machinery for the transfer of securities to the Corporation. The general date of transfer under Clause 11 will be May 1, 1950, or such later date, up to eighteen months from the passing of the Bill. I

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  do not propose this afternoon to go into the very intricate questions of compensation. That matter was dealt with fully in another place, and I have no doubt that at a later stage, if the Bill is given a Second Reading, a fair amount of time will be taken up on this matter in your Lordships' House. The remainder of Part II, which comprises a substantial portion of the Bill, contains provisions designed to maintain the integrity of the companies named in the Third Schedule until the date of transfer, by ensuring that there shall be no dissipation of assets.
  I do not wish to detain your Lordships at this stage by attempting any detailed explanation of these complicated clauses. They were the subject of full discussion in another place, and I have no doubt will not be ignored by your Lordships' House at a later stage. I would, however, like to mention that my right honourable friend the Minister of Supply made it clear in another place—and I want to repeat what he said—that he had no reason to believe that the directors of the companies to be taken over would take any action detrimental to the interests of the new Corporation and of the iron and steel industry as a whole. For removal of doubt, however, the Bill states specifically what they should not do, and what the penalties for evasion would be. No proper action taken by any company in the normal course of business will be challenged, but if any company has any unusual proposal in mind, and the directors are in doubt about its validity, they can put their proposals to the Minister, whose consent would relieve them of any fear of subsequent trouble. As the Minister expected, however, the number of such proposals he has so far received has been few.
  Part III is the natural corollary to the acquisition of the companies in the Third Schedule. Part IV deals with finance and conforms to the precedents already established. Part V deals with a number of miscellaneous matters, and its provisions follow the precedents of previous similar measures such as the settlement of terms and conditions of employment which are dealt with by Clause 39. That clause gives legislative sanction to a joint procedure which has worked with remarkable success for a longer period than most similar pieces of machinery in other in
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  dustries. The relations between management and men within the iron and steel industry are a credit to all concerned.
  My Lords, after a very long examination this Bill has now arrived in your Lordships' House for further consideration, and I have no doubt that here, as in another place (that is, if it survives the Second Reading) the many debates will be conducted with the same good humour, although some of the speeches will, I have no doubt, be penetrating and hard-hitting.
  VISCOUNT SWINTON: We will do our best!
  VISCOUNT HALL: I am sure that, with the noble Viscount leading, we can expect that. It is regretted that, notwithstanding the invitation from the Minister of Supply to the leaders of the industry, they have not yet put any suggestions before the Minister for any alteration or improvement of the Bill. Similarly, it is also regretted that, owing to the failure to make a voluntary arrangement on the time-table for the discussion of this Bill in another place, the Government had to apply the guillotine, a procedure which is not liked by any Opposition. But it was a weapon which was inherited by the present Government from representatives of noble Lords opposite.
  VISCOUNT SWINTON: The bad days during the wars.
  VISCOUNT HALL: Without the use of the guillotine this Bill would not have passed through another place for a very long period. It is as well to record that no fewer than thirty-six days were given to its consideration in Standing Committee, in addition to eight days for the other stages. How long it would have taken without the guillotine can be judged when discussion of Clause 1 alone, which contained no new principle whatever, occupied no fewer than seven of the thirty-six Committee sittings. There is no doubt that sufficient time was allotted for a reasonable discussion of the main principles and, indeed, the details of this Bill.
  There is a general acknowledgment that something must be done to re-organise the steel industry—as, indeed, is recognised by noble Lords opposite. Let me take the attitude of the Party opposite, as expressed by one of their

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  leaders in another place, who said with emphasis:
  "It is necessary for me to repeat that, as a Party, we do not believe that the industry should be entirely uncontrolled. Government ownership—no; Government control—yes."
  I take it that that is the policy of noble Lords opposite. If it is, then we are clearly of the opinion that Government control must be linked up with Government ownership, otherwise chaos will quickly follow. The Liberal Party also said, during the debates in another place, that something must be done, and in the course of the debate asked for an inquiry, although during the war a memorandum was issued by some of the leaders of the Party in which the principles embodied in this Bill were strongly advocated by those on whose behalf the statement was issued.
  There is no doubt that the majority of your Lordships opposite are strongly opposed to this measure, as indeed you are to most measures of nationalisation in principle. Although over a very long period of Conservative Government control national services, and, indeed, some national industries, have not only been continued but have been increased, on no single occasion where an industry or a service has been taken over in this country have a Conservative Government attempted to de-nationalise it—not even the "pubs" in Carlisle. Notwithstanding that, I have no doubt that this measure will be fought at every stage by the Opposition, and, indeed, by the industry, for we have discovered in the opposition to this Bill that there is the closest possible link between the industry and the Opposition. So much so, that the industry itself declares that many of the Amendments which were put in another place were not so much Opposition Amendments as industry Amendments, which were submitted by a policy committee of the industry. I am not complaining, but that fact gives an idea of the very close combination which exists. But this combination, strong as it is, has not been strong enough to arouse any hostility against this Bill in the country.
  SEVERAL NOBLE LORDS: Oh, oh!
  VISCOUNT HALL: There is no doubt in my mind that not only the majority of the workpeople in the industry but the people of this country generally are
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  strongly in support of this measure. When it was first announced in 1946 that this industry was to be nationalised, it was strongly urged that immediate dislocation would be inevitable and it would be very serious. Fortunately, that did not occur; instead, the men and the management continued to produce iron and steel in largely increasing quantities. Indeed, since the date of the announcement production has increased from an annual output of just over 13,000,000 tons in 1946 to about 15,000,000 tons last year, and there is a further increase this year. These results not only dispose of the gloomy prophecies but are an indication that, by the provisions of this Bill, nationalisation can be applied to the industry without any dislocation whatever.
  One cannot refer to the present production of this industry without paying a tribute to the great achievement of the men and management in accomplishing in these large productions a superhuman task. These men, without any request being made to them, work a continuous shift system, while the surrounding industries work a five-day week. Men of this understanding will not let the nation down in any circumstances. I am convinced that under this Bill the management, the technicians and all bearing any responsibility will have ample opportunity for initiative and enterprise to carry out the developments required to meet what we hope will be a largely growing demand. The making of iron and steel in its many forms will be the responsibility of the managements of the existing companies, who will retain their identities, their goodwill and their loyalties which so many of them have built up, while conforming to the overall needs of the nation.
  In conclusion, I want to refer to what I said at the commencement of this speech. I made some reference to the evolutionary changes which are taking place in this country. The people of this country, with the people of Europe, believe that the logical sequence of social democracy is economic democracy, and our task here is to develop in the fullest way that democratic idea as the basis of our effort. Let it not be supposed that because we are building for the future rather than the present—by the only method possible in this country—the proposals of this Bill are not devoid of

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  historic significance. The conflict of the cold war which has been going on in Europe, and the fighting war in the Far East, is not a conflict between capitalism and anything else; it is a conflict between social democracy and communism. Democratic countries have demonstrated that politics and economics have come right into the ambit of government, and have come to stay; so if democracy is to govern—and govern it must—it must take over some of the basic industries of the country. This means the public ownership of the major industries, of which steel is one.
  If this Bill is carried through with its main principles intact, it will enable the steel industry, through its key position, to do much to lessen the severity of trade depressions, and it will offer greater security to those who are employed in the industry; it will enable increased co-operation with the peoples of the Commonwealth and of Europe, and will make a considerable contribution to their efforts in the rehabilitation of their industry and their economy. It is an integral part of the Government's plan for establishing a prosperous national economy. There can be no doubt that the vast majority of those employed in the industry, at whatever their level or job, whether in the office, the steel works, or in the Iron and Steel Federation or one of its commercial subsidiaries, or the very fine research organisation, will all, when this measure finally receives the Royal Assent and has been implemented, continue to make their valuable contribution as wholeheartedly as they have in the past. I ask your Lordships' acceptance of this measure. I beg to move.
  Moved, That the Bill be now read 2a.—(Viscount Hall.)
  3.26 p.m.
  VISCOUNT SWINTON: My Lords, there is one thing at any rate on which I think we can be all agreed, and agreed with the noble Viscount the First Lord; and that is his opening statement that this is a highly controversial measure. I think that through the long controversy which has been waged on the nationalisation of iron and steel, and particularly since this particular Bill was introduced, four things have increasingly impressed themselves upon the public mind. The first is that there is a complete absence of any sound economic reason for national
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  ising iron and steel; and for all the admirable qualities which the noble Viscount displayed, as we should expect, I am bound to say that I do not think that he has supplied in his speech to-day any additional or adequate reason.
  The second thing which has impressed people is this: the present Bill bears no resemblance to anything in the Election programme. The noble Viscount forgot the Election programme, on which I thought the claim was based, and he has dated everything from the announcement of 1946. But this Bill bears no resemblance to anything in the Election programme, or even to the Government's intentions as expressed in the Motion submitted in another place in 1946, to which the noble Viscount referred, which was to transfer to the ownership of the nation appropriate sections of the iron and steel industry. No one could imagine that we should see a Bill which, while leaving large parts of the so-called appropriate sections of iron and steel making outside, embraces huge engineering enterprises which are not steel-making at all. Indeed, whatever claim the Government could advance for a mandate to nationalise iron and steel, they have no authority whatever for this particular Bill.
  The third thing that has increasingly impressed people is the determination of the Government to get this Bill through, and to lay their hands on these vast and vital undertakings before the electors can express an opinion. For that discreditable and undemocratic purpose they are in process of altering the Constitution. And the fourth point which—particularly of late—has more and more impressed people is this: that not only is this a thoroughly bad Bill but it could not have been introduced at a worse time. We are more dependent than ever upon exports. As the First Lord himself said, steel products are the raw material of many of the industries on which that export depends. The First Lord said that at least half of our exports, and probably more, to-day depend upon steel. More and more we have to compete in a buyers' market, in which price will be the determining factor; and price depends on costs. Every exporting industry is already heavily handicapped in its costs by the increase in prices and charges of the nationalised industries—coal, power, transport and, I may add, the costs of raw materials due to bulk

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  purchase and State trading. If we are priced out of the world markets, the largest contributing factor will be the costs of nationalisation and State trading. My Lords, what a moment to add iron and steel to this list of liabilities!
  Let me take each of those four considerations and justify it. What is the case for this Bill or, in other words, the case against the industry? Just look at the record of the industry. Of course, the important thing, and the only important test, must be: What is the efficiency of the industry to-day? But as this Government, who are supposed to "face the future," prefer in this matter to disregard the present and dwell on the past, let me briefly review the past; for the facts will controvert all the Government's fancies. From the time the steel industry obtained the protection which every competing foreign industry had previously enjoyed, it made an impressive advance in production, efficiency, new plant and competitive prices. The prices to which the noble Viscount referred have always been controlled. From the very start they were fixed by the Import Duties Advisory Committee, and the prices were always based upon efficient production carefully costed by independent accountants. Before the war, our prices were fully competitive with the European and American prices. To-day, they are below them. In the pre-war period after protection, production of ingots and castings increased in the United Kingdom by 35 per cent. as against a world increase of 11 per cent. and an actual decline of production in the United States.
  Then we come to development. To listen to the noble Viscount one would have thought that nothing had been done. As a matter of fact, in the five pre-war years, £50,000,000 was spent on development; and that, I suppose, was the equivalent of £120,000,000 or £130,000,000 to-day. All this was part of a comprehensive plan which, but for the war, would have been completed in the war years. It is true that some obsolete plant was kept in being. But why? At the request of the Government, because it was foreseen that, if war should come, every plant, every works, old or new, would be required for the war. That is the truth and I challenge
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  contradiction from any quarter. That is the truth about the industry before the war. It is an absolute refutation of the Government fiction that the present development and efficiency of the industry is a death-bed repentance. Since the last war, complete developments plans have been produced. It is true that they were produced in 1946, but that had nothing to do with the threat of nationalisation. The industry had been working on these plans in the later years of the war, at the request of the National Government, and long before the Election.
  The noble Viscount has spoken as though one could not trust this industry during a war, implying that, unless the steel industry were nationalised, we were bound to be beaten. We were not beaten in the last war. During the long war years, this industry never failed; it never fell down on its task. And since the war, it has gone from strength to strength. It is, indeed, the brightest jewel in the industrial crown. It has been set increasingly high targets. Every time it has been set a higher target, it has beaten it. It has pressed on with reconstruction and development. In spite of the rising cost of coal, prices are strictly competitive to-day with any prices in America or on the Continent. This record, indeed, reflects the highest credit on the management and the workmen. Whereas the noble Viscount rightly said that relations have always been of the happiest for forty years of unclouded peace, I wish I could say the same of the nationalised industries and the relations there. If we desire to have happy relations in an industry, I do not think that the best way, judging by experience, is to start on more nationalisation.
  To what is this efficiency due? I agree that, in a large measure, it is due to this close working, this mutual confidence between the management and the men; but it is due also to the efficiency and the quality of the individual firms, names which are household words the world over. The Government pretend that they are going to keep this. They are going to nationalise the industry and place it all under one ownership, where the power will be controlled and all the directors in all the hundred companies can be sacked at a moment's notice. The Government are going to keep the façade, the names. But it is not the name over

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  the door that counts; it is the individual management, experience and "know-how" that have made and maintain the reputation of these great firms. And if this industry is left alone, I see only one risk. It is this. I am genuinely anxious—and I think your Lordships probably are as well—whether the nationalised coal industry will produce the quantity and quality of coal and coke which an expanding steel industry requires.
  Let me pass now to the allegation that the Government must nationalise this industry in order to exercise control in the national interest. The noble Viscount made much of that; indeed, it was the staple of his speech—the only real reason for buying out this industry. Even in theory, as the Government well know, that is nonsense, for every industry to-day is working with the Government on their plans for export and the attack to be made upon markets. If the Government argument about steel were true, it would mean that every single industry had to be nationalised. Perhaps that is the ultimate goal. In all these months, the Government have not produced one single example, even the smallest, showing that the steel industry has failed to comply with Government direction, Government advice or Government control—even if the industry thought it foolish. The noble Viscount said, "You will get the right policy and development only by a single owner running the industry." Power! What then becomes of the independent management of the hundred firms? You cannot have it both ways. Either those firms are to go on with their independent management—in which case what is the need for buying them all out—or there is to be what is the intention here, as expressed in the Bill which will be examined in Committee: the Government are to take the control, the power, the ownership, the opportunity to sack, the right to give directions. All that is going to be taken into the hands of this single monopoly.
  The whole industry has been organised to comply with the general policy laid down by the Government. It was doing it before the war. It did it during the war. With the greatest respect, it really is nonsense to say that you cannot get the war production. We got it during the war. In war, the whole of the industry is concentrated upon winning the war and upon the
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  production which the Government need. As for peace—I speak subject to correction as there are steel-makers in the House—I suppose the amount of steel that goes directly into munition-making in peace time is, at the outside, 3 per cent. or 4 per cent. of the total production. The internal arrangements in the industry, working with the Steel Board, have proved in practice that that is the most efficient way of securing the execution of policy in action. As we shall see, the present Bill cuts right across all this and will make the execution of policy much more difficult. Surely, a Bill of this kind could never have been expected from anything which was written or said during the Election. Even after the nationalisers had carried the day in the Party fight—as we know there was one—the then Minister of Supply gave no indication that we should see anything like this extraordinary Bill.
  Now I come to the point upon which the noble Viscount based his argument. In May, 1946, the Government tabled a Motion which was carried in another place, in these terms:
  "To approve the Government decision to nationalise appropriate sections of the iron and steel industry with a view to its organisation in the public interest."
  The then Minister of Supply condescended to give some detail, explaining the sections of the industry which would be taken over. He itemised iron ore, pig iron, ingot steel, and primary or heavy rolling. He added:
  "When finishing operations are so closely integrated with iron and steel-making as to be virtually one process we intend to include the whole plant."
  Who could imagine from that, that the result would be the present Bill? This Bill does not take over the "appropriate sections;" it leaves out a great many. It takes over a great many inappropriate sections in the hundred or so firms selected—I think it has come down to ninety-six in all—and it leaves out the remainder of the 2,000 firms which have been effectively co-ordinated up till now under the supervision of the Steel Board.
  I am not talking theoretically here. Let me cite a few examples. Sir Andrew Duncan, to whom a very fine tribute has been paid to-day, had worked out some of the main categories, and cites them as follows: Heavy forgings, 45 per cent. capacity taken over 55 per cent. left;

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  drop forgings, 16 per cent. taken over, 84 per cent. left; steel castings, 23 per cent. taken over, 77 per cent. left; steel wire, 60 per cent. taken over, 40 per cent. left; bright steel bars, 40 per cent. taken over, 60 per cent. left. At the same time great undertakings which are purely engineering and not steel-making—such as companies concerned with bridge building, constructional engineering, locomotives, floating docks, barges, and many others—are taken over. The Government will become the owners of all sorts of businesses in Commonwealth and foreign countries, with all the political difficulties involved in Governmental activities in a foreign land.
  My Lords, this muddled plan, or absence of plan, cuts across the whole of the existing organisation which has been carefully designed to co-ordinate all steel-making activities by firms, great or small, the Government exercising a wide measure of direction and control—and exercising it completely effectively—but which at the same time is designed to leave alone the other businesses which are engineering and not steel-making at all. Compare that with the Bill. So much for the "appropriate sections"; so much for the "organisation in the public interest"; so much for the "well-being of the nation"!
  Introducing this Bill, the present Minister of Supply made the following rather strange statement on November 15 last year:
  "Our policy is simply this, that where an industry is basic to the well-being of the nation and it is evident, after the fullest consideration of the merits of each particular case, that that industry cannot, while it remains in private hands, do all that the nation requires of it, but will be able to do so under public ownership, then we nationalise it."
  Applying that test to the Iron and Steel Industry, there is absolutely no case for nationalisation.
  Your Lordships will have studied the measure and I think you will agree that the Minister could hardly have composed a less appropriate overture to this Bill. To bring the overture more in harmony with the theme and the reality, ought we not slightly to re-write it and make it run thus:
  "Our policy is simply this. Where an industry is basic to the well-being of the nation and it is evident, after the fullest consideration, that the national interest is being fully served (as it is), and that the industry in
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  private hands is doing all that the nation requires of it (again, as it is), and would certainly not be able to do so under public ownership, but where the more irresponsible members of the Party insist on nationalisation, then the national interest must be subordinated to Party convenience and the industry must be nationalised."
  That would be a more true and accurate overture to this Bill. There was certainly no mandate for this at the election. The Bill fails to co-ordinate the steel industry; on the contrary, it will destroy it. The noble Viscount talked about chaos. He will be creating chaos with this Bill if it ever becomes law. It destroys the co-ordination which has worked so well, and it makes the Government enter into subsidised competition with large sections of the engineering industry; it even puts the Government into competition with foreign industries in foreign countries all over the world. Foreign relations are not too easy to-day and I should not think the Government would want to add to their difficulties in foreign policy.
  It is not surprising that the Government never submitted this ill-advised venture to the electors. What is surprising, if indeed this Government can still surprise us at all by their ineptitude—I withdraw the word "surprising" and substitute the word "shocking"—what is certainly shocking, is that the Government should seek to rush this Bill through without giving the electors any chance of expressing an opinion. What is still more shocking is that, in order to accomplish that end, they should pass the Parliament Bill to deprive a democratic electorate of its constitutional safeguards. So anxious were they to avoid the popular verdict that the Bill was guillotined through the House of Commons. The noble Viscount felt he had to offer some explanation for that. "Confession and avoidance" is, I believe, how lawyers would describe the admirable exhibition to which he treated us. What about reasonable discussion? A number of clauses were not even discussed at all. Over 300 Amendments were guillotined in Committee or on Report. This was done although there was no pressure on Parliamentary time. We are all to be given an extra holiday at Whitsuntide. We shall all appreciate it. No doubt during that time the noble Viscount will take his place with others in the dock at Blackpool. I am not at all sure that

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  they and Parliament would not have been better occupied if, instead of having this extra week at Blackpool, an extra week had been devoted to the study of this Bill. I say no more about that, except that the country may indeed be thankful that there is a Second Chamber.
  Lastly, consider the time this Bill is introduced. A little while ago, the Lord President of the Council offered to his Party some very wise advice—wise politically and economically. It was that they should go slow with nationalisation, and consolidate the position which they had won. It is common knowledge that there were divided opinions inside the Party—even the iron curtain has not concealed that!—on this measure but, as usual, the extremists won. But the economic situation to-day is much more serious than it was when that ill-fated decision to introduce this Bill was taken. It did not require much foresight to see that there would be a rapid change from a sellers' market to a buyers' market. Salesmen were reporting it from markets all over the world. It was the common experience of exhibitors at the British Industries Fair. It is already shown in the April figures for exports, though those figures reflect the past only and are but an indication of the far more serious difficulties into which we shall run in the future.
  It really is no good Sir Stafford Cripps getting a cheap cheer by saying that costs can be cut if money is not transferred to reserve. That is strangely inconsistent with the advice—indeed, the urge—which he was giving to our companies only six months or a year ago, to transfer to reserve in order that we might have a fund for re-equipment. It was curiously forgetful for so clear-minded a controversialist to fail to inform his audience—even after dinner, though that is no excuse for Sir Stafford Cripps!—that more than half of the funds which he alleged were available to reduce costs, had, as Lord Cherwell has reminded him, already been taken by himself in taxation. I do not think that that was a particularly happy intervention on the part of the Chancellor. I am afraid that even nationalised industries cannot satisfy him. It is true they make no profits—they must have a good mark on that account—but although they have failed to make profits, it is certainly not true that they have reduced prices. Do not let us forget, do not let the Chan
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  cellor forget, that it is on the free industries—on private enterprise, not on the nationalised industries—that we depend for our exports. It is these industries which have given the great results for which the Government claim so much credit.
  What are the elements of cost which are most important? First of all, I would say, there is up-to-date equipment. That is most important; and that up-to-date equipment can be supplied only by the creation of reserves and the investment of those reserves—which Sir Stafford Cripps decries—in that equipment. Take other costs. They include raw materials, coal, power and transport. These are now all outside the industries' control, and the Government have made themselves directly responsible. What is the result?—because these are the practical tests of nationalisation. Since nationalisation, coal has gone up from 39s. 4d. to 47s. 8d.—the pithead price at the end of last September. And if we are to continue to export coal in what is going to be a competitive market—and we must do so—we shall undoubted have to reduce the prices at which we sell the coal abroad. That does not mean a very happy prospect of reduced prices for the industrial and domestic consumers at home.
  Coal, of course, immediately reacts on the railways. Transport costs have increased, and with heavy deficits and wage claims, they look like going higher. Transport costs always fall most heavily on the heavy industries, and the easiest rates to raise are the heavy traffics, coal, ore, iron and steel, which must use the railways. Electricity is up. Gas looks like going up. Will any noble Lord on the opposite side of the House lay me any odds that gas will not go up in price, just as electricity has gone up?—What! no odds; not even from the noble Lord, Lord Quibell? Added to that, Government bulk buying keeps the price of metals far above world prices. Even allowing for the reduction made last week, at the urgent request of industry, metal prices are still far higher in this country than in the free market in the United States. Here are some comparisons: Copper—United Kingdom price, £130; United States free market price,£101. Lead—United Kingdom, £95; United States, £78 10s. Zinc—United Kingdom, £85; United States, £67 4s.

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  And now it is proposed to nationalise steel, which at one stage or another is a raw material of most of the industries on which our exports depend. What hope is there, if this industry is nationalised, that it will not repeat the story—the story which has followed in every other nationalised industry—of decreased efficiency, increased cost and increased price? Could there be a more irresponsible moment at which to introduce this measure; or a more suicidal proposal? This is no case of competing theories. Every statement I have made in my speech this afternoon is factual. I do not believe that one of them can be challenged. I challenge the Government opposite to deny any one of the statements which I have made or, at any rate, to give me proof that I am wrong.
  THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM): My Lords, may I interrupt the noble Viscount for a moment? Since he has challenged anyone to deny statements which he has made, or any single statement which he has made, I would deny the statement that there has been decreased efficiency in British coal mining since nationalisation.
  VISCOUNT SWINTON: The noble Lord may well be satisfied with his intervention. Machinery has been introduced into 75 per cent. of the mines. If the noble Lord is satisfied with the efficiency of the nationalised coal industry as compared with the coal industry in 1938 (that is, in the "bad old days") then he will, no doubt, say so. He has intervened and he has challenged me. He is always very ready to bob up. He is a Professor of Economics—or he was. It is true he belonged to another Party at that time. He has given his testimony to the efficiency of the coal industry. Let him go and consult the Chairman of the National Coal Board as to what he is saying to the industry itself about the need for improving its efficiency. Then let him come back to your Lordships' House and cite the coal industry as a reason for the nationalisation of steel. If there is no better reason for nationalising the steel industry than the monumental success which has attended the nationalisation of coal, then, indeed, the proposal is as bankrupt as the industry is likely to be if it is carried out.
  LORD PAKENHAM: May I take it that the noble Viscount withdraws his original and most inaccurate statement?
  VISCOUNT SWINTON: I withdraw nothing. I am on record in Hansard, and I am perfectly prepared to stand by what I have said. I hope that both our statements will receive the widest possible publicity. Surely the conclusion and the issue are plain. No case has been made for nationalisation, except in terms of political expediency; and no vestige of excuse has been advanced for denying the people of this country an opportunity of giving their verdict on this vital issue.
  4 p.m.
  LORD RENNELL: My Lords, I do not want to cover the ground already covered by the noble Viscount, Lord Swinton; I wish to confine myself to one particular subject. Before doing so, however, I think it right to declare an interest in the steel trade, in that I have been associated for fifteen years with the financing of the steel industry. If the noble Viscount, Lord Hall, who expressed the view that the industry could not be financed through the normal channels, would care to see some figures I have with me of what one firm has done in fifteen years, he is welcome to have them after this debate. In regard to the same point, I think there is a certain amount of misunderstanding in the noble Viscount's mind. He spoke of the Finance Corporation for Industry as being necessary to finance the modernisation of the steel industry, but he is no doubt aware that the Finance Corporation for Industry is an organisation which was set up and is wholly owned and financed by private enterprise in the City. The Government have no part or lot whatsoever in either financing or controlling that Corporation.
  VISCOUNT HALL: My Lords, I certainly do not want any misunderstanding in relation in this matter. I think it can be said that the Bank of England took the initiative in forming the Corporation and the Bank of England itself (I may be corrected) is closely associated with the other financial houses, banks and insurance companies which make up the Corporation.
  LORD RENNELL: The initiative was taken by the Bank of England, but the money is not found by the Bank of England.
  VISCOUNT HALL: I understand that some of the money is found by the Bank of England.
  LORD RENNELL: Some of the money is found by the Bank of England, but most of it is not. The greater part is found by the normal working machinery of the City. Leaving that out of the count, because it is not the point I want to touch on particularly, let me say that the steel industry has been subject to a great deal of very unfair and adverse criticism in the course of these debates. Indeed, the case made for the Bill, so far as there is a case, rests on the fact that the steel industry, especially in the inter-war years, allowed itself to get into a very inefficient and unmodern state. The noble Viscount, Lord Hall, said that at one moment the steel production of this country had fallen to 30 per cent. of capacity. That is perfectly true. It fell to 30 per cent. of capacity on more than one occasion. However, it is not true to suggest—I do not say that the noble Viscount suggested it, but it has been commonly suggested—that this is a peculiarity of the British steel industry. That is far from being the case.
  As everybody associated with it knows, the steel industry is subject to considerable fluctuation of production and demand. In point of fact, the low points of the steel industry in this country coincide with remarkable accuracy with the low points of the steel industry in the United States. It can be shown that, year after year, the courses of activity for the steel industry in the United States and this country have been parallel. The low points in production in the inter-war years in England were in 1921 to 1926 and 1931 to 1932. The industry was operating at about 30 per cent. of capacity in the first period and at about 40 per cent. in the other two years. In the United States the steel industry was operating in 1921 also at a little over 30 per cent. of capacity and from 1931 to 1934 at round about 30 per cent., except in 1932, when it fell to 19 per cent. Therefore, to suggest that the steel industry in England is responsible by its own inefficiency for these low periods of production is absolutely misleading, and entirely beside the point.
  The average figures for the whole of the inter-war years—that is, from 1918 to 1939—in the United States and this
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  country run singularly parallel. The average ratio of production to capacity in the United Kingdom was over 66 per cent. and the mean deviation from that average was 15 per cent. In the United States from 1918 to 1939 the average ratio of production to capacity was 61 per cent., 5 per cent. lower than in the United Kingdom, and the mean deviation was somewhat greater at 16.5 per cent. So let us get out of our heads and let the public ear be disabused of the view that the situation of the steel industry was peculiar to this country. It was not.
  Let us consider for a moment what happened in the production of iron. The figures are approximately the same as those for steel. The average United States production of iron and ferrous metals and alloys from 1918 to 1939 was only 59 per cent. of capacity. The figures for England are more difficult to obtain, but as they have a very considerable bearing on the complaints of the noble Viscount and others about the lack of modernisation in England, I think it is fair to quote one or two to show how misleading and how misled a great many people are on this subject. It is true that the end of the First World War found us with a large number of small unit producers. The test of that can be seen in the number of blast furnaces in England. At the end of the First World War the number of blast furnaces in England was round about 500—just a little under; the figures are not easy to obtain, but that is the order of magnitude. In 1939 the number of blast furnaces in England was 182, very considerably less than half.
  It is a happy coincidence, when we take the figures of pig iron production in 1920 and 1939—I pick these years because production was practically the same at 8,000,000 tons—to find that in 1920 we produced 8,000,000 tons out of a little under 500 blast furnaces working at 60 per cent. capacity, and in 1939 we produced 8,000,000 tons out of 182 furnaces, also working, it so happens, at 60 per cent. capacity. Surely that is evidence of modernisation in an industry which had suffered a major war and the consequences of that war, parallel in those days to what we may see here hereafter. That that should have been achieved is not only very creditable to the industry; it is an absolute refutation of the accusation of the lack of energy, the lack of desire

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  and the lack of capacity and ability of the industry in this country to modernise itself.
  In the second place, let me point out that in the production of iron in this country we happen to be at a serious disadvantage compared with the United States. As your Lordships know, our own native supplies of high-grade iron ores are running out. We have nevertheless in this country developed the smelting of iron from our lower-grade ores to a greater degree than any other country in the world has ever succeeded in doing. With this lower-grade ore, plus imported ores, we are still smelting, and smelting effectively; and we are producing iron as cheaply as in America, from an average of 40 per cent. iron ore, taken overall with imports, as against something over 50 per cent. in the United States. To have achieved that, and at the same time to have achieved the costs we have, redounds to the great credit of the steel industry in this country, and not to their discredit, as has been suggested in many quarters.
  So far as the financial consequences of these ups and downs of the steel trade are concerned, may I remind your Lordships that the experience of low earnings equally finds its parallel in the United States? The largest steel organisation in the world, United States Steel—which also, incidentally, is the largest single steel producing plant in the world—found it necessary for several years in the inter-war period, not only to pay no dividend on its common stock, but to reduce the dividend on its preference shares from a standard of seven to a standard of two, which was recovered in 1936 only by the payment of arrears. Let us therefore assume it is common ground that what happens to the steel industry in one country is liable to happen to the steel industry in other countries, and is the result of economic circumstances and not the result of the incompetence of any particular management.
  On the question of the quality of our plant, it is idle to pretend that it is today as modern as the plant in the United States, for the simple reason that our plant in England is a great deal older. We produced iron and steel in this country long before it was produced in America; and, owing to the rate of
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  growth of the United States and the increased demand for steel products there, as against a virtually static demand in this country, there has always been a larger proportion of modern plant in the United States than here. It is an interesting fact that steel output since the beginning of the century shows a 25 per cent. increase every five years in the United Kingdom, but a 50 per cent. increase every five years in the United States. It follows from that that the average age of plant in the United States must be younger than it is in this country. That is not to say that the plant cannot be modernised and is not being modernised by the industry itself of its own initiative.
  As I understand it, it is very largely on the basis of the inefficiency of the industry and the possibility, as the noble Viscount said, of the national interests being let down in times of crisis, that the Government have thought fit to introduce a Bill to take over and control the whole of the steel industry; that is, to turn nearly the whole of the steel industry of this country into one single Corporation. Size is not always indicative of efficiency. There are a number of schools of thought in the United States that consider that even the United States Steel Corporation—which is by no means the only Corporation in the United States producing steel—is already too large for efficient production. That may or may not be the case, and it is not for me to comment or criticise, but I state as a fact that there are a number of people who think so, and they can show good cause for their argument. It is by no means certain that a larger Corporation than the largest we have in the United Kingdom would by mere size become any more efficient.
  I presume that the answer of the Government to that argument would be: "Yes; but we do not intend to alter the composition of the individual companies which go to make up the Steel Corporation as a whole." If one accepts that, one is inevitably driven to asking, "What is the Corporation which the Government are trying to set up to be or to do?" I have read the speeches of eminent spokesmen of the Government, and I have also read the Bill—oddly enough! But I have hitherto failed absolutely to understand what the Corporation's functions are to be. Your Lordships will remember that when the Bill was first introduced in draft form in another place there was a

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  Clause 2 which appeared to have some sort of mystical meaning to the writers, or to the Bill's "godfathers," but which had virtually no meaning to anyone else. In point of fact, that Clause 2 was abandoned and substantially another Clause 2 finds itself in the Bill now before your Lordships' House. To my mind, that, alone, apart from other things, is evidence of a lack of clarity even on the part of the promoters of this Bill as to what it is they are trying to do. Even to-day I still do not understand what the Corporation's functions are to be.
  I want to ask a simple question. I am sorry the noble Viscount, Lord Hall, is not here, but no doubt the Leader of the House in due course will endeavour to find a reply to the question: What is the Corporation supposed to be? Is it a holding company, holding the shares of a number of other companies and behaving as a holding company, directing policy only at the top end; or it is an operating company? If it is an operating company, why are all the underlying companies left in existence and not merged into it? As the Bill comes to your Lordships' House, it appears to be a hybrid, which is neither one thing nor the other. Until that point is cleared up, it seems to me very difficult to know what it is we are going to talk about when we get into Committee on this Bill—if your Lordships go into Committee on the Bill. It is very difficult to discuss principles when those principles have never been stated anywhere; and, to the best of my knowledge, they have not been stated anywhere. The second matter which arises from that point is the question of planning. Are the Government going to plan, or are the Corporation going to plan? The noble Viscount spoke a great deal about the necessity of planning for steel to the economy of the country as a whole. The Government, presumably, are going to plan, and therefore are going to tell the Corporation what they want done. Are the Corporation, so far as planning is concerned, to be subservient to a Government policy, or are they to try and make steel as cheaply as possible? Those are two very different things. In other words, there is no statement of purpose in the speeches I have had the advantage of reading.
  I entirely concur with the criticism of the noble Viscount, Lord Swinton, on the experience of Government costs. The
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  main difficulties we are facing in the competitive world markets are the high prices which are imposed on raw materials by the Government to the disadvantage of our own traders. The noble Viscount, Lord Swinton, quoted the case of base metals. I had lunching with me to-day an American friend whose comment on the subject of the price of base metals in England was that it was midnight folly to try and expect British trade to compete in the export markets when they were paying 30 per cent. more for copper than the Americans. Those prices are fixed by the Ministry of Supply, presumably to cover bad purchases made. Your Lordships will note that the experience in the cotton industry has been the same. If that policy is to be followed in fixing the price of steel, we shall have to look around for very different markets and very different types of trade in all the engineering industries which depend upon steel. The experience of the past few years, therefore, is not one out of which we can get any comfort in hoping, as we must hope, that if this Bill becomes an Act the steel industry will be made to work economically and well.
  The last point with which I want to deal is on the financial aspect of the Bill. I do not want to go into the method of compensation, but I think the Second Reading is an occasion in your Lordships' House upon which it is appropriate to comment upon certain misstatements which have been made, and which I think need correcting before further mischief is done. I do not propose to take up the question of the method of compensation, Stock Exchange values or others. I shall no doubt have an opportunity of speaking on this subject hereafter when we go into Committee, if ever we do. But there are two points which I think need to be exposed and dealt with here and now. In my opinion—I say this with all the regret that I feel in having to say it—where a Government has imposed a limitation of dividends on industrial concerns, and then uses Stock Exchange values to value those securities for the purpose of nationalisation, it is committing a dishonest act.
  Now in that context I must draw your Lordships' attention to a statement which was made in another place by the Chancellor of the Exchequer on November 16 (Column 313, Hansard) when he

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  made what, to my mind, was a most surprising statement. He said:
  "There is, therefore, neither in fact nor in theory, any justification for a general attack on Stock Exchange prices as under-valuing industrial securities as a whole at this time.…Limitation of dividends should, in fact, as it did, increase the capital value of industrial securities.…"
  Carried to its logical conclusion, the value of a security which pays no dividend should be greater than the value of a security which pays a large dividend! That is, with all respect, absolute nonsense, and proof of that is found in the case of two concerns in the steel industry, particulars of which I have here but whose names I shall not quote, although I will give them to the noble Viscount afterwards if he wishes to have them. These are two concerns which did not follow the Chancellor's injunction not to pay increased dividends. Both these concerns did pay increased dividends, as a result of which the take-over price to shareholders on the vesting date, if this Bill becomes an Act, is greater by something of the order of 12s. to 14s. per £1 share in the one case, and in the other case something of the order of nearly 35s. a share. To suggest that limitation of dividends increases the value of a share is, as I have said, not only nonsense but can be demonstrated by figures and facts to be entirely wrong.
  A further point, which I am afraid I regard as even more serious than that, is the failure of the Government to implement an undertaking given about adequate compensation being paid to companies who have expended moneys which have not yet borne fruit. Your Lordships will remember—I think the noble Viscount, Lord Swinton, referred to it in his speech—that in May, 1946, Mr. Dalton, then Chancellor of the Exchequer, repeated an undertaking which had been given by the then Minister of Supply, and which read in the following words:
  "Whatever the final method and basis adopted, proper allowance will be made in assessing compensation for the results of any expenditure incurred from now onwards on approved schemes of development or rehabilitation."
  That has been translated into offering shareholders Stock Exchange values which are based on current earnings and cannot by any means take into account the earnings of capital invested which
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  have not yet fructified. That, I regret to say, I regard as a complete breach of faith.
  With those remarks, I would like to end by saying this: that if the principle of nationalising steel were accepted, and an inquiry had been made into the desirability of nationalising it which had found that it would be a good thing to do, then a better Bill could have been made than has been made. I repeat that the present Bill does not make sense. Secondly, the financial terms and the Government's engagements or policies have not been fulfilled, and the financial terms offered I regard as dishonest. For those reasons I personally am wholly and entirely opposed to this Bill in the form in which it stands, and shall remain opposed to it until such time as an inquiry is made which can convince me that there is some merit in nationalising companies which have served this country so well and which have kept themselves in the forefront of their trade as the steel companies of this country have done.
  4.28 p.m.
  THE MARQUESS OF SALISBURY: My Lords, it may seem rather unusual that two speakers should rise from the Front Opposition Bench so early in a debate, but then the circumstances of this Bill, too, are rather unusual. The action which your Lordships are going to take over this measure is fraught with such moment that it seemed to me desirable—and I hope your Lordships will agree—that I, who have the privilege for the moment of leading the official Opposition, should give some guidance at an early stage to my own supporters as to the action which they might properly take with regard to the Bill. The noble Viscount, Lord Swinton, who of course speaks on this subject of iron and steel with very much greater authority than I can, and the noble Lord, Lord Rennell, who spoke for the Liberal Party and who also has great knowledge of the conditions of the industry and the financial implications of the Bill, have already gone fully into the detailed provisions of the measure. I rise merely to examine the broad issues and, as I say, to give advice, so far as I can, to my own supporters as to the course which, in my view, they should adopt towards this Bill.
  The debate which has begun this afternoon, and which is to continue over to

  1013
  morrow, is bound, of course, to be of the first interest and importance, not only to this House but to the country at large. It is concerned with a Bill whose purpose is to press into public ownership an industry which, as the noble Viscount, Lord Hall said, is perhaps in many ways of all industries the most vital to our national existence. For after all, we in Great Britain live on our exports. If we fail to sell abroad, we shall starve. And our exports, both in respect of the actual products of the iron and steel industry which are sent abroad and the machinery which is used at home for the manufacture of other goods, depends upon a cheap and abundant supply of iron and steel. For this reason I say—though I speak entirely as a layman—that the iron and steel industry is essentially different from other great undertakings which have already been nationalised by the Government.
  Railways, road transport, electricity and gas may be regarded as public utilities. Their actual operation is confined to this country. Whether they are more cheaply and efficiently run under public ownership than private is, of course, a matter for doubt. I should have thought that at the present time all the evidence was in the opposite direction. But at any rate they are not the subject of any direct competition from foreign operators. Coal, of course, may be said to have something in common with steel. That, too, is an important element in the life-blood of our export trade. But of coal, at any rate, this can be said, and has been said: that it was not working—and we should all admit it—entirely satisfactorily under private enterprise. Unhappily, for a long period of years a feeling of bitter antagonism had grown up in many districts between masters and men, which had interfered with the full flow of competition. The reasons for this unhappy state of affairs are rather outside the scope of this debate to-day, and I will confine myself to saying merely that it might be argued, rightly or wrongly (and I am not going into the rights and wrongs of the matter), that the existing unsatisfactory state of that industry might be held to justify the experiment of public ownership.
  But such an argument as that cannot possibly be used of iron and steel. This is a model industry, an industry which
  1014
  is the admiration of the whole world. It is modern; as the noble Lord, Lord Rennell, has said, the charges which have been made against the industry in this respect are not justified. It is efficient; and to the best of my information the relations between employers and employed in that industry have been outstandingly friendly and contented. During the last difficult years of war and the postwar years, it has been, and we are proud to recognise it, the main element in our national recovery. Masters and men have combined together in patriotic harmony to raise production, while keeping prices at a competitive level with production in other countries. I am not competent to go into details about these matters, as the noble Lord, Lord Rennell, and the noble Viscount, Lord Swinton, have done; but there are certain broad basic figures which are intelligible even to a layman. Production in this industry has already far outstripped the target figure of 100 per cent. above pre-war. That is a significant fact. Wages have risen by over 100 per cent., and prices have risen by only 70 per cent.—compared with 145 per cent. in the nationalised coal industry, to which the noble Lord, Lord Pakenham, paid, just now, so glowing a tribute. The iron and steel industry has a magnificent record, which reflects the highest credit on all concerned. But this makes us wonder all the more why the Government want to alter the basis of an industry which is working so smoothly and so efficiently.
  So far as I can understand it (and I have read a good many speeches on the subject), there are three main reasons put forward by the Government, some of which have been dealt with already to-day. First, it is suggested that inadequate steps were taken by private enterprise to modernise and reorganise plant and increase production. That aspect, of course, has already been covered by Lord Rennell and Lord Swinton, and therefore I shall say, very briefly, only this. I listened to the opening speech of the noble Viscount, Lord Hall. He gave us some astronomical figures of the necessary capital expenditure required for the industry. I know that capital expenditure is a thing at which this Government are particularly good.
  VISCOUNT HALL: May I interrupt the noble Marquess, and say that I was quoting figures which were given by the

  1015
  Iron and Steel Federation itself as to what would be required? It is true that I added £50,000,000 to £60,000,000 because of the increase of prices between 1945 and the present time.
  THE MARQUESS OF SALISBURY: Of course, I accept that. But the fact remains that the noble Viscount did devote himself to the question of capital expenditure, and did not give us any figures to support the charge that private enterprise had failed in its duty of production. And, as Lord Rennell has said, there are no such figures. In fact, so far from there being a fall in production under the existing management of the industry, there has been a steady rise—and that rise is still continuing. I do not think that either the noble Viscount, Lord Hall, or Lord Pakenham, were he here, could give equally convincing figures about coal, which has already been taken over by the country. So far as my information goes, I understand that, in the coal industry, the production in 1937 of saleable deep-mined coal was 240,000,000 tons, and that in 1948 it had fallen to 196,000,000 tons. In 1937 the production of coal per man was 304 tons per annum, and in 1948 the production per man was 270 tons per annum—in spite of a great increase in the provision of mechanised equipment for the mines. I quote that only as showing that this great panacea, which is at present being offered to the steel industry, does not fill us with quite such glowing hopes as apparently it inspires in noble Lords on the other side of the House.
  Moreover, these figures which I have quoted, and the figures which Lord Swinton and Lord Rennell have quoted, are also the answer to the second charge, that production has been artificially restricted in order to maintain high profits. That is a charge—I think a very reckless one—which has been made during the course of this controversy, and I was glad that the noble Viscount, Lord Hall, did not use that argument this afternoon. It is indeed an argument which, in the light of the facts and figures which have been quoted to-day, is too fantastic to be taken seriously. It may be all right for an uninstructed audience at a public meeting, but not for your Lordships.
  Nor is there any truth in the other suggestion, that the industry, under private ownership, has been unwilling to
  1016
  co-operate with the Government in the general interests of the community. On the contrary, it has submitted voluntarily to a very extensive measure of Government control under the Steel Board; and we have it on the authority of Sir Andrew Duncan, to whom Lord Hall has paid a tribute—and so far as I know what he said has not been disputed in any way by the Government—that during the two years in which the Ministry of Supply have exercised control of the industry through the Steel Board there has not been a single complaint
  "…either against the co-operation the industry has given, or against the willingness of the industry to measure up to the full requirements of the public interest."
  That I believe, too, to be the answer to the "strategic" argument which was used by the noble Viscount, Lord Hall, this afternoon. He said: "It would be too dangerous from the strategic point of view to leave the steel industry in private hands." I have no reason to suppose that there would not be exactly the same co-operation, if the Government wished it, in this sphere as there has been in other spheres covered by the Steel Board.
  The noble Viscount, Lord Hall, quoted the Minister of Supply as saying—I did not get the words exactly, but the gist of them was—"But all this machinery of co-operation was temporary and futile." That, I think, was the effect of the Minister's remark quoted by Lord Hall. But the noble Viscount adduced no facts to support this view, and I am not surprised, for as the noble Viscount, Lord Swinton, said in his speech that there are, I believe, no economic arguments in favour of making this change, which can tend only to disturb the industry and to reduce output at the very moment when it is most vital that it should be maintained.
  What other arguments do the Government put forward to justify the introduction of this Bill? There is the argument which, to my great surprise, was advanced by the noble Viscount, Lord Hall: that the country, by its votes at the last General Election, demanded nationalisation.
  VISCOUNT HALL: I did not say so.
  THE MARQUESS OF SALISBURY: I understood the noble Viscount to say so. That argument has certainly been used by several of his colleagues in the past, and

  1017
  I understood him to say that to-day—I am sure he said it to-day. Anyhow, I gather that he would agree that he said the country is in favour of this proposal now. I have never heard a more specious argument in my life. Everybody knows—I am going back now to the last Election—that the votes cast against the Socialist Party at that Election greatly exceeded the votes cast in their favour. I want to be perfectly fair. It is, of course true that the anti-Socialist forces, of which the main elements were the Conservative Party and the Liberal Party, were divided. That is why the Socialist Party got in. But on this particular issue the Conservative Party and the Liberal Party are at one. They both oppose this Bill. It must therefore be concluded by anyone who uses his mind at all that there is a very large majority in this country against this Bill. I was astonished to hear the remark of the noble Viscount, whether he referred to the Election or not, that there is at present a majority in the country in favour of the Bill.
  VISCOUNT HALL: In the course of my speech I did refer to a memorandum which was issued by certain leaders of the Liberal Party which advocated dealing with the nationalisation of steel in exactly the same way as this Bill does. The present Leader of the Liberal Party in another place, had himself admitted that he signed this memorandum.
  THE MARQUESS OF SALISBURY: I think the Liberal Party and the Labour Party can settle this difference between themselves.
  VISCOUNT HALL: So we did have a majority.
  THE MARQUESS OF SALISBURY: There is no doubt that anyone who reads the statements of the Liberal Party at the present time will find that they are against this Bill, and that is really what concerns us.
  There remains one single argument, which has been used principally by the Minister of Health and those who share his view. That is, that the industry is too important to be left in private hands. This, with one other reason which I will mention later, is no doubt the real motive behind this measure. It was stated quite definitely by a supporter of the Government on the Third Reading debate on
  1018
  the Bill in another place, a Mr. Evans, I think his name was—I will quote what he said—that
  "Steel and insurance are the citadels of twentieth century power, and no society moving towards a planned economy, can afford to concede autonomy to two such giants within its ranks. I do not think that it is of any good to deny the political implications of this measure and for my part I make no attempt to deny them—nor, indeed, to conceal them."
  Nothing could be more definite than that. I will therefore repeat—and I think everybody really knows it—that the motive is purely political—
  THE LORD PRIVY SEAL (VISCOUNT ADDISON): The motive for what?
  THE MARQUESS OF SALISBURY: The motive for the introduction of this Bill. That motive is purely political, and all those elaborate economic arguments about the necessity for increasing production and the closer integration of the industry and so on are pure "ballyhoo" to deceive the public.
  The inspiration of this Bill is far simpler than that. The noble Viscount, Lord Hall, who made a most charming speech to us this afternoon, tried to paint a picture of this Bill as if it represented a mild, natural evolution in the production of steel which ought to be as acceptable to Conservatives as it is to Socialists. But, in our view, it is not evolutionary at all; it is definitely revolutionary. It is not, as the noble Viscount, Lord Hall, tried to indicate, a bar in the way of Communism. It is a definite step towards Communism. It is the latest example of the Marxian doctrine of control by the State of all the means of production, distribution, and exchange. That is what it is. That is the long-range policy which is being imposed by the Government upon this unhappy country. That is the issue before us in Parliament to-day. The Government have already nationalised coal, gas, electricity, road and rail transport, and now they are stretching out their hands to take iron and steel. Then, if they win the next Election—which I am glad to say at this moment looks rather improbable—they will proceed to take over the great insurance companies and thus, through the investments of those companies, secure control of most of the other industries still left in private hands. And so, gradually but inexorably, free institutions and free enterprise are going

  1019
  to be utterly obliterated, and an all-powerful State is going to be set up. I see the Leader of the House smiling.
  VISCOUNT ADDISON: Yes.
  THE MARQUESS OF SALISBURY: That then leads me to what I was in any case going to say next. Such is, no doubt, not the intention of most noble Lords opposite. I shrewdly suspect that in their heart of hearts they dislike this Bill just as much as we do. But, as I was bold enough to say on the Second Reading of the Parliament Bill, it is not they, the noble Lords opposite, who dictate the policy of their Party. They are there merely to give an air of respectability to what is in reality a very "shady" concern. I hope that all noble Lords who are sitting on those Benches will search their consciences as to the way things are going.
  Finally, I come to the last motive which I suggest has inspired this Bill to take into public ownership this great and prosperous industry. Perhaps it is not so sinister as that which I have just described, but it is even more "grubby" (if I may use so homely a word). It is a very simple motive: it is the Government's frantic need of money. They are in the position of a young man who has come into a great and wealthy estate and has been occupied during the last three years in the congenial occupation of "blueing" it. Now the Government are coming to an end of their resources, and they are looking about, right and left, for some means of what I believe is called "raising the wind." The cost of the social services is going up by leaps and bounds. The nationalised industries are running at a heavy loss. The cost to consumers is steadily rising. Charges cannot be further raised without causing serious discontent. That discontent is already evident. Taxation has reached a point when the law of diminishing returns is beginning to operate. No wonder the Government are worried! No wonder they are looking round for new sources of revenue!
  One can almost hear the Cabinet saying, "Here in the iron and steel industry we have an industry which seems to be paying very well. Let us take that over." In the old days—and by "the old days" I mean the beginning of this Parliament—it was the unsuccessful industries which were to be nationalised, which were to be given the advantages
  1020
  of public ownership. That was the doctrine which, your Lordships will remember, was enunciated in particular by the Lord President of the Council. But such ideas as that have long gone by the board. To-day it is not the weaker vessels which are to be acquired—there is no money in them; it is the prosperous concerns, such as the iron and steel industry, the insurance industry, and the sugar industry and so on. The best chance that an industry has to-day of remaining in private hands is to be thoroughly unsuccessful and to declare every year a thumping loss. But, my Lords to be more serious, what a dangerous policy it is on which the Government are now embarked! It can result only in discouraging initiative amongst all those who are engaged in industry and commerce. No longer have those people any incentive to do well; it would mean only the confiscation of their business.
  Such, my Lords, is the Bill which we are asked to consider to-day—conceived in the wrong spirit, likely to be deplorable in its results, and actuated as I believe by utterly unworthy motives. Indeed, if I were a racing man (which I am not) I should describe the breeding of this Bill as "by Greed out of Lust of Power"—a word used rather significantly by the noble Viscount, Lord Hall, in the course of his speech. And if I were to pursue that sporting metaphor just a little further, I should say that the "Lust of Power" strain was very dominant among certain Ministers of the Crown to-day, though I should hope not among those in your Lordships' House. Those Ministers to whom I have referred love power. They think they are competent to manage any great industry, whatever their lack of experience or business capacity; and they say so very loudly.
  The other day I was reading Shakespeare's play, Measure for Measure, and I came across a passage which seemed to me, and still seems to me, to be applicable to the general attitude to life of these particular Ministers to whom I refer. If the language is a little strong, I would ask your Lordships to remember that it is Shakespeare's language and not mine. It is a very well-known quotation, and it runs as follows:
  "…man, proud man,
  Drest in a little brief authority,
  Most ignorant of what he's most assured…
  Plays such fantastic tricks before high heaven
  As makes the angels weep…"

  1021
  I have no doubt that in that quotation noble Lords opposite will be able to recognise some of their colleagues. At any rate, my Lords, in our view, it is the mentality described in that quotation which produced the Bill with which we are concerned to-day. The question is—and here I come to the gist of my speech—what are we in this House to do about it?
  No doubt there are those in this House who might fairly advocate the propriety of throwing it out now, on the Second Reading, for the purpose of providing a breathing space to enable the British public to give it further consideration before it is passed into law. But, my Lords, I say frankly that I feel very reluctant to advise this particular course if we can avoid it; for though we have no obligation to do so—and indeed in certain circumstances our duty might very well lead us in the opposite direction—we have, in this House since the last Election made it a general practice, when a measure has been on the programme of the Labour Party at the last General Election, to give it a Second Reading and to do our best to amend it and improve it: and, quite frankly, I dislike the idea of altering this general practice for a single Bill, however important, especially if we can achieve what we want—an opportunity for further consideration by the people—by another method. Fortunately, I believe that in this case that is possible.
  What I am going to recommend to your Lordships is this. Let us give this Bill a Second Reading. Let us amend and improve it as best we can on the Committee stage—and, heavens knows, it will need plenty of amendment, for, as Lord Swinton has pointed out, some of the clauses were not discussed at all in another place. And, in particular, let us put in an Amendment that the Bill shall not come into operation until October 1, 1950—that is, after the latest date of the next General Election. That will give the electorate a chance of having another look at it and coming to considered conclusions. If the electorate return the present Government to power, nothing can prevent this Bill coming into law, however pernicious we ourselves may think it. The people will have decided
  1022
  on it. If, on the other hand, the Government are not returned to power at the Election, then it is evident that the people will have rejected nationalisation of iron and steel.
  Nor is there any unreasonable delay involved in the course which I recommend. I would remind the Government that they have left this Bill until the very last months of a dying Parliament, when their mandate is already clearly fading. The earliest possible vesting day under the Government's own Bill is fixed as late as May 1, 1950. I may say, in passing, that I have always thought it rather odd that a Government which prides itself on being democratic should choose the date for the final transfer of shares at just about one month before they must appeal to the people. One would have expected them to postpone the bringing into operation of this Bill until some time after the Election, to ensure that the people were consulted on a matter of this importance. Such, surely, would have been the correct procedure for any democratic Administration. At any rate, my Lords, it is to bring about that result that I now suggest this Amendment. I hope on reconsideration that the Government will consider the propriety of the course which I recommend, and will show themselves willing to accept the Amendment.
  My Lords, in making this proposal I do not for a minute wish to conceal the fact that in our view this Bill, to get which the Government have not scrupled to upset the whole balance of the Constitution, is an unnecessary Bill, a bad Bill, and indeed a thoroughly dangerous Bill. If we had to consult merely our own judgment I have little doubt that we should throw it out on Second Reading. But this is a democratic country—and none of us would wish it different. And in a democratic country the people must decide, or at any rate should decide. It is to give them an opportunity of deciding, on a matter of vital importance to each one of them, that the proposed Amendment is directed. I believe that it is a wise Amendment, and that it is a thoroughly democratic Amendment. As such, as I have said, I hope most sincerely that the Government will feel able to accept it. If they do not, I tell them, here and now, that on that Amendment we shall stand.
  4.50 p.m.
  LORD PETHICK-LAWRENCE: My Lords, I hope that no noble Lord will feel it necessary to rise in his place and move me out of Order if I do not follow the noble Marquess in his interesting display of dialectical tactics, or indeed discuss at all the Bill which we have before us, but tell your Lordships of a dream I had last night. I dreamed I was reading a story of an unknown island in the Antipodes where, as your Lordships know full well, men walk about upside down and live in a sort of Through the Looking Glass world, which, from our point of view in this country moves backwards instead of forwards. The island to which I am referring, I learned, had the name of "Niatirb." If your Lordships will spell that backwards you will understand its significance. In this island of Niatirb there had been manufactured, for many years, a product of essential national importance, upon which depended the whole economy of the island in peace and, more especially, in war. And because it was recognised that this was so, the industry was owned and controlled by the people as a whole, and it rested upon the Government to lay down the main plan to which it should conform. Profit was not the ultimate motive of the production, but such profit as was earned belonged to the people as a whole. Throughout the island, there were different plants manufacturing specialised forms of the product but all were co-ordinated and fitted into the nationalised plan.
  I regret to say that in my dream I found that a terrible event had taken place in that island. In place of the co-ordinated scheme for the production of this essential product, there came a body of people eager to seize power in the island, and they set about and carried through a revolutionary change. They sold out the property of the nation to a number of individual shareholders; they subjected the industry which had been run hitherto for the national good to the decision of hundreds of thousands of people who held individual shares. But, to meet criticism, they established a negative control by the Government of the island, which enabled the Government to forbid certain things being done but which did not provide the stimulating positive control which the Government had had
  1024
  in the days before. And for a time they were satisfied with that position.
  But, after a little while, they were ousted by a further body of people who claimed that this negative control produced the worst of both worlds and that it was much better to have no control by the Government at all, so that the individual plants throughout the country could be run entirely unco-ordinated by any main Government plan, go each their own individual way and make as much profit as they could for the individual shareholders of these respective plants. So they got rid of the control of the Government, negative though it was, but they still retained a protection in the form of import duties which enabled the industry as a whole to remain a monopoly and to squeeze out or to prevent the incoming of any fresh blood or newcomers into the industry. In that way, as the country urgently needed a certain amount of this product, they were able, by keeping production down and limiting output, to keep up the price so as to ensure that the most inefficient firms in the country paid their way, while the efficient firms could make a substantial profit.
  Time went by, and then a number of people said: "Yes, but this is now a monopoly. We feel that the great benefit of private enterprise is competition, so monopoly must go." And they established competition throughout the whole industry and there were then a number of quite independent isolated plants, up and down the island, from one end to the other, each entirely on its own, each seeking its own advantage, unco-ordinated by any plan either by the Government or by the industry itself, each pursuing its own unregulated way. Then came a number of people who said: "These plants are much too big. We want smaller units." So the units got smaller and smaller, each producing this product in its own way.
  I was pondering upon this wondering what would happen next. Then I saw two things. In the first place, I saw that the arguments which must have been put up against the first main step of taking away from the people of the nation as a whole the right to govern their own essential industry must have been far greater, far more powerful, than the arguments which have been put forward to-day from the other side as against making a change

  1025
  in the opposite direction. I imagine that the counterpart of the noble Marquess who has just spoken must have had far more potent arguments to use than have ever been used in this debate or were used in another place in the debates on the Bill when it went through there. That was the first thing I realised. The second was that once you depart from the main principle that an essential industry of a country must be planned for as a whole, not by the industry itself but by the Government representing the people of the nation, you have taken a fatal step and that the other steps backwards in the production of essential articles are much easier to take and are faced with much weaker arguments.
  I never learned what precisely happened to the industry of the island because at that time, I woke up. I hope that your Lordships will forgive me for telling you this story instead of devoting myself to the precise details of the Bill before your Lordships' House.
  5.8 p.m.
  THE EARL OF DUDLEY: My Lords, I must first of all divulge my interest in the iron and steel industry, with which my family have been closely connected for a good many centuries. The noble Viscount, Lord Hall, when he introduced this Bill, referred to the early days of smelting iron using coal instead of charcoal, and he attributed that invention to a Welshman, an ancestor of the noble Viscount, Lord Wimborne. I think that if he is interested enough to refer to the British Iron and Steel Institute, which, as he knows, is the scientific body of the industry, he will find that the official handbook on the subject is a book called Metallum Martis written by an ancestor of mine, a certain "Dud" Dudley, who invented, while still an undergraduate at Oxford, what is virtually the blast-furnace process. In this document he applied to James I for a patent for his process, giving as his reason the depredation of the forests of England for the purpose of making charcoal, which constituted a threat to the shipbuilding industry. I do not wish to adopt a dog-in-the-manger attitude, but should there be any royalties still appertaining to this invention, I want to stake my claim.
  VISCOUNT HALL: If the noble Lord would allow me, I certainly do not wish to take from his ancestors any credit to
  1026
  which they are entitled. I dealt solely with the difficulties in South Wales, the district which I know best. I did not cover the whole country because I did not wish to assume a knowledge which I do not possess.
  THE EARL OF DUDLEY: And I do not wish to take away from South Wales anything which is their due. I have been a member of the Executive Committee of the British Iron and Steel Federation for over twenty years, and chairman of the Corporation since its foundation. I suppose that in the eyes of noble Lords opposite, or at any rate in the eyes of their friends, I am one of the "villains of the piece." I am not in the least ashamed of my record. On the contrary, I am glad to think that in some way, like my family before me, I have contributed to the organisation and development of this great industry, of which the country has every reason to be proud and which provides a lucrative livelihood to millions of citizens in itself and in its ancillary and consuming trades (the average pay packet for all classes of steel workers is now £7 12s.) and which has been brought to its present high level by private enterprise; by the ironmasters, scientists and technicians who have shaped it in the years gone by and up to the present time. That fact is at least recognised by the promoters and supporters of the Bill, and was stressed by the noble Viscount in his opening speech. They propose to do all they can to retain the good will of the industry, to keep the names of the various groups and companies, famous and respected as they are throughout the world, and to disturb as little as possible the present managers, who they know full well are vital to its future welfare. I think that in that respect the Government are nursing a vain hope, and that the noble Viscount, Lord Hall, was guilty of a certain amount of wishful thinking in his speech.
  This question of control and management is so important that, in my opinion, it cannot be over-stressed, though it has already been adequately dealt with by the noble Viscount, Lord Swinton. No business, whether publicly or privately owned, has any hope of success unless it is properly controlled and managed by first-class men, and unless there is a carefully studied chart of decentralisa

  1027
  tion and flexibility from the top. I have known ironmasters all my life. I have worked with them and in competition with them. They have to be of a sturdy, hard-headed sort. They have to know their business, and that takes a life-time. They have to be shrewd, enterprising, bold, diligent taskmasters, ready to take immediate decisions and accept great responsibilities on their own authority, and on theirs alone. They cannot be, nor will they be, replaced or overborne by civil servants, or by people who know nothing about steel making. If under nationalisation they were to be given by the Government the same authority, the same incentives and the same personal responsibilities as they are given by the shareholders now through their boards of directors, the arguments against this Bill on this particular score might not be so strong. But to achieve that we should have to redraft the Bill, because at present it demonstrates that this will not happen.
  The transfer to the Corporation of the ownership of all the Third Schedule companies will produce over-centralisation, uniformity and rigidity, and the enterprise and initiative of the managers will be stifled. They will have no security of tenure, unless they are complete timeservers. Much of the craftsmanship and technical development, for which British industry is justly renowned, has originated in men of strong individuality and personality who are by no means "Yes-men." They are not going to work under the orders of a bureaucratic Corporation; and they will be lost to the industry. So without that firm skilled grip and driving force at the top levels, the efficiency of the industry will deteriorate very rapidly. As regards the lower levels of the management, staff and executives, all those thousands of men who are working their way up to higher and the highest posts, the same arguments apply. They will be frustrated, handicapped, shorn of their ambitions and initiative, subjected to governmental yardsticks and red tape, surrounded by fears and jealousies, and will find themselves unable to give of their best. That has become abundantly clear in those industries which have already been nationalised.
  As regards the workers in the industry, their main concern is their weekly pay
  1028
  packet, their continuity of employment, their conditions and hours, their amenities of work and living, and the opportunities they have for advancement and promotion. Many of them no doubt did think that they might be better off under public, rather than private control; that the Government might prove to be a more lenient and progressive taskmaster than the present managers. But I am quite sure of this: that the majority of those who had that thought in their minds are being sadly disillusioned by the example of other nationalised industries, where the workers find that they fare no better, and in some cases a good deal worse, under the rigid mentality of civil servants. In any case the regulations and agreements over all those matters which I have enumerated in the steel industry, which are so important to the workers as well as to the managers, have been carried out in the past so smoothly by central bodies representing and covering all sections of the industry that the spirit of discontent is almost negligible—the feeling is exemplary so far as good relations in any industry are concerned. Therefore it is right to assume that the number of workers who wish to see this violent change carried out is very much smaller than the supporters of this Bill try to indicate.
  I have never heard it claimed by anyone that any of the great steel-consuming industries is in favour of this Bill. Even taking into account the recent advance in steel prices of some 9 per cent., consequent on the abolition of subsidies on imported raw materials, the prices of practically all kinds of British steel remain lower than those of our Continental and American rivals, as your Lordships have already heard to-day from other speakers. During and since the war all those prices were settled by statutory order, after due examination by an outside control of the industry's costs and profits. They are fixed in relation to the cost of efficient plant. Whereas, according to the Board of Trade figures, the prices of industrial materials and manufactures in April of this year were 142 per cent. above 1938 level, and that of coal was 145 per cent. above, the prices of steel were only 86 per cent. higher than pre-war. Steel consumers know perfectly well that, should this Bill become effective, there will be a very different story of steel prices, and a very different

  1029
  standard as regards quality, service, and delivery. How can the Government then take an impartial view of these matters, as they do now? How can they take an impartial view, when they are the owners and are responsible to Parliament for the profits they make? The profit motive which is present in every man is too strong for the Government to be able to resist having a good balance sheet to read in another place every year when the annual Vote is taken.
  Nor, so far as I know, is there any demand for this Bill from any of those countries which import our steel products, or from which we ourselves buy our essential raw materials and semi-finished products. On the contrary, they are generally strongly antagonistic to it. So far as the United States are concerned, this Bill, if it becomes an effective Act, may do untold harm, not only to the flow of materials upon which the industry so vitally depends, and which has been so carefully nurtured, but to the whole fabric of restoration and rehabilitation in this country which they have placed at our disposal and which is so necessary for our future well-being. The Government ignore all these facts, and claim that they have a definite mandate for the nationalisation of the industry. This question has already been referred to this afternoon, but I think it is one to which your Lordships cannot remain indifferent.
  One of our principal duties is to ensure that legislation proposed by the Government shall not override the will of the nation. I submit that any mandate to which the Labour Party may lay claim at the last Election was secured by false pretences, and that the proposals contained in this Bill go far beyond it. The Labour Party stated their case in one sentence in Let Us Face The Future. They said:
  "Private monopoly has maintained high prices and kept inefficient high cost plants in existence."
  That sentence contains three errors of fact. It is not true that the privately-owned steel industry is or ever has been a monopoly; it is not true that it has maintained high prices; and it is not true that it has of its own volition kept in being high-cost plants. Up to fifteen years ago there cannot have been any question at all of a monopolistic state of affairs or of exaggerated prices. No
  1030
  industry in the world was subject to fiercer competition, and no consumers in the world, unfortunately for our industry, were able to buy more cheaply in relation to costs of production than the consumers of British iron and steel. For fifteen years on end during that period the return on capital employed in the industry did not average more than 2 per cent. But even at that time, in spite of what the noble Viscount, Lord Hall, has said, we were able to produce steel, on the whole, more cheaply than they were able to produce it in America.
  Then from 1935 until the outbreak of war no price increases were allowed, except with the approval of a public body—namely, the Import Duties Advisory Committee. So far as the charge of maintaining high-cost plants is concerned, that was fully and adequately dealt with this afternoon by the noble Viscount, Lord Swinton, and I will not follow him in what he said. If it had not been for the war, we should have had then, as we have now (some of it is only in skeleton form, it is true, but it will be completed by next year or the year after), plants all over the country comparable and superior to any in the world. Had it not been for the production in these high-cost plants—which, as your Lordships have been told, were kept in being on the instructions of the Government, and that pre-vision was Fully justified—we should have had to rely to a far greater extent during the war on imported steel from the United States, with all the hazards and dangers which that would have entailed. Indeed the rather unflattering and ungracious remarks from Washington to which the noble Viscount Lord Hall referred—I think rather unnecessarily—show that the United States ought to be very grateful for the production of those surplus plants. The Labour Party are not content only to dispossess us but they always try to blacken our past records in every way they can.
  The British steel industry is not opposing this Bill on political grounds, or because it happens to be Socialistic legislation. We are entirely in favour of any change in administration, control or ownership which we honestly feel would be in the best interests of the country and of consumers. But we fail to see any advantages in the Bill over the present system of private ownership under public

  1031
  control; nor have any spokesmen of the Government yet enumerated them. The partnership between the industry and Government, which has been going on for the past fifteen years, has been a highly successful one. It is ridiculous for the noble Viscount, Lord Hall, to describe it as unregulated and uncontrolled. Its soundness has been proved by the present production of the industry, its comparatively low-price structure, the smoothness of its relationship with labour and the swiftness with which its development plan has been put into operation. Why then disturb this happy relationship? What adequately replaces it in the Bill? If it should be advantageous to give the Iron and Steel Board further powers, then by all means do so. That is perfectly possible, and nobody would have any objections.
  But the Bill we are discussing to-day is not a Bill merely to nationalise iron and steel. It is a Bill to establish a Corporation which will have a virtual monopoly of iron and steel production and distribution; which may determine all its prices without proper protection to the consumer; which may compete with privately-owned companies in many ancillary trades; and which is to have statutory powers to expand itself into numberless activities having no connection whatever with iron and steel. And it is a Bill which enables the Corporation, on account of the wide terms of the Articles of Association of those companies which are being transferred to it under the Third Schedule, to take over virtually the whole of the industry and the services of the country. Do the Socialists really say they have such a wide mandate as that? Do they honestly think that all this is in the best interests of the country, the consumers and the workers? I submit that they have produced an instrument which constitutes the greatest threat to the liberty of the subject seen in this country since the days of the Protectorate, and which is a most dangerous one in the hands of any Government. It is very natural that we in the industry should oppose the Bill. The noble Viscount, Lord Hall, referred to that opposition, and complained of the fact that the industry had not suggested any amendment to the Government. But he answered his own question later on in his speech by saying that the flow of suggestions from
  1032
  the industry to improve this Bill has been going on continually—through the proper channels, if I may say so, which is the Front Opposition Bench, both in another place and in your Lordships' House. If the noble Viscount reads his paper to-day he will see that some very potent suggestions have been made by the President of the Federation, Sir Ernest Hunter.
  I will take up your Lordships' time for only a few more moments. What can the Government do, once the industry is in their hands, which cannot be done under the present system to secure employment for the workers? That is a vital question, and I think your Lordships should insist on an answer to it during the course of this debate. We are coming to the end of the sellers' market, and in a year or two, when our steel production under the development scheme will be as high as 18,000,000 tons a year, there may be great difficulty in disposing of these products. The Corporation, whatever noble Lords opposite may say, will have no alternative but either to close down some of their works or accumulate huge stocks which nobody wants at a vast cost to the taxpayer.
  The remedy for unemployment in the steel industry does not lie in change of ownership but in a policy which can promote general business stability. To this end, the Bill makes no contribution whatever, and, if anything, may indeed hinder it. Business stability can be promoted if large investment projects are kept in reserve by both public and private authorities for the first sign of a slump. To launch out on considerable capital expenditure when sales are falling takes courage, flexibility, and rapid decisions; and it is a step which can be taken far more easily by privately-owned rather than by publicly-owned industry. Our steel development plan, for example, is greatly threatened at present by a shortage of coking coal. This is due to the hesitant and timorous attitude of the National Coal Board over the question of enlarging its coke oven capacity.
  It would be safe to assume that the new Steel Corporation will be considerably less fitted in every way to discharge the difficult task of exporting our steel products all over the world in falling markets, than the industry as at present organised, with its vast experience of these difficult matters. The existence of

  1033
  a State monopoly—already stressed this afternoon—on the export market may well be very harmful, and that market may tend to look elsewhere for supplies at a moment when we are in the greatest need of foreign currencies. We have seen the difficulties of State monopoly in regard to purchases of meat from the Argentine. It seems a very great pity that this fine industry of ours, like many others, should have fallen into the political cockpit, especially at a time when it is playing such an important rôle in our national economic recovery. It is clear now that its fate hangs upon the decision of the electorate at the forthcoming General Election. I believe that the Socialist Party will have a rude shock when that decision is made, and that their downfall will be largely due to the blunder of trying to bludgeon this Bill through Parliament. Instead of setting forth to pluck the ripe peach—as Dr. Dalton described the spoliation of the steel industry—I think their theme song is much more likely to be the old nursery rhyme:
  "Here we come gathering nuts in May."
  And I believe that it will be for them a very
  "cold and frosty morning."
  In view of the brutal tactics adopted in another place, resulting in the ill-consideration of this Bill, your Lordships will desire to give it the closest study and amendment during its later stages through this House. For the sake of our national welfare I hope that everything will be done to defer the vesting of the industry in the Corporation until the voice of the people is heard again.
  5.35 p.m.
  LORD LLOYD: My Lords, the introduction of this Bill marks, as it were, the opening of the fourth nationalisation season since 1945. These seasons, as your Lordships are only too painfully aware, start every May and close, conveniently, just before the holidays, in order to give the Government time to hatch out the next batch of trouble for the following October. If the Socialist Party is returned at the next Election and they carry out their threat of nationalising industrial insurance, sugar, cement, water and so on, there seems to be every prospect of this becoming a sort of national—or, should I say, nationalised—institution, until either the supply of efficient
  1034
  industries to be nationalised runs out or the country goes bankrupt, whichever comes first.
  A new tradition is growing up, and it seems to me that there is much that is traditional, both in this Bill—in which we have the usual system of expropriating the shareholders, the usual penal legislation against directors, the usual legislation against contracts, and so forth—and also in most of the speeches of noble Lords opposite in support of the measure. As we have come to know, any industry which the Government wish to acquire is always either an undesirable monopoly or grossly inefficient, or sometimes both. As a respecter of tradition, I was very pleased to see the noble Viscount, in introducing this Bill, sticking so valiantly to those time honoured excuses, though I must confess that I felt a certain anxiety for him—and I think he must have felt an unusual anxiety—over the difficulty of marrying his brief with the facts, because, after all, if the industry is inefficient, is it not astonishing that all production records have regularly been broken? On the other hand, if it is an undesirable monopoly, despite twenty-five years of close Government supervision, is it not rather astonishing to find that the best cure for that is to create a larger monopoly? In the circumstances, I think the noble Viscount, Lord Hall, was wise not to attempt to explain either of those things.
  Equally in keeping with tradition seemed to me his decision not to risk wearying your Lordships by any explanation of how the Bill was going to achieve higher steel production or cheaper prices, or even how the Government were going to produce more coking coal to permit that higher steel production. Nevertheless, although we appreciate his consideration in this matter, the explanation did seem to me to be rather an important one, because, as has already been pointed out by a number of noble Lords, the Bill disrupts the whole of the existing relationship of the industry with the Government and the whole of the internal structure of the industry. On the one hand, it is proposed to abandon the whole system of partnership between Government and industry, the fruit of twenty-five years' experience which has never failed the country, either in war or peace. Here again, I think the noble Viscount was going a little far when

  1035
  he said that the Government could not trust private enterprise with an industry of such vital national security. We have had no experience of nationalisation of this industry, but we have had experience of this industry in the war years between 1939 and 1945, and it served the country admirably. On the other hand, it is proposed to mutilate and distort the whole framework of this great and vital industry.
  As has been pointed out, there is no logic in this Bill. It would have been logical, if possibly unwise, for the Government to nationalise all firms producing iron and steel as opposed to finished iron and steel products—for example, tennis racquets, curtain rails, parts of electric irons, parts of golf clubs, kegs, drums and umbrella frames, to mention a few of the more fantastic. Apart from logic, this would have the merit of complying with such a mandate as the Government claim to possess. In point of fact, this is not a Bill to nationalise any coherent section of the industry; it is a Bill to nationalise a certain number of firms.
  In the circumstances, therefore, I felt that such an explanation from the noble Viscount was something which we had a right to demand, because it is the only possible justification for the Bill. Yet, despite the economic crisis, despite the failure of other nationalised industries, despite the lack of proper mandate, despite the disruption and dislocation which the Bill must occasion, we had no explanation whatsoever from the noble Viscount. So far as I can make out, the magic word "nationalisation" was good enough for him. It seemed to me that when he said that nationalisation would lessen the severity of trade depressions, his ideas of what nationalisation might achieve were really very extravagant. Nationalisation is apparently the magic cure-all. It is good enough for him, but I wonder whether it will be good enough for your Lordships. Certainly it is not good enough for me, for it seems to me a most reckless gamble and one which is likely to imperil the whole of our economic recovery.
  Now a great deal has already been said about the iron and steel industry itself, but very little has yet been said about the effect that this Bill is going to have on various other people who are not
  1036
  actually nationalised—and, of course, the Bill extends over a very wide area of British industry. As your Lordships are aware, it extends to the small producers of the Second Schedule products, none of whom are going to be allowed to operate except by the Minister's consent and on terms imposed by him. Those small producers who are already in operation will, under Clause 30, have to limit their production, while new entrants under Clause 29 may not only have to limit their production but may be restricted as to whom they may sell their products. In any case, licences may be for only a limited period—quite regardless of the capital involved. In other words, these people are to be allowed to exist so long as there is no danger of their competing seriously with the new monopoly—a curious provision in view of the Government's apparent confidence in their superior efficiency.
  I turn now to consumers, whose interests in this Bill, as in other nationalisation Bills, are the last to be considered. In this case their interest is mine, since I am in fact a director of a company of structural engineers who are large consumers of steel. As your Lordships are aware, many consumers are also producers of finished steel products, and if this Bill becomes law they will find themselves in direct competition with publicly-owned companies. Now, competition with a large monopoly is difficult enough anyway. It is all the more vital, therefore, that this competition should be fair; and yet, when we look at the Bill, we find there is a whole maze of difficulties which will stand in the way of the private competitor. To begin with, under Clause 7 he may never even start at all, because his works may be compulsorily acquired by the Corporation, without any ado. If he survives that danger he is still dependent on the Corporation for all the raw materials, of which the Corporation will have an effective monopoly. If the Corporation are unwilling to supply either the quantity or the quality required, he will be out of business in a few weeks. If he escapes acquisition under Clause 7 and obtains adequate supplies of steel, he will still have to pay the price which the Corporation, under Clause 3, can fix without any reference to anybody. Since the Corporation will have a monopoly of intermediate products it is not difficult to see that by fixing the prices for those

  1037
  products as high as possible they will undercut their private competitors in the market for finished products and still comply with the provision of having to make both ends meet, taking one year with another. In addition publicly-owned companies will be financed at gilt-edged rates and will have tax advantages, in that no profits tax will be payable on dividends paid to the Corporation.
  The only safeguard will be the Consumers' Council. I was astonished to hear from the noble Viscount that the consumers' representatives had withdrawn their objection to this Council. I shall be interested to hear when the noble Viscount the Leader of the House replies, whether that is indeed a fact. Obviously, the consumers are completely at the mercy of this new monopoly, and the prospects of fair competition are remote. In the circumstances the Minister's remarks on this point are really astonishing. He said:
  "I can see no harm in the possession by the Corporation of the shares of closely-linked engineering or other firms who are now the subsidiaries of iron and steel companies.…Critics suggest that is it undesirable for a publicly-owned company to be in competition with a privately-owned company. On the contrary, this is likely to be highly beneficial, in that both the publicly- and the privately-owned companies will be subjected to the competition of each other. What is wrong with that? Do people fear that private industry cannot withstand the superior efficiency of public industry?"
  Those were the words of the Minister. Of course, private industry does not fear such competition provided it is fair. The only thing that is wrong, it seems to me, is the Government's idea of fair competition, which is that competition is fair only if all the cards are previously stacked by the Government in their own hands. We shall no doubt be told that none of these things will happen and that we must trust the assurances of the Government. But, quite apart from the fact that no Government can bind their successors, it seems to me that the industry's confidence in the Government must be shattered by the breach of the undertaking given in 1946 to ensure proper allowance being made in compensation for expenditure on approved development schemes. In any case, why should the industry trust the Government, seeing that the Government shows no disposition to trust the industry? Look at the pro
  1038
  visions about directors, the disclaimer of agreements, and so forth. There is no indication of good faith on the Government's side. Why should the industry show this faith when it is not extended to them? If the Minister really has this glowing faith in the beneficial results of fair competition, let him demonstrate it, not by vague assurances but by accepting suitable Amendments to this Bill.
  As I have said, this is the fourth nationalisation season. During the last four years we have witnessed a series of these Bills—and we have seen the results. Despite the failure of nationalisation in every other country where it has been tried, I was still not entirely unsympathetic towards the Government's original experiment of nationalising coal, provided it was clearly regarded as nothing more than an experiment. Having witnessed the depressing results of that experiment, one would have hoped that it would have become generally recognised that whatever the shortcoming of any particular industry, no remedy could be expected from nationalisation. Even if we make allowance for the fact that the Government's powers of perception are definitely sub-normal, we might have hoped that, after nationalising coal, civil aviation, transport, electricity and gas, it would at last have been borne in upon them that nationalisation raises prices, lowers output per man-hour, and eliminates profit—a fact of which an increasing number of consumers are becoming only too painfully aware.
  This Bill is the most illogical, unnecessary and reckless of all these Bills. It shows that the Government have still to learn their lesson. If one is charitable one questions their sanity; if one is less charitable, their motives. My belief, however, is that even if the Government have not learnt, the people have. I do not believe that the people understood the implications of this measure at the General Election. I do not believe that the people want this Bill to-day. If they do want it, why are the Government so anxious to rush it through before they have a chance to express their opinion? I hope that this manœuvre of the Government's will be circumvented; and I am sure that if it is, the great sanity of the British people will prevail and that this futile measure will never reach the Statute Book.
  5.50 p.m.
  LORD RITCHIE OF DUNDEE: My Lords, I ask your kind indulgence for a few moments, for two reasons. One of these may perhaps not be unknown to some of your Lordships. The other is that I felt it might not be inopportune if I were to say a few words on the subject of compensation prices. The noble Viscount, Lord Hall, did not go into the question of compensation prices, and I am bound to say that I am hardly surprised that he did not. I hope that I shall not be guilty of repetition. The subject of these compensation prices can be dealt with by other noble Lords far more ably than by me, but I felt that I should not be out of place if I were to speak from personal experience and try to throw what weight I can in the matter, having particular regard to the fact that I am a member of the Council of the London Stock Exchange.
  The prices quoted in the Stock Exchange Daily Official List are based on dealings which take place from day to day in an open and free market between a willing buyer and a willing seller. It may be that A has bought fifty shares from B, or that C has sold 500 shares to D. It is the business done which creates the official quotation, and not the quotation which governs the prices at which dealings will take place. In the present case, as we all know, there is no question of a willing buyer and a willing seller. There may be a willing buyer, of course: the buyer has a gun in his hand. But the seller is certainly very far from willing. In addition to this, I think it will be appreciated that the ordinary daily deals which take place on the market are one thing. The whole basis of prices may become very different when one is dealing in a large number of shares. In fact, without wishing to detain your Lordships with technical details, I may say that we have a particular symbol which is placed against a price where an unusual number of shares are involved, and we call that "marking the bargain at a special price."
  When it comes to the case of buying and selling a whole business, however, the Stock Exchange Official List is no criterion whatsoever for a deal of such magnitude. A strong protest was lodged in the proper quarter by the Stock Exchange Council at the time of the nationalisation of the railways. No
  1040
  further action was taken with regard to electricity stocks because it was felt then that no fresh argument could be advanced; but, in the case of the iron and steel companies, a new and much more sinister element has crept in—I refer, of course, to dividend limitation. At the time when these proposals were first made public, we forwarded a further memorandum to the Minister. This memorandum appeared in the Press, and the contents of it may be known to a number of your Lordships. If I may, however, I should like to read just one sentence, which is as follows:
  "The Council feel it to be their duty, on behalf of the very large number of stock and share holders involved, to make the strongest possible protest against the use, as a basis for compensation, of Stock Exchange prices which have been artificially held down as a result of voluntary co-operation with the policy of His Majesty's Government which is now to take powers for compulsory purchase on its own terms."
  Is it to be wondered at that from week to week we see certain companies in the other threatened industries tending to increase their dividends? Is it to be wondered at that the directors are doing what they can to try to obtain a reasonably fair deal for their stockholders before they are silenced for ever?
  Perhaps the worst feature of this shabby deal is that the limit upon dividends, and therefore the artificial prices which have been established, was not brought about by legislation. No, my Lords, what makes the Bill so shocking to all that we used to stand for in this country and in the City of London, is that the limitation of which advantage is being taken was arrived at by a voluntary and honourable agreement. In my business, I am glad to say, we still have power, if a firm with whom we are dealing does a thing like that, never to deal with that firm again.
  5.56 p.m.
  LORD GIFFORD: My Lords, I feel honoured to follow the noble Lord, Lord Ritchie of Dundee, who has given us such a thoughtful and interesting speech. I am sure that we all hope that we shall have his great knowledge of financial affairs placed at our disposal on many occasions in the future. But, of course, he and all the Stock Exchange may be entirely wrong, because I understand from some of the noble Lords opposite that the less the dividend the higher the

  1041
  price of the share. Be that as it may, to come to the main theme of my speech, I want to say a few words about the effect of this Bill upon the consumer. I do not think it is a point of view that has been sufficiently emphasised. Of course, as other noble Lords have said, a very large proportion of the industries of this country are consumers of steel. In fact, one noble Lord stated that no less than 50 per cent. of our exports depended upon steel products.
  I think that one should look at the extremely wide range of steel products. For instance, take steel wire, which ranges from hair pins to the steel used in reinforced concrete, for wire fencing and in the hawsers of great ships which we used when I was in the Navy. Steel tubes range from the largest pipes used for hydro-electric schemes down to the hypodermic needle used by the doctor. I do not think I have ever heard of any consumer who felt that he would be better off under nationalisation. Did the Government approach any of the consumers' organisations to ascertain their views before they introduced this Bill? No, of course they did not! One can well imagine why this was not done. The result would scarcely have been calculated to strengthen the case for nationalisation!
  Mention has been made of Clause 6, which we have been told by the noble Viscount, Lord Hall, will completely look after the consumers' interests. I very much doubt it, and I know that the consumers are not at all satisfied. Many people are apt to forget that steel is an infinitely variable product. A consumer who uses over 1,000 tons of steel a week wrote to me recently as follows:
  "We naturally consume many different classes of steel, even if they are all bought in the same outward form, and buy from many different steel-makers. Years of experience have shown us that steel-maker A produces the best steel for one purpose, steel-maker B for another, steel-maker C for a third, while steel-maker D is perhaps mainly engaged in certain of the many ramifications of the steel trade which really preclude him from producing anything which is generally suitable for us."
  There is, of course, the closest co-operation between the supplier and the consumer, not only between commercial representatives, but between their metallurgists and their production men. If the consumer requires steel of a special analysis the reason for this is explained
  1042
  to the steel-maker and he fully understands the position.
  My Lords, I am afraid that consumers are very nervous that when they have to deal with this Steel Corporation it will probably be necessary for them to fill in numerous forms if they require any steel outside the ordinary run. One consumer said to me the other day, "Our customers buy from us not because they like us (although I hope they do), but because we have made a study of their requirements and know what they want. So we, in turn, have spread our orders amongst various steel-makers as they are best able to serve us." The Government say that they do not intend to disturb the entity of existing firms and existing trade relations. If that is so, why on earth nationalise the industry? The nationalisation of the coal industry brought about an almost immediate deterioration in the quality of coal. The consumer is very much afraid that the same thing will happen with steel. He fears that instead of getting the type of steel he wants he will be told what he is going to get—which situation will mean, of course, that the quality of many kinds of steel products will, in turn, deteriorate.
  I should like to turn for a moment to an entirely different aspect of the situation, and one with which the Party to which noble Lords opposite belong have made a great deal of play—I refer to the attitude of the steel-worker towards nationalisation. It has been said that there will be demoralisation among a large section of the workers if the Steel Bill fails to go through. My Lords, what has happened in the past? As practically every speaker has said this afternoon, the steel industry has been singularly free from labour troubles. Does this indicate that the working man in the steel industry mistrusts the boss? On the contrary.
  To illustrate that, I should like to tell your Lordships of an incident which occurred recently in a large steelworks. This steelworks has a sports club and playing fields which are run by a committee for the use of their workers. Recently the committee asked to see the managing director, and they asked him whether it would be possible to purchase their club and playing fields from the company. They qualified their request with this remark: "We should like to

  1043
  get this fixed up, sir, before this nationalisation business starts. We know where we are with you, sir; we are sure we shall get a square deal." Another steel firm that I know took an unofficial ballot amongst the men in the various shops, as to whether or not they were in favour of nationalisation. All the shops, except one, voted for a continuation of the present régime. It was rather interesting to note the reason given by the one shop which was in favour of nationalisation; it was very illuminating indeed. The reason given was this, "We shall not have so much of this nonsense about increased production when we are working for the Government."
  My Lords, I have no connection with the steel industry, but I have taken the opportunity of seeing and hearing something about it during the past few months. Only a few weeks ago I was present when a new and most ingenious ore-loading and grading plant was started up for the first time. It was a magnificent project, and this one contract cost somewhere in the region of £1,750,000. Here is a shining example to refute the allegation that the steel industry has not done its best to modernise equipment and put its house in order. I personally am quite satisfied that we have an efficient and well-run steel industry, and that the Government have adequate powers for controlling both price and production. This whole vast machine is working smoothly, and at full throttle. For heaven's sake, leave it alone to get on with the job!
  6.6 p.m.
  VISCOUNT RIDLEY: My Lords, in speaking on this Bill I should, as I have done before, declare my connection with one of the companies proposed to be taken over. It is becoming almost a matter of routine with me to have to do this. I speak also with some knowledge of industrial conditions connected with steel making, and with the needs of industrial consumers of steel. I find it difficult to approach this Bill in the same way as many of your Lordships did the earlier nationalisation Bills. Then there was a fairly clear case to be made in each case, there being a public utility, a need for co-ordinating skilled services in gas and electricity, and matters of that sort; so that, even though not convinced of the virtues of nationalisation until they had
  1044
  been tried, one was willing to say that there was at any rate a case for it, and that the proper procedure for us in this House to adopt was to amend the Bills in Committee, so far as we could, in an honest attempt to make them work. We spent a lot of time doing that and one or two noble Lords who speak for the Government from time to time have been good enough to say that in that process the work of this House was very useful.
  This Bill, however, seems to me to be entirely different, because I cannot yet see any real justification for its introduction. One has heard many arguments, publicly spoken and written about, of the necessity for public ownership of steel, some of them based on political theory, some on misconception—and some, perhaps, merely wishes, which were not based on very great knowledge. I was careful to listen to the reasons advanced by the noble Viscount who introduced the Bill this afternoon, the chief of which, if I understood him aright, were as follows. One thing that he made a great point of was the importance of steel-making for the defence of industries. He did not, however, elaborate that proposition and he did not, I think, say anything about the failure of the steel industry in the past to meet the programme of munitions required for defence. In fact, I think I am right in saying that he, with others of your Lordships, congratulated the industry on its output and its performance.
  Furthermore, even supposing the steel industry as at present constituted and organised had not done as much during the war, or had not before the war prepared itself as it should, it was, and still is, open to the Government at any time to take steps to improve the performance in that direction. They could have made suggestions before the war through the Import Duties Advisory Committee, through the Iron and Steel Control during the war, or through the Iron and Steel Board in the last two or three years. Such suggestions could have been in the form of very strong pressure on the industry, either as a whole or in part, to install certain plant and to carry out certain operations. If necessary, had there been no commercial demand to justify the production which might have been proposed, there could have been methods of Government supply

  1045
  or raising of capital to meet what they considered to be the special needs of the State for munitions production, as opposed to the ordinary commercial demand. Further, there could have been put into operation the system which was used during the war when the Government owned and operated plants working in parallel. Had that been done on a purely commercial basis, it would have been possible to see how different kinds of operation in industry would work out.
  The noble Lord also referred to the question of monopoly. I think he said that this was too important an industry to leave in the hands of a monopoly. In saying that, I thought that he had forgotten the implications of the Monopolies and Restrictive Practices Act, which has recently become law. I believe that he has overstated the closeness with which the industry is organised. The price-fixing machinery, which is I think the key to monopoly control, is, and has been for a good many years, operated by, in conjunction with and at the direction and guidance from time to time of the Ministry of Supply or their agents. To me the essence of a monopoly is that it can restrict production and can force prices up; that by agreement it can refuse to sell below a certain price. At the present time we have, on the one hand, the consumer wanting cheap and plentiful supplies of steel and, on the other, we have the producers in what is called a monopoly, organised in what is called a Federation, with the Ministry of Supply or the Iron and Steel Board, whichever it may be, in between. It seems to me that there is there such protection against the bad effects of monopoly that we are in danger of getting into a worse monopoly in which, owing to the ownership of companies by the Iron and Steel Corporation, we shall have price fixing, on the one hand, and the consumer on the other hand, without a third party, in the person of the Government, to whom appeal can be made. I leave aside for a moment the protection of the-Consumers' Council, which I think experience in other industries has shown to be at any rate somewhat illusory.
  The noble Viscount referred to the difficulty of finding finance to carry out the development programme of the Iron and Steel Federation. I think it is agreed that the programme produced in 1945
  1046
  then met the views of the industry, and of the Government's planning agencies, as to the total need, in terms of tonnage, of the various products required annually after the next few years. Subsequent developments have shown that the capacity provided will slightly exceed, by reason of various adjustments which have since been made, the amount then proposed. The noble Viscount quoted a figure which was estimated for the cost of this development work as stated in the Report of the Iron and Steel Federation. The programme was to cost £168,000,000 and to take seven-and-a-half years. That, of course, was at prices current in 1945. The noble Viscount said—I think rightly—that it was more than likely that those prices now would add up to something around £250,000,000; and he referred to the method of financing one or two of the enterprises which are now getting going with their development work.
  He also said that although the steel industry had produced a record quantity of steel products during the last year or two, and had largely met the nation's needs during the war, it was not so efficient or so up-to-date as it might have been. I think he implied that before the war the rate of capital investment in equipment in the industry was not so high as it should have been. I would refer to the very simple summary of that expenditure which is contained in the Report of the Federation in the same part where they discuss the total cost of the present development programme. They say that on the average—and an average is, of course, apt to be a little deceptive—the industry spent £6,250,000 a year for the last eight years before the war. That gives a total of £50,000,000 for the eight years. And to get the same amount of machinery and equipment in 1945 would probably cost double as much as before the war—I refer to 1945 because that was the date of the Iron and Steel Federation Report.
  The plan, outlined in the Report was for re-equipment at the rate of £22,500,000 for seven-and-a-half years. The Report then goes on to discuss the amount which the Federation think can be found in the industry. I feel that those figures are of interest because they show, first, that, taking pre-war rates of re-equipment, the comparable expenditure by the whole industry in post-war terms was about £12,000,000—which is

  1047
  not far behind the estimated amount of £22,000,000 a year required for the same number of years to re-equip the industry following a period when the industry was very heavily worked and no replacements were possible. I think those figures tend to show that the industry was not by any means so guilty of failure to keep itself up to date as has sometimes been suggested.
  I have tried to understand how this Bill is going to work, and what will be its effects on the industry. Functionally, I have the greatest difficulty in seeing what will happen. It is clear that the Corporation will acquire the shares of the companies listed, and that the Corporation will be responsible to the Minister for policy on all the general matters, but that they will not operate any steelmaking plant except through their ownership of the companies. Nowhere in the Bill is there any connection between the Corporation and the companies, except that the Corporation will be the only shareholder and have the right or power to call a special meeting of a company at which resolutions may be passed to decide a particular matter. So, I take it, that the companies will go on operating, will go on doing what they think best and, suddenly, the Corporation, represented by one person—as is certainly scheduled—
  VISCOUNT ADDISON: Why does the noble Lord say "suddenly"?
  VISCOUNT RIDLEY: It might take long, or it might, so far as one can see, happen at any moment. The Corporation can call a special general meeting and then dismiss the people in charge of the company. That seems to me a sanction. I am not suggesting that it would by any means be the normal procedure, but if it were it would be too impossible to contemplate. It strikes me as a little odd that nothing is included in the Bill to show any means whereby the Corporation can control the companies they own except by that one procedure. It makes it look as if security of tenure for the people who are operating the companies might in certain circumstances be a little uncertain.
  I think this Bill suffers from the same fault as other nationalisation Bills, in that it seeks again to centralise authority
  1048
  into one body. I am convinced that in every form of undertaking, whether producing steel, coal or anything else, there is an optimum size of organisation which can be operated with success and efficiency. I fear very much that changes of this sort may tend to increase the size of units. The smaller units which are allowed to make Second Schedule products, so far as one can see, must always stay at this low level of production, because they can get a licence only for an unspecified period; they will have no guarantee of operation at whatever level it may be; and there is in that a great risk of preventing the growth of small undertakings. In the past small units have often been the most successful in producing new ideas and working out new principles. It seems to me that there is on the one hand a danger of bigger firms being centralised into too big units, and on the other hand a danger of smaller firms being forced to remain too small.
  I am puzzled about Clause 3, which deals with the protection of the consumers. Second Reading is not the occasion on which to go into details of this sort, but I see in Clause 3 the greatest opportunity for a Corporation that do not wish to be entirely fair to their consumers to do exactly what they like. It would seem that companies owned by the Corporation may sell to consumers whatever category of products they like at any price. Even if Clause 3 applied to publicly-owned companies, the question to my mind is not so much discrimination between one consumer and another, but discrimination between the consumers of an intermediary product (which may be a Second Schedule product) who are outside consumers, and consumers who are owned by the Corporation. The Corporation might be selling billets for re-rolling to one of their own companies at any price they like to mention, and that company, in association with other companies and through the Steel Corporation, can easily make the price of billets almost anything they like, so that they may put up the price and take the profits on the sale for themselves. That would be a considerable handicap on their competitors.
  One of the old arguments of the steel business is when is the right point in the chain of production to take the profit on any product, and what margin is allowed

  1049
  on each process. There may be unlimited opportunities under this clause for an unscrupulous Corporation, if there be such, or for anyone directed by a Government or a Minister, to do infinite harm to many manufacturing industries. I feel that this Bill may bring into the steel industry all sorts of semi-political considerations which are not there now. The present atmosphere between employers and employed in the industry is very good. Wage negotiations work on a complicated but very rational system and I hope very much that that will not be disturbed. I will not say more on that point than that in other industries which have been nationalised there are as yet no signs that they are going to be on a better basis than private industry in that respect. I should deplore anything which would lead to such a risk in the steel industry as well.
  There are further points in the Bill which I think are of danger—for example, the effect on foreign sales. Most of the exports of the steel industry are of manufactured and further processed materials rather than of iron and steel as products themselves. I think it is in the interests of this country to process and manufacture from our steel to the highest degree of finish, so that we can get as much as possible from our exports. That means that we must concentrate more on capital goods for the industries of other countries, and these goods are subject to severe competition and must not run the risk of there being a further range of prices.
  One matter which does not come directly into the Bill but which I think is going to cause a great deal of difficulty is the question of the location of steel-works. There will come a time—in fact, there already have been cases—when, under the new development plan, difficult problems of the location of steel-works will have to be decided. The economy of steel-making depends on the siting of a plant in relation to its supplies of coking coal or coke and ore and on whether we import high grade ore by sea or use basic ore from this country, and all of those points are connected with the type of product sold and the distance from probable markets. It is an extremely complicated question when taken as a purely economic calculation on its own, but when it is argued, as it has to be, in relation to the needs of the public and in the sense of the needs of the people who are employed in
  1050
  the steel industry, it becomes even more difficult. I have come to the conclusion that, difficult question though it must be, it is bound to arise some time or another in the future.
  Suppose that the time comes for the closing of a fairly large steel undertaking on economic grounds. That decision as to the economics of the industry should surely be taken on its own merits, but any action that might result should not be taken without regard to the social factors involved, such as unemployment and distance from work. I would be the last to suggest that such factors should be ignored. It is far better that the Government should be in a position as an over-riding authority, to step in and say to a certain undertaking that they must not close their steel-works because of the work provided and the men's livelihood. It is far easier for the Government either to make special arrangements with such a company on their own financial footing or to make other arrangements for the men to be given employment elsewhere.
  It will be very difficult for a Corporation belonging to the public and directed by a Minister even to entertain the possibility of a change in the volume of employment in any place. To my mind, there are clear signs that the same difficulty is already appearing in the future plans of the National Coal Board. They have, I understand, extensive plans for reorganisation re-equipment and re-development. Where a part of the coalfield works out and they work up towards another area, they want to increase production at one pit and other pits have to be closed. There is then the difficulty of a nationalised body being, as it were, part of the Government, and it is not easy for them to carry out such proposals.
  On that sort of subject, in connection with steel-making I feel it would not be inappropriate to refer briefly to the history of what happened in the town of Jarrow. It is an old story, and it has often been told wrongly. There was the case of a town which had grown up around the industry of shipbuilding, which later developed its own steel works. It was an industry started in the second half of the nineteenth century, when this country was expanding production; we were going through the end of the Industrial Revolution, and becoming the supplier to the world of capital goods,

  1051
  ships, coal and steel. It so happened that after the First World War, when this country began to feel the intense competition of other manufacturers of products of this kind, competition in the export of coal, and so on, the whole of the areas where heavy industry had grown up got into serious difficulties and became known as "special areas." Jarrow was one of the places that suffered most. It must have been very difficult for any one to decide to cease production there.
  The point I wish to emphasise is not so much that fact but the efforts which were made to start a new undertaking in the area. It became almost a burning political question, and there was a tendency to overlook the facts of the case. There had been a shipyard, building relatively small ships, which had gradually expanded to build big ones; and there had been a small steel-works there. There was room for very little more, but there was a suggestion, which was widely canvassed, that a modern, fully integrated steel-works should be built there. This was the subject of much discussion; Committees were appointed, and so on. It was clearly a case of the industry having grown too large for the place, because when the scheme was examined by a consulting engineer with experience, and definite plans were put in hand, three things at once became obvious. One was that there was not room on the site without pulling down part of the town; the second was that the transport facilities by rail were totally inadequate for getting the products away; and the third that a great deal of reconstruction of the dock would be necessary. There was no doubt whatever that a modern steel-works could not be put there. I do not suppose that in 1935 or 1936, when this was considered, anybody would have contemplated that it was economical to put up a steel-works to produce less than 300,000 to 400,000 tons a year.
  The interesting thing, however, was that it did raise the question—which was taken up by the Import Duties Advisory Committee, who then had a good deal of control over relations with the governing Federation—as to whether the Government should not take part in such a decision. That seems to have been clearly right. That principle was established then, and has been carried on since. In actual
  1052
  fact, a subsequent development there was to build a modern processing plant—though it has not a re-rolling plant—which is as modern as any in the country. Indeed, had it not been for the war there would have been developed a number of ancillary products—as there probably are now. Therefore, I think the right solution was reached. It taught the practical lesson that it is quite possible for an economic decision to be taken on its own merits, and for the machinery to be developed by the Government, with the Ministry of Supply, the Iron and Steel Control or the Board to vary it for quite different reasons. It seems to me that that is necessary, but it is something which must be kept on its own footing.
  There is one point about which I feel a little uncertain and which I do not think was mentioned by the noble Viscount who introduced the Bill, although I have seen it dealt with by other Government sources—namely, that although the Iron and Steel Board have ample powers to see that the firms in the steel industry do not build or spend money without their approval, they have not the authority to force any expenditure which the Government think is necessary. They say it is only a one-way control, whereas two-way control is necessary. That seems to me to rest rather on a fallacy because, so far as I know, there are no records of a lack of desire on the part of the firms to rebuild or repair. In fact the opposite is the case; most of the firms in the industry, I believe, are anxious to get on with their rebuilding plans. If that is now said on behalf of the Government, I would like to know whether it is based on any experience of anything that has happened, or only on the belief that something may happen.
  There are many things in this Bill which are difficult to understand. First, as I have said, it is difficult to understand for what reason it is introduced. I was very much impressed by the speech of the noble Marquess the Leader of the Opposition on that point, and also with his advice to give the Bill a Second Reading. Had he not spoken so convincingly, I should have felt very dismayed indeed at the idea of this Bill being given a Second Reading. I feel that it has been regarded as a political expedient, and that it runs the risk of damaging an important industry. If there is to be a Bill to increase the control of the Government

  1053
  over steel-making, let it be a different Bill from this; one more precise in its implication, and confining its activities to a narrower range.
  6.40 p.m.
  VISCOUNT FALMOUTH: My Lords, an immense amount of interest has been taken in this Bill up and down the country, and small wonder, because it intimately affects the great engineering industry, the shipbuilding industry, the structural steel industry and a variety of other industries which use steel as a raw material. As has been pointed out during the debate, steel forms one of the most important of our exports at the present time. Anything that will interfere with the flow of steel materials in the export trade will be bound to react most seriously on the economic position of the country. It came as a great shock when this Bill was given such abrupt treatment in another place, because many of the clauses which were ruthlessly guillotined should have been carefully examined and might have improved this very unsatisfactory Bill. It is almost as if the Government were determined to get the Bill through at any cost and as if industry did not matter. They had to satisfy certain of their followers, and a Bill of some kind or another, whether good or bad, was all that mattered.
  It has been pointed out that we have had a number of nationalisation Bills during the last four years. This Bill more nearly approaches the Coal Bill in the type of industry it is sought to nationalise, because the other industries—transport, gas and electricity—were industries which were protected to a certain extent by franchise in the area in which they operated, and in that way were protected from competition by rival undertakings. The coal industry consisted of many independent companies, all to a certain extent competing with one another, and at the same time with a certain overriding control. The Coal Bill was advocated in your Lordships' House and elsewhere as being a measure which would appeal to the miners, who at the time were very dissatisfied with the conditions in the coal mines. As we all know, there has been a great deal of labour trouble up and down the country. We were told that the miners would welcome working for a benevolent State and that they disliked intensely working for the hard-hearted
  1054
  and wicked owners. What has happened? We have seen this benevolent State throwing off its cloak of benevolence and acting as a dictator, doing things in the coal industry which no private individual would dare to do. We see the miners beginning to think that the hard-hearted and wicked owners were not quite so bad as they were made out to be in the old days.
  We were told that one of the reasons why the Coal Bill should be passed was that the system was inefficient, and that all that had to be done was to nationalise the mines and a great change would come over the scene: coal would be produced in greater quantities, of better quality and at no increased price. In fact we were informed that we were on the threshhold of a golden age. Now what has happened? We know the miners are dissatisfied, and that conditions are nothing like they were made to understand they would be. And what about the price in cut coal which, in the end, is the standard of efficiency? Instead of a golden age we are rapidly going back into the dark ages. I have to pay 84s. a ton for coal in the West Country, and I am now told that it is going to be put up another 12s. a ton. I feel that when we are asked to consider the efficiency of a nationalised industry we must be careful to remember these facts.
  This Bill is put forward by the same Government who recommended to us the nationalisation of coal, and on that account we must look upon it with the greatest care. I submit that there is no industry in the country more complicated than the iron and steel industry, and no industry less suited for nationalisation. On the iron side there is mining and the melting, and then you have to take into serious consideration whether to use low grade ore or high grade ore. You have to consider the location of the industry, you have to consider transport and you have to consider the sources of your supply. These are all matters which can be dealt with only by people well versed in the industry, and they are not in any way suitable to be dealt with by a Government department, which is really what the Steel Board will become. On the steel side there is an infinitely greater complexity than the complexity on the iron side. Steels differ greatly in chemical composition and in physical properties.

  1055
  On the one side there are low grade carbon steels, which are made in great quantities and which form the greater part of the output. At the other end there are the high alloy steels, the steels alloyed with all sorts of elements—nickel, chronium, molybdenum, tungsten, and so forth. Steel of this character requires greater flexibility and experience of treatment. Steels used for biscuit tins are different from steels used in crankshafts or wireless magnets.
  The engineer is always making fresh demands upon the steel industry to meet new specifications and, as we all know, one of the latest triumphs has been the steel blades for gas turbines for jet aircraft, without which it would not have been possible for any of those aircraft to fly. All these products are required in an endless variety of shapes and sizes—sheets, section plates from rolling mill, forgings from the great hydraulic presses, small forgings from the drop stamps, and so on. To melt the steel there are the great 100-ton open-hearth furnaces, used chiefly to supply ingots for the rolling mills, some using hot metal, some using cold scrap. To-day, as those interested know, the Bessemer steel-making process is returning to this country after many years absence. For many years now it has been adopted on the Continent under the name of the Thomas process, and it is now coming back to this country, for reasons which I do not think I need explain.
  Another interesting point in connection with the steel industry is that over 5 per cent. of the steel used at the present time in this country comes from electric furnaces. These steels, of course, are extremely costly, but they are absolutely vital for the particular purpose to which they must be applied. Surely for such an industry as this, with its immense complexity in its different technical aspects, to fall under the dead hand of nationalisation, will lead only to the industry becoming mediocre in its outlook. It will play always for safety first, which will prevent these new developments coming forward as they are doing at the present time.
  The Bill seeks to do more than that. If your Lordships turn to the Second Schedule, you will see mentioned there only casting and rolling, but by implication this Bill takes over all the great forges
  1056
  in this country. The three biggest hydraulic presses in the country will become nationalised by the Bill. The forging for every big turbo alternator, if this Bill becomes law, must come out of a nationalised factory. So must every big high-pressure chemical reaction chamber. A large proportion of the heavy engineering industry is going to be nationalised as well. All the biggest forging presses in the country will also come under nationalisation. The machines in these big forging shops are heavier than those found elsewhere. These are for the special purpose of dealing with very large forgings, and it will be impossible in the future to obtain the bigger size forgings anywhere else.
  When one thinks of the scope of this Bill and the immense difference it will make to the steel industry and the country, one would expect to find some very good reasons advanced for putting it into force. If, for instance, there had been bad relations in the industry there might have been an argument for a Bill of this kind; but, as has been said repeatedly in this debate from both sides, labour relations are exceptionally good in this industry. Nobody, therefore, can say that the Bill is necessary for that reason. It has been said that the industry is falling behind in technical efficiency. If that were so, that again might be an excuse for the Bill. But it has been pointed out that the industry has been romping ahead; it has beaten its own record, quarter after quarter. It has been able to meet the different specifications of the engineers. If the industry had failed and could not raise sufficient capital to carry out the necessary alterations, that again might be an excuse for the nationalisation of the industry. But we have heard that there is no difficulty in raising capital, and I am certain that if ever there was an industry with a "song in its heart" it is the steel industry at the present time.
  Part of the attack on the industry has been based upon what happened earlier—in the 1920's and early 1930's. I was in those days the manager of one undertaking; and I know that things were very bad indeed then. Production varied from 3,600,000 tons to 9,600,000 tons in the 1920's and the early 1930's—a very big variation, which gives an indication of the difficulties which steelmakers had to face in those times. But, as the noble Lord, Lord Rennell, pointed out, it was not

  1057
  only the British steel industry that was in difficulties; world production in 1929 was 118,400,000 tons, and in 1932 it had fallen to 49,400,000 tons. The great United States industry, which has always been pointed to as an example to us, produced in 1929 56,400,000 tons and in 1932 only 13,700,000 that is to say, the United States output was reduced far more than our own. There is nothing in this Bill which can in any way control the steel industry of the world; and the steel industry of the world depends, in its turn, on the engineering industry. It is the supplier of raw materials to other industries. Yet up and down the country it is being said that a repetition of the unemployment of the early 1930's will be avoided if this Bill comes into law. I say with great respect that that is absolute nonsense.
  Another attack on the present industry is based on the statement that the industry is heavily subsidised. The cost to the Exchequer last year was £18,800,000. The figure is generally quoted as £22,500,000, but it came out to only £18,800,000. This was a subsidy on imported semi-finished and finished steels. It was not a subsidy to the steel industry; it was a subsidy to the users of steel, the engineers and re-rollers and so on. A further £6,000,000 was a subsidy on ore and manganese freights, and the reason for it was that in the old days ships used to go out loaded with coal and come back loaded with ore. At the present moment, thanks to the nationalisation of the coal industry, the ships are going out empty and coming back loaded with ore. Therefore, you have to pay double freights on your ships, and the subsidy was given for that reason. The industry is not, I submit, benefiting by these subsidies, because they are subsidies to the user. The industry in 1947 said that they were quite prepared to shoulder these subsidies; then, as your Lordships will know, in March this year the subsidies came to an end, and as a result the price of steel was increased by 9 per cent. I feel that it is highly unfair on the industry to pretend that the steel industry is being boosted to the extent of £22,500,000, when it is not the industry but the user of steel that is benefiting.
  Furthermore, the industry is accused of being a huge monopoly. We have heard that claim made, and it has already
  1058
  been adequately disposed of in this debate. It is strange to hear noble Lords representing the Government in this House say that they object to a huge monopoly, because after all what this Bill is setting up is a terrific monopoly which will put a stranglehold on the whole industry. The future development of the industry is not a haphazard affair: it is carefully guided by those who can best judge the different factors in the case. This Bill nationalises all the big firms, but alongside them there are many small firms who are also doing very good work. What is the position of these little firms vis-à-vis the great monopoly? Are they to be entirely in the power of this monopoly, so that the small firms can be crushed out of existence without being able to do anything to help themselves?
  Another factor in this Bill which gives me great anxiety is that no large ingots can be obtained from any source other than a Government-nationalised factory. This means that a large number of heavy engineering firms up and down the country who have medium-sized presses, or presses up to 2,000 tons capacity, and who have been accustomed to getting ingots from steel firms, cannot forge those ingots into various shapes, guns and whatnot, machine them, and then sell them to customers. If this big monopoly gets short of work—and we cannot possibly pretend that the steel industry is always going to romp ahead at its present output—what will be the first thing which will happen? The monopoly will want all this work for their own machine shops, and they will kill these outside heavy engineering firms, not directly but by putting up the prices of forged ingots to such an extent that it is not worth while taking them.
  I was interested to hear the opening statement of the noble Viscount, Lord Hall, about the strategic importance of the country owning the steel industry. With all due respect, it seems to me that that statement is absolute nonsense. I have myself been in this particular side of the industry, and out of the same furnaces in the morning you pour ingots for a gun tube, or something like that, while the next type of ingot is for a reaction chamber and so on. It all works in together. You cannot segregate the works entirely for one particular aspect of the steel industry; you have to keep this great work going all the time. It is

  1059
  an extremely skilled work running a big rolling mill and forging heavy presses, and if you shut down the works and open them up only when you have Government orders, there will not be a man in the country capable of working this heavy machinery.
  I am unable to follow the reason why the Government are bringing forward this measure. It seems to me that they are activated by the idea that nationalisation is good in itself. An industry may wither and decay, but if you tell your friends "It is all right, we have nationalised it," it seems that that is what matters. As one who was in the steel industry, first in a small way and then as the manager of a large undertaking, but who is no longer connected with it other than by virtue of taking a keen interest in its fascinating development, I for one should look upon the bringing into law of this measure as an absolute disaster.
  7.5 p.m.
  VISCOUNT BRIDGEMAN: My Lords, when the question of nationalisation of steel was first debated in this House in 1946, I declared my interest, and I do so again by telling noble Lords that I am a director of two of the companies which at present figure in the Third Schedule of the Bill. It is two years almost to a week since we first debated this question in this House, and I sometimes think that so much has been written and talked about this question of nationalising steel, that we are running the great risk of having the main issues obscured in our minds, particularly on Committee points. Therefore, I think we should now try to stand back and realise, as we look at the picture as a whole, how very little argument there is for this Bill at the present time. I feel that the position is in a way rather like the Berlin blockade. It started by technical difficulties in transport, and gradually, as we grew used to the idea, we began to accept the Berlin blockade as something which was almost justified, and we had to think again to realise that there was no justification for it whatever. I suggest that we should think again on this Bill and, if we do think again, we shall come to the same conclusion.
  It seems to me that this Bill comes forward with the main case for it still quite unproved. I want to go back to the debate of June 4, 1946, when the noble
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  Lord, Lord Winster, who at that time spoke for the Government, said that the nationalisation of iron and steel represented the fulfilment of decisions taken after long and intensive research, and was fairly and squarely put before the electorate at the General Election. Whether it was in fact put forward fairly and squarely before the electorate at the General Election is an arguable matter—as the noble Viscount, Lord Swinton, has said. But if what the noble Lord, Lord Winster said was true—and I am certain it was—then the grounds on which the nationalisation decision was made must have been those which existed in 1945—namely, because of opinions which were formed, not by everybody but by the Socialist Party, of the work of the steel industry between the wars. "The system had wrought such havoc," said the Minister of Supply the other day. "The old system," said the noble Lord, Lord Winster, "was demonstrably a failure." So we are faced, I think, with the consequential effects of a decision taken in 1945 and not in 1949.
  My Lords, 1945 and 1949, seem to me to be two very different years. In 1945, so we were told, the Socialist Party were "facing the future" and they were facing it with great optimism; and no doubt they were justified at the time in doing so. But I do not know whether we face the future—particularly the immediate future—with great optimism; and certainly those who are concerned with the steel industry at the present time do not face it with anything like the optimism which would be needed to cope with the difficulties of a Bill such as this. It is common knowledge, I think, that a very critical time is coming for British industry as a whole. So many speakers have made this point that I shall not go back over the ground again. I want to ask you merely to think of a graph on the wall, with the curve of Marshall Aid running out, as it is bound to do, and the curve of exports struggling to reach the point where they replace the need for foreign aid, realising, as so many of you have told us to-night, that steel is a component in almost every single export, whether as the export itself or as going to make machinery for the manufacture of the product, or the factory in which the product is manufactured.
  I would merely repeat what other speakers have said: that export output at

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  the moment is certainly not so bright as we should like, and certainly not so bright as it was six months ago. It was only this morning that those of us who read the papers saw that further difficulties will arise in exporting goods to South Africa. Any of your Lordships who went round the British Industries Fair at Birmingham, as I did myself, will have noticed that although it was a magnificent display, the bees were not so busy in the garden. The buyers were not so active as they were last year. Every day, with difficulties in export, rises in prices and rises in wages, industry is struggling to keep up exports by cutting profits, even at the expense of reserves which ought to be set aside for the renewal of machinery—a subject about which the noble Lord, Lord Rennell, and other noble Lords have spoken to-night. Speaker after speaker in this debate has referred to the achievements of the steel industry since 1945. Again, I shall not repeat it, but I shall simply remind you that even some of the ranks of Tuscany have not forborne to cheer.
  There is no doubt that the whole of the industry has been fully behind the Government in the effort which we are all making for economic recovery, and that every bit of iron and steel has been made which it has been possible to make with the coke and the iron ore which has been allocated through Government controlled sources. Where does that lead us? I think it shows that, whatever may have been the case in 1945 (and I do not think it matters very much what was the case in 1945), here in 1949 not merely is there no production reason for this Bill, and no production reason that I have heard has been advanced to-day, but there are some very serious dangers which, in view of the state of our exports, it would be more than rash to incur unless absolutely necessary. I was not quite clear what the noble Viscount, Lord Hall, meant about strategic reasons. If he meant that the steel industry could not be relied upon to accept the directions of the Government in any strategic matter and do their best to work them out, then I think he was wrong. If, on the other hand, he meant that the heart of the steel industry might not be in meeting the strategic need, then I fear he must have been insulting the steel industry.
  Now let us turn to another point that has scarcely been touched upon this
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  evening. Is there any labour reason why this change should be made? I want to go into this a little more fully because, although perhaps it is not for the likes of me to talk about what the unions have done, it is such an important aspect of the whole question that it ought not to be left out. I do not think it is sufficient to say merely that we ought to do this because there has been no hostility. I want to look at what happened, so I am informed, each time the matter was raised in the Trades Union Congress. In 1946, a resolution—I need not quote the actual words to your Lordships—was moved by the representative of the Constructional Engineering Union, which is not at all what we call a Second Schedule union. In 1947 a similar resolution was moved by Mr. Gardner, of the Amalgamated Union of Foundry Workers, which likewise deals with a section of the industry which is not in the Second Schedule. In 1948, our foundrymen came into the lead, and they were supported by the Electrical Trades Union, whereas the Confederation moved an amendment which did not quite mean the full nationalisation of the steel industry at once. I think it is right and proper that we should ask why, if it was so necessary and so much wanted, the unions which are concerned with Second Schedule activities did not take a more leading part, why they left it to three unions, two of which are known to be very largely influenced by Communist officials. I want to ask that as a definite question, because I think it has a good deal of bearing upon what I am going to say in a moment, if I have the time.
  But before I do that, may I go back for a moment to this question of efficiency? Your Lordships have heard a great deal from a number of speakers, who have said that efficiency will be retarded. In the old days it was maintained that efficiency would be increased, but I am absolutely certain that, whatever may happen in the long run, in the short run with which we are now concerned, where now we have to watch our export market, there is bound to be some dislocation. The mere creating of a dividing line—nationalised and non-nationalised industries, the sheep and the goats—is bound to cause dislocation. The mere fact that under this Bill agreements can be disclaimed in Clause 13 (an unlucky number) is bound to cause dislocation and

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  hesitation in carrying forward plans which would have been carried forward unhesitatingly in the days when a contract which was valid in law could not be disclaimed in the steel industry. I think that we are going to have a lot of small upsets when some parts of the industries not connected with the Second Schedule fall to be dealt with, to come under the control and to remain under the control of nationalised industries, while others carry on outside. Both my noble friends, Lord Ridley and Lord Falmouth, made those points.
  Whatever happens, however carefully we plan, however knowledgeable we are about an enormous industry like this with all its ramifications, horizontal and vertical, right down to the safety pins that we have heard about, unexpected stoppages and difficulties are bound to occur. That would be heartrending to anybody who has taken a part, however small, in the struggle to straighten out production in the interests of our best efforts since the war. I can see all the difficulties, such as confusion in ordering, coming back and so much of the work which has been put in to straighten out those things being lost merely because this Bill enforces changes which are bound to cause dislocation. One may say that it would not be dislocation because it is the intention of the Government to maintain the managements and the boards as they are. Very well. So what? If the managements and the boards of directors are to be maintained in their present position, and are to go on doing what they have been doing up to now, what then is the argument for nationalisation?—because we have not heard it. If, on the other hand, some change is to be made, then, as I say, that change will be made at the expense of a disruption which we cannot afford.
  I have been thinking from time to time that it would be quite interesting to be a director of a nationalised company with one shareholder. As a director of a company one is accustomed to meeting the shareholders face to face once a year. They are real people. You meet them man to man and, if they do not like you, they can say so. What could be more democratic than that, the big and the small shareholders all coming in and saying what they like? I am surprised that the noble Viscount, Lord Hall, thinks
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  it is more democratic to have a totalitarian shareholder. As the old soldiers say: "We can try everything once."
  Before I sit down, I want to look at the slightly wider angle. I mentioned just now, and I mentioned it on purpose, that there was a very large Communist element among those who were vocal at the Trades Union Congress in support of the nationalisation of steel. The noble Viscount, Lord Hall, in introducing this Bill, said that if democracy is to govern, it must take over. I have been unable to see any political advantages in this Bill, just as I have been unable to see any production or industrial advantages in this Bill—unless, of course, one is a Communist. I can imagine that, if one were a Communist, one could see some great advantages in a Bill of this sort. I have no doubt that it would be magnificent for noble Lords opposite to have the nationalised steel industry with a Socialist Government. It might be tolerable to have such an industry under a Conservative Government—I do not know. But surely we must look a little further ahead; and, before going much further with this Bill, ought we not to think what it would be like supposing, by any mischance, this Bill had to be worked under a Communist Government—or, if you like, under a Fascist Government?
  All I can say is that every nationalisation measure is cumulative in its effect. It places more and more control in one quarter; more and more horses are being driven from the same pair of reins; and therefore, if the pirate crew come on board, the damage will be infinitely greater than if we were to continue this industry by what I consider the real democratic method on which it has been built up and by which it is now being controlled. But I will leave that point with your Lordships and come back to my main point—namely, that, judged in the light of the present economic situation and the extreme danger of doing anything to interfere with the flow of our exports, there is a very strong industrial case and a very strong economic case—and therefore, I should consider, a very strong political case also—against the Bill. We have the choice whether we are going to be guided in this matter by the bright hopes of 1945 or by the grave facts of 1949.
  7.21 p.m.
  LORD WOLVERTON: My Lords, as the time is getting late and there are several other important speakers whom I am sure your Lordships wish to hear, my remarks will be very brief. In addressing you on the Second Reading of this Bill, I wish to say at once that I disagree fundamentally to the Bill. I think all its provisions are unworkable and unnecessary, and that this is a totally inappropriate time to bring forward a measure of this nature. The few observations which I wish to make to your Lordships to-night are made in a completely detached way because I have no personal interest in the iron and steel industry. I have listened to-day to most of this debate with great attention, and especially to the speech of the noble Viscount, Lord Hall. I was really amazed at the flimsy arguments he put forward when he recommended the Bill to your Lordships' House. What were the main reasons he gave? If I may summarise them once again, they were the inadequacy of modernised plant in the steel industry; that it is an industry which cannot get adequate finance from private sources for the construction of new works, except by going to the Finance Corporation, and that there is an inadequately controlled monopoly in the industry.
  Although the case against these reasons has been so well argued from these Benches, I should like to add one or two further words. After a major war of nearly six years, it would have been, in my humble opinion, utterly impossible to have completely modernised the steel industry. If that industry had not been sufficiently modernised in 1938, we should never have got through the last war. We were told that there were reasons for the nationalisation of the railways, electricity, road transport and so on; but after six years of war there must be a big run-down, and the fact that an industry is not able to replace machinery quickly is, I think, not an adequate reason for bringing forward this suggestion to the House. I have recently had the pleasure and privilege of going round some of the large steel-works in England and Wales and I have seen some of the great modernisation schemes which are in progress. I can assure your Lordships that in a year or two we shall have some
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  of the most modern steel works in the world.
  I should like to say a word on the point of finance. As everybody knows, some of the finance for new steel-works schemes is coming from the Finance Corporation, but some of the finance was obtained, as my noble friend, Lord Rennell, said, from City finance houses. It is quite true that the Bank of England provided a proportion of the capital in the Finance Corporations which have been established by Parliament, but those Corporations were financed to a large extent by well-known finance houses in the City of London. New capital can come only from the savings of the people, and if you take a large proportion of their incomes away, how can you obtain all the savings that are necessary? We heard that point very well put the other day by the noble Lords, Lord Rennell and Lord Brand. They were very apprehensive whether the savings were sufficient for all these new capital schemes. I think it is remarkable that we have been able to do as much by private enterprise as we have.
  I should like to say a word or two about this alleged monopoly. I do not agree that it is a monoply. It is true to say that it is a trade association, but when that trade association was established in the very difficult times between the two wars it was formed for the specific purpose of stopping foreign dumping into this country; and in exchange for protection against foreign dumping the Government set up the Export Credits Advisory Committee, which was afterwards succeeded by the Iron and Steel Board. I feel that the person who naturally should be protected most is the consumer. Even if you wish to strengthen the Iron and Steel Board, the consumer is going to get far greater security by having a privately run industry publicly controlled than by having a publicly run and controlled industry from which it is very difficult to get any information as to what is happening—as we on these Benches know.
  In conclusion, I would like to refer back to the speech which was made by the Lord President of the Council in Toronto, I think in 1946, when he said it was up to the nationalisers to prove their case. Has their case been proved? I think this House has a great responsibility to the people of this country as

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  a revising and delaying Chamber, to examine very carefully what is being done. I cannot see that the case has been proved. Let us take coal, civil aviation, railways and electricity. Nearly all those industries are now operating with largely increased costs of production and, I think, with not such a high degree of efficiency. We must take that point very much into consideration before we proceed any further with this measure. I was glad to hear my noble Leader's suggestion, that we should send back to another place an Amendment to provide that the Bill shall not come into operation until after the date of the Election, thus giving the people another chance (because this is our function here, as a delaying Chamber) to make up their minds, and avoid the mistake of operating the provisions of this Bill in regard to certain aspects of steel production and not in regard to others. I conclude by saying that I heartily disagree with every provision of this Bill.
  7.29 p.m.
  THE EARL OF BUCKINGHAMSHIRE: My Lords, like the previous speaker, I hope to be brief, and I also have no connection with the steel industry, but I wish to bring up one point which arose in the speech of the noble Viscount, Lord Hall—namely, the question of public opinion. He stated that he considered the great majority of public opinion in this country was in favour of this Bill. I am bound to say that I heartily disagree with that point of view. I am quite certain that public opinion in this country is dead against it, and that the one question which everybody is asking themselves is: Why nationalise an industry which has such a fine record behind it? To an outsider, there may seem to be good reasons for nationalising gas, electricity, transport—and even coal. But is it necessary to take such a revolutionary step as we are attempting to take in this Bill? I may be wrong, and I stand open to correction, but has any other country carried out such nationalisation? I do not think so. Noble Lords opposite, if I am right, may suggest that this is a new form of pioneering. I sincerely hope that noble Lords on this side will agree with me when I say that, if that be so, it is a very rash form of pioneering.
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  Since the present Government came into power, they have set up the Iron and Steel Board, to which many of your Lordships have already referred to-day. Many noble Lords have paid tribute to the valuable service which that Board have done to the community and to the industry. Surely that is a unique experiment in what one might describe as "the middle way," giving the Government all the control they require and preserving, at the same time, all that is flexible and efficient in private enterprise. Knowing the problems and difficulties which have cropped up in connection with the nationalisation of coal, do the Government think that they will be able to make the steel industry more efficient by nationalising it? I can tell the Government, from personal knowledge, of a very strong sense of frustration and of delay, slackness and discontent that exist among employees of the Coal Board, both management and workers. If these exist in one Government monopoly, are they going to be avoided in another when the nationalisation process is applied to steel? I very much doubt it.
  We have heard many arguments against private ownership, and we have heard the argument that the general situation would be very much better for these industries if they became publicly owned. Does that argument hold water? Surely, what is actually happening, as the noble Viscount, Lord Falmouth, has told us, is that the Government have already turned these other industries into huge State monopolies. By nationalising steel they are going to turn this industry into another State monopoly. Therefore, I come again to the question which is in the minds of everyone to-day, and to which we still require a specific answer: Why nationalise?
  7.34 p.m.
  LORD CLYDESMUIR: My Lords, your Lordships will agree that we have had an interesting debate, and that the balance of argument has been against the Bill. In fact, except for the stouthearted speech which we had from the noble Viscount, Lord Hall—which we expected from him—and for a lone and sudden intervention by Lord Pakenham, and a rather pleasant parable from Lord Pethick-Lawrence, the case for the Bill has not been presented to-day. But we have had a wealth of argument against it. To-morrow, doubtless, we shall hear

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  more from the noble Viscount the Leader of the House. We are also to hear from Lord Morrison, who, I understand, will speak first, and that emboldens me to say a few things about Scotland in my short winding-up speech.
  Perhaps your Lordships will allow me to begin with a personal explanation which I think I have made on another occasion but which, in order to make doubly sure, I am now going to repeat. My family for four generations have been engaged in steel-making in Scotland. And let me, as proof of my faith in the industry, come what may, tell your Lordships that my son is in it now. There is difference of opinion as to what is best for the industry and I honestly try to voice this to-night. I agree with the noble Viscount who opened the debate, that this is an extremely important measure. In fact, I would say that though it is difficult to assign relative values, it is the most, important measure of this Parliament. Yet I think it has been accorded rather cavalier treatment. It has been introduced late in the present Parliament and after much indecision. It was taken in Committee upstairs. Perhaps that was inevitable, but its importance, I should have thought, might have justified a Committee of the whole House. Last, and most important, it was mangled by the guillotine. The noble Viscount has said that that was inevitable. He believed that no Government could have avoided the use of the guillotine. But in the result, I would remind your Lordships that sixteen clauses and six Schedules of the Bill were not discussed in Committee, and seven clauses were not discussed at all, either in Committee or on Report. Surely, your Lordships will agree that there is a clear case for this House to examine the Bill searchingly, and, in view of the past treatment which it has had, I do not think the Government can complain if we do so.
  Ever since the debate on the gracious Speech at the opening of this Session, we have been waiting to hear some new and cogent reason for the nationalisation of steel, and I am bound to say that I do not think it has been forthcoming. We have heard much "about it and about," but fresh and cogent reasons have not been advanced. So we must come back, at the end of a long day, to ask ourselves three questions about the proposed nationalisation of the industry. Will it
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  produce more steel? Will it produce cheaper steel? Will it improve labour relations? I would apply these three tests, and I would ask your Lordships, even at this late hour, to concentrate on them. I take the first question: Will it produce more steel? The record output of the steel industry, together with its marked success in promoting its own great development plan, gives very high promise that the large requirements of steel which have been asked for will be obtained. I do not know of any other industry which has shown such expansion. Certainly no nationalised industry has shown any such signs of vitality. There is no reason at all to suppose that nationalisation will produce more steel.
  Now as to the next question: Will it produce cheaper steel? Again, your Lordships will be aware that all the experience of the nationalised industries shows that in every case prices have risen—coal, railway fares, transport charges, gas, electricity and now telephones. Even when an industry or a service makes a profit it is pocketed by the Chancellor of the Exchequer, as seen by the extra charge put on the telephone. In the case of coal, there was an increase of 4s. a ton in 1947, 2s. 6d. a ton in 1948, and no less than 25s. 0d. a ton for export coal during the period; while in electricity, since nationalisation in April, 1948, charges have risen in many districts from 20 per cent. to as much as 40 per cent. and 50 per cent. There has been a much greater rise in all these industries than in the steel trade when the subsidies were recently removed. Then there was a small rise of somewhere between 6 and 9 per cent. over a wide range of steel products, which still leaves these products highly competitive. So I answer the second question by saying that nationalisation will not produce cheaper steel, and I have yet to hear any argument that it will.
  Next comes the question: Will it improve labour relations? The noble Viscount, Lord Hall, paid an eloquent tribute to labour relations in the steel trade with that complete fairness which we know we can always expect of him. He said that over a long period of years there had been adequate and proper machinery to adjust labour matters in the industry. I believe that the State, with the best will in the world, tends to

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  become a remote and impersonal employer. There may be a way to secure closer relationship in management, but this has yet to be found. Looking at examples of nationalised industries, I feel no confidence that this measure will effect any improvement in labour relations. Indeed, if one may judge by all the standards of nationalised industries, the reverse may well be the case. Take, for example, the trouble on the railways and in the coal industry. I recognise that these industries are experiencing initial difficulties, but, in reply to the question whether nationalisation will help labour relationships in the steel industry, the answer is "No." No such argument has been adduced. I think therefore that your Lordships are bound to agree that the Bill which comes before the House to-day fails on these three extremely important tests.
  What is the attitude of the workers in the industry at the present time? The noble Earl, Lord Dudley, in his interesting and thoughtful speech, told the House that a large number who had thought that nationalisation would provide greater security of employment were now a little less sure about it. That is also my experience. The workers in the steel works thought there might be greater continuity of work in bad times and more security of employment if the trade were nationalised, but they have seen coal mines closed down in my own county of Lanark and elsewhere. These mines have been closed down of necessity, because they are worked out, and closing them down was probably the only course the National Coal Board could adopt. But, in face of the economic difficulties, it would be very unwise to hold out to the workers in the steel industry that, on becoming a nationalised industry, they would be kept working at all plants in the same way as workers in the old coal mines hoped they would be kept working in all circumstances. I hope no one is suggesting to the workers that under State ownership there can be security of employment in the steel works in all circumstances, because that would be an unfair thing to lead them to believe. Efficient industry is the best security for their employment, and I believe that efficiency can better be secured under present ownership and control than under national ownership.
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  I should like now to say a word about the steel industry in Scotland. It has grown up round that great cradle of shipbuilding, the Clyde. I can tell your Lordships that much anxiety is felt in Scotland about this Bill. The steel industry in Scotland is not carried on behind an iron curtain drawn across the Border. It is closely integrated with the industry in England in regard to prices, wages and in many other ways. There is no narrow nationalism. But that is under the present system of voluntary co-operation, secured through fully representative bodies. It would be far different if an unimaginative bureaucracy should arise at Whitehall to dictate policy without full knowledge of local conditions. What I say about Scotland is true also of the North of England and the more remote parts of the country. There is a growing realisation that remote control will not give the personal contact that they have at present. I expect the Government will say that that will not happen under the present measure. They will say that the plan provides for a large amount of local autonomy and that the present management will carry on. But I have no real confidence that that situation will continue under State ownership. All experience of nationalised industries goes to prove that there is an almost irresistible tendency to centralise control. I feel that there are real grounds for the anxiety I have expressed. None the less, I would tell your Lordships that important extensions and developments are going forward in Scottish works just now which represent a real act of faith on the part of Scottish steel-makers, while they have the sword of Damocles hanging above them. Taking a broad view, we think it is the right thing to do, but our anxieties remain.
  As many speakers have pointed out to-day, the iron and steel industry in this country is highly and efficiently organised. Competition between firms in the matter of costs results in good service to the public. Prices are fixed by the Government on the basis of efficient production, and the public interest has been fully safeguarded by the existence of a Board drawn from both sides of the industry, the consumer and the State. The success of this organisation is clearly seen in the great contribution which the industry has made to post-war recovery. Why should all this be jeopardised? In the few

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  remarks I made on the gracious Speech at the beginning of the Session, I said that those who urged the nationalisation of the steel trade were using arguments which reminded me of Rip van Winkle, who slept for many years. Old arguments are used that do not apply to modern conditions in the steel trade but look back fifteen or twenty years or more. The trade went through a very difficult time during the slump in the 'twenties, and that has been held up more than once, and I think by the noble Viscount, Lord Hall, to-day, as an argument against the private ownership of the industry. But was unemployment the fault of the industry? Nobody wants to keep a steelworks idle; it is the most costly thing in the world to do so. The trouble during the slump was that there was a lack of demand. Will nationalisation create a demand? Should we not have to nationalise the consumer to do that? There is no sense there.
  The hour is late and I will not keep your Lordships longer. It is rumoured abroad that the more thoughtful members of the Government are themselves a little anxious about this Bill. Perhaps they may find a sense of relief in the thought that after all it may be the electorate who may decide this matter, one way or the other. I hope your Lordships will accept the advice of the noble Marquess, Lord Salisbury, to give this Bill a Second Reading, though we do not approve of it, and then to examine it carefully and objectively and, if possible, amend it in such a way as to give the people of the country a chance to decide this grave and important question.
  LORD AMMON: My Lords, on behalf of my noble friend, Lord Morrison, I beg to move that the debate be now adjourned.
  Moved, That the debate be now adjourned.—(Lord Ammon.)
  On Question, Motion agreed to, and debate adjourned accordingly.