§ 2.50 p.m.
§ Order of the Day for the House to be again in Committee read.
§ Moved, That the House do now resolve itself into Committee.
§ On Question, Motion agreed to.
§ House in Committee accordingly:
§ [The EARL OF DROGHEDA in the Chair]
§ Clause 18:
§ Duty of Iron and Steel Holding and Realisation Agency to return iron and steel under-takings to private ownership
§ 18.—(1) There shall be a body to be called the Iron and Steel Holding and Realisation Agency (hereafter in this Act referred to as "the Agency"), and it shall be the duty of the Agency to secure, by the exercise of their powers under this Act, the return to private ownership of the undertakings which on the appointed day are owned by subsidiaries of the Agency:
§ Provided that the Agency may discharge their duty under this section in such manner, and by such stages, and with such postponements of the sale of securities or other assets, as they may with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate, and pending the discharge of the said duty the Agency shall so exercise their powers as a holding company as to promote the efficient direction of their subsidiaries.
§ LORD WILMOT moved, in subsection (1) after "Agency"(where that word occurs a third time) to insert, "in consultation with the Board." The noble Lord said: This Amendment, standing in my name and that of my noble friends, goes to the heart of what we regard as one of the principal defects in the Bill. There is no great question of political procedure involved in this Amendment; it is directed to improving the machinery of operation. Your Lordships will be aware that Clause 18 is the clause which lays upon the Realisation Agency the duty of returning to private ownership the undertakings which are now the property of the Iron and Steel Corporation. The purpose of this Amendment is to provide that, before taking specific action in discharge of this duty the Agency shall consult with the Board. Now it is the Board and not the Agency which has the responsibility for the supervision of the whole iron and steel industry and has 1080 within its keeping the welfare of the industry. It seems to us to be a very imperfect arrangement that this disposal Agency should proceed with its duty of selling off the undertakings completely out of touch with the Iron and Steel Board. Imagine, if one can, the extraordinary position of the directors of a corporation, or even the directors of a holding company or some agency responsible for the welfare of an undertaking, if, parallel with them, there is a liquidator in office disposing of units without any consultation. I ask the noble Marquess to consider this matter purely as one of operating machinery and commercial practice, and to agree that in exercising their function as the disposal agency this body should be in continuous contact and consultation with the Board. I beg to move.
Page 18, line 20, after ("Agency") insert ("in consultation with the Board").—(Lord Wilmot of Selmeston.)
§ LORD MANCROFT
I am very sorry indeed to start off the afternoon's procedure on a discordant note. I do not really think the noble Lord would be anything but astonished if I agreed with him in the arguments which he put forward. He described this Amendment as an attempt to improve the machinery. As such an attempt I welcome it, but I must ask his forgiveness when I tell him that I think the only result of his attempt, if approved, would be to throw a most enormous spanner into the works. Wherever in disposing of the undertakings the Agency finds itself faced with two or more courses of action and the choice between them is likely to be of importance to the iron and steel industry, it will, as a matter of practice, consult the Board. This is not a cue, I must assure the noble Lord, for a loud and cheerful cry of, "Put it in the Bill." It is impossible to put in the Bill or in any Bill or in any arrangements, domestic or strategic, the occasions upon which two authorities, working to the same end, should always and inevitably or casually or sometimes, consult each other. The parallel I can make to the noble Lord, if he will accept it, is this. In all the Field Service Regulations concerning conduct of troops in the field, emphasis is laid upon the desire for the artillery—I choose this arm because it was my own—to work in close co-operation with 1081 the infantry. On certain specific occasions, for certain specific drills, it is laid down exactly what that co-operation is to be. On all other occasions it is taken for granted that there will be the closest co-operation necessary between the artillery and the infantry. So it is in this matter.
My Lords, in certain specific cases, where the Agency is proposing a merger or a regrouping of the undertakings, there is an obligation in the Bill for the Agency to consult the Board. That is in Clause 19 (7). That is a definite obligation. But to oblige the Agency to consult with the Board in the discharge of the whole of its primary duty would, I ask the noble Lord to believe me, be very wasteful of the time of the Agency and of the Board, and would be likely to delay, if not to frustrate, the return of the undertakings to private ownership. The noble Lord's Amendment as drafted would—if I have read it correctly—oblige the Agency to consult with the Board on every part of its programme for denationalisation. Surely it is not practicable to impose a specific obligation of consultation more widely than is already provided in the Bill. As I said just now, in the end it is not practicable by legislation to ensure that all consultation which is desirable shall take place. The Agency is responsible to and subject to directions from the Treasury and in the end it roust be the responsibility of the Chancellor of the Exchequer to ensure that the Board is consulted when it should be, and to answer in Parliament for any failure to do so.
These two authorities, the Board and the Agency, are both working in different ways but towards the same end—the efficient conduct of the iron and steel industry of this country. There will be many occasions on which it is obviously desirable for them to contact each other most closely, and as they will be reasonable men, carefully chosen and fully aware of their responsibilities, they will, of course, consult each other where consultation is desirable. Where consultation is essential and imperative, it is provided for in the Bill in Clause 19 (7), which I have just mentioned. Where consultation would be a waste of time, a matter of triviality, a matter of formality or a matter of delay, no consultation is necessary, and to put it in 1082 the Bill would, I submit to the noble Lord, be a work of supererogation. Therefore, I hope he will agree with me that consultation wherever it is wanted will take place, and that universal consultation, even though not necessary, should not be provided for in the Bill. For those reasons I am sorry I cannot accept the noble Lord's Amendment.
§ 2.58 p.m.
§ LORD SILKIN
I should have understood the noble Lord's answer much more clearly if the Bill did not already provide for consultation in certain circumstances. What the noble Lord is saying is that there shall be consultation in the circumstances set out in subsection (7) of Clause 19—that is, where there is a possibility of grouping or re-grouping of the undertakings, and so on—and that in other cases there will be consultation wherever desirable. In spite of the noble Lord's reluctance to "put it in the Bill," I still say that some words ought to go in the Bill; because if there is in the Bill a provision that there shall be consultation in certain circumstances, and no words at all regarding other circumstances, there is the implication that the Agency has its instructions: these are the circumstances in which there shall be consultation, and as to the rest there need not be. I should have thought that the insertion somewhere of some words saying "without prejudice to consultation in other cases where it is thought desirable" might be appropriate.
I know that this Amendment may be a little more sweeping than is necessary in requiring consultation in all cases and I think the noble Lord has made his case in that respect, but there is a range of cases, as the noble Lord said, where consultation would be desirable; and I suggest that it is undesirable to have almost a clear indication in the Bill that consultation shall take place only in certain specific circumstances and in no others. The noble Lord as a lawyer is, of course, aware of the legal principle on this subject—that if you include one thing in a Bill (I am not going to quote the Latin) you automatically exclude others, and this may have that effect. I would therefore strongly urge on the Government to look at this point and see whether some words might not go in to indicate that while consultation must take place 1083 in the circumstances set out in this subsection, that is without prejudice to its taking place in other circumstances.
§ LORD WINSTER
I should like to support this Amendment, for one particular reason. We have these two bodies, the Agency and the Board, and it seems to me that the Agency is charged with rather narrower responsibilities—not less important but rather narrower—than those of the Board. It will tend for that reason to have a rather narrower outlook. It may well happen that the Agency will go ahead with some particular transaction and it may go ahead with that transaction without telling the Board, because in all good faith it did not seethe repercussions of what it was about to do. The Board, knowing practically everything, may have good reason for objecting to the transaction, although the Agency may not see the bearings of the matter and may accordingly fail to consult the Board. I think we have to be very careful in this matter and not have "two kings of Brentford." It seems to me that that possibility does exist unless provision is made for the fullest co-operation and consultation between these two bodies.
I suggest that in practice, if everything goes harmoniously, as we all hope it will, the Agency will in all important matters, consult the Board. I think that that, in effect, was said by the noble Lord who spoke for the Government just now. But suppose everything does not go harmoniously. That has been so sometimes. There has been friction: I can remember that even in war time two Government Departments were fighting each other much harder than they were fighting the enemy. There might well be friction—
No, but it would put some responsibility on the Agency not to act contrary to the wishes of the Board. We should prepare for that. After all, the Board has the responsibility for carrying on that part of the industry which has not been sold back to private interests, and I should have thought it essential that they should know how sales were going and how any important negotiations were getting on.
In that case, why not accept our Amendment? I am not wedded to the particular words, which may cause some indignation among noble Lords opposite, but why not accept the principle of the Amendment?
§ LORD CHORLEY
I suggest that the noble Lord who has spoken for the Government has himself proved the necessity for some words of this kind. He made it clear that it would be essential that in a large number of cases consultation should take place, and said that because it was essential it would follow automatically. But time after time that argument has been put up in this House, and rejected. If it is essential that there should be consultation, then surely it should be in the Bill itself. It may well be that there are a number of cases where consultation is not only not necessary, but positively undesirable; but I should have thought that the skilled draftsman who works for the Government on Bills of this kind would have been able to find a form of words which could cover the cases, leaving out the unessential ones and putting in those which are essential. I hope the Government will take this point away and look at it again.
I think that noble Lords on the other side are making a mountain out of a molehill. Surely we can be perfectly certain that sensible people will consult where it is necessary. It would therefore be a great mistake to put it in definite words in the Bill.
§ THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY)
Perhaps I might say just one word on this question. It seems to me that even since the beginning of this very brief debate, the Opposition have entirely changed their position. Originally there was to be always consultation with the Board. Now they say, "Well, perhaps not always: perhaps consultation with the Board sometimes—consultation with the Board when appropriate," and so on. That is a different matter from the original proposition they put before us. And indeed, as my noble friend pointed out, that is already covered. What one does not want in 1085 setting up this new machinery is to make legislation elaborate, clumsy, cumbersome, and tied up with all sorts of provisions put in by Parliament to cover every conceivable circumstance—as if the people who are going to carry out the work are half-witted idiots and not to be depended upon at all to do the appropriate thing themselves.
Even supposing Parliament does not trust the Agency—and if you are setting up a high-powered Agency you must give it a certain amount of confidence—the Agency, as we know, is to be responsible to the Chancellor of the Exchequer and the Treasury and be subject to the Treasury's direction. The Chancellor of the Exchequer is responsible to Parliament and if the Agency fell short of its obligations in this matter he could be challenged in Parliament. For these reasons I urge the Opposition not to press this Amendment. It would no doubt be an attractive pursuit for the Parliamentary draftsman to build up an immensely elaborate structure covering every conceivable eventuality. But in fact what is wanted can be done; and unless the Agency is a very foolish body indeed—which it will not be—it will be done. I feel sure it would be best to leave matters to its good sense.
§ LORD WILMOT OF SELMESTON
I wish I could feel the matter was as simple as that, but when one examines the practical bearings I do not think it comes out quite that way. There are two bodies, and they have been made responsible to two separate Ministers. One is appointed by the Minister of Supply and presumably will be in close touch with the Ministry of Supply. The other is a purely Treasury body concerned with the sale of assets. It is a very interesting thing, in view of what the noble Marquess says, that in the next paragraph the Agency is specifically enjoined to consult with the Treasury. That is not left to the good sense of the Agency; it is put in the Bill. If it is necessary to do that, it is no less necessary to put in the Bill the requirement to consult the Board. Imagine the Board making these estimates and forecasts and plans after receiving the information which we dealt with yesterday, and then suddenly finding that this other body has disposed of a large part of the productive mechanism of one of the units. The Agency goes to the Treasury and 1086 consults with them, who are its masters, or at any rate appointees, about the price, about postponement, about all these other financial questions that it is required to do; but it is not required to go to the Board that is responsible for the welfare of the industry and say: "Shall we sell the rolling mills at X, or shall we integrate them with the furnaces at Y?"These are problems of organisation and future management which are vitally concerned with the pattern of disposal and upon which the future build-up of the industry will depend.
As regards this body, this Agency appointed by the Treasury, once this Bill has become law and will no further be discussed in this House or in another place, it becomes the Agency's "Bible." The Agency's duties are laid down in the Act. It is required to keep hand in hand with the Treasury, but only occasionally, when it thinks right, will it consult with the Board. The most likely thing to happen is that it will become—and I speak from some experience in these matters—a Treasury Agency, solely concerned with realisation, and that it will have little day-to-day contact with the actual industry as a breathing, living, developing thing. I should have thought that the Government, if they wanted to make this work harmoniously, if they wanted here to provide for the long-term future of the industry, would be wise to see to it that there is this linkage between those who are responsible for the life of the thing and those who have the liquidators' task to perform.
§ 3.12 p.m.
§ LORD WINSTER
I have one brief question to ask, arising out of something which the noble Marquess said. I understood that one of his reasons for disliking the. Amendment is that it is unnecessary because the Agency has a responsibility to the Treasury. But is it not the case that that responsibility is solely financial, and that the Treasury itself would decline to enter into consideration of any wider issue than the financial issue involved?
§ THE MARQUESS OF SALISBURY
No, I would not accept that. I should have thought that the Chancellor of the Exchequer, who, after all, is responsible to Parliament, would be bound to take into consideration every question which he thought the national situation and the 1087 situation of the industry required. I could not accept that. I appreciate the purpose of noble Lords in putting forward this Amendment. I have listened with great interest to the persuasive speech made by, the noble Lord, Lord Wilmot, but, quite honestly, I do not think that their fears are justified. I am quite sure that the Agency must in proper cases consult with the Board, and it is absolutely certain to do so. We have, I can assure the Committee, given a great deal of consideration to this question.
Finally, I would point out to the noble Lord that he moves back on the "Wilmot leg"—if I may call it so—off the "Chorley leg." The "Chorley leg" is "consultation where appropriate." The "Wilmot leg" is "always consultation," and I must take that to be what I call the "official leg," because that is the leg which is stood on by the promoter of the Amendment. What it really means, in effect, is that on every occasion and on every matter where a decision is to be taken by the Agency, there has to be consultation with the Board.
§ THE MARQUESS OF SALISBURY
The noble Lord says "No." If that is not what it means, then his Amendment is erroneously drafted. At any rate, that is the way in which we must read it. We believe that it will make for a clumsy, top-heavy machine. I am not complaining that the noble Lord put down the Amendment—I can quite see his purpose—but I am afraid that we cannot accept it.
§ On Question, Amendment negatived.
EARL JOWITT moved to add to the first paragraph of subsection (1):
Provided that the Agency shall unless otherwise directed by the Minister retain in respect of each of the said undertakings a sufficient number of securities to entitle the Agency to not less than four-tenths of the voting rights at any General Meeting of the shareholders of the undertaking; and
The noble and learned Earl said: I rise to move this Amendment because I played some part in thinking it out. I believe I am right in saying that, unlike most of the Amendments we have had, this has had no counterpart in the discussions in another place. I am not at
all optimistic about getting my way about this Amendment. I suspect that I shall receive the reward which the peacemaker generally receives in this world: I shall be well flogged with my olive branch and I shall get thanks from nobody. Notwithstanding that fact, I believe that it is a matter which we ought to discuss.
§ I discuss it for this reason, that I am very doubtful whether it is good for an industry to be in a state of flux, dependent upon Parliamentary majorities. When the Labour Party come in, it is nationalised; when the Conservative Party come in, it is restored to private enterprise. I do not quite know what its position will be when the Liberal Party come in, but perhaps we need not discuss that matter further at the moment. I make it quite plain, however, that I think the solution we had found was the right one—and I do so for this reason. I believe that the development of this industry is likely to call for important major decisions, decisions far outweighing the fate of any particular company. I believe that, with modern improvements and modern developments, it may be necessary, in the public interest, to take very unpleasant and drastic decisions. Those decisions can be taken only by the Government—that is obvious—who must balance all the considerations, the human considerations and the other considerations. I believe, therefore, that they should arm themselves with the powers by being the owners of the shares. In order that I may make my peace with the noble Viscount, Lord Davidson, may I also say that I take the view that the Government should not interfere at all with the running of the companies? They should be shareholders with the ultimate power, but they should allow people who understand the business to run it for them.
§ After all, in the case of the Anglo-Persian Oil Company, we did have, I believe, rather a happy blend of public ownership with private control. I have not verified my references, and I am not sure what proportion of the shares the Government had. I think I am right in saying (noble Lords opposite can tell me if I am wrong) that the Government held 51 per cent. of the shareholding, but I believe also that the Government did not interfere on any occasion with the running of the concern. I know that when we had 1089 our trouble about Persia we consulted with the directors and the managers of the concern about every single matter; but there was no occasion—about this I am sure I am right—when we ever dictated to the company. We discussed things together and tried to hammer out what was the right solution.
§ I remain absolutely unconvinced by the arguments that I have heard that this arrangement does not work properly merely because the State owns all the shares. That view does not prevail. Your Lordships take the view that it is essential that private people should own the shares so that there can be, in reality, a shareholders' meeting, a check control of the directors, and all the rest of it. I do not dispute that, but I say that it may be a wise thing, in the public interest, that we should try here the experiment of having some substantial State ownership of the shares. I have not attempted to give the State a majority of the shareholding; I have suggested 40 per cent. If 40 per cent. is too much, let us say 25 per cent. But in view of possible contingencies, I believe that it would be a good thing for all of us that there should be some substantial block of shares owned by the State.
§ I believe that from several points of view: first of all, because it is desirable that we should get accustomed to the idea of private enterprise and the State being thus in harness together; that I feel to be enormously important. I say, quite frankly, that no extremist on either side would accept this suggestion, be it 40 per cent., 50 per cent. or 25 per cent., as a solution. But the whirligig of politics is so uncertain and, in my long experience, so unpredictable that there may come a time when compromise has to prevail. If that time ever does come I think it is not at all a bad idea that we should begin to realise that a system whereby the State owns part of the shares but does not control the company, is a system to which we should get accustomed. As I say, I do not suppose that idea is popular from the point of view of extremists on either side. I may be almost alone in holding that view. None the less, I hold it, and I hold it sincerely. In view of all the difficulties of the situation, I believe that it is desirable, that we should try to look forward to a scheme whereby the State and private enterprise work in harmony and in harness together.1090
§ Next, I believe it is desirable from the point of view of getting the best price for these shares—because here we are dealing only with shares. Where you are dealing with a large block of shares (and I speak with great experience here, if I may say so) frequently it is very difficult to get as good a price per share as where you are dealing with a small block of shares. The very immensity of the transaction which you have to undertake necessarily narrows the market and the number of people who can undertake the business. Therefore, the fact that you are holding back a certain proportion of the shares, that you are trying to market 60 per cent. instead of 100 per cent. of the shares, would be likely, other things being equal, to mean that you can get a better price for those shares. So long as you give the purchasers clear control—as I say, I am not wedded to 40 per cent. and I hope the noble Marquess, if he replies for the Government, will not treat this Amendment as if I were so wedded—I see no reason why you should not get as good a price per share, even though you are not selling 100 per cent. of the shares. I believe that is another reason why this Amendment is a goof thing. I have suggested that the Agency should hold these shares. I realise that that may not be considered desirable and that it maybe felt that the Board should hold the shares. That is a matter of drafting about which I am not in the least concerned.
§ My object in framing this Amendment is to bring about a situation whereby there is a partnership between the private and the public concern, with the private enterprise managing the concern. As I say, I am not likely to get any support for the Amendment from extremists on either side: I fully realise that. But I believe that if we play the rôle which I think this House can so well play, there is no reason why we should be embroiled in extremist politics on the one side or the other. I believe that we may be taking a very wise course if we do something on these lines. May I emphasise again, that I am not wedded to the 40 per cent.?—though that, I believe, is a satisfactory sort of figure. Neither am I wedded to the question of whether the shares should be held by the Agency or transferred to the Board, or at what time they should be transferred to the Board. But I am concerned with the principle. The principle I want to establish is that, as things 1091 are to-day, this business should be run by private enterprise, because that is what the country has settled for and that is what your Lordships want. At the same time, there should be, not a controlling block but a substantial block of shares owned in some form or other by the State, in order that the State and private enterprise may work in harmony and in harness together.
§ I am not going to overstate my case for a moment. I do not pretend for one moment that this is a solution which would be accepted as necessarily solving the question. If I could say that it would, I should have a stronger case. But no one can possibly say that. I do say, however, that a solution on these lines is the right approach, and it may be that, ultimately, we shall have to come to a state of affairs where moderate and reasonable counsels prevail over the extremists on both sides. Therefore, I am prepared to run the risk of moving this Amendment and I am prepared to run the risk of what happens to me with my olive branch. I strongly suspect what will happen. I have raised this matter. I believe it to be one which merits most serious attention, and I very much hope that those who are not extreme politicians on both sides, and who want to see whether they cannot bring about a possible and viable solution, will support me.
§ It may be that so long as the industry is left in the hands of competent people, who are not interfered with by politicians—I cannot say more strongly again what I have said before, that that is the essential of the running of the industry—it does not matter very much who owns the shares. But I am rather doubtful about that. I think it must have a disturbing influence if, when one Government comes into power the shares are all owned by the State, and when the next Government comes into power they are all owned by private enterprise. As I have said, it may well be that ultimately Parliament, in its wisdom, and with the good sense of this country, will work out some compromise solution. This is only a first step towards that compromise solution, and as such I commend it to the Committee. I am prepared to take a figure which is not enough to be able to interfere with the 1092 proper commercial control of the concern, and I am prepared to have the shares held by whatever agency is right, be it the Agency set up under the Bill, the Board, or whatever is thought to be convenient. I humbly commend this solution to the Committee as one which is along the right lines and one which this House, in contradistinction perhaps to another place, may very properly commend.
§ 3.28 p.m.
§ LORD MANCROFT
The noble and learned Earl, Lord Jowitt, ended his remarks by suggesting modestly that this was an Amendment which merits attention. He is perfectly right. It is for that reason that I have taken the opportunity of rising now, not to beat him with his olive branch, as he gloomily forecast, but merely to offer a few observations, as clearly the Committee will want to debate this matter in some detail. It does, indeed, merit attention. I think this is an entirely novel Amendment, and one not discussed, or even thought about, in another place. It offers and opens up quite a new interpretation and a new aspect of the whole of this problem in this type of industry.
I will let the noble and learned Earl into a small personal secret. Shortly after the war, the Clerk of the Parliaments, Sir Henry (later Lord) Badeley, of blessed memory, very kindly gave a series of lectures to those of us who had returned from the wars and were not familiar with Parliamentary procedure, upon the procedure within your Lordships' House. The other day I turned up the notes which he gave us on the subject of possible Amendments to Government Bills. He said that they fell roughly into four classes. There was the Amendment which the Government could willingly accept—we have had some of those during the course of this Committee stage. There was the Amendment which the Government could not possibly accept, including the wrecking Amendment. We have had some of those, and we may possibly have some others as time goes on. There was the Amendment which at first you were not willing to accept but which the Opposition's oratory impressed you as being worthy of consideration. We have had some of those. Finally, there was a fourth type of 1093 Amendment which Lord Badeley described as the "My goodness me! what are these fellows up to now?" sort of Amendment.
I must confess, frankly, that when I saw this Amendment I did not know what was behind it. The noble and learned Earl, Lord Jowitt, has pointed out, not exactly what was behind it, but what the Amendment is striving to achieve. This is something novel and something important. Before the Committee make up their minds how they would like the Amendment to be treated, I think it is only right that one or two of the practical snags inherent in the noble and learned Earl's scheme should be considered. The Amendment, as drafted—I appreciate that the noble and learned Earl does not stick very closely to his draftsmanship as a matter of principle—would have the effect of ensuring that unless the Minister directed otherwise, the Government would permanently be the owner of some 40 per cent. of the equity of the steel companies. In this form it would be open, so far as I can see, to these practical objections. First, it would make it difficult, if not impossible, to sell any of the equity. A 40 per cent. interest is generally a controlling interest, if the rest of the equity is scattered—I apologise for mentioning this to someone with the experience of the noble and learned Earl, but I think it as well that the facts should be made clear—and there would be little incentive to the private investor to take up any of the equity except at a very low price. In addition, it would make it very difficult to persuade the institutions to buy the shares of the steel companies.
The second point that occurs to me is this. To provide that the Government should be the holder of 40 per cent. or 25 per cent., or what you will, of the equity of the steel companies would be undesirable so far as the private companies are concerned. The existence of a large minority shareholding, if only of 25 per cent., would make it difficult for the parent companies to arrange their relations with their otherwise wholly-owned subsidiaries. For example, one of the interests arising from the ownership of steel making is the control of quality. That can be and has been very severe. This control may affect the profitability of the subsidiaries, thus affecting minority shareholders' rights.
§ SEVERAL NOBLE LORDS: How?
§ LORD MANCROFT
The parent company might insist upon a quality in the product which it required from its subsidiary that would not be financially profitable in the open market, for a company which was not a controlled subsidiary. On the other hand, there is little point in minority shareholding if all the rest of the holding is concentrated in one hand. Such a holding gives neither control nor influence.
The third point is that the Bill, as at present drafted, without the Amendment, implies that the Agency will be temporary. This was a point which came out in the debate on the previous Amendment. To our way of thinking, that is essential in the Bill, and that is an essential feature of our concept of this scheme If the Agency were to remain a permanent shareholder—I think the noble and learned Earl envisages that it should remain a permanent shareholder—then the Agency would itself become a permanency. Again, I am not beating the-noble and learned Earl with his olive branch; I am only pointing out the practical consequences of the Amendment as it stands. As it stands, it is a flat contradiction of the declared objective of the Government, embodied in the Bill, that the steel industry should be returned to private ownership. I have not, I hope, done what the noble and learned Earl feared that I would, but have done what I thought it my duty to do at an early stage—I have tried to point out some of the practical difficulties raised by the noble and learned Earl's very interesting, but very far-reaching and wide-sweeping, Amendment.
§ 3.35 p.m.
May I briefly try to answer the two main objections put forward by the noble Lord, Lord Mancroft? This Amendment does raise very important issues, and I am not atempting in any way to deal with the whole subject—I rise only to try to answer two of the noble Lord's points Lord Mancroft says that a 40 per cent, interest would, in effect, give control when the other shares were scattered. But: do we envisage public issues all over the place every month or so, inviting the general body of shareholders to come into the steel industry again? Surely 1095 what the Government wants the Agency to do is to sell the shares of the companies—in other words, to hand them back to private owners. The Government would not want them to be sold to a host of small shareholders but to the big corporations, as the noble Lord has mentioned, or to special companies formed for the purpose. The shares would not be sold on the market, to be bought up by clergymen and widows, and so on, as was the case with railway shares a hundred years ago. In this instance, it will be a great financial operation. We know that the Bank of England has been given instructions, and they will look with an indulgent eye on the operations necessary—of course they will—for the issue of the capital to buy up this great undertaking. Therefore, the 40 per cent. will not be a controlling interest. It will be a large interest. It will give the State, the Treasury, a foothold in the industry.
As I have said, I am not attempting to deal with great principles—thereare great principles involved here—and the only other point I wish to refer to is this. Lord Mancroft said that the adoption of this Amendment would mean maintaining the Agency in perpetuity. Why should the Agency hold the 40 per cent. of the shares? The Treasury would hold them. My noble friend quoted the case of the Anglo-Iranian Oil Company or, as it was, the Anglo-Persian Oil Company. That transaction was a Treasury transaction. I can go back further to the case of the Suez Canal shares. We did not have to create a special Agency to maintain our holding in the Suez Canal Company. The Treasury holds the shares. In this case, when the Agency has done its work it can be wound up. I suggest that those are answers—perhaps not complete ones—to the arguments put forward by Lord Mancroft in opposition to my noble Leader's speech.
§ 3.39 p.m.
§ LORD BALFOUR OF INCHRYE
The noble and learned Earl, Lord Jowitt, came back to the point with which some of us on the Second Reading of this Bill tried todeal—namely, whether we could not ensure that this industry in the future would not be, as it were, a sort of political football, passing backwards and forwards according to the particular complexion of the Government of the day. 1096 To that extent, I think we are all grateful to the noble and learned Earl for having raised this point in the very interesting speech which he made. If we agree with the purpose of the noble and learned Earl, we must equally address ourselves to the method which he proposes. He said that he was not wedded to the Agency, and he was not wedded to the 40 per cent. Nevertheless, an Amendment must be judged in two ways: it must be judged, first, as to what it does, what it aims to do, broadly in principle; and secondly, as to how in detail it proposes to fulfil its particular purpose. The noble and learned Earl said that he felt that partial public ownership was essential if the State interest was to be served. I wonder whether I might take issue with him on that, and question whether State ownership in part, in the form of shareholding, is essential for the serving of the public interest. I would maintain that the public interest is served already by the broad structure of this Bill. The Board, with their supervisory powers over the industry, can exercise those powers in the national interest, and public ownership is not necessary for serving the national interest.
This Amendment has two practical results. It converts the Agency into a long-term body, whereas, in fact, it is set up for a particular short-term task. Secondly, it would give effective control to the Government. If the Government had a 40 per cent. or a 30 per cent., perhaps even a 20 per cent., interest in the equity of the companies, and if the balance of ownership was a widely diffused balance, owned by a large number of individual shareholders, that would give an opportunity for public control without nationalisation.
§ LORD CHORLEY
Would the noble Lord say how that differs from the case of the Anglo-Iranian Oil Company?
§ LORD BALFOUR OF INCHRYE
I have not the exact figures about the Anglo-Iranian Oil Company. I do not know what percentage of the capital the Government own. But what I am saying is that this would be in accord with what the Co-operative Societies say in a recent pamphlet:Public control can be secured by purchasing an interest, through the acquisition of shares in existing undertakings or with the appointment of directors representing the public interest.1097 I believe that arty single body, whether it be the Government or an institution, that owns a 40 per cent. or 30 per cent. proportion of the equity of these companies, would be entitled to, and should, appoint directors to the boards in order to safeguard their large and substantial shareholdings. So we should really get to the point where the Government of the day would virtually have control without nationalisation. I do not think it is the noble and learned Earl's intention that that should come about, but I believe that would be the final result of this Amendment, if it were passed. For these reasons, and particularly for the reason that I believe public ownership of shares is not necessary for the service of the public interest, I hope the Government will resist this Amendment.
I am sorry the noble and learned Earl, Lord Jowitt, should class me as an extremist. If all those who oppose this Amendment are to be called extremists, then we are all extremists. I never regarded myself as one and I do not think my friends or my enemies do so either. I think any substantial block of shares, even 25 per cent., would give effective control of any of these companies, because I visualise that the balance of shares would be widely distributed. The usual procedure would be to get a quotation on the Stock Exchange and then the shares would be sold off in small parcels to the public, and I hope to the employees; therefore there would be a wide diffusion. As the noble Lord, Lord Wilmot of Selmeston, well knows, anything up to 20 per cent. in one hand gives a substantial degree of control. I should have been very reluctant to bring forward as an example the case of the Anglo-Iranian Oil Company. That company has met with a singularly unhappy fate, and I do not think it should be entirely dismissed as impossible that the fact that there were Government directors in that company may have contributed to that fate, because that fact meant that the company was morally bound to support Sir Stafford Cripps' dividend limitation, which bore uncommonly hard on the Iranian Government at the time.
§ EARL JOWITT
The noble Lord is making a serious allegation. Has he the slightest justification for making that allegation?
I am making no allegation at all. I am saying that any company with Government directors on the hoard must morally respect the request of the Chancellor of the Exchequer, even when history may say it might have served better the ultimate business interests of the company to have ignored it.
§ EARL JOWITT
Is the noble Lord suggesting that the difficulty with Persia would have been avoided if there had been no restraint on the amount of dividend?
Nobody who speculates in history can tell what would have happened. I say only that it might have happened. When the House was dealing with the Transport Bill, I was the protagonist of a scheme whereby the State Transport Commission would own a certain share of the capital in some of the road haulage companies. I put that suggestion forward with the specific intention that there should be some co-ordination of services and the avoidance of uneconomic competition. Here the conditions are entirely different. In this Bill there is no question whatsoever of the avoidance of uneconomic competition, or of co-ordination. The cases are completely different. For that reason I do not: support this proposal although I supported such a proposal in the former Bill. Here the noble and learned Earl has completely different reasons for part ownership and these reasons are precisely against the proposition of the Bill espoused by noble Lords on these Benches. We are against State ownership of this industry and his Amendment is trying to bring it in by the side door.
§ LORD MILNER OF LEEDS
For the most part the remarks of the noble Lord, Lord Hawke, seem to have no relevance to the present argument. He certainly knows that his remarks about the Anglo-Iranian Oil Company have no relevance to the issue.
§ LORD MILNER OF LEEDS
But the noble Lord made a suggestion which has not any truth in it, a suggestion which certainly may reflect on either the Government directors or on the late Sir Stafford Cripps, I am not clear which.
1099 But even that has no relevance to this argument. I wish to address myself to the remarks of the noble Lord, Lord Balfour of Inchrye, who argued that the broad public interest was already served by the form of organisation set up by this Bill. But I do not think that is the case. There is not a word in the Bill—I am subject to correction here—about the broad public interest. A Board is to be set up, none of whose members is representative of the public interest, and in my submission that interest is not represented at all, either on the Agency or the Board, or elsewhere.
§ LORD BALFOUR OF INCHRYE
May I suggest to the noble Lord that he should look at paragraph 3 of the Explanatory Memorandum on page 1 of the Bill, where it says that the Board is to be appointed by the Minister of Supply, with certain general duties, and if the Board does not fulfil these duties, then, of course, the Minister can take steps to have them carried out?
§ LORD MILNER OF LEEDS
That is very far from the public interest. Again that seems to have no relevance to this matter. There is nothing in the Bill which says the broad public interest is to be served by the Board or anybody else, so that the noble Lord's whole argument goes by the board. I should have thought that as a practicable proposition it might have been of great advantage both to the Government and to the future private owners of this industry if the Government had an interest in it in some form, either through the Treasury or through the Board. So far as I can see, they are not likely to sell undertakings; it would be much easier, I should have thought, to sell and have the money provided for three-quarters of an undertaking than for the whole. Less money will be required. Therefore I should have thought that the Government might have looked at the matter favourably from that point of view. Secondly, I should have thought that many companies—I do not say all—would be glad if a proportion of the money was found by the Government. I can think of many companies which would be very happy if money could be found by the Government to take over their undertakings. That seems to me to be an argument that would appeal to many companies.
1100 Thirdly, I should have thought that the Government might have an interest in a concern, because then they would have responsibility for it; they would have knowledge of the operations of the company; they would, in certain circumstances, be able to use their influence with the company; in certain circumstances they would be able to provide money for the company; and the fact that the Government had an interest in it would give the company better credit than it might otherwise have. From all those practical points of view, apart from the general submission which the noble and learned Earl, Lord Jowitt, made, I should have thought that those were distinct advantages to practical people who may take over these enterprises from the present set-up. I submit that those considerations might well be borne in mind by the Government in this matter.
§ LORD WILMOT OF SELMESTON
Probably nearly every member of this Committee would agree with what is the primary purpose of this Amendment. It is to try and find some way by which this great industry can be relieved of the perpetual political strife which takes place around it. I have always felt, as I have said several times in these discussions, that in a peculiar way the future of Britain is harnessed to the future of the steel industry. It must be a most damaging thing that fierce, deep political rifts should occur about the future of this industry every time there is a change of Government. Whatever may have been the mistakes of the past—if there have been mistakes—this Government will not escape the censure of history for having once more thrown this industry into the political arena. They need not have done so. They could have found some accommodation, or, at any rate, they might have tried. But they have made no effort at all. They have merely reversed the engines and are returning to the status quo. It seems to me that that is a bankrupt form of statesmanship, when you are dealing with the vitals of a nation utterly dependent upon this industry.
Somewhere between absolute Socialism and absolute private enterprise alone will peace be found. There is no peace in this Bill. Somebody, somewhere, has got to find that peace. Why should we not try to do it now? Ever since I have been 1101 concerned with this matter—and. it is a good many years now—I have believed that there is an essential partnership between this industry and the State: and I ask the noble Marquess, Lord Salisbury, to acquit me of Party considerations in this matter. It is inherent in the position of the industry. We have to find some political instrument which will give effect to that partnership. In drafting the Steel Bill which was passed in 1949 an attempt was made—I do not wish to discuss it or to defend it now—to put management in the hands of the private managers, and ownership of the essential part in the hands of a public agency. This Bill seeks to alter that. This Amendment, which was moved, I thought, so eloquently by my noble and learned Leader, does suggest a method. He said that he is not tied to his proposal of 40 per cent. He wants a partnership—a partnership based upon some share in ownership. No partnership is a real partnership unless it is so based.
The objections which have been urged against it by the noble Lord, Lord Mancroft, and others, do not go to the principle at all; they deal with difficulties of administration, none of which is fundamental. The equity will not be widely diffused. Nobody really believes that this industry will be returned to the original shareholders—it cannot be done. The equity will be held in comparatively few hands: and the fact that the Government, or a Government agency, is the holder of a small minority holding, even if it was as much as 40 per cent., would not affect the value of the equity as the noble Lord suggests; in fact it might greatly enhance it, because days may be coming in which the steel industry once again will have to look to the Government for financial succour, as it has in days gone by. It may well be that the Government partnership could be a substantial bull point for the equity of this industry.
One noble Lord talked about questions of quality and the effect of the quality of the primary producer upon the products of subsidiaries. My noble and learned Leader distinctly and specifically said it is not intended to vest in these shares any attributes of management. Management would be vested entirely in the managers and in those who control the majority undertakings. It is for that very reason that a minority holding is suggested. One noble Lord said: "You will have this holding in the hands of an 1102 Agency which is intended to be a temporary and ephemeral body." But the holding can just as well be transferred to the Board or to the Treasury. These are objections about details which nobody has attempted to lay down.
Before the noble Marquess replies, I should like to ask him one question. What view do the Government take about their responsibility for the long-term future of this great industry? We know that a Government elected in 1945 with a substantial majority carried out, not in that Parliament but in the subsequent Parliament, after much consideration, disputation and debate, a policy which was declared and twice submitted to the electors. Merely to reverse that policy is to invite further political strife about this matter. I would suggest that this Government have a unique opportunity to find some permanent course of action which will remove this perpetual struggle for all time. This Bill will not do that. This is merely an invitation to still further strife; and I beg of them, either now or at a later stage in the Bill, to give some indication that they realise their responsibilities in this matter.
§ 4.0 p.m.
§ THE MARQUESS OF SALISBURY
I think it would be for the convenience of the House if I said something now. If I may so express myself, I do not want to go too far into the persuasive polemics with which the noble Lord, Lord Wilmot, began his speech. He attacked the present Government for attempting to denationalise this industry—I think he said "again throwing this great industry into strife." Apparently in his mind that consideration did not apply to the nationalisation by the late Government of the industry, which was working perfectly well under its then organisation. As I said on Second Reading, this is one-way traffic with a vengeance. If we were to accept this view, if the country were to accept the view that it was always legitimate for a Labour Party to change the economic and social system of this country, but that it was never legitimate for the Conservative Party to put it back where we believe the country would wish it to be, that can only mean the victory of the extremists and the defeat of that moderation for which the noble and learned Earl, Lord Jowitt, has made so eloquent an appeal to-day.
§ LORD WILMOT OF SELMESTON
The noble Marquess should not misrepresent me. I was not making a Party appeal. I did not ask him to put it back. I asked him to find some middle road.
§ THE MARQUESS OF SALISBURY
Then perhaps the noble Lord will listen to what I have to say. It must be said that the noble Lord did, in a rather provocative way, go into the past, instead of looking, as we hoped he would, into the future.
Having said that, I am very ready to agree with the noble Earl, Lord Jowitt, in the speech which he delivered this afternoon, which clearly made an important contribution to our discussions. By his interpretation of the Amendment which he was moving he made it a much more considerable affair than the words of the Amendment themselves indicated, because he added to the actual effect of the Amendment the purpose for which it was put down by him. I can assure him that I am not going to subject him this afternoon to what he called, I am sorry to say, rather sadly, the normal fate of peacemakers, which I understand to be an extremely painful one. But, equally, I am bound to point out that, as expounded by him, this Amendment goes very far indeed. It involves in one important respect a complete alteration in the character of the Bill which Parliament is discussing. Under this Bill, as it is at present drafted and interpreted, this Agency is to be a temporary organism. Its only purpose is to effect the liquidation of State holdings in the iron and steel industry; when that has been done it will have performed its duty, and will fade out.
Under the proposition which the noble and learned Earl has put to us to-day, that conception, as I understand it, is radically altered. The Agency would cease to be a temporary one, and it would become a permanent body holding permanently 40 per cent., or some smaller proportion, of the shares of the industry on behalf of the Government—I think I am interpreting his meaning correctly. My noble friend Lord Mancroft has already explained to the Committee some of the main practical difficulties, as we see them, of a development of that kind, and I do not want to traverse again the ground he has already covered. At any rate, the Committee will have seen that 1104 in the view of us on this side of the House they are very real difficulties. In any case, however that may be, I fully appreciate the noble Earl's intention. He has thrown out what he calls an olive branch; he wants to try to find a middle line between conflicting views. For that I honour him. Whatever views we hold, we must always try, if we can, to get an agreed solution of great Party problems.
What was not clear from the noble Earl's speech—and I hope he will not mind my asking the question—nor was it clear from the speech of the noble Lord, Lord Wilmot, who spoke on rather the same lines, though perhaps a little more robustly, was whether they put forward this olive branch on their own behalf or on behalf of the Party which the noble Earl has the honour and privilege of leading in this House.
§ EARL JOWITT
I put it forward on my own behalf. I said that I could not promise that the acceptance of this Amendment would mean that there was a settlement of the whole thing.
§ THE MARQUESS OF SALISBURY
That is a very important matter. It is one thing that there should be put forward to us a proposal which we know to be acceptable to the Opposition as a Party and which does, therefore, form a solid basis for inter-Party agreement that might lead to an enduring national settlement of this great problem; and it is quite another to have a proposal which is put forward by one or two noble Lords, however eminent they may be; because if the Amendment has only them behind it, it may be thrown over at any moment by their own Party. The Government might find themselves in the strange and embarrassing position of having radically modified the original plan—which they drew up after an immense amount of consideration—thinking that it was going to lead to an enduring agreement, and then, after the Bill had gone back to another place, finding that it meant nothing at all. That, I am afraid, would do a great deal more harm than good, because, instead of increasing the confidence of the Parties in each other, it would lead to a great increase of friction, which would be neither for the good of the country nor for the good of the industry.
In any case, I should not have been in a position to-day to express a definite 1105 view about this Amendment, even if it had had behind it the whole weight of the Party of noble Lords opposite. I am not in a position to do that, and it would have required much more consideration. But if it is only the two noble Lords who have spoken, however eminent they may be, and if they have no reason to give us an assurance that their views are likely to be reflected by the main body of their Party, then I am afraid that to ask us radically to alter the whole basis of our scheme would be too difficult for us. I am sure they will understand that, and in these circumstances I am afraid that we cannot accept their Amendment. In saying what I have said, I have tried to indicate that I fully appreciate the purity of the motives which inspired the noble and learned Earl to table his Amendment.
§ 4.8 p.m.
I think this Amendment has brought forward an atmosphere which may have far-reaching effects. I fully appreciate that the noble Marquess is not in a position to accept this Amendment, and I further appreciate all the things that he has said as to the position of my two noble and eminent friends who put this forward. Perhaps I may be included in their company, if not in the term "eminent." My main purpose in rising was to clear away one of the difficulties which the noble Marquess emphasised on the practical side of this Amendment. It is that the structure of the Bill makes the Agency a temporary organisation, and that it would therefore be difficult, if not impossible, to give them shares which, after a certain time, would have to be disposed of. I think the noble Marquess has overlooked Clause 25 of the Bill, which actually makes provision for this very contingency.
From subsection (1), it appears that, when the time comes, the Minister may wind up the Agency. Then subsection (2) says this:If, immediately before the dissolution of the Agency, the Agency have any property, rights, liabilities or obligations, the order shall make provision—Therefore, this matter is taken care of by the foresight, of the drafters of the Bill itself. I do not think the fact that 1106 the Agency is a temporary one need provide insuperable difficulties. Of course, that does not dispose of the matter. It is right that Her Majesty's Government should put forward some practical effects of this Amendment, but I do not think that other factors need hold up the expedient of trying the principle. Of course, my noble Leader will decide what shall be done about this Amendment; but I feel that, whatever happens, it has resulted in the Parties coming a little closer together on this issue; and if, in the end, it should turn out that we have done something to put an end to this battle over the body of the iron and steel industry the Amendment will have had a valuable result.
- (a)) for transferring them…to a Minister of the Crown or his nominees or agents and for the disposal thereof;…"
§ THE MARQUESS OF SALISBURY
I thank the noble Lord for what he has said. I am speaking without the book: I have only just looked at this clause in the light of what the noble Lord has said. I think he reads a little more into it than is intended. I think the purpose of subsection (2) is this. There will come a moment when the Agency is to be dissolved, but that does not mean that every single share will have been disposed of—that may be an impossible event to wait for. Under this clause even if some shares remain to be disposed of, the Agency can be dissolved. But this was not intended to be a loophole for Agency or State ownership of the shares to be continued permanently. It is not for me to say what noble Lords opposite shall do with their Amendment—it is for them. We cannot accept it, though we recognise the spirit in which it has been put forward. But there is a Report stage, and if noble Lords would like to think it over and see where they stand, well and good. They held out the olive branch, presumably, not only to us but to some of their own Party in another place, and it may bring back better results than some of us might expect. I do not think we can do anything more about it at this stage, and I should not like to hold out any hope that we can do so.
Before we come to the end of this very important discussion I should like to draw your Lordships' attention to the, implication of the remarks which the noble Marquess the Leader of the House has just made. He was accepting my noble Leader's olive branch as an olive branch—and the noble 1107 Earl was not being chastised with it. He then challenged us on these Benches to say whether we spoke officially for the whole of the Labour Party on this matter. That is surely a very novel procedure. It is one which I have never heard mentioned before. I have sat in this House for seventeen years; I have taken part in many discussions and I have benefited very much from much that has fallen from noble Lords on both sides of the House. But I have never heard the Opposition, whether Conservative or Labour, challenged as to whether they were speaking for their Party in another place. That puts the relationship between the two Houses on an entirely new footing. We met together, those of us who were interested in this matter, and had a discussion with our colleagues in another place and we put forward certain Amendments. If the Government accept the Amendments it is for the House of Commons to discuss them. But to ask us whether we speak for our Party in another place is a new doctrine to me. We never ask the noble Marquess whether he speaks for the Government; we take that for granted: but that does not give him any right to ask us who has inspired or instigated our Amendment.
§ THE MARQUESS OF SALISBURY
The noble Lord, as so often, had better have remained silent, because it was the natural thing for us on this side to ask the noble and learned Earl who leads the Opposition whether he was speaking for his Party. The noble and learned Earl was very careful what he said, and rightly indicated a doubt that that was so; but it was natural for us to ask him the question. I think that on this occasion the noble Lord is barking up the wrong tree.
§ LORD CHORLEY
May I say a few words on this subject? What we have been discussing during the last few minutes is not an ordinary type of Committee point; it is really in the nature of a policy problem, which is normally discussed on Second Reading. I think the Government might well consider this proposal on its merits, rather than raise the question whether it represents the official policy of the Labour Party. Surely it must be obvious to everybody that, during the next generation or two, industries in this country will be carried 1108 on on the basis of a mixed economy. We shall have some industries which are nationalised; we shall have some smaller industries—those which, perhaps, are not basically of the same national concern—which for some substantial period will be carried on under private enterprise. In between, there are industries which, if we are not careful, will be the shuttlecock of conflict between Parties. I should have thought that it was very important—and in a way more important from the point of view of the Conservative Party than from that of the Party to which noble Lords on this side belong—to try to find some sort of via media along which the nation could travel.
The Conservative Party have in effect just gone back to the old position, J'y suis, j'y reste. Eventually, they always come round. This House, in about the year 2000, will no doubt witness the spectacle of a descendant of the noble Marquess defending very powerfully the sort of situation which the noble Marquess himself is now condemning. That always happens: it is part of the general political development of this country. But I should have thought that the present Conservative Party, with its leadership, might have attempted to find some via media for dealing with these intermediate industries. The Labour Party's Bill of 1948 was not a full nationalisation Bill. We attempted to find some sort of method by which this great industry could be maintained and organised. But, that having been rejected, it was up to those concerned to try to find some compromise method. I think it is a wise thing to do that if possible.
My noble Leader has suggested a method which may be a via media. I suggest that it should be looked at. There are other national economies from which we can learn something. I understand that Finland, for example, which has not by any means a Socialist economy, has made an experiment of this kind. They have adopted a scheme of having substantial State holdings in an industry which is nationally important—and adopted it with complete success. I would suggest to the noble Marquess that he should look at the matter again and perhaps consider what has happened in other countries and what has happened in connection with the Anglo-Iranian Oil Company, the Suez Canal and other 1109 things of that kind, to see whether the Government themselves cannot discover some method which would enable us to carry forward this great industry without, is my noble Leader has said, after every Election making it the battledore and shuttlecock of political antagonism.
§ EARL JOWITT
I am not going to ask the Committee to go to a Division on this Amendment but perhaps it can be negatived. I am glad we have had this discussion. I thought it right to raise it, though I think I made it quite plain in raising it that I was not speaking for my Party. I could not say that this would be a settlement of the whole problem, or anything of that sort. I simply said that I thought it desirable that the two different and rival methods of organisation should get to know each other a little better by working in harness together. I gave as an illustration the Anglo-Iranian Oil Company. The only point in this discussion that I regret is the observation made by the noble Lord, Lord Hawke, which I can regard only as an attack and a criticism of the directors of that body. Having been through the whole of those negotiations, I can only say that if the noble Lord had known as much about them as I did, if he had known what Dr. Mossadeq was like, I feel certain he would have agreed that whether the directors had regarded what Sir Stafford Cripps said or had completely disregarded it, it would not have made a pennyworth of difference to the fortunes of that company in Persia at that time.
I know that the noble and learned Earl has been through all the papers and had an opportunity of studying them, and I fully accept everything he said. I was not making any personal attack on the directors.
§ EARL JOWITT
I am glad to hear that, because the noble Lord left me under the impression that he was. I did not represent this proposition of mine as being clothed with any Party authority. I represented it as a perfect specimen of the nude, and it is as a perfect specimen of the nude that you have scorned it and turned it down. In the fullness of time, let that be remembered. If it is said that we on this side of the House, are always the unreasonable people, let it be remembered that at any rate on 1110 this occasion I have done what I could to suggest what might be a possible solution for a difficulty which is going to be a very real difficulty in time to come. What will happen about this industry—I never utter threats—I have no knowledge, and it is quite impossible to forecast what the Labour Party in power in this country, if and when they get back, will do to this industry. It would be simply foolish to forecast, and I am not going to try to predict at all. It is to guard against possible dangers, and only that, that I made the proposition I did. As I say, I am not going to ask the House to divide upon this Amendment, but if necessary it can be negatived.
§ On Question, Amendment negatived.
§ 4.23 p.m.
LORD SILKIN moved to add to subsection (1):
Provided also that no one sale or disposal of any securities or other assets by the Agency, the total consideration for which exceeds one million pounds, shall be valid unless the Minister shall have previously signified his approval thereof; and his approval shall not be effective until he shall have so signified it by a direction in that behalf to be given by a statutory instrument which shall be laid before Parliament and shall not come into operation unless and until affirmed by resolutions of both Houses of Parliament.
§ The noble Lord said: In moving this Amendment, I hope: that the brevity of my remarks in favour of it will not be interpreted as indicating either a lack of interest or a lack of conviction that the Amendment is a right one, but in view of the time that has been taken on the last Amendment I will do my best to be brief. I hope it may be possible to get some satisfaction. The purpose of the Amendment is twofold: one is to ensure that before the Agency disposes of any undertaking where a large sum of money is involved—where it exceeds £1 million—they must get the approval of the Minister; the second is to ensure that Parliament shall be informed. The Amendment goes rather further than that and requires an Affirmative Resolution of each House for any such sale. On reconsideration, I think that possibly that is going a little far, and that if Parliament is informed and has an opportunity of raising the matter before the transaction is concluded, that should be satisfactory. I attach great importance to the Agency getting the specific approval of the 1111 Minister for a transaction of the magnitude of £1 million or more, and I think Parliament should be informed.
I do not think I need emphasise the first point. It is obvious that a £1 million transaction is one on which there ought to be the most careful consideration, and even approval. On the second point, the question of notification of Parliament, there is, of course, provision in the Bill for informing Parliament. The Agency is required under Clause 23 of the Bill to inform Parliament every year, as soon as possible after the end of each year, as to the
exercise and performance of their functions during that year.
But that is rather notifying Parliament after it is too late for it to have any influence on the work of the Agency. The principle of notification of Parliament is accepted and I have no objection to it in the case of smaller transactions. In the case of these large transactions, however, I think that Parliament ought to be specifically notified. I therefore beg to move this Amendment.
Page 18, line 32, at end insert the said proviso.—(Lord Silkin.)
§ LORD WINSTER
I should like to support this Amendment from two points of view: first, from the point of view of the iron and steel industry and the provisions made for it in this Bill. If the Bill indicates that transactions involving £1 million or more shall be referred to the Minister, with a view to their coming under the notice of Parliament, I think it will ensure the greatest care and attention on the part of the Agency. The Agency will go into their business much more rigorously and much more carefully if they know that their actions may eventually come under the searchlight of Parliament. We shall get a more efficient transaction and execution of the work of the Agency if this Amendment is accepted.
But I support the Amendment for a larger reason still, and that is in regard to public economy. It is this sort of measure which can have some effect in reducing the very high Government expenditure from which we suffer at the present moment. One way of getting that expenditure down is, where reasonable and possible, to bring all expenditure 1112 under the scrutiny of Parliament. The more Parliamentary scrutiny there is in such matters, the more light that is brought to bear on Government expenditure, the more possibility there is of getting that expenditure reduced. I know that there is a tendency to regard proposals for economy only in a large way. Whenever any economy or any supervision is proposed for something small, it is said: "It is really such a small matter that economy is not worth while; supervision is not really necessary," and in that way a habit of wasteful spending and of insufficient scrutiny of public expenditure grows up; whereas if, as in this instance, expenditure and transactions are subject to the review of Parliament, the habit of careful scrutiny and of economy is much more likely to be inculcated. Only when there is such rigid supervision as this Amendment proposes can the public interest really be preserved. There is far too little stress placed in this Bill on public interest. The Government have rejected Amendment after Amendment which proposed that there should be more control in the public interest. I believe that only by such scrutiny as is suggested in this Amendment can the public interest really be secured. For those reasons I support the Amendment.
§ LORD CHORLEY
I wish to support this Amendment, for slightly different reasons than those which have been so cogently advanced by my noble friend, Lord Winster. What worries me about some aspects of this Bill is the possibility of its increasing the already too monopolistic situation which exists in the steel industry. No other industry is so closely knit and, as has appeared from time to time during the course of this discussion, undoubtedy that has its effect on prices, which everybody knows are very high indeed. I am not saying that large scale organisation is not very necessary, but, in my view, when a complete monopoly or something of that sort is established, it is safe only in the hands of the community as a whole—in other words, in a nationalised industry, where the chief incentive is not that of making a private profit out of it. If these very large aggregations are to be built up and over £1 million of shares transferred to this or that organisation without any public supervision or control, the danger is that there will be established a monopolistic 1113 company which will have much too great a power in the land.
By this Amendment, we are breaking up any "Krupp organisation." One of the main objectives after the war in Germany was to break up the Krupp organisation in the iron and steel industry. It had become the over-mighty subject—an expression which used to be heard in the Middle Ages when some individual built up a private army and acquired so, much land that his position in the State threatened that of the King himself. We have long passed the age of the over-mighty subject of that kind; but in the modern State the over-mighty subject is the great monopolistic joint stock company with its tentacles throughout industry and with a solid position, perhaps in the heart of the iron and steel industry. I suggest that if that danger is to be overcome, the Minister should have full control, and what is happening should be brought to the attention of Parliament. For that reason, I think this is an Amendment which might well be made to the Bill.
§ 4.35 p.m.
§ LORD MANCROFT
I am afraid that not even the persuasive oratory of the noble Lord, Lord Silkin, and his two "juniors" can convince me that this Amendment is practicable. The purposes behind it and the sentiments they have expressed seem to me wholly admirable—certainly those voiced by the noble Lord, Lord Winster, favouring economy in public expenditure are sentiments which we particularly like to hear coming from those Benches. That is not a remark with which I can possibly quarrel. So far as concerns the suggestion that in this Bill we have not taken sufficient care of the public interest, noble Lords on this side have argued Amendment after Amendment in trying to convince the Committee that the public interest has been wholly safeguarded.
The effect of this Amendment would be that disposals operations for a price of £1 million or more would require the consent of the Minister of Supply and an Affirmative Resolution of both Houses. Whatever the desirability of that may be in theory, in practice it would be quite impracticable. What is more, it would make satisfactory disposal almost impossible. So far as private negotiations with large-scale buyers are concerned, no deal 1114 could be concluded if the buyer had to face the delays and uncertainties of the procedure which the noble Lord, Lord Silkin, advocates—or, if it could, it would be only at prices noticeably lower than those which could be obtained if both parties were free to make a bargain promptly and effectively at the moment terms were agreed.
So far as disposals by public issue or offer for sale are concerned, the terms of such issue or offer have to be settled at the last minute in the light of the day-to-day position in the market. The Treasury, with the aid of their professional advisers, are continually handling Government issues in this way. I submit that to hamstring the Agency (because that is what it would amount to) as is proposed in the noble Lord's Amendment would be as unreasonable as to make the terms of issue of Government securities subject to Affirmative Resolution. It would be inappropriate to subject the operations of the Agency (which, as the Committee are aware, are in general under the direction of the Treasury), to approval by the Minster of Supply, for they are concerned with actual disposal operations, which are essentially of a financial nature, rather than with the technical structure of the industry. Here I would emphasise a point which I have already made—there would be the closest consultation between the Chancellor of the Exchequer and my right honourable friend the Minister of Supply. But to put a formal and statutory responsibility on the Minister in relation to disposal, for which the Chancellor of the Exchequer would be responsible to Parliament, would, I suggest, blur the responsibilities of the respective Ministers and not really help in any way at all.
Whilst I did not quite catch his argument, I think the noble Lord, Lord Chorley, suggested, that as the Agency are disposing of assets of very large value and will, in many cases, be disposing of them in single operations covering many millions of pounds, the approval of Parliament should be obtained before the acceptance of a price becomes binding. In fact, the precedents do not confirm that argument at all. Contracts are continually being placed without prior approval by Parliament—surplus stores are one example of things being disposed of in the same way on the largest scale. 1115 It is true that where practicable competitive tenders are obtained, but there have been many cases, and particularly in regard to such properties as factories, where competition of that sort was not possible and disposal had to be by private negotiations. Equally, it is precisely the largest contracts for purchases which cannot be put out to tender, but have to be negotiated with a single prospective contractor or supplier, without competition, or, at best, with the possibility of choosing between only two or three competitors. The Minister of Food (Financial Powers) Act of 1949 empowered the Minister to make long-term contracts without any need for Parliamentary approval, whether by Affirmative Resolution or Negative Resolution procedure—and the case for prior approval of such contracts must surely be much greater than in the kind of deal which will be made under the Bill.
To sum up, I fully appreciate what it is the noble Lord has in mind: that here sums of £1 million or upwards are being dealt with, and in the public interest it should be possible for Parliament to see that there is no wastage, no unnecessary extravagance, and that the public interest is best served. Those are admirable sentiments, but I would submit that the way the noble Lord wants it to be done is just not physically possible—it is just not practicable. That has been clearly borne in mind by the Government, who have taken every precaution—Parliamentary, practical and legislative—to make certain that the needs the noble Lord, Lord Silkin, has so eloquently put forward are met. The disposal of companies at a price below what the Agency and the Treasury believed to be fair would be inconsistent with the wording of Clauses 18 (1) and 19 (6). I know that the fear of such disposals is behind arguments which noble Lords have put forward. In addition, on several specific occasions Her Majesty's Government have given assurances that this is not going to occur. I am going to ask the noble Lord not to press this Amendment, whilst, at the same time. I accept entirely the sentiments which have prompted him to move it. I give him once again the assurance Mat the objections and the difficulties which he has foreseen have been clearly borne in mind, and I say that I think 1116 they are sufficiently covered and safeguarded by the Bill as it stands.
§ LORD SILKIN
I have listened with considerable interest to what the noble Lord has said. Frankly, when looking at this Amendment again this morning I realised that it would not really be practical politics to ask Parliament for an Affirmative Resolution on all transactions over £1 million. For that reason I do not feel that I am in a position to press the Amendment. Nevertheless, I feel that transactions which involve over £1 million do need special consideration of some kind. I propose to ask leave to withdraw this Amendment, but, having regard to the fact that the noble Lord has encouraged the sentiments which are behind it, I will consider another form of words which will not be subject to the same objections as are those set out in this Amendment but which will, nevertheless, seek to give us what we want to achieve. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 18 agreed to.
§ Clause 19:
§ Powers of Agency in respect of securities and companies
§ (6) The appropriate department shall, in exercising their powers under the last preceding subsection, have regard to the obligation of the Agency under the last preceding section to secure an adequate consideration for the assets disposed of in the discharge of their duty under that section; and, in deciding what would be an adequate consideration for any securities or other assets so disposed of, the appropriate department shall take all material factors into account including the physical assets, capital structure, reserves and trading prospects of the company in question, and the monetary and market conditions prevailing at the time of sale.
§ 4.42 p.m.
LORD WILMOT OF SELMESTON moved, in subsection (6), after "including" to insert:
the value of such securities or, as the case may be, of securities relating to such other assets, as in either case determined under and in pursuance of the provisions of Part II of the Iron and Steel Act, 1949,
The noble Lord said: I wonder whether one can expect the same kindly consideration for this most constructive Amendment as we have had on one or two previous occasions. I shall be very brief because there is not a very big point here, although the Amendment is important.
§ Subsection (6) of Clause 19, which deals with the mechanism for the disposal of these great assets, was put in by the Minister in response, I think I may say, to very considerable feeling in the other place that there ought to be some directive to the Agency engaged in what is not only a formidable but also, in very large measure, a novel task. Having regard to the magnitude of the assets, it was felt that some sort of directive should be given to the Agency as to the considerations they should bear in mind. This Amendment simply adds to the things to which considerations shall be given the value which was paid for the particular asset by way of compensation to the previous owners when the asset was acquired. A great many people felt and said, both m Parliament and elsewhere—whether rightly or wrongly I cannot judge—that the price paid when those assets were acquired was below what it should have been in equity. To ask that the Agency shall have regard to the price that was paid is a most reasonable request. I do not ask that they shall necessarily make that the only consideration, but it certainly is one of the considerations they should bear in mind as ordinary business men would when selling assets. The practice of business men would be to look up what the assets stood at in the books of the Company, and what was the price paid for them. In view of the fact that this Amendment follows ordinary commercial practice, I think I can confidently ask the Government to accept it. I beg to move.
Page 20, line 28, after ("including") insert the said words.—(Lord Wilmot of Selmeston.)
§ LORD CHORLEY
I should like to add just one or two words to what the noble Lord has said. He has pointed out that this subsection was inserted in order to ensure that the Agency might have in mind relevant matters in considering the question of price. What the subsection does is to set out all the obvious things that the Agency would have in mind, but the one thing which the Agency might leave out, and which they obviously ought to consider, is the one thing which my noble friend asks may be inserted. Therefore, I suggest that this clause will not really be an effective clause unless the Amendment is inserted. I hope that the Government will accept the Amendment.
§ LORD WINSTER
I wish to support the Amendment with two or three very brief words. I read the Report of what took place in another place on this matter, and, while I must not put words into his mouth, I felt that the Minister was impressed by the strength of the arguments brought forward in support of the contention that regard should be had to compensation. But although he may have been impressed by the strength of those arguments, I feel that he did not meet them with the Amendment which was made in this subsection. I think some regard ought to be paid to compensation. Public money has been paid out in compensation in these matters. Of course, there are people who think the amount too low. Still, compensation having been decided by some yardstick, I think that now, when securities are to be returned to private ownership, some consideration ought to be given to the compensation paid when the previous Act was going through. Whether or not the Minister was impressed by the strength of the arguments, certainly he did not yield to them sufficiently to put into the Bill words which bore them out. As Lord Chorley has said, a great many matters have been put in which inevitably would be considered without special provision being made. I think there is a very strong case indeed for ensuring that when these transactions are being pet through, there is some regard to the compensation paid by the public when the industry was being nationalised. I support the Amendment, and I hope that the noble Lord may be able to accept it.
§ 4.48 p.m.
§ LORD MANCROFT
It is quite true that subsection (6) was inserted by the Government in another place in an effort to go some way towards meeting the views of the Opposition who had, I believe, tabled Amendments with a similar object to that of the Amendment moved by Lord Wilmot Some of the Amendments put forward by the Opposition in another place, I seem to remember, went much further and sought to set the compensation price as an absolute minimum for resale. The purpose of this Amendment is to bring in the compensation value of the securities as one of the material factors which ought to be taken into account in deciding what 1119 would be an adequate consideration on disposal.
The Government really cannot accept that view. There have been a great many changes—as I am sure noble Lords opposite will agree—in the position of the industry and of individual companies since 1949, and the Opposition themselves, I must remind noble Lords, argued in another place that the compensation value ought to be no more than a very low minimum. To include this value as a material factor to be taken into account must inevitably suggest that the Agency ought to be satisfied if they get the compensation value, or at least should be satisfied with this unless they could show cause why there should have been a specific increase.
In some cases, of course, the compensation value will be relevant, and in those cases the Government will have regard to it. But in many cases the value of companies will be much greater, and in those cases it will not be in our interest for the purchasers to be able to quote the Statute as against the Agency. The Government are advised that if this phrase were included the Agency would be less able to obtain the proper price for the securities and assets that they would be selling. This can hardly be the Opposition's intention, or what the noble Lord has in mind. I am sorry that we cannot see eye to eye with the Opposition on this Amendment. Nevertheless, I should like to take this opportunity of stressing again as firmly as I can the Government's most earnest intention of obtaining fair and adequate prices. The chief objection to this Amendment is that it would hamper the Agency in securing those prices.
§ LORD WILMOT OF SELMESTON
In view of that statement and of the advice which the noble Lord has received and passed on to us, I feel that it would be in the public interest to withdraw the Amendment. I am grateful to the noble Lord for telling us in such plain language that in most cases the value of the assets has gone up since they were acquired, owing to the excellent management of the Iron and Steel Corporation.
§ Amendment, by leave, withdrawn
§ Clause 19 agreed to.1120
§ Clause 20 [Other financial powers of Agency]:
§ LORD SILKIN
had given notice of his intention to move, in subsection (1) (a), after the first "company" to insert "the majority of." The noble Lord said: In view of the fact that we have had a discussion on a point analogous to this, I do not propose at this stage to move this Amendment.
§ LORD OGMORE
had given notice of his intention to move, in subsection (1) (a), to leave out "to a substantial extent." The noble Lord said: Since my noble friend Lord Silkin has not moved his Amendment, I cannot move mine, which in a sense is dependent upon his.
§ Clause 20 agreed to.
§ Clauses 21 to 28 agreed to.
§ Clause 29:
§ Enforcement of certain provisions by injunction
§ 29.—(1) No criminal proceedings shall lie in respect of any contravention of a requirement imposed under section six of this Act or any breach of the duty imposed by section eight of this Act, but civil proceedings shall lie, at the instance of the Board, for an injunction restraining any person—
- (a) from providing or procuring the provision of additional production facilities without the consent of the Board in a case where such consent is required under the said section six, or
- (b) from charging for any iron and steel products prices greater than those determined by the Board for those products under the said section eight, in breach of his duty under that section,
§ 4.55 p.m.
LORD SILKIN moved, in subsection (1), to omit all words from the beginning of the subsection down to "civil," and to insert:
Without prejudice to any criminal proceedings,
The noble Lord said: As Amendment No. 54 is preparatory to No. 55 and the case I want to make is on No. 55 rather than No. 54, I think it would be for the convenience of the Committee that they should be taken together. The purpose of the Amendments is simple. It is to provide a more effective remedy against certain breaches of the Bill, particularly of the provisions of Clauses 6 and 8.
Clause 6 deals with the provision of additional facilities with the consent of the Board, and Clause 8with the fixing of maximum prices. The Bill contemplates that certain producers may commit breaches of both these provisions, and certain remedies are provided. In my view these remedies are inadequate.
§ First of all, let us see what these breaches may be. Clause 6 deals with the case of a person whose application for permission to increase facilities has been considered by the Board and refused, on the ground that it would be against the public interest that those facilities should be provided. There is provision for an appeal to the Minister. If the Minister has upheld the Board it might happen—and this is the case we contemplate in this Amendment—that the person concerned would nevertheless be disposed to go on with the provision of those facilities. That is a contingency which the clause in the Bill recognises, because it provides a remedy—the Board may apply to the courts for an injunction and restrain the person concerned from carrying out the proposed work. Similarly, under Clause8, the Board may fix maximum prices and the case which is contemplated in Clause 29 is that of a person who sells products, the prices of which have been fixed, above the maxima. Again the machinery for remedying this is an injunction. We consider that those remedies, while they may be adequate and appropriate in certain cases, are inadequate in others.
§ We consider that these offences are in the nature of criminal offences and ought to be dealt with accordingly. We are not suggesting that in every case a breach should be dealt with as a criminal offence. We are content that there should be an option on the part of the Board to decide for themselves whether they should prosecute or deal with the matter by way of injunction, and our Amendments provide for that. There may be cases of innocent misunderstanding, or cases which can be dealt with appropriately without resort to legal process at all. There may be cases where an injunction would be a suitable remedy, and we are proposing that that should be left in the Bill. But there may be other cases of a grave nature where people deliberately flout the provisions of this Bill with a view to making profit, where the only 1122 appropriate method would be by way of criminal proceedings.
§ Particularly in dealing with the noble and learned Lord the Lord Chancellor, who I imagine is to reply, I must always qualify what I say by adding that perhaps this Amendment does not do what I hope it will do. But at least it gives a clear indication of what is intended—that is, to create a new offence which the Board can utilise. It is not as if this Bill does not provide for offences: it does. In a number of clauses, the breach of their provisions is treated as a criminal offence. Curiously, even a failure to comply with a notice requiring information, which in my view is a much less serious matter than carrying out works without the permission of the Board or charging more than the maximum price, is treated as an offence, under Clause 15 (6). And in this very clause there is a similar provision for treating as a criminal offence failure to supply information. It seems to me rather absurd that if the Board ask you for information on the question of overcharging, or for the purpose of enabling them to deal with Clause 6 or Clause8, and you do not give them the information, that is a criminal offence; but that if, having given them the information, you then flout those clauses and charge more than the maximum price, that is not a criminal offence. I am sure the legal mind of the noble and learned Lord, the Lord Chancellor, will revolt against that kind of inconsistency, and that he, at any rate, will be glad to make the Bill consistent, so that both the failure to give information, as well as, after having given the information, the failure to carry out the purpose for which the information is sought, should both be treated in the same way.
§ I need only refer to one or two analogous cases where there is no doubt that a criminal offence has been committed which are provided for in the law of the land. We have failure to comply with building restrictions, which I submit is a similar kind of offence to that involved in a breach of Clause 6. A person may be carrying cut building operations in defiance of the decision of the Board.
THE LORD CHANCELLOR (LORD SIMONDS)
Would the noble Lord say to what building restrictions he refers, and made under what authority?
§ LORD SILKIN
I am referring to the restriction on building and the requirement to obtain a licence from the Ministry of Works. Any breach of that is an offence. The same thing applies, of course, to contravention of price-fixing regulations—food prices, and so on. The poor butcher who charges one penny extra on his meat is liable to be prosecuted. But the iron and steel producer who charges an extra few shillings or pounds per ton on his steel is dealt with by way of an injunction.
I feel that an explanation is required as to why there should be this discrimination. It may be that the noble and learned Lord will say that in the one case the regulations which permit of the prosecution are made by a Government Department, and the offences are in respect of regulations made by a Government Department, but that in the case of this Bill that is not so. But there are cases where price regulations are made by the Minister. Under Clause 8 the Minister has power himself to fix maximum prices. The clause as it stands does not create a criminal offence, even when the Minister himself has fixed the maximum price. Moreover, under Clause6, the provision of facilities, the person desiring to provide those facilities makes his application to the Board, in the first instance but if he is refused by the Board, he has the right of appeal to the Minister, and, of course, the Minister may refuse. Even when it is a decision of the Minister, and not of the Board, he is still not subject to the treatment which the poor person is subjected to for refusing to give information.
In further answer to the point made in another place, that this is a breach of something done by the Board, and not by the Minister, I may say that if you refuse to give information, not to the Minister but to the Board, you may be charged with an offence: and you may be liable on summary conviction to a fine not exceeding £100, or to imprisonment for a term not exceeding three months, or to both. That is not a breach of anything required by the Minister, but a breach of a requirement by the Board itself. Similarly, in this very clause there is provision for an offence being committed where a person gives false information to the Board—again, not to the Minister. Therefore, in my submission, 1124 the distinction is not whether the offender is committing a breach of something required by the Board or by the Minister. Even where he is doing something which is a breach of something required by the Board, he is, under other provisions, committing an offence. Therefore, I submit that it is right and logical, and in the public interest, that where persons commit serious breaches of either Clause 6 or Clause 8, they should render themselves liable to a prosecution, as well as to the possibility of an injunction. For those reasons, I beg to move this Amendment.
Page 28, line 1, leave out from beginning to ("civil") in line 4 and insert ("Without prejudice to any criminal proceedings")—(Lord Silkin.)
THE LORD CHANCELLOR
This is the first time that I have taken any part in the discussion of this interesting Bill. I am sorry that on the first and only occasion on which I do take part I am unable to say anything which will be acceptable to noble Lords opposite. This is really a rather startling and novel proposal. I think on both sides we are anxious to assert the importance of Parliamentary control. Particularly on questions of delegated legislation are we anxious to assert that there should be Parliamentary consideration and scrutiny of any rules made by any body to which a power to make legislation is delegated. We are even more emphatic about that when there is any question of penalty, and especially when that penalty may be the penalty of imprisonment. For I believe it would commend itself to noble Lords on all sides that our fellow citizens should not be put in jeopardy, in peril of their liberty, by a determination, a rule or regulation, or anything you like to call it, which has not been submitted to the scrutiny of Parliament.
It may be that you can find certain analogous cases—though I do not think those to which the noble Lord referred are analogous. I do venture to suggest, however, that it would be altogether wrong to give to this Board (whose powers noble Lords opposite would circumscribe in various ways, rather on the footing that they require a good deal of supervision and looking after) the power to make certain determinations, and then to say that those determinations, although they are not subject to any 1125 scrutiny, or subject to Parliamentary scrutiny only at a remote distance, may yet put a man in peril of his liberty if he disobeys them. That is something which cannot possibly receive the support of Her Majesty's Government or, I should venture to think, of noble Lords opposite.
Certain analogies were offered by the noble Lord, Lord Silkin, and one in particular in regard to price-fixing regulations. But, surely, price-fixing regulations, as we know them now, are laid. You can pray against them and they are subject to control. But here you have determinations made which will be under no control and for which even the Minister is not primarily responsible. How can it be right to make such a thing the subject of a penalty involving the loss of liberty? Her Majesty's Government cannot possibly make themselves responsible for such a measure. It is not as if it were in any way necessary. I rather anticipated that, either in another place or here, the measure which we have adopted might be subject to criticism as putting too stringent an obligation upon the iron and steel industry. I thought it might be said that it was rather a novel experience that they should be deemed to have entered into contractual obligations with the Board and I thought that that might be the subject of criticism. But that has passed and I think that this somewhat novel experience is based on some precedent in the Monopolies Act.
Having accepted that, I ask your Lordships to accept also that it is thoroughly efficient. Upon this matter I venture to speak with some authority and experience, and I daresay that nothing would be more effective to ensure the determination of the Board being observed by those who are interested than the knowledge that quickly—because your Lordships will not go back to Bleak House or anything of that kind—in the Law Courts, an injunction can be obtained if there is a breach of the provisions. Let us see what that involves. An injunction must be obeyed, and, if it is not, there can be an enforcement of the order by sequestration of the whole of the assets of the company which has refused to obey the order. This is a most powerful sanction which is already contained in the Bill, and there is no need that there should be this further sanction of a criminal penalty.
1126 I would remind your Lordships of this. A valid criticism was made in another place of the Bill as it was originally drafted. It was pointed out that considerable profits might have been made by excess prices being charged before proceedings were taken. That was recognised as a valid criticism, and in addition to the sanctions which were already contained in the Bill the new subsection (4) was inserted by which all extra profits so illegitimately obtained might be sequestered for the benefit of the Board. That was a valuable suggestion which was adopted by the Government; so that in addition to the powerful sanctions which you now have, you have procured that the profits, if any, made by the offending firm are taken away from them. I have dealt shortly but I hope not discourteously with this problem. To my mind it raises a very serious question. I would venture to say this finally. Every other Amendment which has been put forward, whether accepted or not, I would have accepted rather than this, because the other Amendments go maybe to the purpose and object of the Bill, but this creates a far-reaching precedent which I should be most reluctant to see upon the Statute Book. Accordingly I am afraid that I cannot advise Her Majesty's Government to accept the Amendment.
§ EARL JOWITT
We are in rather a peculiar position here. I am afraid I have not verified my references at all and of course I accept what the Lord Chancellor says. But in all these price fixing powers surely an order that is made is always laid.
THE LORD CHANCELLOR
I hesitate to say a thing like that without having looked at the Book. I think it is a general practice, but in any case the Minister is immediately responsible to Parliament. He can be questioned at once.
§ EARL JOWITT
I would not assert to the contrary—indeed, anybody who asserts anything about all these Defence Regulations without being very sure of his ground is a very foolish man indeed. My feeling is this. I do not like having price-fixing powers unless those price-fixing powers have to be obeyed. The corollary may well be that the price-fixing power should be made by a Minister and should be promulgated by an 1127 order. It is the fact that in the Amendments we moved earlier we sought to give the price-fixing power to the Minister and to say that it should be made by order. I think we were perfectly right, because either you have a price-fixing power or you have not. But at least this is plain: that if you have price-fixing powers they should be observed. I cannot recall—I may be wrong—any single case of price-fixing powers and maximum prices in which the failure to observe those maximum prices is not a criminal offence. It may be that there are cases where the orders have been laid, and, if so, let them be laid here. But I think it is a bad principle to authorise elaborate price-fixing powers and then to say to a fellow who disregards them and charges higher prices, "The worst that can happen to you is that you can be brought before a court if anybody finds out what you are doing, and, of course, you must obey the injunction." I quite agree that if an injunction is obtained the fellow would indeed be in peril if he did not observe the terms of the injunction. It is true that the judge who would then obtain cognisance of the matter might order that in addition the miscreant should repay his ill-gotten gains.
There is really no particular reason why anybody should observe these maximum prices for the first time. Like every dog, he is entitled to his first bite. It is only when he has had his first bite and been discovered, and had an injunction granted against him, and then is brought before the court which granted the injunction, that these things happen to him. From what the Lord Chancellor has said, I hope that the noble Marquess will now see how wise we were in our generation in moving the Amendment that the Minister should fix these prices and that he should do it by order. If only we had had our way then, the whole of the objections which the Lord Chancellor raised would have gone by the board and we should all be happy; we should all have what we want. Let us hope that when we come to Report stage the noble Marquess, who has listened to the argument of the Lord Chancellor and has realised the strength of our case, will see fit to meet us on that Amendment.
§ LORD SILKIN
The noble and learned Lord has dealt with certain parts of the 1128 case I made. I should be grateful if he would explain to me how it comes about that, in spite of what he says, it is still an offence under this Bill for a person to fail to comply with a notice requiring him to give information to the Board. There is no order involved there. Parliament has never approved the request for information, and even the Minister has not approved it: yet under Clause 15 (6) it is an offence. A similar offence is created under Clause 29 (5). There, again, Parliament has never approved the requirement to give information, nor even necessarily in the case of Clause 25. It may be the Minister has. Nevertheless, in both those cases it is an offence, and it is an offence not against something of which Parliament has approved but against something which the Board itself has requested. If that is the case, what is the difference between that and what we are asking for?
THE LORD CHANCELLOR
The noble Lord is really seeking to be too logical. It is perfectly reasonable for Parliament to say that information shall be given for a certain purpose, and that if the information is not given then the person who fails to give it has committed an offence. That is quite specific. But where you are giving a wide power to make determinations, as in Clauses 6 and 8, I think that Parliament is entitled to know what those determinations are. There is something quite specific about saying, "You shall give information," for Parliament knows exactly what is required by giving information. It seems to me that it may be very near the line, but at any rate it is on the right side of the line. Parliament can say what is required. But you go over the line when you say, "Make this or that determination and then it shall be a criminal offence if it is not obeyed." If that does not satisfy the noble Lord, the proper satisfaction for him would be the elimination of that other part of the clause which creates the criminal offence.
§ On Question, Amendment negatived.
§ Clause 29 agreed to.
§ Clauses 30 and 31 agreed to.
§ 5.23 p.m.
§ EARL JOWITT
had given notice of an Amendment, after Clause 31, to insert the following new clause:32. Any notice or other document required or authorised by this Act to be served on or 1129 iven to any person, other than a company to which section four hundred and thirty-seven of the Companies Act, 1948, applies, may be served or given by leaving it at or sending it by post to his place of business or, if he has more than one, his principal place of business.The noble and learned Earl said: I must apologise for my youthful exuberance and enthusiasm, in that I attempted to move this Amendment too soon. It is a wholly admirable Amendment, but, if I may, I should like to move it in an amended form. I will move it with these additional words at the end:Provided that nothing in this section applies to any notice under Paragraph 15 of the First Schedule to this Act.If I may move the new clause in that form, I think it will satisfy the requirements and will be a useful addition to this Bill. I beg to move.
§ Amendment moved—
After Clause 31, insert the following new clause:
32. Any notice or other document required or authorised by this Act to be served on or given to arty person, other than a company to which section four hundred and thirty-seven of the Companies Act, 1948, applies, may be served or given by leaving it at or sending it by post to his place of business or, if he has more than one, his principal place of business.
Provided that nothing in this section applies to any notice under Paragraph 15 of the First Schedule to this Act."—(Earl Jowitt.)
§ LORD MANCROFT
The youthful enthusiasm and exuberance of the noble and learned Earl is wholly justified. This Amendment was a fine enough Amendment, even as it stood on the paper, but the additional words of the noble and learned Earl have made it well-nigh perfect, and Her Majesty's Government are very willing to accept it.
§ On Question, Amendment agreed to
§ Remaining clauses agreed to.
§ First and Second Schedules agreed to.
Third Schedule [Iron and Steel Activities]:
7. The production from iron or steel of bright bars or of hot-finished tubes or of hot-finished pipes.
§ LORD WILMOT OF SELMESTON moved to add to Paragraph 7: "or of wire." The noble Lord said: The harmonious note which seems to have 1130 marked the concluding stages of this debate may well continue for just a few minutes more. I shall be glad if the Government find themselves able to agree to this final Amendment. As your Lordships are aware, the term "iron and steel industry," which runs like a refrain' throughout this Bill, covers the activities described as in the Third Schedule; where any part of the industry is not included in the Third Schedule, this Bill has no relation to it.
§ Noble Lords will see that the industry is described in considerable detail, beginning with primary processes, the quarrying and mining of iron ore, which goes on through various other processes such as smelting and rolling, and then on to the finished product. I will not weary your Lordships with a recital of those processes. Finally comes the production of iron and steel bars, hot finished tubes and hot finished pipes. There is one other product which I suggest should be included, and that is wire, which is made, as your Lordships know, from rods specially prepared for that purpose. It so flappers that wire, in its various forms, is the, raw material of a considerable range of important industries engaged in the making of fencing and other things. The supply of wire from time to time tends to be restricted and short; and it is very desirable, looking to the future—and not perhaps the distant future—that the Board should be able to cast their beneficent influence over that section of industry which deals with the production of wire. I beg to move.
Page 41, line 44, at end insert ("or of wire").—(Lord Wilmot of Selmeston.)
§ LORD MANCROFT
I should have liked to accept this Amendment, not on its technical merits but if only by way of compensation to Lord Wilmot for having inflicted so much of my oratory on him during the last few days. But it cannot be so—again for practical reasons. I admit that the matter is not an easy one—indeed, it is very difficult to know what should be included in this Third Schedule and what should not. The Government have given the most careful consideration to the boundaries of the iron and steel industry over which the Board should exercise supervision. The question is a complicated one, and the 1131 line of demarcation is a very difficult one to draw. But the Government have reached the conclusion that as most of the wire drawing firms are not steel makers, the Board's production and supply supervision should end at the wire rod stage and should not extend to wire drawing.
§ LORD WILMOT OF SELMESTON
Can the noble Lord say what is the proportion of the total output of wire made by steel makers and, alternatively, by firms who are not steel makers?
§ LORD MANCROFT
No, I am sorry: I have not the information available. Let me give reasons why the Government have made this decision. The wire drawers are not producers of iron and steel, or users of iron and steel making raw materials, but purely convertors; and in the main they are not part, but customers, of the steel industry. Wire drawing is associated not so much with steel making as with a wide range of end products. Its raw material is wire rod, and the Government's view is that the Board's supervision should stop at the wire rod stage. It is merely a matter of convenience that the wire makers are associated with the Wire and Wire Rod Conference of the British Iron and Steel Federation, and that the continuation of the war-time price control has been carried on by the Iron and Steel Division of the Ministry of Supply. The noble Lord, Lord Wilmot of Selmeston, will be familiar with that.
The next reason—and I think it is a very important one—is this. Wire-making is one of the industries on the fringe of the iron and steel industry which are regarded as more akin to the engineering industry. I do not, of course, want to be dogmatic about it since it is to some extent a matter of opinion. Similar cases, which are also excluded from the Third Schedule, are drop-forging, cold drawing of tubes, structural steel, bolts, nuts and screws. The wire drawers should be in the same position as other users of re-rolled steel—that is, that they should rely on the Board to see that the steel industry produces the right types and quantities of steel which they need for making wire and wire products.
Those, I think, are the practical arguments. The Board's general duty under 1132 Clause 3 requires them to promote the "adequate supply of iron and steel products" and that includes wire rods. Thus, if any consumer was unable to obtain the supplies he needed, it would be open to him to approach the Board. If the Bill had to cover every product where there were fears that adequate supplies might not be obtainable, then the Third Schedule would obviously become very extensive indeed. Wherever the steel industry projected into other industries—for example, bridge-building and drop-forging—there would be a case on these grounds for extending the Schedule. There again, I do not want to be dogmatic about this. I realise that the difficulties of finding where this borderline should be are acute. I appreciate that there may be force—indeed there is force—in Lord Wilmot's argument. It is not quite "six of one and half a dozen of the other other:" I think it is seven on my side and five on his. That does not alter the fact that I admit that the five exist on his. I hope that he will agree that the seven are on mine and will not press his Amendment.
§ 5.33 p.m.
§ LORD WILMOT OF SELMESTON
There are one or two technical considerations which perhaps I might put to the noble Lord, in order that the balance of five to seven may be slightly tipped in my direction. The supply of wire rod, as the noble Lord says, is part of the duty of the Board. Wire is made from wire rods, and it happens that a considerable proportion of the total national output of wire is made by the makers of wire rods. My fear is that the consumers of wire, who for many years hitherto have had the protection of the Board or the Minister, or some regulating body, will have no kind of protection if the producers of wire are unable or unwilling to supply them. It is in just this situation that the Board are useful.
I do not want to press this point unduly, because it is a purely technical machinery point; but if the noble Lord will look at subsection (3) of Clause 3, he will see that it says:In this Act, the expression 'the iron and steel industry' means—1133 Secondly, the next subsection gives the Minister power w increase the number of things brought in under the Bill. I think I am right, however, in saying that he would have no power, even if he found it necessary, to bring wire within the Schedule. I wonder whether the Government would consult, between now and the next stage, with the users of wire to find out whether my fears are justified. If they find that they are, or could be, and if the Government are still unwilling to add "wire" to the Schedule—though I would prefer that they said they were willing to do so—perhaps they will so amend subsection (3) of Clause 3 that it will be competent for the Board or the Minister later on to include wire among the products brought within the purview of the Board. This is not an unimportant matter. There are substantial industrial interests concerned with this vital interest, the supply of their raw material. It has to do with important agricultural supplies for fencing and protective coverings, and any kind of shortage of wire will be a very serious thing for agriculture. It is most important that, at any rate, somebody should have the power, in the case of need, to bring the regulation of wire within the purview of the Board
- (a) the activities included in the Third Schedule…"
§ LORD MANCROFT
I am most grateful to the noble Lord for his comments. As he rightly says, this is a technical matter and I, alas! am no technician in this matter. I cannot give him a promise to do what he wants me to do, but I will make certain that what he has said is given careful consideration; and if, by 1134 any chance, I am wrong, others will put me right. I can do no more than that. I quite appreciate the importance of this point. In fact, I may mention that my right honourable friend the Minister went so far as to examine a factory himself to see with his own eyes the actual problem which faces us. I tell the noble Lord that to assure him that the Government do appreciate the seriousness and importance of the problem.
§ LORD WILMOT OF SELMESTON
I should like to thank the noble Lord for his accommodation, for his courtesy throughout this long debate and, if I may be allowed to say so, for the remarkable grasp he has shown of this most technical matter in connection with which many of us have spent a much longer time than he has. I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ House resumed.