IRON AND STEEL BILL

HL Deb 25 May 1949 vol 162 cc1077-143

2.42 p.m.

Debate resumed (according to Order) on the Motion for Second Reading moved yesterday by Viscount Hall.

THE PARLIAMENTARY SECRETARY, MINISTRY OF WORKS (LORD MORRISON)

My Lords, after the adjournment last night, at the end of a very long Sitting, when no fewer than fourteen of your Lordships had addressed the House, two for the Government and twelve against, I wended my weary way home ward, wondering whether it was still possible to find any new argument either for or against the Iron and Steel Bill. I wondered whether anything more could be said which had not been said several times over, either here or in another place. Just to check up, before I went to bed I looked at the House of Commons Hansard containing the Third Reading debate in the House of Commons. The first statement that caught my eye was that of an M.P. who said that during the Committee stage alone in the House of Commons 1,090 speeches were delivered, 700 for the Opposition and 390 for the Government. Idly turning over pages I was a little startled after reading that to find that in winding up on the Third Reading the leading speaker for the Opposition said: This Bill leaves this House for another place unwept, unhonoured and undiscussed. When I was an innocent Member of another place I often suspected that certain leaders of all Parties were inclined to allow their eloquence to run away with them and to lead them into slightly overstating their case. I fear they are still doing it. When we conclude our debate this evening I shall not object to any of your Lordships saying: "The Bill is unwept and unhonoured": but "undiscussed"—No!

The speeches delivered in your Lordships' House yesterday were, in many respects, similar to those in another place except, of course, that they were of a higher level and better delivered—as one would naturally expect. My first general conclusion, after hearing or reading, all the speeches, will not greatly surprise your Lordships. It is that the majority of your Lordships do not entirely approve of this Bill. When the Minister of Supply moved the Second Reading in another place on November 15 last, he said: It has been suggested that in spite of the electoral mandate which the Government received for this measure, it may be rejected—or suffer death by a thousand cuts in another place. So be it. In due course, your Lordships will, no doubt, take the steps which you think wise and prudent, quite irrespective of any advice from me. Indeed, it would be presumptuous of me to offer any. I gather, however, from the debate, so far as it has gone, and particularly from the very clear statement of the noble Marquess that, despite the well-known kindliness of noble Lords opposite, in this particular case they prefer to use the bloodthirsty method of death by a thousand cuts.

Trying to sum up these long speeches in both Houses on this "undiscussed" Bill, I believe that I have found one main point of agreement between the Government and the Opposition. It is this: that, so far as I know, no important member of any political Party desires to return to unregulated private ownership of the iron and steel industry. I doubt whether there are any of your Lordships who would not support that proposition. Will your Lordships listen for a moment to Mr. Oliver Lyttelton, speaking on November 15, 1948? He said (referring to the Conservative Party): We think that a great basic industry like the steel industry, employing a large number of men, and considering the widespread use of steel in other industries, and the power of the steel industry to contribute to our exports, is so important that it should have Government supervision.… We believe that the prices charged by the industry should be subject to Government supervision and approval.… The Government should govern and supervise and not own and manage. So there we are. The Conservative policy for the steel industry is: Government supervision; no competition, except with the consent of the Government; prices subject to Government supervision and approval; and that the Government should govern and supervise. I think we can all agree that this is a long way from the Leader's well known slogan, "Set the people free."

What is left between us? Again, if I may use Mr. Lyttelton's words, he said: The Unionist Party would accept a certain amount of Government supervision for the iron and steel industry provided that it stopped short of ownership. So I put this as a fair statement of the difference between us: the Government are competent to supervise the steel industry, to permit or not to permit competition, to decide on prices charged by the industry; are the Government, therefore, competent or incompetent to own it? I think that clearly states the publicly announced dividing line between the supporters of this Bill and the opponents. Indeed, it can be boiled down to this: that the supporters say this industry is so tremendously important to the people of the country that in view of the diffi cult days through which we are passing it would be unwise to leave it in private ownership; while the Opposition say that to take this industry out of private hands would be a mistake from which the country might never recover. I hope that is a fair statement of both sides.

Yesterday, my noble friend Lord Hall outlined clearly the reasons why the Government had produced this Bill. In view of the subsequent twelve speeches I doubt whether he succeeded in converting many of your Lordships to supporting the Bill. If he could not do so, I think the chances of my success are even less. Therefore, I do not propose to repeat the arguments for the Bill, good as they undoubtedly are. With your Lordships' permission, I will content myself with what might be called, if I may be forgiven for using the expression, a running commentary on yesterday's proceedings.

After my noble friend Lord Hall came the noble Viscount, Lord Swinton, who without waste of time proceeded, in cricket language, to hit out all round the wicket. If he will allow me to say so, I thought he was in sparkling form; I thought that perhaps his skipper had told him before he came in that the tactics in this match were to "hit out or get out." There was a little confusion towards the end of his innings, and I was a little uncertain how he finally got out. So far as I can recollect, I think that what really happened was that my noble friend Lord Pakenham, who was quietly fielding in a place known as silly mid-on, stopped a hard stroke which was going straight off to the boundary and caused the batsman to fall over his wicket. Lord Swinton was followed by the noble Lord, Lord Rennell, who proceeded to put some very difficult questions; but as he was looking in the direction of the noble Viscount, Lord Addison, and not in my direction I was glad to assume that he expected Lord Addison, and not me, to answer them; and I hope the noble Viscount will do so later.

Then came the noble Marquess, captain of his side, going in second wicket down—unusually early, as he indicated. Here I think I had better drop the language of the cricket field. The noble Marquess said that he rose to give guidance—and he did. I hope the noble Marquess will not be offended if I say that I thought the brilliant speech that he delivered was almost worthy of Mr. Churchill at his best. True, he used language seldom heard in this House; he called this a "revolutionary Bill," "a definite step towards Communism," "sinister," "grubby," "deplorable." I hope this kind of language is not going to be regularly used in this House, otherwise some of us on this side of the House will be indulging in recollections of the language used many years ago. I hope it is not our coming to this side of the House that has led the noble Marquess to indulge in language of that kind. There was only one familiar word missing from his speech; I do not know whether he forgot it—I hope he deliberately forgot it. It was the word "Gestapo" which, your Lordships will remember, lost his Party some millions of votes at the last General Election. I should like to congratulate the noble Marquess; I am naturally difficult to convince, but his speech convinced me of one thing at least—that he thoroughly disliked this Bill. What I could not understand clearly, if he will forgive my saying so, was the anti-climax of his speech. He will remain in my memory as the statesman (if I wanted to be rude I should say "politician") who, after using violent language about this most wicked Bill, proceeded to make a fervent appeal to his followers, assembled almost in mass meeting behind him, for Heaven's sake not to oppose its Second Reading.

I enjoyed the noble Marquess in his rôle of champion of private enterprise. I have never been able quite to understand that phrase as applied to ownership of the steel industry. It reminds me of the man who spent a holiday at Southport and said, when he returned, "Southport is all right. It is not in the South and it is not a port, but it is all right." Similarly, much of private enterprise is not very private and in many respects not very enterprising; but apart from that it is all right. I prefer to call it "private acquisition." At one part of his speech the noble Marquess quoted Shakespeare. When I hear a speaker saying he is about to quote Shakespeare, I know he is really getting into his stride. I hope the noble Marquess will think that I am really getting into my stride if I also quote Shakespeare. When I looked at the noble Marquess yesterday, surrounded by his faithful henchmen, denouncing the Bill as "ballyhoo" (not altogether a Shakespearean word, if I may say so) and trouncing the Government, a few words came into my memory: Why; man, he doth bestride the narrow world Like a Colossus, and we petty men Walk under his huge legs and peep about To find ourselves dishonourable graves. In much inferior words of my own, the noble Marquess appeared to me to be saying: "Out of the way, you members of the House of Commons elected by the people. We are the Lords of Creation and will dictate what you must do."

For the rest, I desire to pay my tribute to many excellent speeches, which indicated a great knowledge of the steel industry and brought out many points that my colleagues and I will find pleasure in answering during the Committee stage. There was one point, however (made, I think, by the noble Viscount, Lord Bridgeman, and other speakers), to which I wish to refer. In view of statements which have been made suggesting that the trade unions representing the workers in the iron and steel industry do not want nationalisation, it is worth placing the facts on record. The Iron and Steel Trades Confederation, which represents the great majority of the workers employed in the heavy branches of the industry, first adopted a resolution calling for public ownership in 1931. The Confederation's scheme for the socialisation of the industry was subsequently adopted by the T.U.C. in 1934. The Confederation reaffirmed the policy of iron and steel nationalisation at divisional conferences in 1943 and again in a report to the Government in 1945, when it declared that the scheme adopted by the T.U.C. in 1934 constituted the declared policy of the Confederation on the question.

It is true that no resolution on the question was moved by the Confederation or the Blastfurnacemen's Union at the Trades Union Congresses of 1946 to 1948, but it is not to be inferred from this that there was any change of policy in the matter. It was made abundantly clear, in the speeches made on behalf of the Confederation and the blastfurnacemen during the T.U.C. debates, that there was no departure from their previous decisions, and that they were content to rely on Government promises, which are now being implemented, to nationalise at the appropriate time the relevant portions of the industry.

The latest published affirmation of the Confederation's support for this measure, which puts its attitude beyond question, was contained in a resolution passed by the Executive Council of the Confederation on November 16, 1948, and quoted by the Parliamentary Secretary in another place. The text of that resolution was as follows: The Executive Council of the Iron and Steel Trades Confederation welcomes the Steel Bill and places on record its satisfaction that the Government are now introducing a measure to bring the industry under public ownership. It repudiates the suggestion which is being made that the workers in the industry are opposed to nationalisation. Its policy on this question has never altered since it first advocated a scheme of public ownership of the industry in 1931 which was later adopted by the Trades Union Congress. Since 1945 it has accepted the assurances given by the Government that within the life-time of the present Parliament the industry will be nationalised, believing that this course is necessary for the future of the industry and the well-being of the country as a whole. The Confederation, as the principal trade union in the industry, assures the Government that its members will do all in their power to ensure the success of the scheme when it becomes law. If sufficient time is to be afforded for the ten or twelve other speakers who desire to speak to-day, it would be unreasonable of me to answer even generally many of the other arguments that were raised by previous speakers. In particular, I regret that the only comment I can make about the speech made on Scotland last evening by the noble Lord, Lord Clydesmuir, is that, so far as my knowledge of Scotland goes, Scotland will continue to show as much private enterprise when this Bill becomes law as it has always done.

In conclusion, may I now say what, in my opinion, this most enjoyable day that we spent yesterday was all about? It all happened because of a Bill which says that in the Year of Grace, 1950, the mighty iron and steel industry, upon which our population of 50,000,000 is largely dependent and upon which our survival as a great nation largely depends, ought not to continue to be the private property of the few but should be publicly owned. With many and loud protestations your Lordships opposite say, "No." Hoping to placate them—for we do our best from these Benches to placate them—we reply, "Well, it will not be so bad after all. The shareholders will be compensated." But that only makes them more angry still, and they reply: "We do not want your compensation money; and, besides, it is not enough." I think I had better leave the issue there, in the hope that, before the final stages, your Lordships may realise that in this rapidly-changing world the Conservative Party cannot for ever continue to maintain a system of private ownership of things vital for the needs of all. Here, as I feared—I hope the noble Marquess will forgive me—I must again emulate him and quote from Shakespeare, because I know that his words will be remembered while mine will soon be forgotten. I quote from memory: … you take my life When you do take the means whereby I live.

3.5 p.m.

LORD TEYNHAM

My Lords, I am sure we have all listened with great interest to the noble Lord who has just sat down. In his very charming way, as usual, he has endeavoured to put forward answers to the very difficult questions which were raised in yesterday's debate. But I am bound to say that I find all his answers very unsatisfactory. I suggest that it is perfectly clear, from the introduction of this Bill, that the Government are concerned neither with good economics nor with the national interest, but merely with power politics. What do we find in this Iron and Steel Bill? I suggest that there is not one single clause or line in the Bill which will contribute in any way to the efficiency of the iron and steel industry. In fact, the Bill does not even indicate how the proposed new Iron and Steel Corporation are to administer the network of public companies which are to come under their control.

We have heard from the noble Lord, Lord Morrison, that no one in any Party wishes to return to unregulated private enterprise, and I think that we all agree with him. But I would like to ask the noble Viscount who is to reply for the Government later to-day why it is considered necessary to disturb the present system of good relations in the industry and, also, all the arrangements for Government supervision which has preserved all that is best, flexible and efficient in private enterprise. It is not in any way an unregulated industry. I suggest that the present system represents a unique and successful experiment of a middle way between unregulated private enterprise and Government control; and, what is more, I believe that it is acceptable to a large majority of all thinking people in this country. The real trouble is, I think, that His Majesty's Government will continue to legislate for the past, instead of for the future.

We have heard from time to time—not in your Lordships' House, it is true—that one of the main arguments for nationalisation is that the iron and steel industry is the key to the capitalist's citadel, and that once this citadel has been stormed and entered and the power of the steel barons broken, then Socialism in our time will really be an accomplished fact. As I say, we have not yet heard that argument in this House, and I hope we shall not hear it. The fact is that practically everyone at the head of the industry to-day has risen from the ranks, and the industry is owned by a vast number of small shareholders. I suggest that the Government already have sufficient public control for any need that may arise in the industry. It may be argued—I think it was mentioned yesterday by one noble Lord—that the powers of the Iron and Steel Board were negative, rather than positive, and that for that reason they could not initiate new developments and new enterprises. Surely, if the Board at any time felt that their powers were not strong enough, they could have co-operated with the Iron and Steel Federation to work out a more effective plan. We should then have had evolution, and not revolution, in this great industry which is now to be allied with political dogma and out-of-date theories which have already been shown to be wrong in other nationalised industries.

Under the present set-up, the various steel companies have been able to carry out their own policies, and have been free to make their own decisions under the guidance of the Iron and Steel Board. What is going to happen when all these hundred companies come under the sway of the new proposed Iron and Steel Corporation? Surely there is bound to be a tendency for managements to cease to feel responsible for their undertakings; and frustration, delay and discontent are bound to arise. We have seen this happen in other nationalised industries, and again we shall see efforts which should be directed to improving the industry being drawn away to unproductive work, such as administrative readjustment and so on. What is more, I think, we shall find that labour will require something out of nationalisation, and there will be the usual demand and pressure for higher wages. Administrative costs will go up and inevitably, as night follows day, the price of steel will rise, and we may find ourselves priced out of the world markets—not a very happy position to find ourselves in when Marshall Aid is coming to an end. I think no one can dispute that labour relations in the industry have been a model of co-operative good sense, If all this is to be swept away by the Moloch of nationalisation, the men in the industry will feel themselves further away from the boss than ever they have been in the past. Grievances which have frequently been settled in the board room will now have to be ground away in the bureaucratic wheels of this mammoth organisation, and that is bound to cause delay and unrest amongst the men in the industry.

The main charge that I levy against His Majesty's Government is that by the introduction of this Bill they intend to destroy a nucleus of a new and promising set-up in industry which has worked well and produced all that has been demanded of it—a set-up which is neither undiluted private enterprise nor complete State ownership, but which has succeeded in giving the country a high output of steel and peaceful labour relations. I believe that it is true to say that His Majesty's Government have inherited from the past a rancour and prejudice against private enterprise which seems to blind them to the future. The only solvent they appear to have for this rancour and prejudice is State ownership, regardless of whether it may be good or bad for the industry and the country.

My Lords, I suggest that what is required to-day is not the concentration of power in a huge monopoly, with all its attendant faults, but a scheme in which private enterprise is left to do the work of production and trading and the Government are left to act as an impartial overseer, with powers to guide the industry in the direction of national interest. All that this Bill means is that the State will abdicate its present impartial position, and will become an arbitrary competitor in a large field of industry. Private enterprise does not in any way fear competition on level terms, whether from a public Corporation or elsewhere. But, by the nature of things, how can these terms be level? Surely there exists the danger of preferential treatment! It is true that an Amendment has now been inserted in the Bill in another place to try and prevent the Corporation from showing undue preference, but such undue preference might equally well be shown by the public companies, and, as the Bill is now drawn, I think it would be difficult to bring an action against the Corporation.

There is another matter which I think will arise as a result of the nationalisation of the iron and steel industry, and which may well involve the country in serious international difficulty. When the world knows that the State is the owner of practically all British steel-producing units, and attempts are made to vary the price of steel in order to re-enter, or perhaps retain, the foreign markets, all kinds of complications will arise which may well be very detrimental to this country. Can it be doubted that foreign countries will look upon subsidiaries of a British State Corporation carrying on activities within their own countries in a quite different light? Can it really be that His Majesty's Government fondly hope that our overseas customers will be fooled by the façade that is now to be erected in this Bill in order to make it appear that our famous steel firms are still under the same management and control? It may well happen that when this change has taken place our overseas customers will no longer have the same confidence as they have at present in these firms; and our exports may suffer. I need hardly remind your Lordships that steel, and articles made of steel, represent nearly 50 per cent. of our export figures.

In this Bill the Government seek powers far in excess of those obtained in any previous nationalisation measure, and yet these powers and intentions are far less precisely defined in it. As in the case of all previous nationalisation measures, the Government have been absorbed in the theoretical case for nationalisation, but have paid little or no attention to the practical problems; and in the end the taxpayer, as usual, will have to pay for this lack of planning.

In spite of all the noble Lord, Lord Morrison, has said about the Iron and Steel Trades Confederation, I think it is gravely open to doubt that the majority of the steel workers in the industry are really in favour of nationalisation. Even supposing they were, it would be because they have had so much false propaganda put upon them by the Socialist Party. There is no doubt that the Party opposite have done their best to persuade the workers in the iron and steel industry that nationalisation will give them greater security of employment. But, my Lords, it will do nothing of the kind. Nationalisation will lower efficiency and steel prices will rise, and that must inevitably mean less demand for steel; and less demand for steel means less employment. Even a nationalised industry cannot get over these economic facts. In the last year or two the steel workers have seen what has happened in the nationalised airlines, and in other nationalised industries, where it has been found necessary to discharge quite a number of workers, and I think they are beginning to realise that nationalisation is no insurance against unemployment.

The iron and steel industry, as we all know, has surpassed all expectations and its success is marvellous; I think that is acknowledged on all sides. Output is at record levels, prices are low and competitive in foreign markets, and labour relations are excellent. Why do the Government wish to disturb this industry by passing a measure which will contribute, as I suggest, nothing to the efficiency of the industry and which only erects a new and less accessible monopoly? I suggest the real answer is not far to seek. We can see it in a speech made by a Government supporter in another place, when these words were used: When we have nationalised steel we shall have broken the back of capitalist control of industry and its domination for ever, and if that happens, whatever Party is in power, we shall be a Socialist State. My Lords, that is the purpose of this Bill in all its naked ugliness. The issue of steel nationalisation is the vital issue between democracy and Socialism and the establishment of a complete Socialist State.

3.20 p.m.

LORD LAYTON

My Lords, I have no special interest to disclose, but I am probably one of the few people in this House who happen to have approached this question of the State in relation to the steel industry at close quarters from both sides of the table. The Leader of the House will recall that it fell to my lot in 1918 to prepare the plan for the demobilisation and decontrol of the steel industry in the following year. A year later I had the task of organising the National Federation of Iron and Steel Manufacturers as its first director. Two years later I parted company with the steel industry owing to a difference over policy, because at that time I had discovered that the steel-masters were not prepared for a sweeping measure of rationalisation, and any such scheme would be frustrated by the many sectional organisations in the industry, whose sole purpose was to control prices in the interests of the trade. Subsequently, I happened to come into contact with the same problem during the Second World War.

I intervene in this debate because I would like it to go on record that, as a result of my experience, my conclusion is that this Bill involves taking an unwarranted risk with our most essential industry at a very critical moment in the economic history of the country. During the recent debates—I mean the debates which have taken place in the past few months—a great number of bad arguments have been put forward, one of which was particularly lucidly dealt with by my noble friend, Lord Rennell. It would be tempting to follow on similar lines, but I do not propose to do so. Nor indeed do I propose to touch on all the points which were raised yesterday. But as the noble Viscount, Lord Hall, referred to the question of whether the people of the country were or were not in favour of this Bill, I should like, again for the record, to note that in a recent Gallup Poll the voting was two to one against the Bill. I know that the result of the Presidential Election in the United States has cast a certain doubt on Gallup Polls, but even the severest critic of such polls would hardly claim that the margin of error is such as to convert a two-to-one majority against into a majority in favour of the Bill.

A further point that is interesting in connection with the Gallup Poll is that when the same question was put a year previously the result had been a tie. So, during the twelve months of 1948, public opinion, as recorded in that way, has moved from a position of doubt and uncertainty to a very definite majority against steel nationalisation. But, after all, these are not matters which we can suitably debate here. They serve only to underline the significance of the proposal made yesterday by the noble Marquess the Leader of the Opposition, that the right course to pursue is to leave the question to be decided by the vote of the people.

The first speaker said yesterday—rightly, in my opinion—and it has been repeated again and again, that there are a number of points of common ground from which we can start the discussion of this measure. The first is, clearly, the enormous importance of the industry. The size of the industry was also mentioned to-day by the noble Lord, Lord Morrison, who seemed to think that because the industry was big therefore it should be nationalised. We on this side of the House cannot possibly accept that view. The test is not whether an industry is big or not. The test is whether the form of organisation proposed by the Government is suited to that industry and most likely to promote effective efficient production and services for the community. Secondly, we all accept and agree that the State has a vital interest in the steel industry. There cannot be a return to laissez-faire, and we cannot assume that competition alone will produce all the results which the public interest requires. The State must therefore have some powers of direction and control, and in particular, in the tight place in which this country finds itself after the Second World War, the fiat of the Government must run in such matters as capital expenditure, prices charged, localisation in relation to our resources generally and defence.

Thirdly—I am not quite sure how far this would be accepted by all the speakers who have spoken in opposition to the Bill, but it is my own view—I should not include myself among those who dismiss the criticisms that have been made of the iron and steel industry in the past. Indeed, during the early part of this century the industry undoubtedly passed through a period of great stagnation. The industry in its present form is less than a hundred years old, for the Bessemer converter was invented only as late as 1857. In the early part of this century, the industry was having a reaction after its first brilliant period, owing in part to the fact that it had fallen into the hands of ironmasters of the third and fourth generation. But after passing through the pressure of the inter-war period, the industry has made very great strides and, particularly in the last ten years, has had a great measure of success which even the critics of the industry have acknowledged.

I would add a fourth point of common ground between us—namely, that the problem of the iron and steel industry is utterly different from that of any other industry which has been nationalised during the life of the present Government. That is shown by the different character of the solution proposed, for while there is to be a transfer of power—to use Lord Hall's phrase—the State is going to keep in being the separate units of the industry. A compromise is to be attempted between power in the hands of the State and some kind of independent existence of the units. That brings me to the central point, which has already been repeated a number of times and which I do not propose to deal with at length. It is that the sole test of whether a policy is good or bad in this industry is whether or not it makes the industry increasingly efficient, progressive—particularly in the matter of the adoption of new processes and methods—adaptable to changing circumstances, and such that in its development, its localisation and its activities generally it conforms to the requirements of national policy.

If ever these conditions were necessary—particularly the conditions of adaptability and flexibility—they are necessary now in respect of the iron and steel industry. Those of us who are opposed to the form of this Bill believe that the essential conditions for a vigorous industry—this also has been mentioned a number of times—are (a) that control and ownership should be divorced, not joined; and (b) that the units should be sufficiently independent to maintain internal competition. In this connection, it cannot be too forcibly insisted that the iron and steel industry from its outset has been and still is a constantly changing industry. But it is significant that at every stage the changes have been made against the weight of authority. Take, for example, the introduction of the Bessemer process. What a hard fight Sir Henry Bessemer had to overcome the resistance of the ironmasters of those days! Move on a number of years to the Siemens' open hearth process, and then a further ten years to 1879, to the introduction by Thomas of the basic steel process. That was an English invention, but it was an English invention which largely created the German iron and steel industry and enabled Germany to challenge Europe and the world in the First World War. All the weight of English authority was against its use in this country.

Critics might say that that was the fault of the steelmasters, and that if only the State had had something to do with it, it would have gone ahead with this new process. That is certainly not the case. Twenty-five years later, in 1904, the late Sir Hugh Bell did his best to persuade the Royal Commission on Food and Raw Materials in Time of War to lift the ban on the use of basic steel for defence purposes. He failed. Eleven years later, in 1915, as the Leader of the House will well remember, Mr. Lloyd George had one of his hottest battles to overcome this ban, imposed, not by the steelmasters, but by the Army and Navy authorities. If that ban had not been swept away, the great munitions effort of the First World War would have been impossible. If we were to go through the history of the British iron and steel industry, we would see that all the way through progress has been made against the weight of conservative authority, a weight all the greater in the case of Government authority.

If the iron and steel industry is to regain its dynamic keenness of development and go forward on an expansionist line, it must be independent in matters of technique and process. It is imperative that there should be great freedom and elasticity. It may be said that this is now impossible because the industry has already become a monopoly. But to argue along those lines is to misunderstand the character of the British Iron and Steel Federation. It is true that there are some monopolistic features in that organisation, including the very important one of price control, but this is exercised in conjunction with the Government. If we use the word "monopoly" in the sense of a highly centralised organisation, then the British Iron and Steel Federation is certainly not a monopoly but a federation of independent units.

Of course, it has common services, as it should have, but it is an organisation of separate entities which possess the characteristics of private enterprise. These are, first, freedom to compete in process and method, secondly, competition in forms of organisation, and thirdly, absolute freedom in the choice of personnel—a characteristic that is vital for a dynamic, pushful industry, which is to keep free from the hampering incubus of bureaucracy. The continued existence of such concerns will be determined by their ability to keep afloat by making profit. If firms in the industry have those three conditions, they have the essentials of freedom of enterprise; but if not, then the danger is that the industry will be weighted down by bureaucracy and develop stiffening in the joints. It seems to me that there is no guarantee against the Corporation imposing stratification and standards of method or action on the iron and steel industry. I can see nothing in the Bill to ensure that the conditions of freedom, liveliness and competition will exist in the industry in its new form.

At the beginning, I said that the issue is one between control and ownership. It is common ground that the industry must obey orders. But there is all the difference in the world between general orders issued to an industry by a controlling authority, and special orders which are delivered to every firm in connection with its own business. Where there are special orders, the management ceases to be independent. The gravest danger of the Bill is that it will suppress and kill not only the willingness but the desire to take risks on the part of those who are responsible for the British iron and steel industry.

It has been said that while the Government have negative powers, they cannot really ensure the public interest unless they also have positive powers; they must have powers, it is said, not merely to restrict, but to tell each firm what it is to do. That criticism does not seem to me to be a valid one. In the first place, it is not true that negative powers are practically ineffectual The State has great powers in many spheres for directing the course of the activities of our citizens, and in the main these are negative powers. But there is a further answer. I believe there are very few groups of business men who, while they run their businesses for financial reasons, do not regard themselves in some respect as public servants, as men whose work is integrated into the life of the community. Very few, if any, groups of business men will not carry out the wishes of a Government Department if the reasons why a thing should be done are made clear to them. And I believe that to be true of peace as well as of war. My last word to the representatives of the Government on the opposite Front Bench is that there has been no clear indication of the policy which has been projected. If what is needed further in the public interest is made clear, I personally do not doubt at all that it will be carried out by the British Iron and Steel industry. At all events, try it.

3.40 p.m.

VISCOUNT DAVIDSON

My Lords, in accordance with the custom of the House I declare my interest in a firm affected by the Third Schedule of this Bill. I do not propose to take up much of your Lordships' time, but there are three or four points to which I should like to refer. A certain amount has been said during the course of this long debate with regard to the effect of this Bill upon the interests of consumers. I should like to say a word or two about that aspect of the Bill. I happen to be President of a body of engineers, organised regionally, and they form a microcosm of the greatest users of steel. They are not a political body. Their arguments and their reasons for opposing this Bill are purely economic. I will weary your Lordships for only a moment or two by reading their view.

They regard this Bill as harmful to every engineering firm, because it would disrupt the steel industry, splitting it into three sections—nationalised, licensed and free. It would substitute a rigid central executive control (the Iron and Steel Corporation) for the present system whereby there is Government control of broad lines of policy and of prices, but under which individual firms preserve their independence and vie with one another in achieving the utmost efficiency and in studying the needs of their consumers. Moreover, it would bring Government-owned units in the engineering industries into direct competition with privately-owned undertakings, thereby prejudicing the fair allocation of raw materials and licences.

What is it that the consumer of steel requires? He requires the right steel, at the right time, at the right place and at the right price. Under this Bill there is no guarantee—in fact, in our view, there is exactly the opposite—that the consumer will have any of those four requirements satisfied. Having said that, I would like to comment on what the noble Lord, Lord Teynham, said with regard to the effect of this Bill on our export trade. It has been my experience to travel the world, and there is the greatest difference between firms having diplomatic support and the Government being principals in a contract. Bulk buying, we know from bitter experience, has put up the price of many commodities; and bulk buying suffers from exactly the same defect as that from which the steel trade would suffer if it were nationalised. It is this. Where there are relations between Governments it is impossible to exclude politics. One of the dangers of nationalising steel is that a foreign client, when considering contracts for public works or for capital plant, will think twice before he engages himself with a Government rather than with a private firm, where he has a remedy in the courts if there is a breach in the contract of any sort or kind. After all, we have had experience of bulk buying—I think it would be unwise even to comment on it at the moment, because the negotiations have reached a critical stage; but your Lordships know to what I am referring. The relations between Governments must ultimately always be on a political basis. Whereas, in the case of private enterprise, if there is any breach of contract there is a remedy in the courts, there is only one ultimate sanction when difference between Governments is carried to its logical conclusion; and that is war.

The noble Lords, Lord Teynham and Lord Ridley, referred to what is, in the long run the most vital factor in the production of steel—namely, the relationship between the partners in the team. I desire to be restrained in my language, but those of us who are connected with the trade, and feel our responsibilities for the welfare of these men, deeply abhor the methods which are being adopted to win the support of the men engaged in the industry for the scheme of nationalisation. I have evidence of men in leading positions as leaders of their fellowmen in the iron and steel trade, who have been told by men who know it is not true that if the steel industry is owned by the Government there will be full employment and that, come slump or no slump, they will continue to make and roll steel. The only reason, in the case of many of the men, for their support for this Bill is the belief that they will be safe in their employment. Anyone in a position of responsibility who uses that argument in order to gain support for any political policy is deserving only of contempt.

I have lived most of my life in the shadows, in that part of London where policy has been created. When the noble Marquess the Leader of the Opposition was delivering his attack upon noble Lords on the Government Benches (Lord Morrison and I were old colleagues in another place, and I hope we are still good friends), and on the ultimate intention of the Government to acquire not only through the nationalisation of the prosperous iron and steel industry but also through the nationalisation of the great insurance undertakings—a great deal of wealth, of which they were very short I could not help feeling that since our standards in public life must be maintained it is the duty of the Opposition, if they find the standards are going down, to use their opportunities of criticising. They should do that, not in order to be just futile or annoying but in order to try and see that standards are maintained.

There is one other thing I would say. There is no justification whatever for this Bill. The steel industry, as Lord Layton has just said, was not always perfect; it was reactionary. The steel industry has learned its lesson. It organised itself long before the Government had any idea of organising it. It was private enterprise that created the Iron and Steel Federation, which enabled us to come into the war fully organised. We were organised on the external side, and we had also so organised our export machinery that we were able to take advantage of markets which hitherto, owing to our cut-throat competition, we had lost. We have realised fully in the steel industry the dangers from which we suffered, and I think everybody will now admit—even the Government will admit this; and perhaps that is the reason why they want to nationalise us—that we are as efficient as any other industry in the country. If we are opposing this Bill it is because we feel (I oppose it, and I do so mainly on this ground) that the result will be the exact opposite of that which the Government believe will follow. I believe the livelihood of the men will be jeopardised, and the initiative will be lost. I think it is public knowledge that it was during the deepest depression that a great firm with which I am connected took the risk of building the Sydney Bridge. They did it to keep their men employed. What was the result? The result was that British expertise, design, craftsmanship and quality of steel became famous all over the world; more bridges were built by Great Britain, and in that way more men were employed. Would nationalised industry take that risk? I am perfectly certain that it would not. I am not going to say anything more, except that I shall oppose this Bill with all the vigour at my disposal.

3.51 p.m.

LORD KERSHAW

My Lords, no one could have listened to this debate during the last two days without realising that noble Lords opposite—the noble Lord who has just sat down is an example—speak with sincerity and conviction. There is no doubt that the debate, so far as it has gone, has demonstrated once more how fortunate this country is in having at its disposal such a wealth of knowledge and experience. But, unlike many noble Lords on the other side, I have no interest, vested or otherwise, to disclose. I speak as a citizen who tries to take an intelligent interest in these matters. We have listened to a long debate, a debate which I think, boiled down, might have been compressed into one speech. Members of the Opposition have repeated over and over again the same arguments, and I imagine that for the rest of this debate we shall hear much the same thing again. We have had a perfect orchestra. The noble Viscount, Lord Swinton, was the first violin and set the pace. But I submit that the whole of the debate has been based on two very serious fallacies. First, we do not say, and never have said, that the justification for nationalising the iron and steel industry rests upon proving a case of inefficiency. Secondly, we do not assume, as noble Lords appear to assume, that on the vesting date the leaders of the industry—the ironmasters, the technicians and the management—will, as by some virulent poison, change to a lot of gibbering maniacs. That is the suggestion behind so much of what has been said on the other side.

The Bill provides, in a unique manner, for the continuance of the industry with the least disturbance. There will be as much scope for the technicians as there is to-day—probably more. Therefore, I am submitting that the main arguments upon which nearly all the speeches have been based are on unfounded premises. It has been suggested that the nationalisation of the iron and steel industry, and all other industries, is something new in the Socialist programme. The noble Viscount, Lord Bridgeman—I am sorry that he is not here—has tried to raise again the bogy of Communism. Now it is rather dangerous to label every aspiration of the working class as springing from Communism. It is dangerous in respect of such matters as those with which we are now dealing, and dangerous in the wider field of international unrest. A great part of this surging forward of the working man is a perfectly legitimate aspiration, and it is manifest in one country in one way and in another country in another way. Our way is the way which has been taken in this case—by the ballot box and by the election of a Socialist Government. If a Socialist Government were to be untrue to the principles which they have adumbrated for a generation, then there would be more danger of the Communism which is feared than otherwise.

In the few minutes I propose to speak, I will not deal with some of the obvious misunderstandings which manifested themselves in the course of yesterday's debate; they will probably emerge on the Committee stage and will be dealt with then. My noble friend Lord Morrison dealt with the suggestion that there had been no demand for this Bill by the workers in the iron and steel industry—a point to which the noble Viscount, Lord Davidson, referred a moment ago. I think it can be accepted that, if the nationalisation of iron and steel were not proceeded with, some unrest would be manifested in the iron and steel industry. But the Labour Party does not legislate for sectional interests. My noble friend Lord Hall touched on the fundamental basis of this matter when he said yesterday that the logical sequence of social democracy is economic democracy. If democracy is to govern, it must take over basic industries. Some of us have been concerned for many years with the building up of this great Labour movement, and we are not content merely to change the name of these organisations. We say that ways must be found whereby the workers in the industry—notwithstanding that there are exceptions to what I am saying now—must find a channel through which they can express themselves from the bottom to the top.

I had sent to me the other day a treatise on the relationship between workers and management by a young man who I think is an inspector in one of our engineering industries. I am not suggesting for one moment that what he says is right or wrong. What I am suggesting is that, throughout industry, the more intelligent of the working people are thinking along lines of wanting to take an active part in the executive direction of industry, and they will be worth cultivating for the sake of the industries as well as for the sake of themselves. Some of your Lordships have postulated that even though it might at some time be proper to nationalise the industry, this is not the time to do it. There, there is a fundamental difference between noble Lords opposite and ourselves. We believe most profoundly that if we, as a nation, are to regain and maintain the standard of living to which we have been accustomed, the sooner we nationalise and bring under national control the basic industries, the sooner we shall get to that standard of life we all desire. Every week, every month, every year's delay in doing that will put back the time when we can hope to recover.

But the whole of the debate, so far as I have been able to gather, has been concerned with what I call the mechanics of the industry—including, of course, finance. There is something more than that, however. The relationship between worker and management will have to be studied by all Parties and some solution to the problem will have to be found. Noble Lords opposite may be likened to Canute. They will attempt, as they always have attempted, to thwart the rising of the common people to higher standards until the pressure becomes too great, and possibly dangerous. It may be good political strategy for the noble Marquess, Lord Salisbury, to promise, as he has promised, to give the Bill a Second Reading. I hope it may be possible that the Government will be able to meet him in the suggestion that he made with regard to the vesting date.

THE MARQUESS OF SALISBURY

I am glad—if I may interrupt the noble Lord—to have the opportunity of clearing up this point, for there has been a certain amount of misapprehension in the newspapers. It is the whole of the coming into operation of the Bill that I suggest should be postponed until October. There would have to be consequential Amendments with regard to the vesting date, which will come at a later date. It is not merely the vesting date, however, but the coming into operation of the Bill which I suggest should be postponed until after there has been opportunity of consultation with the people.

LORD KERSHAW

I am not very much concerned. I am sure we all understand what is in our minds. But, as one who has been concerned with the administration of the law for many years, I attach importance to the dictum that not only must justice be done, but that it must appear to be done. I am glad that, thanks to the generosity, I nearly said the patronising generosity, of the noble Marquess and his followers, a Second Reading is being given to the Bill, so that it will be possible for the wealth of knowledge and experience which has been manifested in this debate to be directed to an impartial and objective examination of the measure at a later date.

4.4 p.m.

LORD BRAND

My Lords, if the noble Lord, Lord Morrison, is correct and there are no further arguments either for or against this Bill to be put, I am afraid I shall be wasting your Lordships' time. But I think the noble Lord may have listened, as I did with admiration, to the speech of my noble friend Lord Layton, and may have learned something from it. I do not say that I can teach your Lordships anything, because I am not acquainted with the iron and steel industry and I have no interests in it. Nevertheless, I want to put to your Lordships certain arguments which perhaps may throw another light on this Bill. I regard it as against the interests of our Parliamentary democracy, and against our economy in general, that the Government should own and work competitive industries, and particularly industries concerned in the export trade. What we are debating to-day is, in my view, part of one of the greatest problems of our time—namely, what, in a free Parliamentary democracy, is the sphere of government, and what is the sphere of the private citizen, considered not only from the point of view of freedom but of the standard of living. No one denies the immensely important sphere of government in our financial, monetary and economic life. It is an important sphere in all countries; it is doubly important in ours, because we are the furthest possible away from being a closed economy. We have to secure the best standard of life for 50,000,000 people on our crowded Island, and yet we are necessarily exposed to influences, good and bad, from all the rest of the world.

In these circumstances I regard two things above all as being necessary. The first is a Government which devotes itself to maintaining, so far as possible, stability and equilibrium in our central monetary and exchange framework and also our elasticity—and this is a point that Lord Layton particularly stressed—in our adjustment to world conditions. The second thing that is necessary is a Government which does not itself try to conduct the country's foreign trade, but leaves the vital energies of the nation free for that purpose. The sole reason why we have 50,000,000 on this Island is our unparalleled success in the nineteenth century, through free enterprise, in building up an immense foreign trade in relation to our size and in making great foreign investments throughout the world. Times are now much more difficult, but in my view our objective must still be the same.

I need not do more than refer briefly to some highly important duties of government—I think sometimes they are forgotten—in the sphere of central control. They include, as your Lordships well know, control of currency and ex change, and the preservation of our ultimate reserves; control of Government expenditure to secure that taxation is not too burdensome; control of inflation and deflation; and control of aggregate demand and purchasing power in relation to our productive capacity, in an attempt to prevent booms and slumps and to minimise unemployment. These are the really important functions of government, to which all Ministers, and not only the Chancellor of the Exchequer, should devote their minds. I admit that such functions are very distasteful and very difficult, and that it is certainly much easier to nationalise a few hundred firms and think you are doing good. These functions of Government are indeed very difficult—just because, as I have said, we are so far from being a closed economy.

In this connection I should like to re-echo the noble Lord, Lord Kershaw, by mentioning King Canute again. The Government's control, and whatever powers they exercise end at the seashore. The more rigid our system inside our boundaries, the less able we are to adjust ourselves to world price movements; then the more troubles we shall face. I need not dwell on present difficulties caused by the difference between our prices and world prices, although at present the ensuing problem is an extremely difficult one for all our exporters. But the Government cannot act like King Canute, and forbid world prices and their influences to touch us. One way or another, we must adjust ourselves to them. I regard this lack of elasticity, as we now have it, as our greatest danger.

My complaint, indeed, against Socialism is that it leads to rigidity. Most Socialists do not like the price system, that system which a distinguished Liberal-Socialist economist recently called "the miracle of a properly working pricing system." They do not like the freedom of markets. They think the human brain can manage and plan everything. It cannot. I myself think that Socialism is more easily experimented with in countries like Australia and New Zealand, where there are ample resources and small populations. But it is a totally different thing in this country, where we cannot stand what one might call a rather static society, such as I think exists in those countries I have named, as com pared with one other country that I know well—the United States. We cannot stand that sort of society. We have to make every conceivable effort, and use every kind of free enterprise, in order to keep our great population in possession of a reasonable standard of life.

With all these questions of central Government control, and the maintenance of elasticity, the nationalisation of iron and steel has nothing whatever to do, except to add further rigidities, more bureaucracy, less freedom and less initiative. I might add that of course the nationalisation of other concerns, which is suggested—such as Tate and Lyle, the Prudential Assurance Company and the Pearl Assurance Company—also has nothing whatever to do with the serious problems that face us. I sincerely trust that, when the Labour Party finally decide to settle their policy on these matters, they will think better of what is now proposed with regard to those companies. When I speak of insurance, I do not know whether it is necessary to declare my interest, but I tell your Lordships that I am chairman of a big insurance company in this country. I can assure the Government that, in proposing the nationalisation of any insurance company at all they are treading on very dangerous ground, if they wish to safeguard the interests of this country, our interest in earning dollars and the interests of great British concerns abroad.

From reading the debates in another place, I do not think that either the Chancellor of the Exchequer or the Minister of Supply claimed that steel nationalisation had in fact anything to do with the real problems of government to which I have referred. To my mind, it has little to do with our modern economic problems. It is almost purely political, a legacy from the past, from Marx and the Webbs. It is a successful slogan which is dear to Socialists, because propaganda for it has, I suppose, contributed to their victory hitherto more than anything else. In the nineteenth century, for reasons which no longer exist, nationalisation was advocated because there was supposed to be too great power in the hands of too few and profits were supposed to be divided too unequally. But those arguments no longer exist. In view of generally held opinions now, it is a curious reflection that, even when nationalisation was first suggested in the nineteenth century, the standard of life was rapidly increasing under private enterprise. The other day I happened to read a book by a great economic historian of Cambridge, Sir John Clapham, in which I found the statement (which I must say surprised me) that between the years 1850 and 1900 the general standard of life of the community, the great mass of people, increased by 75 per cent. In those fifty years it nearly doubled in real value, and, but for two wars, it would be very much higher now than then. The basic fact is that if more wealth is produced, and those who create it are adequately rewarded so that enterprise continues, then consumption must increase among the great masses of the people. Under private enterprise, consumption has greatly increased, and it would, no doubt, go on increasing if there were, in the future, sufficient rewards for enterprise.

The Chancellor of the Exchequer and the Minister of Supply used entirely other arguments than those used by those whom I may call Fabians in the nineteenth and twentieth centuries. Mr. Strauss had the hardihood to say that the nationalisation of iron and steel would increase the standard of living; or, in other words, that it was certain the Government would produce more steel by less human effort than is being done now. I have not seen anywhere any argument that could hold water on that score, and I cannot think that any man who knows anything about business would support it. Sir Stafford Cripps argued that there was a direct and inevitable conflict between private owners and public interest. How could that be? It is equivalent to saying that in all private enterprise there is a conflict between private and public interest. If you are a farmer and you produce food, is there a conflict between private and public interest? If there is a steel-maker and he produces steel, is there a conflict between private and public interest? It seems to me to be an assertion without truth, and on that point Sir Andrew Duncan's speech at the time seemed to me unanswerable.

The main argument of the Chancellor of the Exchequer was based on strategical and planning necessities. On this point I fully agree with what the noble Marquess, Lord Salisbury, said yesterday. If there were sufficient demand, whether from the Government or private interests, how could it be that the steel companies would not produce the steel that was needed if there were the labour and material available to produce it? Would the argument be that, in the United States, unless the Government at Washington controlled the steel industry, that country could not count on sufficient steel being produced to meet its strategical requirements? It seems to me absurd to suppose that the Russian Government must be able to get the steel they want because they control the country's steel industry, whereas the United States may not get the steel it wants because its Government do not control the steel industry there. It is difficult to take seriously an argument like that.

In my opinion the real steam behind the argument for nationalisation is a continued widespread tendency towards what I may call the levelling process in this country, the hatred of any poppies whose heads are higher than others. I remember when I was at Oxford reading in a book by Sir Henry Maine (a great lawyer of a somewhat earlier time), a prophecy that democracy would never cease levelling until any excrescence above the plain had been levelled. We have gone a long way towards that end, and it seems to me that we are still having to fight against going further.

There is one argument, perhaps, to be considered in the case for nationalisation of iron and steel, and that is the argument for monopoly. Here I would fully support what Lord Layton said. It is a strange consequence that those who hold the view that there is a monopoly, create a greater and bigger and better monopoly. I deeply regret that the fruitful experiment in the iron and steel industry of seeing whether, in such a great industry, co-operation between the Government and private enterprise could not be worked out is now to be destroyed, because it is perhaps on those lines that we could solve the great problem of this age—namely, where do we draw the line between what the Government do and what private enterprise does. It seems to me tragic that, just when we had an opportunity to try to solve that problem, on a basis that left freedom to industry, we have destroyed it. It is useless to say that in order to get what they want the Government must control an industry and own it as well. I might cite a case in the insurance world that comes to my mind. Take the State of New York, where there is a Superintendent of Insurance. They have very rigid arrangements by which the Superintendent of Insurance follows everything that the companies are doing, insists on certain conditions being carried out and, in general, has a very considerable sphere of control. But that in no way limits the complete freedom of the companies to carry on their own business, to run their business throughout the country. It is in that direction, I think, that we may find a fruitful solution to these problems that now face us.

I should like to go back for a moment to the strong reasons that I think exist against Governments carrying on the export trade themselves. The strongest reason is that even if one limits oneself to iron and steel companies—and still more if one looks at exports as a whole—our products are infinitely varied. We are not like Russia, where the Government export trade consists of a few bulk products. We export, I do not know whether it is a thousand and one things, or ten thousand and one things. We have to copy still far more countries like Switzerland, in having to live on our skill, our wits and our craftsmanship, and to export whatever we can make to every part of the world. It is impossible to suppose that the Government can carry on such a trade. Moreover, export trade is a matter of personal relationships, and close working agreements with foreign countries. Often English companies own whole businesses abroad, or hold shares or investments in foreign businesses. Export trade, as Lord Layton pointed out, requires the utmost flexibility and quick decisions, qualities which are not particularly shown by Governments. Perhaps your Lordships will allow me to state that all this applies with still greater force to such great earners of invisible exports as shipping and insurance, both very highly expert trades.

As Lord Davidson pointed out, Government trading by us provokes Government trading on the other side. If the British Government buy meat, it will be the Argentine Government, not the Argentine packers, who sell it; and business becomes diplomacy. If the British Government own businesses in foreign countries, how shall we view foreign Governments owning businesses in England? Would we prefer the United States Government to own the Vauxhall Company or General Motors? Do we look with pleasure on the Government of one country owning businesses in another country? Do we think that that will bring peace, or will it bring a sword? Those who have lived their lives in what I may call the profit and loss world, have a greater sense of the extreme complexity, the variety, the instability and riskiness of the world at large, than perhaps have academic intellectuals or even great lawyers who, though they may have dealt in profits, have never had to make a loss—except that sometimes they have to consider other people's losses. Why should we suppose that great businesses like steel, requiring expert, detailed, lifelong knowledge, can be controlled on their heads by Ministers without experience—because in the end, whatever this Bill says, the Minister must have the final responsibility. Why should we suppose that the Minister of Food, for instance, burdened with a thousand and one things, can easily conduct and be responsible for great operations in the middle of Africa?

My conclusions can be briefly stated. In my view, it is essential for our country's interests that our export trade should be conducted by traders and not by the Government. It follows that the exporting interests must necessarily control their own businesses at home. In other words, the Government should not nationalise industries engaged in export. My argument may not apply so strongly to an industry like coal, where the export is a bulk product, though it may be found that it applies even there. It certainly applies to industries where exports are very varied in character. The more the Government extend nationalisation and diminish the area of free markets and free adjustment of our prices to world prices, the more our exporters are going to be ground between rigid conditions at home and, possibly, quite contrary conditions abroad. Your Lordships will be well acquainted with the old saying that one should not swap horses when crossing a stream. We are crossing a very dangerous stream now. Nevertheless, as has been pointed out, the Government are intro ducing in a great industry not evolutionary changes but revolutionary changes, without any clear ideas of what they intend. If the wiser elements among them cannot stop this rake's progress, I can only hope that the electorate will be sensible enough to help them.

4.30 p.m.

LORD ROCHDALE

My Lords, it is generally realised, I think, that in productive industry in this country, a major part is played by the medium and small-sized firms, which concentrate, to a large extent, on specialised high-class products, and, in fact, provide a remarkably high proportion of our export trade. It is from the point of view of the firms who produce those specialised products, these small firms, that I want to approach this matter for a few moments this afternoon. Recently, as a result of the close connection which I have with one of the trade organisations which has, I believe, the largest membership of any, and that deals primarily with the smaller firms, I have had the opportunity of ascertaining the reaction of many of these undertakings to this Bill. Their reactions follow closely those which have been described by many of your Lordships during the course of the debate. They have asked certain questions. They have asked the now familiar question: Is this Bill likely to produce more steel? They have asked: Is it likely to produce cheaper steel?

But one particular question which I do not think has been dealt with quite so fully in the debate so far, and which they have underlined invariably is this: Will the industry under the Bill, when it becomes an Act, retain that flexibility which enables them, as users of its products, to obtain the particular quality they require as and when and where they want it; that flexibility which also encourages producers to continue their constant endeavours to find new methods, new forms, with new characteristics, in order that they may comply with the new specifications that the more progressive industries are continually putting forward? The noble Viscount, Lord Falmouth, touched on this point to a certain extent yesterday, and he mentioned one or two particular cases in which special requirements were called for by special industries. I need not give a list of similar cases. One could quote many from the chemical industry, from the scientific instrument-making industry, from the motor car industry and so on. But, generally, from this point of view, I find it difficult to regard the future with any feeling of complete assurance.

The fact of which supporters of this Bill have spoken, that the industry under nationalisation will start off with its various company organisations ostensibly as they are now, to my mind, to use the words of the noble Viscount, Lord Swinton, is no more than a "temporary façade." Once the new Corporation is established it will be bound to be held responsible for everything that goes on in the industry; and in self-defence, if for no other reason, it will be bound to put its fingers more and more into the day-to-day working of the industry. Perhaps it will do this slowly at first, but the movement will gather momentum and, despite the best will in the world on the part of individual members of the Corporation, I am afraid that that flexibility, which these industrialists have mentioned over and over again, will gradually give way to rigidity and a steady slowing up in all its operations. I do not believe that to be mere theoretical surmise. I am convinced that it would be fully borne out by the experience of other nationalised industries. With regard to the particular industry we are discussing, it has long been the case that the success of the engineering and other kindred enterprises has been due to the very intimate association between, and experiments carried out by, individual steel-makers and steel users, a fact which has never applied to anything like the same extent in the case of other industries, such as electricity, gas and transport, which have already been nationalised, though I admit that it did apply, to a certain extent though not to the same extent, in the case of the coal industry.

The question which one must ask is this: Is that intimate co-operation between producers and users going to be prejudiced? In so far as the same thing applied to the coal industry before, I am afraid that prospects for the future do not look very bright. It is perfectly true, as your Lordships well know, that the Corporation will have the power—as, of course, well they must—to carry on research work. But whether the Corporation will be prepared to use, or indeed will feel fully justified in using, public funds for research along any but the most logical and systematic lines of approach is, to my mind, very much open to question. In support of that opinion, I would ask your Lordships how many really great discoveries have been produced under State auspices in any country in peace time. Possibly there have been a number of great discoveries in war time, but not in peace time.

Are we in this country, who are, I think, right at the top in the matter of inventions, going to allow the position which we have gained to be lost? In considering that matter we must remember, of course, that there will remain the smaller firms who are substantially outside the scope of the Bill though, inevitably, not unaffected by it, those firms that come within the third column of the Second Schedule and those somewhat larger firms which will be allowed to operate under the licence clauses, Clause 29 and Clause 30. One might at first gain some measure of assurance from the hope that they will have a measure of freedom which would allow them to undertake the bolder or more speculative research, from which, as your Lordships know, really great inventions have sometimes grown. I do not think, however, that one can obtain a great deal of satisfaction down that path, because even if the smaller firms have the financial resources and the existing research resources at their disposal (and this is not at all clear under the Bill), I suggest that their incentive is bound to be damped when they see the reward of their enterprise and any growth which may follow from any success they may achieve, taken away at the discretion of the Minister, himself an interested party.

What is the alternative open to these smaller firms who wish to develop some invention they have produced and perfected? I suggest that if they are to get a fair reward for their effort and risk, the only alternative for them is to attempt to sell their discovery abroad. I hope I shall not be accused of making an unpatriotic and improper suggestion; because I agree entirely that, particularly to-day when we need all the modern methods obtainable to keep our export trade ahead, to sell an invention abroad would be an unpatriotic move. But who would be responsible for it? Responsibility would surely lie with those who had created the conditions that encouraged such a course. In other words, the responsibility would have to lie with the promoters of this Bill.

We are all users of steel, in one way or another. The criterion on which this Bill will be judged can be only the availability, quality and price of the kind of steel which is required for a particular job. Anything that may affect the user's right to select can do only harm, and prejudice the chances of the economic recovery of this country. Yet that is a dangerous possibility which I see in this Bill. It is true that in Clause 3 the specific duty is laid upon the Corporation to see that their products: are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest … While it is easy to lay down that responsibility, it is quite a different thing to carry it out. In the first place, what exactly is the public interest? Who is to determine it? It is the Corporation, which is itself interested. After all, the public interest cannot be a matter of fact; it must be a matter of individual opinion. This Bill lays on the Corporation far more detailed and, therefore, far more onerous responsibilities than were ever laid on the Iron and Steel Board, responsibilities that could be effectively carried out only by a corporation of supermen, who we all know do not exist.

There are two further points I want to make which also arise from what I have already said. The first concerns Clause 3. In this clause the Corporation are given wide powers, either through publicly-owned companies or subsidiaries, and although they are not allowed to exercise unfair discrimination in the disposal of their Second Schedule products which may be used for manufacturing purposes, there seem to be no restrictions whatever as regards the disposal of products which have been carried a stage further, or of finished products. This seems to me a dangerous and wholly unfair provision to keep in the Bill, and I hope the noble Lord who is to reply will say something about it. Certainly the point is not covered by Clause 6, as interpreted in the interpretation clause, Clause 58. My last point deals with the question of the licensing of the smaller steel-producing firms. Why is this necessary at all? It surely cannot be that the Government fear that the industry will get too big, when we consider the claims that the Government have made that in the past the steel-owners have kept the industry too small. Surely it is an admission of the possibility, which many of us fear, that this great monopoly is bound to become slower in its reaction and less efficient, and therefore bound to become much more susceptible to competition from smaller outside firms, so that it will need something in the nature of this licensing procedure to protect itself. If that is the answer—and I believe it is—Clauses 29 and 30 are totally incompatible with and indeed contradictory to Clause 3, which lays down that the Corporation are to promote the efficient and economic supply of their products. I can see no reason whatever for this anomaly except one obvious reason—political expediency. That being so, I wholeheartedly support the course the noble Marquess the Leader of the Opposition has suggested to us in this debate.

4.48 p.m.

VISCOUNT BRUCE OF MELBOURNE

My Lords, I imagine it would be appropriate to declare that I have an interest in this Bill, even if a somewhat remote one. That interest lies in the fact that I am Chairman of the Finance Corporation for Industry, who have lent something over £50,000,000 to the iron and steel industry. I shall have a few words to say later with regard to the Finance Corporation, which was referred to yesterday by the noble Viscount, Lord Hall, in moving the Second Reading of this Bill.

This measure cannot possibly be separated from what, to my mind, is one of the greatest issues that we are up against in this country at the present moment—that is, the whole question of nationalisation and public ownership as opposed to private enterprise. That is a question we all have to keep very much in our minds, because there is a growing feeling that this is a fundamental issue which separates the two great Parties in the State. I think that that is complete nonsense. There are thinking men on both sides who do not take extreme views on this question. There are those who believe in nationalisation who yet see clearly that there are many industries which in no circumstances should be nationalised. There are many who are totally opposed to the general principle of nationalisation who admit that there are certain great activities, such as electricity, water and power undertakings that unquestionably should be under State ownership. It seems to me that this issue has to be clarified. If we are to go forward on the basis that this is the fundamental issue that concerns us all in this country, that will have a disastrous effect upon the industry of the country as a whole, as I hope to make clear in a minute. It seems to me that this is another occasion when your Lordships' House might give a great lead to the people of this country in securing a little more clear thinking up this particular subject.

Take the example of coal. Coal has been nationalised and, so far as I know, there is nobody in this country who is now saying that coal should be denationalised if there is a change of Government; so far as I know, it is an accepted fact. It is not made sufficiently clear, to my mind, that the coal industry has accepted that it has been nationalised, and there is now no controversy about it. Unless that is made perfectly clear, we have to realise the effects upon our efforts to increase exports and to restore our economic position. Just think of the position of coal. We all recognise that during the nineteenth century, in our struggle for industrial supremacy, we devastated our coal resources, getting the cheapest coal we could to maintain our position. We now have to go back over our tracks and reorganise and modernise that industry. That means the expenditure of millions of pounds, and the Government have undertaken that expenditure. I think most people recognise that private enterprise could not have done that. This expenditure will not give a return for a considerable period, and private enterprise has to get a return for its money; it cannot leave its money indefinitely without return.

I would remind your Lordships what has happened about this, because if this issue remains in the political arena the Government will not achieve success with their capital expenditure on the coal industry. For the year 1947 the Coal Board operated and showed a loss of £23,000,000. Promptly the anti-nationalisation forces rose up and said: "Look at that; that is the result of the Government controlling an industry." The forces of nationalisation were not going to stand for that from their opponents, and they promptly raised the price. For the first three months of 1948 they showed a profit of £500,000; for the next three months they showed a profit of £1,000,000; and for the third three months they showed a small loss. We have to realise the effect of that brawling between the nationalisers and non-nationalisers. The increase in the cost of coal has put a penalty on every one of our industries, just at the time when we are struggling to increase our exports, when we are running out of the sellers' market which we have enjoyed and are entering upon a buyers' market. The price of coal is put up to offset the attacks of the other side; probably transport will follow in its wake, and if iron and steel is nationalised, I suppose the same thing will happen there.

It seems to me that we have to recognise that some industries are suitable to be nationalised and some are not; and when those suitable for nationalisation have been nationalised, let us then get on with the job of making sure that the various Boards are doing their job properly. In that atmosphere I feel we would attract back to the industries the men with the knowledge and experience who could really make them successful. We have to view this measure in the light of that situation. Each industry has to be weighed on its merits, and in deciding whether an industry should or should not be nationalised there are three tests which I think ought to be applied. Accepting what was said so well by Lord Layton, that industry has to be run for the maximum benefit of the community as a whole, we should examine the industry from the point of view of, first, whether it could be better run if it were nationalised; secondly, whether if the industry were left in private hands, the necessary finance could be found; and, thirdly, whether those controlling the industry are exploiting the public.

I want to take those three points in relation to the iron and steel industry. Taking first the question of whether it could be better run by the Government, so far as I know the Government are offering no complaint as to the way the iron and steel industry is being run at the present moment. All its records seem to show a considerable measure of efficiency: production targets have been reached, prices have been kept down and the relations with the workers are admirable. I share the view of the noble Lord, Lord Layton, and of other noble Lords, that there was a period when it was difficult to pay tribute to the way in which the iron and steel industry was run; but at the present time it is being admirably handled.

During the time of the Coalition Government the Iron and Steel Federation were invited to work out a five to seven year plan for the development of the industry. That they did, but they did not complete their work until there had been a change of Government and the Labour Government came into office. The Labour Government took that plan and proceeded to create the Iron and Steel Board. That Board was composed of seven members, two representing the Federation, or the private employers, two representing the trade unions in the industry, an independent chairman, Sir Archibald Forbes, who did admirable work, Sir Wilfred Ayre, a great shipbuilder, as a representative of the consumers, and Sir Alan Barlow—the last-named being of the Treasury but not sitting as a Government representative. That Board examined the proposals which the Federation had made for the long-term programme. With certain modifications they approved the proposals, and the question then was one of implementing that long-term programme. The implementation is done by the firm or company with a development project submitting it to the Iron and Steel Federation—that is, the employers' body. They examine it to see whether it fits in with the general long-term programme, and whether it is a sound proposition. If the project meets with their approval, it goes on to the Iron and Steel Board, and they consider it in the same way. If they approve the project, it can then go forward—with the one other proviso, that the raising of the necessary finance has to be approved by the Capital Issues Committee.

There, it seems to me, you have the almost perfect working out of what Lord Brand referred to as co-operation between the Government and industry. It is real co-operation, where the development plans of the industry, because of the close contact, can be so framed as to fall into the general economic policy of the Government. Why the noble Viscount, Lord Hall, in introducing this Bill, brushed aside this admirable method as being some sort of temporary expedient that might carry on for a long time is beyond my understanding. It seems to me one of the greatest and best developments that we have had in the industrial life of Britain.

The second point is: Can the industry obtain the necessary money? From the noble Viscount's speech, I rather gained the impression that he suggested it could not be obtained from private sources. I want to challenge that. The five to seven years' programme, which was approved by the Steel Board, contemplated an expenditure of about £160,000,000 over that period. Because of the severe rise in prices which has taken place, that figure is now estimated to be equivalent to £200,000,000. If there had been no nationalisation rumours, scares and fears, I think the noble Lord, Lord Brand, will agree that a great part of that money could have been raised through the ordinary channels in the City, and from the general public. Because of the scares that had been created, they could not raise any of it.

Fortunately, however, towards the end of the war there were people with some vision, and they created the Corporation of which I have the honour to be the Chairman, the Finance Corporation for Industry. Because of the war we were running all our machinery to death and could not do any modernisation. It was thought that when the war was over there might be huge plans involving vast sums of money and tying up the money for a long time. Consequently, it was decided to mobilise the credit of the City of London, and this was done by forming the Finance Corporation with a capital of £25,000,000 and borrowing powers of £100,000,000. The mobilisation took place by securing 40 per cent. of that capital from the great insurance companies, 30 per cent. from the big investment trusts and 30 per cent. from the Bank of England. That was done in the days before the Bank was nationalised, and had nothing whatever to do with the Government; the Bank of England and the Governor, then Lord Catto, and before him Lord Norman, were responsible for the idea. I want to stress the fact that the Corporation was set up before the Bank was nationalised. The Bank is still a shareholder, but I want to refute the implication—I do not know whether it was suggested in the speech of the noble Viscount who introduced this Bill—that there was some sort of Government institutional character about this Finance Corporation for Industry—there was nothing of the sort. There is not the slightest control. The Bank, as I say, is a minority shareholder. I constantly saw the late Governor, Lord Catto, and I have several times seen the present Governor; but on no occasion has either one or the other endeavoured to put upon me any pressure as to what course my Corporation should follow.

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)

I would like to make it quite clear that at no time did I suggest that there was any link-up between the Government and the Corporation, or that the Government in any way influenced the Corporation. I dealt with the points put by the noble Lord, Lord Rennell, with regard to a certain amount of the finance found by the Bank of England. Of course, whatever amounts have been promised to the iron and steel industry, the major portion has not yet been paid, owing to the development. I well remember the then Chancellor of the Exchequer, Sir John Anderson, announcing the formation of the Finance Corporation of Industry, and the general impression which was left upon my mind—and am sure also upon that of a number of my colleagues in another place at that time—was that industries who could raise money in the open market would be expected so to do, and were not expected to use the facilities of the Finance Corporation. I had that in mind when I made the statement yesterday.

VISCOUNT BRUCE OF MELBOURNE

I am obliged to the noble Viscount. The facts are as he has stated them. When the Corporation was formed, Sir John Anderson, as a Conservative, gave every assistance to it, I think mainly owing to the fact that it was private enterprise. I can understand any misunderstandings which have arisen, because I spent the first six months as Chairman of the Corporation trying to persuade the City that we were not a Government instrument, and that we were not owned by the Government. There has been general confusion on all sides. It is true that we do not find any moneys where they can be found through the existing channels; and I can assure your Lordships that that is an extremely embarrassing position for the Corporation to be in. When somebody brings the most attractive proposal we have to say: "I am sorry, but that is too easy for us; go and get somebody else to do it." But that is the position which exists. I say, without any question, that the whole of the £160,000,000 could have been found, and it could have been found even when it went up to £200,000,000.

To start with, we have borrowing powers of £100,000,000, but I am perfectly confident that by the system which has been created, with the consortium of the banks finding the money at the lowest possible rate of interest, so that we can make the advances in the initial stages of any new enterprise at the lowest possible cost to the industry, that sum could have been found; and, if necessary, we could have gone far beyond the £200,000,000. I can express that only as my view—the Government may have another—but I think I should have the general support of the City of London with regard to that.

The third point is that of exploiting the public. I do not think that there is any suggestion to-day that the iron and steel industry is doing anything of the sort. Even if it had any desire to do so, with the control which the Government now have through the Steel Board there would not be the slightest chance of its doing anything to the detriment of the general interests of the public.

Summing up, then, the three tests which have to be applied are: whether you would achieve better production under nationalisation; whether it is necessary to nationalise it because the finance cannot be found, and whether it is necessary to nationalise it to prevent exploitation of the people. I say that on all three grounds the case fails, and I believe it will be disastrous for the industry of this country if this measure goes through, and the iron and steel industry is nationalised. I said in the beginning that I am completely in sympathy with the nationalisation of the coal mines. I believe the nationalisation of the railways was necessary. I have the gravest doubts as to whether the Government were wise in nationalising road transport, but I am absolutely certain that it would be a fatal blunder to nationalise this industry.

Even if the case against it were not so strong, I would urge that, with all the difficulties which have been created by reason of this measure in regard to the development plans that are going forward, it would be a fatal thing to do. I think we should pay some tribute to those who thought of the Finance Corporation for Industry. If it had not been for that Corporation there would have been a hideous hiatus between the time when the Bill was brought out and the vesting date, which is not until next May. Quite apart from the Amendment which the noble Marquess, Lord Salisbury, indicated yesterday will be moved by the Opposition, I think that even the Government themselves see that the vesting date would have had to be put back to September or October. In the interval, but for the Corporation, all schemes would have had to be held up because the Government had not the authority to take over the industry. They could have taken the borrowing powers, but the schemes would not have come forward from the companies. So everything would have been held up but for the fact that the Finance Corporation were able to come into the ring. We have taken our courage into our hands and agreed to find the monies to keep this developmental plan going until this issue is decided. That, I believe, is a very great service.

I should also like to express my thanks to the Government for the fact that they have inserted Clause 14 in the Bill as a new provision, which has made it possible to do that which we felt was simply our duty: to try to stop the development plans being halted during this interim period. Even if the case against nationalising this industry were infinitely weaker than it is, I find from my contacts that it is catastrophic that the disturbance, confusion and general uncertainty which this Bill has created should have been brought into the major industry of the country just at a time when all our efforts are needed to try to get out of our present troubles.

5.11 p.m.

LORD HAWKE

My Lords, I am the twenty-third speaker; and by all the rules of the game I should be racing the horse and roller to the middle. Without meaning any disrespect to the noble Viscount opposite, I wish I had been the thirty-third speaker, because I regret to notice how few noble Lords have spoken on behalf of the Government. I do not know whether that is through lack of conviction about this Bill, or whether the delicacy of the arguments have to be left in only very skilled hands. One of those two seems to me to be the only possible explanation, but in either event I think it is regrettable.

I wish the noble Lord, Lord Kershaw, were here, because I am going to mention two points which he made in his speech. He mentioned that he thought this Bill would produce a great many opportunities for technicians. Well, my friends tell me that technicians in the electrical industry, so far from having great new opportunities, may have perhaps fifty pounds a year more, but they would sooner be back in the "bad old days" of private ownership, when there was less frustration to their new ideas. The other point of Lord Kershaw's which I was going to take up was his statement that he regarded Socialism and nationalisation as a defence against Communism. I think that when the relevant department of the Cominform is reading this debate a cynical smile will pass over the face of the clerk-in-charge, and he will surely mark the noble Lord's dossier in the archives of that department with an "S" for "Sucker," or whatever the Russian equivalent is. If we had had more speakers from the Government side they might perhaps have been able to explain to us why it is necessary that the "experiment" of nationalisation, about which Mr. Gaitskell recently spoke to the Electrical Trades Union, should be carried out on such a gigantic scale. Surely, if it is really an experiment, we have the "laboratory" of coal, and we could have kept clear of the rest until the experiment in coal had shown results.

The noble Lord, Lord Morrison, in a most amusing speech, referred to the Bill as an Iron and Steel Bill. But of course this Bill has nothing to do with the iron and steel industry; it is dealing only with certain selected portions of the iron and steel industry. I believe, therefore, that the whole of the noble Lord's remarks were irrelevant to the debate. When one is considering an industry for nationalisation one has to consider into which of three categories it would fall: would it be run better by the State; would it be run equally well by the State; or would it be run worse by the State? At the moment I can think of no industry that could be run better by the State; I am at a loss to think of one that would not be run worse by the State. In the case of steel, the best that noble Lords opposite could claim for it is that it would be run no worse and no better by the State, but that the existence of this huge basic industry in private hands is a constant challenge to the Socialist State, and that it must go.

Let us for a moment look at this thesis. We must first admit that nationalisation means ultimate responsibility to Parliament. It is true that Ministers "pass the buck" on every occasion to the Boards; but on matters of grave importance, on which they can give directions to those Boards, I do not think that they can shirk their ultimate responsibility. Indeed the lack of ground-nuts and the paucity of coal are explored very fully in Parliament from time to time. This means that the Board must pursue policies ultimately defensible in Parliament; or perhaps it would be fairer to say that the Boards must not pursue policies that are indefensible in Parliament. From this flows an important consequence. Every nationalised industry must, like the Civil Service, keep careful and complete records of everything it does and its reasons for doing it. It must always be prepared for an inquest. This means cumbersome consultation on everything it does—and, of course, frightful delays.

Now look at the other side of the matter. How is a great business built up and run? I suppose it would be true to say that in addition to the qualities of integrity and hard work, the thing that counts is the ability to take the right decisions at the right time: when to plan for greater output; where and when to build new works; when to reduce prices, and so on. It is the cumulative right decisions of that sort that produce successful and great businesses. The leaders of private industry have to take those decisions, but they need not justify them individually to anyone. They cannot avoid some bad decisions, but if they make too many bad decisions profits suffer, and they have to face their shareholders. They certainly do not need to have a reason on the file for all their decisions and the process of arriving at those decisions. Therefore it is perfectly possible for them to take the unobvious and unpopular decision, if their minds lead them that way. They do not have to defend the unpopularity. Moreover they can act with speed, which means that they can act by instinct and not by reason—and the instincts of a good business man are worth far more than a chain of reasoning on a file.

That is where private ownership has an immense advantage over State ownership—particularly where industry has to meet movements of markets or of fashions. The Boards must have a reason on the file, and that reason must be defended in Parliament. Ultimately, it is the unobvious which is indefensible, and the obvious which is always defensible—even if it is wrong. You plead the weather—if one of your colleagues has not made a copyright of that alibi. If any proof of this is wanted, take the case of the Minister of Supply himself. His family run, or have run, a large and successful business from which they are reported to have made a considerable fortune, supplying base metals to the industries of this country at the high world prices. In doing this, they were able to give full rein to their remarkably acute instincts. Are the performances of Mr. Strauss, the Minister of Supply, in supplying the same metals to the same industries, going to be equally profitable to his Ministry or to the industry? I very much doubt it. Mr. Strauss, as a Minister, has to follow reason with an explanation on the file, and he is not at liberty to employ the very sound instincts which he doubtless has inherited in these matters.

It would be difficult to imagine an industry which could survive those handicaps. Even the Post Office, it seems to me, has never had the telephone facilities which the instincts of its engineers must have told them would be necessary, but which they have never been able to justify to the Treasury in the cold light of reason. For these reasons, I believe the steel industry to be utterly unsuitable for public ownership. It is dependent upon the higgling of the markets, both here and overseas. There are hard and uncomfortable decisions to be made. Decisions which must involve the Minister in difficulties in Parliament, must be taken, and they have to be taken quickly. I do not believe that they will be taken. The profit motive may be an unfortunate outcome of the Fall of Man, but the vote motive is one which will serve the community less well. If we want to get rid of both, we end up in Totalitaria. And that is precisely where some of the protagonists of this Bill want to see us.

5.22 p.m.

VISCOUNT SAMUEL

My Lords, my noble friends on these Benches, Lord Rennell and Lord Layton, have already spoken on our behalf and have presented powerful arguments against this Bill. Other noble Lords from other parts of the House have done the same, speaking with a wealth of knowledge of the industrial and financial aspects of the steel industry which I make no claim to possess. Therefore, my observations will be brief. I have listened with close attention to the speeches of the spokesmen of the Government, the noble Viscount, Lord Hall, the noble Lord, Lord Morrison, and the noble Lord, Lord Kershaw, to see what specific answers they would give to the various heads of indictment that have been brought against this Bill. I am bound to say, with perfect candour and sincerity, that I found those replies quite unconvincing. I am sure that that was not because of any lack of talent on their part in the presenattion of a case. If they had had a case, they would have put it forcibly; if they were not forcible, it was because they had no case to present.

In other industries which have been nationalised, the whole situation has been carefully examined beforehand, usually by impartial Commissions and Committees. Evidence has been taken, Blue Books have been presented to Parliament, the matter has been studied and it has been the subject of widespread public discussion; but in this case Parliament is asked to decide regarding one of the most vital industries, on a case which is wholly undocumented. It is said that the industry is subject to monopolistic practices. It is true that, in some respects, it does have the characteristics of a monopoly, or a quasi-monopoly. The question then arises whether that leads to abuse or not, and, if it does lead to abuse, what is the best remedy—whether it should be nationalisation or whether it should be some other form of control. This House and the other House only last year dealt with this very matter and passed the Monopolies and Restrictive Practices (Inquiries and Control) Act. By general assent, with the support of all the Parties, it was determined that a procedure should be set up for inquiring into precisely such a case as this. Why has that procedure not been invoked? If the Government have conclusive reasons to show that the steel industry is a monopoly and subject to the defects of monopolies, why have they not submitted that case to the very Tribunal which they themselves have set up for that purpose? One can only believe that it was because they could not have faith in what the verdict of the Tribunal might be.

How often have I heard the Leader of the House, Viscount Addison, in debates on these matters, assert that it is not true to say that the Labour Government are engaged in a policy of indiscriminate nationalisation, regardless of the merits of each case. He has repeatedly affirmed on the contrary—and he now assents to what I am saying—that the burden of proof rests upon those who propose nationalisation, and that they have to establish reasons in each particular instance why it should be done. To that I have answered on previous occasions, and I must do so again to-day, by quoting the Objects of the Party to which he belongs and on which the present Government is based, which in unmistakable terms deal specifically with this very point. The official copy of the Labour Party Constitution and Standing Orders, which is obtainable from their head office, states in Clause 4, as one of the Party Objects: To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible, upon the basis of the common ownership of the means of production, distribution, and exchange, and the best obtainable system of popular administration and control of each industry or service. Therefore, their procedure has been to state the conclusion first and then to try to find justifications for it afterwards. That is what they are doing in this instance.

I am sorry that the noble Lord, Lord Kershaw, is not in his place. I sent him an intimation that I was going to call in aid an observation he made. In his speech this afternoon the noble Lord stated, or rather re-stated, this very clearly and frankly. He said: "The nation has returned a Socialist Government to power. A Socialist Government must not be untrue to the principles they have adumbrated for a generation." This is our assertion to which I invite the Leader of the House to reply, if he can. We say that they are proceeding upon the basis of a foregone conclusion which was adopted years ago and is now being applied step by step, in instance after instance, whenever opportunity offers. There is no question whether there is a good case or a bad case. The fact is that iron and steel is a basic industry and therefore, as a basic industry, it must, under the Objects of the Labour Party, in some form or another be nationalised. Having adopted that as one of their Objects, they have occupied a position from which, as it has been said on a different occasion, they can neither advance with safety nor retreat with honour. It is that principle which, more than any other, divides the two progressive Parties, Liberals and Labour, in this country. This industry, this Bill, is a test case. Here the issue becomes for the first time crystal clear and is a matter of practical and immediate politics, because in the other examples a case has been made out. Recently the railways, electricity and gas, have all been nationalised, with the assent not only of Socialists but of other sections of the community. The coal mines were perhaps a boundary case, but on the whole a strong case can be made out for their nationalisation. The question had been fully and repeatedly examined on many occasions. These were all industries where comparatively little risk had been involved in the conduct of the industry. They are not wholly standardised industries—certainly not the coal mines—but to a great extent they are standardised. The question of export trade does not arise in the cases of the railways, electricity and gas; and with regard to the coal mines the dominant position of our export trade in coal involves little matter of risk. The steel industry, however, is entirely different from all those.

As my noble friend Lord Layton pointed out clearly to-day, there is no industry which in itself is more unsuited to nationalisation than iron and steel. It is continually changing. Every generation the whole set-up of the industry differs from what it was twenty, thirty or forty years before. Risks have to be taken at every step. The whole body of our export trade, directly or indirectly, depends upon the success and efficiency of the steel industry. Management is the whole essence of the matter. It is not a question of rules and regulations that can be laid down by a Board. Quick decisions have to be taken every hour and every day, and if those decisions are wrong the business is inefficient and loss is sustained. Profit and loss are the stimulus and the test of efficiency. My noble friend Lord Layton pointed out these differences, and that it was essential that the managers of the steel industries should maintain their independence and initiative and, above all, freedom in choice of personnel.

But then the Government say, "Oh, well, the industry will go on the same as before. As a rule, they will have the same directors. The same people will be managers." The same names will be over the shop door, so to speak. But from this time onwards, as soon as this Bill passes, there will be one difference which is absolutely fundamental; and that is that responsibility will be divorced from ownership. The companies may remain nominally, but all their stocks and shares are pooled into one common Government stock, and no one management will have any direct interest in its own success. By this Bill the Government are taking the mainspring out of the mechanism of this most vital industry, on which so many other industries depend and with which our foreign exchange balances are so greatly concerned. It is, to my mind, a most dangerous speculation, and there is no reason for it, except the reason to be found in Clause 4, subsection (4) of the Objects of the Labour Party. That having been laid down, the Party, feeling in honour bound to their Socialist supporters to carry through those objects, the People, Lords and Commons all have to submit.

To my mind this Bill has in this debate been riddled by argument. The Liberal Party oppose this Bill. They have done so in another place, they do so in this House, and they will do so in the country. We concur in the course proposed by the noble Marquess, Lord Salisbury, and we will support and push to the end the Amendment which he is about to propose—namely, to postpone the date when this Bill shall come into effect in order that the whole matter may be submitted to the judgment of the nation.

5.35 p.m.

LORD BALFOUR OF INCHRYE

My Lords, we are coming to the end of this two-day debate, and according to the mathematical calculation of my noble friend Lord Hawke I am the twenty-fifth speaker to take part. I am sure that all sides of the House appreciate the knowledgeable and wise contributions that have been made from every quarter. What struck me so forcibly, and it may also have struck some of your Lordships, was that so many of the speeches which, to use the words of Lord Samuel, riddled the argument in favour of the Bill, were delivered by noble Lords who do not have any strong Party affiliation, who have only the interests of the country at heart and who see grave dangers to our nation through this proposal. Even though I am the twenty-fifth speaker, I think I would prefer to be the twenty-fifth rather than the twenty-sixth, the Leader of the House, because he has a heavy task in front of him if he is going to answer some of the big questions of importance and is in any way to endeavour to redress the heavy balance of argument against the Bill which has been put forward from every quarter.

My Lords, the twenty-fifth speaker can find little new to say. Nevertheless, with your Lordships' permission I would like to dot some of the "i's" and cross some of the "t's" of the main speech made on behalf of the Government by the noble Viscount opposite, Lord Hall. If I may say so, he made a most charming speech, based on assertion, interlaced with accusation, in place of reason and argument. His main point was that the power of the steel industry, economically and strategically, was so great that it should be in the hands of Parliamentary control. I would like to examine that for a moment. On the strategical aspect he said that for strategic reasons the Government cannot leave the steel capacity of this nation to private enterprise. To support that the noble Viscount used the analogy of the Royal Navy. I have his words here. He said: 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 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 … So to-day it is essential for our defence needs that the State should own a large part of the steelmaking resources of this country, so that we can be assured that the defence position is always safeguarded. That is a powerful argument for nationalising the mercantile marine; but the nationalisation of the mercantile marine is one of those things that the Government have given an assurance they are not going to undertake. It seems to me that if the noble Viscount wants to use that argument he should use it in connection with something mo[...] appropriate than the steel industry. It would be interesting to know whether he can justify its use in connection with the steel industry, and whether the Government can at the same time retain their political integrity and deny the nationalisation of the mercantile marine. Perhaps we may hear something more about that later.

My Lords, I would like to ask this question of the Government: When has the industry, in peace or in war, not responded to the call of the Government of the day for defence purposes—even to keeping the old plants alive at the Government's request, for which we are now reviled on political grounds in the introduction of this Bill? Mr. Churchill has testified that in two wars the industry has never failed any Government, and I would say that we on this side of the House who object to this strategic argument can claim to be as good guardians of the security interests of this country as, at any rate, the Party opposite. Perhaps some of those who advanced this strategic argument, some of the members of the Cabinet, not excluding the Chancellor of the Exchequer and the Minister of Health, might search their own consciences on their speeches and their attitudes to defence matters before the war before they invoke security in support of this Bill at the present time.

I want next to take an argument which was advanced by the noble Viscount, Lord Hall, and supported by Lord Morrison, that this is a monopoly that must be broken down. Lord Morrison said that this industry is "the private property of the few." Let us examine, for a moment, this question of "the private property of the few." I understand that there is some £380,000,000 invested in the steel industry. Take six big companies, and you will find that half their capital is in bundles of less than a thousand shares. One-third of the companies' shareholders have less than 500 shares. There is one particular firm I could name in which the shareholders just about outnumber the employees: there are approximately 16,000 employees and 16,000 shareholders. So that industry is not owned by a few. There might be something in the charge if made accurately—I could argue that, but I will not do so—that it is managed by a few; but it is a complete and erroneous fallacy to say that it is owned by a few people.

In order to save time, I want to accept, so far as I can, the Government's arguments. So for the moment, let me accept the Government argument that the Bill as proposed is not going to give the Government total ownership of the industry. The noble Viscount, Lord Swinton, yesterday showed that in respect of the heavy forging industry the Government are going to take 45 per cent. and that 55 per cent. will remain free. In the matter of steel wire the Government are to take 60 per cent., leaving 40 per cent. to remain free. At the present time some 2,000 firms are under the supervision of the Iron and Steel Board, and the Government are going to acquire, according to the figures of Lord Hall, some 250. Therefore, the claim that the Government are acquiring the whole of this industry to break down a monopoly is not substantiated by facts. The dictum of both Lord Hall and Lord Morrison was that Government control must be linked to Government ownership. I think that was answered very effectively yesterday by the noble Earl, Lord Dudley, in a speech in which he gave us the benefit of his great knowledge and experience, and also to-day by Lord Brand and Lord Bruce, who showed that in peace and war since 1932 there has been evolved in this industry a system of public supervision in respect of policy, in respect of prices and in respect of markets, and that there has been no dictation by any monopoly in respect of these particular and important activities.

May I ask your Lordships to think back for a moment to some three or four days ago, when we debated the Irish question in this House, and the noble and learned Viscount who sits on the Woolsack said this: We are perhaps an illogical people but I believe that we have great gifts of tolerance and of compromise. In a curious way we have evolved a technique of the amalgam of private enterprise and State control, and it seems to me that when the noble and learned Viscount pleads for tolerance and for understanding in respect of Eire, and says that we as a nation have this peculiar quality of finding a middle course, often indefensible in theory but working in practice (unlike Socialism, which is often indefensible in theory and unworkable in practice), it is not wrong to invoke that same plea in respect of our own people and our own systems. The Government are now going to sweep all this away because of this political figment of imagination that there is some wicked monopoly. Our charge from this side of the House is that the public interest will not be protected from an alleged monopoly—whose existence we deny—by the Government creating another great, powerful monopoly of reality hedged about and protected by restrictive legislation.

As the noble Viscount, Lord Samuel, said (it is one of the worst things about being the twenty-fifth speaker that someone else always makes the points which you are going to make and you have to put your pencil through them one after another), why do the Government not put this industry before the machinery of their own creation for dealing with monopolies? The Commission of the recently passed Monopolies and Restrictive Practices Act could judge this industry fairly and publicly, and the country could then see what an impartial Tribunal, set up by the Government, thought of the charge of monopoly. Now, by State monopoly, the consumers and users of steel are going to have no protection in this country except the rather toothless one of the Consumers' Council. In this monopoly, of course, the power is to rest with the political Minister, and, through the political Minister, with Parliament. Nominally, there is talk that the boards of directors will remain independent, but as the noble Viscount, Lord Samuel, and other speakers have pointed out, there is going to be one owner, one master—the Minister. When James I wanted the judges to be the servants and handmaidens of the Crown his ally, Lord Chancellor Bacon, said: Let the Judges be Lions—but Lions under the Throne. Now, if there are to be steelmasters, the Minister of Supply says: "Let there be steelmasters under my office desk where I can control them."

I want for a moment to pass to the charge of inefficiency in this industry. Lord Hall was careful to say that he did not ally himself with that charge. Lord Kershaw was careful to say the same thing. I would recommend Lord Kershaw to a reading course—I would recommend him to read: Let Us Face the Future. If he reads Let Us Face the Future he will see that the justification for bringing in this Bill rests upon a charge of inefficiency. Let Us Face the Future refers to Private monopoly which has maintained high prices and kept inefficient high-cost plants in existence … and says Only if public ownership replaces private monopoly can the industry become efficient. There seems to be some difference of opinion between the Minister and his supporter, Lord Kershaw, and the official writings which come from his own Party machinery. Mr. Aneurin Bevan has said that it was because between the wars the steel owners had made money by not making steel that there was now a shortage. A charge against this industry of inefficiency is made, if not in this House, certainly in Labour Party circles. There is no need for me to repeat the arguments put forward so clearly and positively by the noble Viscount, Lord Swinton, and by the noble Lord, Lord Rennell, and others, who have refuted that charge of inefficiency. I think that all sensible men are on common ground here: first, that in output the steel industry has achieved its target of 100 per cent. pre-war export; secondly, that wages have increased to a figure which compares not unfavourably with wage increases in other industries; thirdly, that industrial relations are good; and fourthly, that money has been raised and, as the noble Viscount, Lord Bruce of Melbourne, said, could still be raised by private enterprise for the re-equipment programme.

We ask, where in this Bill is there any prospect of increased efficiency and lower prices, as compared with what private enterprise has achieved? It has been pointed out that, since nationalisation, the price of coal has increased on an average by 6s. 6d. a ton; since nationalisation gas has increased in price, and electricity charges have also been increased. There are no signs in this Bill that the products of the steel industry will be produced at lower prices, and we fear very much that steel will follow the course of other nationalised industries. There is no description of any new plan in this Bill to achieve the declared Government purpose of improving on the present efficiency level. I think we are entitled to press the noble Viscount the Leader of the House on this point: Where is the plan which shows that the industry will produce more efficiently and more cheaply than at the present time? If the noble Viscount can answer that question, he will go a long way to reassure those of us who fear the future.

The Times is certainly not a paper always favourable to the Conservative Party, but it is a very impartial and authoritative organ. I would remind your Lordships of what the industrial correspondent of The Times said recently: In what way and by how much will costs be reduced by nationalisation? How much more will costs be reduced with nationalisation than without? Will production and productivity rise or fall? Will the workers be more or less exigent? What principle will be applied to prices and investments? How will nationalisation make it more possible to apply the right principles in the right way than under private ownership and management? The writer went on to say: The Government have not answered those questions because they do not know the answers. That was written before this Bill came to your Lordships' House. I submit that the questions still remain unanswered.

All we have now is a new view enunciated by Sir Stafford Cripps, that losses in nationalised industries do not matter. We are used to being told that the test of nationalisation is efficiency and the ability of nationalised industry to pay its way, but this is what the Chancellor of the Exchequer now says: The honourable Member talks about nationalisation at a loss. It is quite a false conception to consider that it is necessary to make a profit out of any industry, except under a capitalist system. It is not necessary to make a profit out of industry except under a capitalist system, … if it was decided that coal should be provided to industry without charge, it might be that that would suit our economy. There is nothing wrong in it if we like to decide to do it. That seems a "new deal" in regard to nationalised industry. It seems to me to make absurd nonsense of Clause 31 of this Bill, which says that the industry must balance its accounts, one year with another. I should like to ask the noble Viscount the Leader of the House—if he does not answer me to-day, we may see action taken on the Order Paper—whether the Government are to move to omit Clause 31 of the Bill. If they leave that clause in, then, by inference, they are denying the words of their own Chancellor of the Exchequer.

So far the Government have put up a sorry case for the Bill to this House. I do not want to say more than two sentences on the question of compensation. The first one, which will gain approbation from all quarters of your Lordships' House, is to congratulate the noble Lord, Lord Ritchie of Dundee, on his maiden speech and to say how much we hope that we shall hear him on many future occasions. The second is to say, as regards the substance of that speech, that I have never heard the case of the unfairness and duplicity (I use the word advisedly) of the Government in their dealings in regard to the taking of Stock Exchange prices, after having asked for voluntary restriction of dividends, more strongly, simply and powerfully put. I am sure that all noble Lords on this side of the House, and indeed the public outside, wait to hear to-night some comment on that speech from the noble Viscount the Leader of the House.

The true reason for this Bill was given by the noble Marquess, Lord Salisbury. It has been brought in to fulfil a political purpose which is to be achieved regardless of the national well-being. The case for it has not been argued on the ground of helping export trade. Indeed, as the noble Lord, Lord Brand, pointed out, it is likely to do just the opposite. The case has not been argued on the ground of cheaper production or greater production, nor has it been argued on the ground of contributing to the national recovery. I submit that the onus is on the Government to show that they can do better with an industry already doing well than that industry could do if left to itself. We are in great danger of sacrificing things of real national value on the altar of political opportunism.

At this eleventh hour, on behalf of my noble friends on this side of the House, and I believe on this occasion I can speak also for noble Lords below the gangway, I appeal to the Government to accept our Amendment postponing the operation of this Bill until October, 1950, and the consequential Amendment on the vesting date. I deny that the Government have a mandate for this Bill, although they claim one. I ask the Government to produce a plan which will be of benefit to the nation or, alternatively, to send back to the nation the proposals they have now brought forward, and let the people have a chance of knowing what these proposals are and of giving their verdict upon them in a democratic way. No member of this House and no member of another place could take any exception to that procedure.

6.0 p.m.

THE LORD PRIVY SEAL (VISCOUNT ADDISON)

My Lords, before I come to make as well as I can a general reply, I should like to answer two points put to me by the last two speakers. In the first place, the noble Lord who has just spoken animadverted on certain statements made by the Chancellor of the Exchequer. I have not had notice of this, so I can make only a provisional comment. I gather, however, that the point was that there might be socialised undertakings that did not pay a profit; and, therefore, having put provision in this Bill for nationalising this industry requiring the industry to pay its way, we are, somehow or other, contradicting ourselves. I would ask the noble Lord to give further thought to that proposition. When has he ever received a dividend from roads or education? I ask that question, and leave the noble Lord to consider it.

LORD BALFOUR OF INCHRYE

One is a trading concern and the other is not.

VISCOUNT ADDISON

The noble Lord said nothing about trading concerns. Roads at one time were a trading concern, and we still see the remains of those archaic blockhouses where everybody had to pay a shilling, or some other sum, to go through. The system was a dismal and disastrous failure, and that is why the State took it over. But it never paid a dividend—of course not. At any rate, that deals with that particular point.

I come now to the question put to me by the noble Viscount, Lord Samuel, and I will return later to some of his comments on the Bill now before the House. This particular point related to some strange ill-association which he found between the programme of the Labour Party and this Bill. The noble Viscount called our attention to the fact that Clause 4 of the Labour Party Constitution and Standing Orders states as one of the Party Objects: To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible, upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service. Having quoted that, so far as I understood him, the noble Viscount suggested that what the Labour Party had done was to come to a conclusion first and invent the reasons after, or words to that effect. I would point out to the noble Viscount that he is entirely wrong. That objective of the Labour Party was the result of generations of struggle. It was discussed millions of times, and was the result of infinite deliberation, much suffering, and endless argument; and it was the embodiment of the aim of the people who shared those views. But it has no relation to this Bill whatever, except in the one sense, that this particular application of that principle which it seeks to make does apply—and, in my view, properly applies—to the industry we are now considering. With those two preliminary observations, I will now address myself more closely to the general debate.

VISCOUNT SAMUEL

The noble Viscount has not really answered my point; perhaps I did not make it clear. My point was that on the one hand he says that a case has to be made out, on merits, for each particular proposal for nationalisation, and if the case is not made out the industry ought not to be nationalised; while on the other hand, the Objects of his Party declare that every one of the main industries must be nationalised, irrespective of the merits of the particular case.

VISCOUNT ADDISON

The objectives of the Party were arrived at and defined as I have explained, and we do not depart from them. But we know very well that, by the process of democratic government, we can give effect to our aims only gradually. That is one of the merits of our system of society and political government. I have nothing to retract from what I said, and I think I took the noble Viscount's point perfectly well.

I now return to the general debate. We have had a great many speeches and a good many of them have not dealt very closely with the Bill. But, still, that does not matter.

VISCOUNT SWINTON

To which side of the House are you referring?

VISCOUNT ADDISON

But there is this to be said for them: that if any member of His Majesty's Government was inclined to "think of himself more highly than he ought," this debate will have had a most chastening influence. I accept that. I also note the advice of the noble Marquess, Lord Salisbury, about the vesting date. My only comment at the moment is that we take note of what he says.

THE MARQUESS OF SALISBURY

It is not merely the vesting date, but the bringing into operation of the Bill.

VISCOUNT ADDISON

The noble Marquess has explained his point, and I think I fully understand what he has in mind. All I say at the moment is that we take note of it. Then the noble Marquess, in an unusual passage, went on to say—I must refer to this thus early—that this Bill was what he called "ballyhoo." I will read his actual words, because they relate closely to what I am going to say. The noble Marquess said: That motive is purely political,"— that is, the motive of this Bill— and all these 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. I have not had time to look up the definition of "ballyhoo," but I take it that its meaning is generally understood. Let us have a look at this for a moment. The noble Marquess's advice later on to the House not to reject this Bill on Second Reading was largely based upon the fact that it was an ingredient in the Labour Party's programme which was put before the nation in 1945. That, I think, was the basis, and I think a very good basis, of the noble Marquess's advice. If that is so, the "ballyhoo" was invented in 1945. How is it that the noble Marquess has only just discovered it? This was put before the people in 1945, without any apology—and one noble Lord opposite read an extract from the programme. I take it that this is the explanation: the Conservative Party, as its name implies, has always been behind the times. It does not realise things until some time after-they have happened. If it were not for the tragic mistake of not realising at the time what opportunity is, we should never have had the miserable history of Ireland. That is the responsibility of the Conservative Party in not appreciating the situation. I gather it is only now that it has dawned on the noble Marquess that this "ballyhoo," whatever it may be—

THE MARQUESS OF SALISBURY

The noble Marquess is not really dealing with the point I made at all.

VISCOUNT ADDISON

I am coming to it.

THE MARQUESS OF SALISBURY

If the noble Viscount is coming to it—

VISCOUNT ADDISON

I am coming back later to the actual words. What I am interested in at the moment is in trying to explain to myself why it is that this discovery has only just been made, four years after the event. That is the only point I am seeking to unravel at the moment. If your Lordships will look at this particular sentence, you will notice in a part of it the words … and the closer integration of the industry and so on are pure 'ballyhoo' …. In this connection my mind is carried back to the events to which the noble Lord, Lord Layton, referred.

Here let me say a little about the record of this industry, and I do so with complete good will. There has been a remarkable integration of this industry, and it has proceeded out of the necessities of the case. Now the British Iron and Steel Federation, in the time Lord Layton was thinking about, was something completely undreamed of. I know what his impressions are, but I know that the British iron and steel authorities were concerned intimately with the Ministry of Munitions from 1915 onwards and the industry was in a very deplorable condition then. That was repeated afterwards. But as time has gone by there has been much closer integration, and now a number of noble Lords have come very far in our direction as to the necessity of a great measure of national control. I should like to pay a tribute to Sir Andrew Duncan and many of his able lieutenants. They have done a great job of work for this industry and, I think, with the good will of the industry as a whole. But they have no power—except by ways in which they can influence finance corporations and in other similar ways—of reconciling the progress of the industry to national necessities. Just look at one or two of them at the moment. They are doing exceedingly well, and without any reservation whatever I would like to share in the tributes to the good work the industry is doing. But the fact is that everywhere we look we find ourselves confronted even now with the limiting factor of the shortage of steel. Programme after programme at the present moment is being cut because there is not enough steel. Whilst it is true to say that the industry has attained the target set for it this year—and it has made a very great effort and has done a very successful job of work—it is still far from meeting national requirements. The noble Lord, Lord Brand, in a speech which was (shall I say?) of his usual cheerfulness to those of us who sit on these Benches, omitted one consideration. He knows that we are having to send some gold to Belgium. Why is that? Largely because we are having to buy steel. If it were appropriate, I could give a number of similar illustrations of how the shortage of steel, notwithstanding the splendid effort of the steel industry, is limiting national output.

Now we come to another point. I have been told that if this Bill were passed it might jeopardise our export trade. The fact is, as we all know, that even now some branches of the export trade which are vital—for instance, the provision of capital machinery to many parts—are restricted by the lack of steel. It is because of that that we cannot take orders from different parts of the world. I have known, and could quote cases, where in times past—and I am not wishing to go back too much to past history—the industry has not responded to the demands of home manufacturers requiring steel. In one well known case they had to buy the steel from Belgium. Whilst this new Federation has done very well, you have no guarantee, and we have no guarantee, that it will have the authority and power, as circumstances develop, to adjust or control this industry or to develop it in accordance with the needs of the State.

And there is another consideration which I am bound to mention, although it is a very painful thing to say. Some of us who understood what was happening in this industry know that in the bad times decisions were taken by steelmasters to close down this or that works, regard being had to what profit they were or were not making out of that particular concern—and I am not blaming them for that—and with no vision of national necessity. There was nobody whose business it was to take stock of national necessities. Many and many a miserable story could be told of the wretchedness and unemployment which was caused in many places because of the unhappy consequence which necessarily attached to that method of conducting this great industry. Now it does not follow—and the noble Lord, Lord Brand, would, I am sure, be with me in this—that the condition of the sellers' market is going to continue a long time.

SEVERAL NOBLE LORDS: It has gone already.

VISCOUNT ADDISON

If that is so, it should reinforce the point I am now going to make. It may well be that considerable parts of our steel production will be, and should be, directed to internal requirements which are now being held up or restrained because we are using the steel for export purposes. It will be necessary to have some national body to control it if we are going to divert our steel into, say, internal development plans which will provide for the worst times. As a matter of fact, if you review this case, good as the Iron and Steel Federation is, thinking of the wide range of national necessities that are with us now and which may arise in the future the conclusion is inevitable that this business must be controlled by some State organisation. It seems to me that while noble Lords accept the necessity for a large measure of control, the only people who are not to be allowed to exercise it are the representatives of the people! I object to that.

Now I will come to one or two items in the Bill. The noble Lord, Lord Rennell, asked me a very proper question as to whether the Corporation would be a holding corporation or an operating corporation. It will be a holding corporation. You see in Clause 2, that the holding corporation will have certain powers to undertake research and provide certain common services—powers which of course any body of that type would have. It cannot be an operating corporation without the specific consent of the Minister.

VISCOUNT SWINTON

Of the Minister—not of Parliament?

VISCOUNT ADDISON

"Of the Minister" is right. You can discuss that point when we come to the Committee stage. The noble Lord asked me the question with reference to what is in the Bill and I have answered his question: that is what is in the Bill. The noble Viscount, Lord Bruce, showed this afternoon that when he had the responsibility, the industry was not so prosperous that it would have been able to finance itself. That is correct. The noble Viscount said that this Finance Corporation for industry could have found the amount required to carry through the long-term plan. I am not casting any aspersions on that; the fact was that it was not in the industry, and it had to apply to this excellent Organisation—which I agree has no connection with the Government and which does its work very well—in order to get additional capital.

Then the noble Lord, Lord Rennell, used the word "dishonest." He used it twice. I wish he had not, because it is not fairly applicable. He said that the terms of compensation were dishonest in that they did not allow for depreciation of prices owing to the restriction of dividends, and that they did not allow for repayment of monies expended in improvements which have not yet borne fruit. I would say that we are not acquiring assets; we are acquiring shares; and the value of the money placed in the industry has its effect upon the value of the shares. The noble Viscount, Lord Swinton, went a little further. I see in Column 1000 of the OFFICIAL REPORT that he said that the Bill was going to produce chaos. He said: The noble Viscount … will be creating chaos with this Bill if it ever becomes law.

VISCOUNT SWINTON

I was not dealing with Stock Exchange values. I pointed out that you are taking over ninety-six firms and leaving the remaining 2,000 firms not taken over.

VISCOUNT ADDISON

Then I will apply my observations correctly. Your Lordships will observe that the noble Viscount was shrewd enough to steer clear of the matter I am now about to mention. If the result of this proposal were to be so desolating as we have been told, how do we account for these quotations on the Stock Exchange?—I had them got out for me and I have the whole details. Taking the figure for the value of iron and steel shares in December, 1938, as 100, it is a very interesting circumstance that when, on October 29, 1947, the Prime Minister made his statement that we were going to introduce this Bill, the figure was 142.6—that is, as compared with 100 in 1938. That was when this "disintegration of confidence" began, and this proposal which was to spread chaos became known. One year afterwards—I take the week ending October 25, 1948—the index figure for steel shares, instead of being 142.6, was 173.5. In other words it had gone up 30.9. That speaks for itself. I need say no more about it.

There are one or two general criticisms to which I would refer. Lord Swinton referred to the operation of the guillotine. I have heard that for many years. I went into Parliament in 1910, and ever since, when the guillotine has operated from time to time I have heard the same speech—not perhaps quite so eloquent, but the same speech. There are two clauses in this Bill, Clauses 4 and 41, which are very important, which were not discussed in another place, and to which I hope your Lordships will do justice.

The noble Marquess, Lord Salisbury, really surpassed himself, if I may say so. He invented a most ingenious idea. We had to take over coal, quite frankly, he said, because it was in such a dreadful mess—I am not disputing that proposition. Then, somehow or other, the clock had turned round. The noble Marquess was a little vague abort why electricity, gas and transport had been taken over. Then he came round to this extraordinarily interesting conclusion that it was by Greed out of Lust of Prices"—

SEVERAL NOBLE LORDS: "Power," not "Prices."

THE MARQUESS OF SALISBURY

That would have been odd!

VISCOUNT ADDISON

I beg his pardon—"Lust of Power." The noble Marquess had previously said that it was the prosperous concerns which were singled out for nationalisation. I am not saying that that was entirely new, but it was exceedingly ingenious. But the reason, in fact, is given in the statement of principles of the Labour Party—to which the noble Viscount, Lord Samuel, has referred and which I have already indicated—that in our view it is necessary to take this measure of control to safeguard the national interests.

VISCOUNT SWINTON

But you select first "those of the largest size."

VISCOUNT ADDISON

As to size, I think transport was a fairly big one; and so was coal. I do not think noble Lords can complain of the smallness of our undertakings. It is not size that matters, as noble Lords know as well as I do. It is because in our view it is necessary for the economy of the State that these controls should be instituted.

Finally, I must refer to one delicious invention of the noble Marquess that somehow or other this proposal is going to obliterate liberties. The noble Marquess said And so, gradually but inexorably, free institutions and free enterprise are going to be utterly obliterated. I heard that, in almost the same words, in 1913. At that time there was brought into operation an Act called the National Health Insurance Act, which required people to stick stamps on cards. I remember the Daily Mail ran a campaign with letters about an inch high right across the front page, saying such things as: "We are going to be serfs, the slaves of an oligarchy; all our liberties are going to be taken away from us; we are going to have to lick stamps each week." I see the noble Lord, Lord Schuster, sitting there. He was one of a committee, with which I was associated, who had the delightful and splendid task of helping to bring that Bill into operation. But the big objection raised by that campaign was that it would obliterate our liberties.

THE MARQUESS OF SALISBURY

Surely the noble Viscount does not draw a very accurate analogy between licking stamps once a week and the nationalisation of the transport system, the electricity system, the gas system, the coal industry and the iron and steel industry.

VISCOUNT ADDISON

All I am going to say is this. What will happen after this will be similar to what happened after the outcry against the licking of stamps—namely, nothing! The people went on licking stamps. There was no excitement. They calmed down very quickly. The Transport Act is coming into operation, almost by stealth. I am not sure whether every part has yet been brought into operation—I think there is some of the road transport which has not yet been dealt with. Really, my Lords, this kind of description of a proposal that has been before the country for some years, and which is in fact an exceedingly modest proposal, is itself mere "ballyhoo." We want this Bill because we are convinced that its purpose is right, and that in the matters of control and guidance for which it provides the representatives of the people should decide.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.