HL Deb 01 February 1962 vol 236 cc1151-200

4.42 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH rose to call attention to the proposed merger between I.C.I. and Courtaulds; and to move for Papers. The noble Viscount said: My Lords, the House will recollect that the statement which was made by the noble Lord, Lord Mills, on Tuesday and which was a repetition of the statement made by the President of the Board of Trade on the proposed merger of the I.C.I. and Courtaulds, did not meet with very general approval in either the other place or this House. It is for that reason that I am calling the attention of the House to it to-day and am moving for Papers. For a considerable time now, running into weeks, the country has been watching, with interest, no doubt, what might be called the battle between the two contending forces for the control—the real, united control—of the manufacture of man-made fibres. The situation is a little different from what has often been the case in previous takeover bids, in that there is no agreement between the two contending forces—who, nevertheless, have, I believe, had harmonious relationships in the past. This has meant that one of the contending parties has issued a statement or statements containing a great deal of information; and it is this which has very much stimulated the public interest and had a good deal to do with the formation of public opinion upon this matter.

We on this side of your Lordships' House felt that it was far better to raise this question at once, while the matter was fresh in the mind of the House after the statement by the President of the Board of Trade on Tuesday last. That statement by the President of the Board of Trade has also been very much in the public eye—and, judging by last night's broadcast on the sound radio, very much in the public ear also, because there was a report on the radio last night which seemed to indicate that there was an impression after a Conservative Party meeting (I suppose that an impression is all one can expect, as a rule, from information arising in the Press or in broadcasts after a Party meeting) that nearly nine out of ten of the members attending that particular meeting were critical of either the merger or the manner in which the Government were dealing with it. If one can judge from events—and that was the position last night—perhaps their view was stimulated by the exceedingly comprehensive and. I think, important article which appeared in the Financial Times yesterday morning. I shall be referring to that in a minute, but I mention it at the moment to show that what I said on Tuesday is, I think, right—that is, that this particular type of merger, in the circumstances in which these proposals have arisen, is being thought about and debated in every class of the community. When we on the Labour side of the two Houses of Parliament raise certain objections, they may be for quite different reasons, sometimes, but it is just as important that they should be considered as it is for these other opinions also to be considered.

Obviously, this merger is unpopular in the City; otherwise I do not think we should have had such an article as was written in the Financial Times yesterday. It is unpopular with the users of man-made fibres—very unpopular; and it is certainly unpopular, to some extent, in certain sections of the trade union circles. I think it is quite proper and right to say at once that there are probably no other great capitalist organisations such as Courtaulds and the Imperial Chemical Industries that have, on the whole, a better history in their experience of industrial relations. As I have said in the House on a previous occasion, the trade unions have always recognised that, although they have their bothers in discussions, their industrial relations with Imperial Chemical Industries, and, I think, with Courtaulds, are such that they could easily be a pattern for some other industrial organisations. It is always well to be fair and to state that position.

On the other hand, the unions, I am certain, are disturbed over the possible effects on actual employment—and if not on employment as a whole in the particular industries which will be covered by a merger, certainly that in particular districts. I think that the section of the statement issued by Messrs. Courtaulds to which I referred to the other day confirms what I am now saying. Courtaulds' statement said: I.C.I have said that complete control of United Kingdom man-made fibres is necessary to avoid over-capacity and duplication". The objective expressed in that statement is, of course, very familiar to those of us who have been connected with industry and wage negotiations over the last forty years—and how great was the cry for rationalisation in the difficult years that followed the First Great War! And whilst there is no doubt that, in arranging the general progress and development of industry, all these things have to be taken into account, there nevertheless must always be some anxiety as to how far these arrangements are going to disturb the actual position of sections of labour; their roots in a district; what the compensation will be if there is a final abolition of their particular, individual employments, and so on.

Therefore, we see the range of criticism of this proposed merger now stretching through these three great departments of public opinion: first, in the City, in finance—its effect upon shareholders and upon the general industry of the country. Then we see it among users—and that is covered by the paragraph in the statement issued by Courtaulds and made by one of the most prominent chairmen of the textile industry using man-made fibres. Thirdly, we find this criticism in the opinion of the working class. The combination of these three great powers of public opinion surely ought to bring the Government to think very seriously about this matter.

To return to the leading article from the Financial Times, I should say that it does not seem to occur to the writer of that article that the Government were ready to deal with the situation as it has arisen in these negotiations, or the failure of negotiations, for the merger. I quote: The first was an announcement that the Government, adhering to its existing policy, intended to do nothing for the time being. His apologia"— that refers to the President of the Board of Trade— for this policy of inaction was unconvincing. It was unconvincing to argue that the position of these two companies in the man-made fibres industry has not been referred to the Mono-plies Commission, though each is formally liable to reference, because they had not yet acted against the public interest. This is question-begging"— that is pretty strong. It was unconvincing, too, to argue that no body of experts could form an opinion about the likely effects of such a merger. …

Nor, my Lords, should we forget in Parliament that, in the many discussions which took place prior to the passing of the Statute setting up the Monopolies Commission, and the like, it was always within the scope of our debates how far action ought to be taken in advance where it was seen perfectly plainly that a merger of a certain kind would not lend itself to the public interest—indeed, entirely the reverse. It seems to have come rather late at the end of this ten years' experience of rule by the present Government that they have, at this very late hour, set up an inquiry—which I must concede at once has been set up—as to how they could possibly deal with questions arising out of take-over bids and merger proposals which would be likely to be against the public interest. Moreover, if I may say so, other people have been thinking this way for a long time. We in our Party have thought so for years. We never thought that the final Act of Parliament which was published in the present Parliamentary régime of the Conservative Party went far enough or was strong enough.

I now quote from our future programme, which has been out for some weeks, and from page 18 I take a final paragraph on this question of monopolies, and so on. We say: Where major changes of ownership and control in a vital industry are threatened by take-over bid or merger, the State must be free to intervene, either by vetoing a proposed transaction or by stepping in itself and asserting the rights of the community through an extension of public ownership". It is evident, I should think, from reports of views of Conservative Members of Parliament—and these views may be shared by many Conservatives in your Lordships' House—that it would be far preferable for the Conservatives to take such action as would prevent making (as it was put by a Conservative Member of Parliament the other day), a "ready-made organisation for immediate nationalisation", such as is proposed in the merger plans which have been published. So far as I am concerned, it shows perfectly well that there are always dangers in these matters, which have never been absent to my mind.

I am not sure whether the noble Earl, Lord Swinton, will remember this—he was President of the Board of Trade at the time, and it is a long time ago—but I introduced a Bill, under the Ten-Minute Rule, to curb the power of thrusting combines, in which many of the arguments to which we are referring to-night could be found. The noble Earl was not very sympathetic to my Bill, but I do not think he needed to answer the arguments himself; he could get plenty of Back Benchers to deal with a Ten-Minute Rule Bill.

There is no change in the situation as to what becomes a threat to the public interest if the threat is created by a trust, or a combine, however it is formed, whether by merger of great interests or the gradual build-up of something which becomes a monopoly, and the Government say it ought not to be dealt with in the public interest. That is why to-day we look at the experience we have had over iron and steel. That is why, so far as I am concerned, I shall never hesitate in the future to go on moving for the restoration to public ownership of those great interests which were acquired by the State and have been disposed of, again for purely political, dogmatic, reasons, and have since been giving a good deal to the people who got them back, though they are not giving all the results we ought to have from the plans which have been made. I should be just as much in favour of re-nationalising the industry at the first opportunity as I was of nationalising it.

Now, this plan to which we are drawing attention to-night has been very severely criticised by Messrs. Courtaulds themselves. Your Lordships will see that not merely is the principal figure in the textile industry objecting because of the effect upon the user of man-made fibres; objection is raised also because of their own experience in regard to the purchase of chemicals, and the like, from I.C.I., which they would require in their industry of producing man-made fibres. If I can find the spot, and if not I will speak from memory, I will quote the fact (I have found the actual quotation) that in 1951 the I.C.I. price for chlorine, another important raw material, was over 65 per cent. higher than that paid by the Courtaulds' German company to its supplier. By 1961, the I.C.I. price was lower, but still nearly 30 per cent. above the German price.

In what sort of position would the general British public, the user, and the citizens themselves at large, be if that merger came off, and then the side of the industry producing the prime raw material—the chemicals used—were able always to maintain its position? They would be completely within its power. I know quite well that in certain circumstances adjustment might be made here or there, or anywhere, in the arrangement; but who is to make it, and who is to insist on it? Where other manufactures are being dealt with—and, so far as we know, either one of the sections of the industry may also be interested in the conditions under which the material or finished article from abroad is imported—what is the ultimate safeguard for the British consumer behind it all? So I feel myself that in this matter we have been perfectly right in pressing for a public Inquiry.

I must say that, like the Financial Times, I am not impressed at all by the reasons given by the President of the Board of Trade as to why the Government either will not, or may argue they cannot—or, if they do, they do it with non-effect—have an Inquiry now. Surely if the Government, instead of having a completely flabby attitude, were to give an indication to industry and finance at large of what their answer would be in such circumstances, that might do a great deal to stop the danger of a merger which so much of public opinion has already decided is not in the public interest.

That is the case we put tonight. I have much more to say but I feel that it would be unfair to go on, when we have a list of eleven speakers and it is now five o'clock. It will be within the recollection of my noble friend Lord Longford that a woman novelist once put these words in the mouth of one of her feminine characters. Looking up at the man she was addressing, she said: "My love, as you are strong, be merciful". I may not he strong, but I should like to be merciful to your Lordships tonight. I think that I have put enough of the case I have in mind to enable the points that we hold on this side of the House to be debated. Therefore, I have great pleasure in moving the Motion which stands in my name on the Order Paper.

5.2 p.m.


My Lords, I should like to congratulate the noble Viscount the Leader of the Opposition not only on raising this matter in such a timely manner but also on putting the case as he sees it so clearly, so compendiously and, I think, so fairly. I am never very long, but to-day I also want to be as brief as I can. Let me at once declare my interest. Unlike the noble Viscount, I am a staunch supporter of private enterprise, though I am not, unfortunately, a shareholder in either of the two companies.

I do not propose to follow the noble Viscount in expressing a definite opinion on whether this proposed merger would be a good or a bad thing. I have read a great deal of the stuff that has been put out by both companies, and the general comments, but I am certainly not competent to express an opinion. I very much doubt whether anybody is really competent to express a valuable opinion unless he knows all the facts—and by that I mean all the inside facts, which it is impossible for either company to spread abroad. One cannot say that a merger is either good or bad, judging simply by its size. There may be a very large company which is very efficient and beneficent—and by "beneficent" I mean that it renders good service to its customers and clients—and there may be a much smaller company which is not to be commended in any of these respects.

For a few minutes, I think I can more usefully ask your Lordships to consider what is the function of a Government in a situation of this kind, and what is the course they should follow. I think it is clear that it would not be possible for the Government, under their statutory powers, to refer this matter to the Monopolies Commission; and I very much doubt whether it would serve any useful purpose, even if they had the power, and did so. I am also very doubtful (and here I differ from the noble Viscount) whether an inquiry of the kind he has suggested would serve any useful purpose. I am quite sure that it should not be a public inquiry, which is what was asked for by the noble Viscount on the last occasion, though I do not know whether he presses that point to-day.

That suggestion has been bruited abroad generally by the critics of the Government. Lot me say why I think that it would be, perhaps not impossible, but unreasonable and unfair, to have a public inquiry. If we are to form a really valuable opinion on this matter, we have to know the whole facts and the most inside facts, facts which it would be quite impossible, or entirely unreasonable, to ask either company to disclose in public—for instance, their plans for the future; how far their projects are succeeding; their research plans and how likely those are to suc- ceed, and within what time; and details of costs. Obviously, we cannot ask the companies to disclose these in public. The only people who would be enormously advantaged, if that were done, would be the competitors of these companies in foreign lands.

But that does not mean that these vital facts cannot be and should not be disclosed to Ministers; indeed, I very much hope that they have been.


My Lords, the evaluation of what is useful or not always seems to me to depend on who puts the questions and to whom. I remember being before the Royal Commission on Food Prices in 1925, which I am sure the noble Earl will remember, as he was then President of the Board of Trade. One morning, when we were dealing only with wheat, flour and bread, Sir Auckland Geddes asked me whether I would give in the public inquiry the Co-operative stocks of tea in bond that afternoon. It all depends on whom you are approaching, and how and why. I cannot see that to instance the competitors of the companies is any real answer to the case for a public inquiry.


My Lords, the noble Viscount has not in the least "floored" me. I think that I was President of the Board of Trade in 1925. I certainly did not put that question to the noble Viscount. May I say that if I put it to him in private, I would expect him to answer, knowing that it would be treated in confidence. I very much doubt whether I should ever have asked him to say it in public, even in the heat of debate. I should like the noble Viscount, in fairness—and he has been fair over this—to consider whether it really would be fair to go to these two companies and tell them they must disclose in public the whole of their secret plans and secret researches, and their chances and prospects. These are all matters which their competitors would long to know.

I do not want to take too long on this matter, but I would remind the noble Viscount of what happened with the Companies Bill when I was leading on that side of the House, and the noble Viscount's Government, with Sir Stafford Cripps at the Board of Trade, were introducing the Bill, now the Companies Act, into your Lordships' House. Both behind the scenes and then in debate, in a most useful, co-operative and constructive Committee stage, we completely altered the Bill as it had been introduced and made it entirely acceptable. I well remember talking with Sir Stafford Cripps and the then Labour Lord Chancellor and asking whether the reserves of shipping lines should be disclosed—there was a question under the Companies Act regarding the disclosure of reserves—and the Labour Party put into the Act that they should not be. The reason for that was that it was the kind of information which would be most useful to competing foreign shipping lines. That was an exception to what would be the general rule. I do not think I need say more to show that that would be wrong.

But I have said that these are matters which it would be proper to disclose, and I hope they have been so disclosed, in confidence to Ministers.


I think you actually included a quite similar provision in the 1929 Act. I was in Committee with you on it for four months.


I have no doubt that I did; I had a lot of sensible provisions. The fact that at a later stage Sir Stafford Cripps and I and the Labour Lord Chancellor of the day all agreed shows, I think, that my views on this subject are not too foolish.

While, as I say, I feel the Government are right not to set up an inquiry, that does not mean, in my opinion, that the Government should take no action, and still less that they are impotent to do so. This is not just a matter of powers under Statute. Apart from Statute, the President of the Board of Trade and his colleagues have enormous power in this sort of situation if they choose to exercise it and think it right to do so. To take an example which I hope the Government will entirely accept (I have not consulted them on what I am saying on this, but quite recently they have not hesitated to exercise this kind of power) the Government thought it right that a number of aircraft firms should come together; that, if we were to compete efficiently in the markets of the world, there was only room for two or maybe three aircraft corporations. It was Government policy, and very largely Government pressure, that brought about the amalgamation of all the aircraft firms, I think except one, into these undertakings.

Conversely, it would be impossible in practice for a great merger of this kind to take place if the Government of the day stated that they thought such a merger was contrary to the public interest. I do not believe it could take place in that event. We are to-day far from the old days of laissez-faire, even it my Party ever really swallowed that lazy doctrine—and I do not think we did, even at the time when it was so popular and so successful in the Liberal Party. But certainly that is not the point of view of the Government to-day. The Government to-day insist—and I think rightly—that they must have a financial and industrial policy (and we are to have a further chapter of that revealed to us shortly) and with the best advice they can get (and I sincerely hope they will get from both sides of industry all the help they can, and certainly need, in this matter) that it is their duty to give guidance and, if necessary, direction.

This proposed merger, my Lords, if it takes place, or even if it does not take place, whichever event happens, is bound to have an enormous and important effect upon a large number of industries. I do not complain that the Government have taken time in this matter. I hope that the time has been occupied in ascertaining just those facts which I venture to say I think it is the duty of the Government to find out. I hope it means that they have obtained confidentially all the information they need in order to form a judgment of whether this merger would or would not, in their opinion, be contrary to the national interests. And in saying "national interests" I do not mean any abstract view about monopoly; I mean what setup in this man-made fibre industry is likely to be most efficient in production, research and development, marketing and, most important, in giving the best service to the users of the product, which is a large section of the textile industry.

I must say that I was just a little sur- prised when I asked the other day at Question Time whether in all the interviews which have taken place the consuming industries had been consulted, and gathered from the Minister without Portfolio that they had been in only a rather general way. Well, we shall come to know a little more about that. However, I should have thought that, as the consumers are becoming so important, the Government in framing an opinion would naturally take their views into consideration. But if the Government tell us to-day that they have conducted all the inquiries which they think are necessary to give them information and that they have all the information they have sought—and it is their duty to make up their minds—and in the light of it they do not think it is a case in which they should interfere to prevent the matter going on its way in what would be the normal commercial course, because they do not think there are any national interests which lead them to take a contrary view, then, in my opinion, the Government have followed the course which they ought to follow and I should not feel competent to criticise their action. I do not think many of my noble friends would dissent from what I have suggested is the proper function of the Government in a situation like this.

So much for the Government. But I feel I cannot close without saying something of the companies, or one of them—and in saying what I am going to say, quite briefly, I think I am expressing the opinion of a great many people. Under the wise guidance and leadership of my noble friend Lord Fleck, Imperial Chemical Industries obtained a remarkable position. It was not only that they were universally recognised as efficient and successful, but it was a very human enterprise; and, what is more, I think everybody felt that the company under that leadership had a great sense of public responsibility and a high regard for the national interest. Those are assets of inestimable value, some of them imponderable, if you will, but I am not sure that those imponderable assets are not the most valuable of all. That may all be equally true to-day—I hope it is. But I cannot help feeling that in the handling and the presentation of this business that imponderable asset of national good will has been considera- ably shaken. If I am at all right in that, then whatever the outcome of this issue may be, it is vitally important, in the interests alike of the company and the country that that confidence should be restored.

5.20 p.m.


My Lords, I also should like to congratulate the noble Viscount the Leader of the Opposition on the manner in which he has introduced this Motion. I agreed with the noble Earl, Lord Swinton, when he spoke of the danger of making a judgment on insufficient information. I can understand the reluctance of Her Majesty's Government to express an opinion on the state of affairs existing between these two companies before it is known whether the merger will materialise and, if it does, how the resulting organisation will behave. Should its behaviour appear to be against the public interest, the Minister has declared his intention to refer the case to the Monopolies Commission. From the statement made by the President of the Board of Trade, Her Majesty's Government appear to believe that, at that stage, if they get an unfavourable opinion from the Monopolies Commission, they would need additional powers to take any effective action in the public interest. I suggest that this really is not good enough. It could also be most embarrassing after the merger for the new organisation.

What I suggest that Parliament has to do is to define very clearly what is and what is not in the public interest. There is nothing worse for industry than the unpredictable action which Government may take to alter the law after action has been taken which was legal at the time. On the admission of Her Majesty's Government in the Minister's statement, our anti-monopoly legislation appears to be inadequate. In fact, in barring intercompany restrictive agreements it does not seem to have been realised that mergers would increasingly be used to provide a way round the Act. In other words, this case has disclosed a serious and perhaps a dangerous loophole in the Restrictive Practices Act, 1956. What seems to be needed now is a reconsideration of the whole problem of over-concentrations of economic power with some simple criteria as to what is and what is not in the public interest. The inquiry should include the protection given by tariffs, which always tend to encourage monopoly growth. In my view the terms of reference should be in the widest possible terms to consider possible misuses of power, whether by the organisation of business or by the organisation of labour, for the public are entitled to be protected against the fears that such concentrations of power create in their minds.

The time for such an inquiry is appropriate. The Treaty of Rome includes provisions to deal with such matters. How they will be applied in practice remains to be seen, but I have the impression that the Commission of the Community intend to be firm in this matter to maintain real competition, without which stagnation would result in the Common Market. An exchange of views at this time during an inquiry with the Commission would be most useful. I hope Her Majesty's Government will set such an inquiry in being without delay.

I am afraid I regard the tears shed over this development between I.C.I. and Courtaulds by those who advocate more nationalisation, or what they call public ownership, as but crocodile tears. If it is as bad as they make out, a merger would make it easier for them to nationalise the combined undertaking. It is those of us who believe in the merits of and wish to preserve private enterprise in a free market economy who should be concerned. One of the greatest protagonists of the free market has suggested three conditions which are essential if the conscience of the public is not to be affronted in accepting the working of a market economy as preferable to that of any other system.

These conditions or rules for the good working of the market economy are, first, the preservation of competition to the greatest possible extent; secondly, to prevent the use of monopoly power, where complete competition is impossible; and, thirdly, the establishment of a State organisation armed with the necessary powers to maintain these rules. We feel, as the Minister seems to admit, that the existing powers of our supervisory organisation are inadequate.

The fact is that the continued existence of the market economy is dependent upon individual and not upon collective decisions. While those in industry fulfil their function as free men to take up opportunities with all the attendant risks they are irreplaceable and may claim a position which should not be challenged. But the moment they over-play for safety by trying to eliminate risks by collective agreements, they become but officials in charge of the administration of a business. In such circumstances, any business becomes the target of officialdom. To save us from this, the supervisory organisation set up by the State must be adequate to prevent undue concentrations of power. Further action in this field now appears to be necessary.

This will take time, and I personally cannot see why the two companies concerned should not be invited meanwhile to convince the Monopolies Commission on one issue, tha; should the merger take place, no undesirable concentration will be created in the category of manmade fibres. Such a limited reference to the Commission would, I believe, go far to allay the fears of the public and should be more useful to the companies concerned if decided now rather than after the completion of the proposed merger. I therefore ask Her Majesty's Government whether they will consider inviting the companies to argue that particular aspect of the merger proposals in front of the Monopolies Commission before the negotiations are completed.

5.30 p.m.


My Lords, this is the second occasion on which I have spoken in this matter, and I think that I should declare, as I failed to do on the first occasion, that I have no interest whatsoever in either of these companies. My only connection is, shall I put it, of a salesman of merchandise in which man-made fibres play a part. I raised this matter on the last Sitting before Christmas, a Wednesday, in view of the announcement which had been made on the previous Monday by the Chairman of I.C.I., that there was a proposed merger between these two companies. As I indicated to the House then, this was a merger not of two factories but of two large economic production groups. In many respects they were twined and intertwined in production and in agree- ments. The noble Viscount the Leader of the House agreed that one could say that in the man-made fibre industry a monopoly did exist.

My Lords, this position had grown up by these two companies through a force of circumstances. In the first case, I.C.I., which had been primarily a chemical industry, had moved into the man-made fibre industry because its product was directly involved. If my memory serves me correctly, they purchased the rights to manufacture two or three different fibres. In the case of Courtaulds, this was one of the oldest of the textile companies of this country and it moved into the chemicals sphere because of a need for raw materials; and as it grew it moved into some of the areas in which I.C.I. itself was operating. It purchased a paint company. And to-day I.C.I. and Courtaulds between them share approximately 30 per cent. of the paint production. Courtaulds are interested in cellulose paper; I.C.I. are interested in plastics and other types of paper used in packaging. So your Lordships will see that we are not dealing with a typical merger of one woollen mill taking over another woollen mill, or one cotton mill taking over another cotton mill; we are faced with two very large economic units—and, I would stress, economic units that are absolutely vital to a very broad section of industry in this country. Therefore when we are looking at this, when we are taking into account the 90 per cent. monopoly of man-made fibres, we see that there is a proposed merger of two large chemical units that play a very vital part in industry.

Yesterday we had a statement from the Minister in which he said that in the present circumstances, whilst it was true that a monopoly position existed, there was no reason to believe that it was against the interests of the public. A monopoly position does exist, in that there are some arrangements, particularly in nylon, where I.C.I. and Courtaulds hold a 50-50 percentage of the shares; but they are, in faot, producing basically different types of yarns and different types of fibres; and they are also slightly different in construction, due to the chemicals that are used. These different fibres, however, are in competition with each other, and can be used and exploited by the salesmen of the two companies in competition of price and delivery. A monopoly may exist, therefore, if one looks at manmade fibres as they are. But the monopoly could be broken immediately if Courtaulds or I.C.I. decided to change their lines; then there could be real competition.

Courtaulds themselves are developing new fibres; they have a remarkable story of development. One of their latest, "Courtelle," is advancing very rapidly in this country and overseas. Therefore one can say that, while the two companies monopolise production, they do at the present moment compete against each other in making one fibre more popular than another, with advantage through price, delivery, handling or whatever it may be in the textile world. But once a merger goes through, the existing element of competition will completely disappear. Therefore, if the merger goes through, what might be regarded as a loose monopoly to-day will become a hard, solid fact; and, as the noble Lord, Lord Grantchester, said, it will be a monopoly that will be protected, or is protected at the moment, by a tariff of approximately 20 per cent. If the merger goes through. and is then found to be against the public interest, how can you unscramble it? How will you dispose of the shares? Who will buy them? I do not believe it would be practicable if this merger went through, to bring back the present position.

We have asked for an inquiry. I asked just before Christmas that this matter should be referred to the Monopolies Commission. I do not believe that the Monopolies Commission can handle this inquiry now, because they cannot deal with a hypothetical question. For this reason, I think that the Government should set up a full inquiry. I should prefer it to be conducted on the basis of the Monopolies Commission. So far as possible, it should be conducted in public, as I think the public are interested, and the public should be aware of the pros and cons of such a merger, or any other type of merger that may well occur. I fully appreciate the point made by the noble Earl, Lord Swinton, that there are certain facts which it is obviously right should not become public knowledge. But, of course, the Monopolies Commission have a right to go into private session and hear facts if they so wish. So I do not see any difficulty in having this inquiry if the Government are prepared to face up to the issue.

I do not want to speak much longer, but if the Government maintain that the facts before them indicate that this loose monopoly about which I have spoken does not act against the public interest, I have before me certain facts and figures which I feel I must put before the House. They are the various prices for various chemicals used in the man-made fibre industry. There is nothing secret about these figures; any person involved in the chemical business can get these prices. I think it is a fact that the prices of chemical products supplied by I.C.I. to Courtaulds are generally higher than those quoted by any other competitor in this country, if he exists, and generally higher than those called for by Continental manufacturers. There is very little competition in the chemical industry to-day. I.C.I. and Courtaulds have seen to that; they have merged and taken over their competitors.

I will give your Lordships some figures. In 1962 the I.C.I. price for caustic soda is £22 1s. 7d. per ton. This was brought about by a threat by Courtaulds to I.C.I. that if their price was not brought down as compared with their prices of 1959 and 1960 Courtaulds would either build their own plant or turn to the European Common Market countries. The caustic soda price is £22 1s. 7d.; the German competitive price, the local price, is £21 9s. In 1958 the price for chlorine was £33 12s. per ton; in 1962 it is £24 15s. per ton; the German home market price is £20 8s., a difference of over £4 a ton. In 1961 the price for methylene chloride was £77 per ton, and this was only after severe pressure by Courtaulds on I.C.I. to adjust its price. The Continental price is £60 a ton. In 1960 the price for methyl chloride was £126 per ton; in 1962, after a threat by Courtaulds to produce itself, the price came down to £56 per ton. The current price for urea is £36 7s. 6d. per ton; Polish supplies are at £28 10s. Now I am in some difficulty; I cannot pronounce the word. It is the name of the yarn now being used in the manufacture of Courtelle. It is acrylonitrile, manufactured in the United States at present and sold by I.C.I. The price is £157 per ton; in 1958 it was £255; the United States domestic price—remember that this particular chemical is made in the United States, is imported by I.C.I. and is sold to Courtaulds—is £116 per ton, as opposed to the price for Courtaulds of £157 a ton.

There may be some reason for these differences in prices. Courtaulds tell me that they estimate that when their competitors purchase in Germany the cost of their raw products would be a least £270,000 less than they pay I.C.I. There may be an explanation why I.C.I. prices are higher than those of their competitors in Germany or on the Continent. It is interesting to note (and here I would not be unfair) that there is some similarity between the European price when you add the import duty and the I.C.I. price. The question I think we must ask ourselves is this. Courtaulds are a textile firm and their products are world wide. If the merger goes through and they have to buy at I.C.I. prices, how then will stand the competitive position of our man-made fibre weaving and spinning industry against the Continental manufacturers'?

I.C.I. have said that this merger is necessary particularly if the proposal for our entry into the Common Market goes through. My experience of the man-made fibre industry, particularly of the well-known products of Terylene, is that these articles are all manufactured in the main countries like France and Germany, the United Kingdom and United States, under licence, and that the market is divided up among the manufacturers who hold the licence. In fact, there is very little physical transfer of merchandise from one country to the other. Last year United Kingdom exports of man-made fibre were in the region of 10 per cent. of its production. I will not refute the statement made by the chairman of I.C.I., that this merger is necessary for our export position, but, being a rather suspicious business man, I rather fall back on this: that the real object of the merger is not for the benefit of the man-made fibre industry but is to protect the position of I.C.I. I.C.I. is an important industry, but is it right for this country that this merger should go through if it has ill effects upon this country's ability to export or, even if our participation in the Common Market comes into being, to withstand the pressure of imports of overseas countries? I think that there is an undoubted case for a full inquiry into the whole merger. The country is entitled to he satisfied that if the merger goes through it will be in the national interest and the nation will be well protected.

There is one last point. I rather share the view of the noble Earl, Lord Swinton, about the sorry display of to-day. I think it raises this issue. We have dispute from either side of the House on how our country should develop, whether we should have a system of public enterprise or whether it should be private enterprise. But with this I am sure every Member of the House will agree: that our country would far better develop with careful understanding and planning than that control and direction should come through what is nothing more than a public auction.

5.50 p.m.


My Lords, while in their handling of this matter I cannot see that Her Majesty's Government have done anything that justifies the criticism put forward by the noble Viscount, the Leader of the Opposition, there are certain aspects of the merger which cause me, and I believe others, some concern, and in a very few moments, if your Lordships will allow, I will endeavour to deploy those matters. The noble Lord, Lord Shepherd, with his full knowledge, entered the field of technical controversy. The noble Viscount, the Leader of the Opposition, just skated round the boundaries of the field of technical controversy, but, like my noble friend Lord Swinton, I certainly keep clear of that, because I believe two matters are quite clear in this debate. The first is that we are in no position to judge the relative technical or financial claims of the rivals in this controversy. Nor do I believe that it is Parliament's task to try to judge such matters. There are few Members of your Lordships' House or of another place who are really technically competent to give a view on these complex questions. All of us who have read the literature surrounding this controversy have read documents from each side which, with force and conviction, seem to cancel each other out. I must say that when I have read all the literature there has been brought to my mind the song, "Anything you can do, I can do better." For that reason I think it is wise that we should leave the technical aspects alone.

The second matter which I think is clear is that Her Majesty's Government at present have no legislative powers to forbid this merger. As I understand it, the position is that, after the merger has taken place, if the giant which has been created apparently abuses its powers, then the President of the Board of Trade can refer the matter to the Monopolies Commission. But that is after the event, and even if the merger is of benefit to our national economy I believe that this action after the event is not really good enough, because great mergers such as this must have social as well as economic effects.

In this case we know that both parties to the merger have exemplary records and achievements in the way of staff relationships. Even so, what we are seeing is tens of thousands of workers having their employers changed without notice or consultation, and without any individual say in their industrial fate and future. What we see is the way of work, possibly the location of work, possibly the conditions of work, possibly even the security of work, changed without any notice or any say on their part. Thirdly, what we see is an undignified display of what I would term financial "tinsel" on the Stock Exchange, and an unedifying exhibition of capitalism and free enterprise working at its very worst as regards public relations. I say that as a Conservative and as a firm believer in the principles of capitalism and free enterprise.

The President of the Board of Trade has declared that he is inquiring into all aspects of mergers and take-overs. But he has admitted that that is a considerable task—something of a long-term review. Surely what we need now is something not so complicated or difficult to devise. For mergers beyond a certain size in terms of money—and, after all, terms of money finally govern the amount of human employment—I think we should consider some simple machinery which, while not hindering desirable mergers, will look at such proposals from the two viewpoints of social importance: first, to see that the interests of those engaged, workers and management, are reasonably safeguarded, and secondly, to see that such national or international competition as may hitherto have existed is not likely to be swept aside. After a merger, and when the merger is working, the Monopolies Commission then, as it were, take over as regards any possibility of abuse and are the watch-dog of public interest.

Such an inquiry as to the desirability of mergers is not strange to us. It is not much different from some parts of the terms of reference of the Press inquiry going on at the present time. It is not an exact analogy, but the Press inquiry is looking into the desirability of the merging and elimination of newspapers. It occurs to me that, possibly for mergers beyond a certain size, something on the lines of the old Capital Issues Committee might be considered—as it were, an approval committee—as an instrument from whom those merging would obtain certification for the two aspects which I have suggested: the safeguarding of the interests of those engaged in the industry and ensuring that competition which hitherto existed is not swept away. Both parties would be free to go to such an approval committee for their certificate of approval, and in the case of a reluctant board finding itself attacked by a powerful enemy wishing to take it over, either party could apply and both parties could be heard.

This is only a suggestion in respect of something which I feel is wrong at the present time in the industrial system under which we live. It is for the Government to recognise that all is not well, and it is a responsibility of the Government to put matters in order. It is for these reasons that I have intervened in the debate this evening, feeling that Her Majesty's Government have acted in every way perfectly correctly but that there is still something not quite right in our system which we look to them to put right in the future.

5.56 p.m.


My Lords, I freely confess to a prejudice in this matter. My prejudice is that I am an anti-monopolist, and I share a great many of the views of the noble Lord, Lord Grantchester, as to the advantages and the importance of competitive private ownership. But the accent must be not on the words "private ownership" but on the word "competitive". There is no point in closing our eyes to the fact that at the present time, as things are moving today, in our economy the room for relatively small competing units is becoming less and less; and the whole tendency, for technical reasons as well as for financial reasons, must be towards ever larger units.

To my mind, this proposed merger of I.C.I. and Courtaulds, although by far the most important that has arisen so far, is no more than a symptom of this general trend. We have many examples. Twelve months ago, from the national point of view although, directly speaking, perhaps not from the economic point of view, we had an extremely important merger of the Daily Mirror Group with Odham's Press—something which is bound to have a great, and an increasing, effect as time goes on, upon the life of this country. At a rather lower level we are now having an increasing trend towards monopoly in the shoe industry. The motor car industry, in the shape of the B.M.C. giant, is growing. The ultimate effect is bound to be that one by one its smaller competitors will disappear. The noble Earl mentioned, quite rightly, as another example of movement towards monopoly the aircraft industry. Some of these monopolies are essential. Some of them do harm; some of them, on balance, do rather more good than harm. At this stage (because I certainly have no technical knowledge which would enable me to do so), I am not going to say whether or not the advantages of a merger between I.C.I. and Courtaulds outweigh the general disadvantages of any monopoly and any great concentration of power, particularly in an industry or group of industries which so closely affects the economic life of the nation.

I go a very long way with the noble Lord, Lord Balfour of Inchrye, in his general proposals about this matter. Looking at it in rather more perspective than just in regard to the present matter, I think we must realise that we are now emerging from the form of business organisation which had its roots in the middle of the nineteenth century and are entering at the present time into a firm and monopolistic business structure. There are various ways of dealing with that. Some of my colleagues, and certainly I myself, say that the answer is nationalisation. That certainly has the value, in some cases, of simplicity, and also has the value of logic, from the theoretical point of view, if not always from the practical point of view. At least, with such a great concentration of power, those directing it and driving it are responsible, not just to a relatively small group of shareholders but to the country at large. That is one of the very strongest arguments, to my mind, in favour of nationalisation. But it also has many disadvantages, though perhaps this is not the time to go into them.

There is another way of dealing with monopolies. That home of private enterprise, the United States, has for many years had its anti-trust laws, specifically designed to prevent undue concentration of economic power in a small number of hands. From what we have seen of the way those laws act over there. that is not a method that I think would commend itself to your Lordships, and certainly it does not commend itself to me. But I feel that the present attitude, whether in this particular case, or in more general cases that will arise in the future, of sitting back and saying, "This is purely a matter for the owners of the business and the shareholders, acting with their directors; let them get on with it," when it is a matter of urgent public interest and importance, is not the right way of going about it.

Reverting to what the noble Lord, Lord Balfour of Inchrye, suggested, I believe that it should be said very clearly that, before any merger takes place which is likely to bring about a monopoly, or where two already monopolistic firms are getting together, or where, in the opinion of the Government, there is likely to be such a concentration of economic power that the interests of the country may be affected, the Government should be in a position to call upon those parties, and not simply rely on one side or other in the proposed merger to object. The Government should have the right to call upon both the sides to prove that the public interest will not suffer. In other words, the onus of proof must be upon those who are proposing to create the concentration of power, rather than for the Government or Monopolies Commission to show that the public interest is likely to suffer.

I would remind your Lordships that there are many ways other than simply in regard to high prices, or restriction of choice, and direct matters of that kind, in which the public interest may suffer through a monopoly. For instance, the group may decide that it will not pursue a particular form of research; or it may decide to bring its influence to bear on the Government to protect it by imposing high import duties, or by a restriction of imports. There are many ways, both direct and indirect (which, inevitably, cannot come up before the Monopolies Commission) where the monopoly can act against the public interest.

I feel, even if we fail in this request to-day, that there should be an inquiry into this specific proposed merger. I hope that the voices which have been raised about it will at least have the effect of making the Government think seriously and urgently, not solely about this particular merger between these two firms, but about this growing trend in our national economy towards huge concentrations of power which can have such great effects upon the whole life of the country and its economic future.

6.5 p.m.


My Lords, we are dealing here with a very fashionable industrial marriage, and the usual questions arising on a marriage arise here: first of all, the question of the marriage settlement; secondly, the compatibility of the parties; and, finally, the national interest. As regards the marriage settlement, as a shareholder of Courtaulds I am not greatly enamoured of the terms offered. I do not think the "bridegroom" is putting enough into the settlement. As regards compatibility, this is quite clearly no love match, but I am told that, on the whole, marriages of convenience, arranged marriages, often turn out better than those starting as love matches.

But the main point we are debating here, of course, is the public interest. Some people think that the public interest is best served by a number of small men competing bitterly against one another. The noble Lord, Lord Grantchester, has for many years been an apostle of that creed in this House. I regard that as a nineteenth-century idea which is completely outdated, and any doubts that I ever had on the subject were resolved when I was engaged in the textile trade and watched Lancashire slowly bleeding to death between the wars through pig-headed adherence to precisely those ideas. My Lords, modern industry requires huge capital to be sunk into it in regard to the very expensive processes involved, and that capital, whether it is capital inside the company, or its reserves, fresh capital raised on the market, or whether it is capital put up by the Government, is a national asset. As a great trading nation our stock of capital is our lifeblood. It is of the greatest importance that our great trading companies should do their utmost to maintain the stock of our national capital.

This raises, of course, a very wide question which is very general to-day. Industrial processes in these days frequently require the setting up of gigantic plants costing enormous sums of money, which can very quickly be made obsolete by some improvement, perhaps not a large improvement, thought out abroad or elsewhere. The noble Lord, Lord Balfour of Inchrye, will be well aware of the difficulties he has with his air transport company, due to the fact that people keep inventing aeroplanes that go faster than those he bought a few years back. The chemical industry is faced with precisely these problems. The cost of producing some product may be comparatively small, but the cost of writing off the plant in the few number of years in which it may have some monopoly value is quite enormous. The industry is particularly liable to price-cutting, because somebody who may not have the same regard for writing off that plant can come along and offer very heavy reductions in price without showing a manufacturing loss, but, of course, at the same time not replacing his stock of capital.

I emphasise again that it is in our national interest that in most cases capital should be replaced before it becomes obsolete. This, I believe, is probably the main reason for the I.C.I. bid: to own your own customers gives you the best security in the market for your products. The second main reason I guess to be that when we go into the Common Market, if we do, we shall then be competing with the giant producers of Europe and America. I.C.I. will be greatly strengthened in bidding for a share of this marker, if they control not only most of the chemical industry in this country but also that great chemical user, the man-made fibre industry, which moreover in this case itself owns very important sally-points into the Continental markets.


My Lords, does the noble Lord maintain that that should go on; that the I.C.I. should endeavour to do the same thing with regard to paint, to fertilisers, or to any of the other industries in which they provide a large amount of the raw material?


My Lords, these things are a question of degree. They already are a considerable size in paint, but the man-made fibres and the chemicals, particularly, go together, because the man-made fibres are really only chemicals in another form. If they are to get a proper share for Britain, it is to our advantage that they should have the greatest possible bargaining power. I agree that a case for strength in this way can lead to a monopoly. There are to-day some safeguards. To start with, at least a year or two ago I believe I.C.I. was run by divisions, and it was perfectly open to one division to buy products from outside its own firm. They are subject to tariffs, there is foreign competition both in chemicals and fibres, and it is perfectly open to Parliament at any time to cut the tariffs.

Incidentally, the noble Lord, Lord Shepherd, gave instances of what he thought was the abuse of I.C.I.'s position. It seems very strange that during these last two years, in spite of paying what he regards as inordinate prices for chemicals, Courtaulds' exports have nearly doubled. But, in the last resort, of course, the Government can have some sort of inquiry.

Personally, I do not regard the danger of exploitation as very great, because there is a new conception of the duty of industrial giants abroad in this country, and the noble Viscount the Leader of the Opposition referred to this. I think the chief danger is that they may be tempted to treat their shareholders in a very cavalier manner. Although I think the board of I.C.I. well deserve certain strictures, which my noble friend Lord Swinton passed, I would say that I do not consider that my board of Courtaulds have treated me very well in cutting my dividend one day and a few months later painting a very glowing picture to the people who were proposing to buy them out.

If we go into the Common Market, my Lords, it will be absolute nonsense to talk about a monopoly. There will be no monopoly of I.C.I. and Courtaulds with chemicals and man-made fibres. It will be just one of the competing manufacturing giants of the Common Market, and there will be no monopoly at all. If we do not go into the Common Market we can always cut the tariffs. I believe that the danger of exploitation is small, and the advantage to public interests, by creating an industrial group covering both fibres and chemicals which is able to talk on equal terms with the industrial giants of America and the Continent, is very great.

Courtaulds are pleading for horizontal combinations. I believe that in the modern world the vertical combination system is more modern, for under the vertical system there is much more security for anybody to recover the capital he sinks in manufacture before that capital has become obsolete. I believe that the President of the Board of Trade has acted quite rightly in the light of modern trends and conditions; but I do not mean to say, necessarily, that the merger will go through, because it has got to satisfy the shareholders of Courtaulds and, I hope, the I.C.I., too. Nevertheless, I believe that the Government have taken a perfectly proper attitude in the matter.

6.16 p.m.


My Lords, it is traditional in this House to thank the person who has put down a Motion, for having done so. I have known occasions when, perhaps, I did not feel that gratitude at all. Nevertheless, it is the tradition and thanks were duly given; but on this occasion I am sure that the whole House will be grateful to my noble friend for having put this Motion down, and for a number of reasons.

The first reason is that I scarcely remember a debate when there were so many worthwhile, indeed excellent, speeches on one side or the other, although I am not at the moment expressing approval or disapproval of the point of view of any of the speakers. I am referring to the quality of the speeches and the thought that has been put into them, starting from the excellent speech of my noble Leader, which certainly did not suffer at all because he put his case in a concise form, right down to the last speech to which we have listened and to which I listened with complete disapproval, but, nevertheless, I thought it was an excellent speech. From that point of view, therefore, I think that the debate has been well worth while.

There is one speech to which I should have liked to listen unfortunately we are not going to get it. While I always enjoy the speeches of the noble Viscount, the Leader of the House, and I look forward with great pleasure to hearing him, I should also have liked to hear the noble Lord, Lord Mills. who sat very quietly listening to it all. One would have very much liked to know what he really thought.


My Lords, although my noble friend is now here to speak I think I ought to say that he was, unfortunately, not able to attend the greater part of this debate for reasons which were outside his control, and out of courtesy to the House he has asked me to reply.


My Lords, I do not complain of the substitute. But there is still time for the noble Lord to make good the deficiency.

This is not really a debate on the question of whether or not this particular merger should take place. Obviously, it is the occasion for it, but most of the speeches were in such terms as to express general views on a very difficult problem indeed, the problem of monopolies, size of undertakings and so on. I should particularly like to express my approval of two speeches, not because I agreed with them absolutely, but because there was so much in them that was of substance which most people could accept; those are the speeches of my noble friend Lord Shepherd and of the noble Lord, Lord Balfour of Inchrye. I do not often agree with Lord Balfour of Inchrye, at least not publicly—although I think that privately we might agree very much more—but I agreed with almost every word he said tonight.

I would say that the balance of the debate on this occasion is quite definitely in favour of an inquiry. Although, as I have said, the occasion of this debate is the proposed or contemplated merger, I think an inquiry would have served the general purpose of clarifying all our minds on what are to be the criteria in judging whether or not a merger of this kind is in the public interest. This particular battle, of course is a battle of giants, and I do not think I am being unfair if I say that the real battle is not over the public interest. The battle between the two giants is simply a battle as to the terms upon which this merger should take place. After all, as the noble Lord. Lord Hawke, said, there were preliminary encounters and discussions, and the parties were quite willing to go into a merger. The quarrel is only as to whether or not four I.C.I. shares are equal to five of Courtaulds. As I understand it, that is the sole issue between the parties. If the I.C.I. were willing to give one share for one, it is probable that we should not have heard very much about the matter—and I would not for a moment suggest that they should not or that they will not offer it in due course.

What we have to decide is whether the Government were right in saying that if this merger came about it should come about without an inquiry of any kind at this stage. I would suggest that if a prima facie case can be made that this might be against the public interest, then an inquiry ought to take place; and I would submit that a prima facie case has already been made. I do not know how many noble Lords have received a document from the Courtaulds group, but if they read that I think they will find that it is full of instances indicating that a merger would be against the public interest. I do not want to quote from the document, as there have been a good many quotations from it in another place and, to a certain extent, also here, but noble Lords have only to read this document to satisfy themselves that there is at least a prima facie case for an inquiry. I do not want to make much of the point that the Imperial Chemical Industries have not replied to it. It may be that they have not had time, or there may be another reason. But, whether they have or not, a prima facie case has been made out, and I would submit that there ought to be an inquiry on that ground alone.

The real case against an inquiry was made, I think, by the noble Earl, Lord Swinton, whom we are always glad to, hear in the rôle of an elder statesman who looks at both sides and then comes down on the side of the Government. He says that nobody is competent to express an opinion at this stage. I would say that the Courtaulds group have expressed an opinion—and if he read this document he would find it was worth while giving it consideration.


With the greatest respect, I did not say that. What I said was that, as I saw it, it was the duty of the Government to get the whole of the facts and, because they were the Government, to make up their minds. The real issue is whether we should have an inquiry by some independent body or whether it is the intention of the Government to make up their minds—and both would have exactly the same facts before them. I happen to think that when the noble Lord's Government nationalised everything they made up their minds and did not have an inquiry. What would be intolerable would be if on this issue the Government said, "We have not got a mind".


But is that not exactly what the Government are saying?


I hope not.


That is exactly what they are saying. They are saying, "We cannot make up our minds at this stage. We must wait and see." By which time the damage will be done. They say, "We will wait several years, until the damage is done"—


Will the noble Lord forgive me for interrupting? I do not want him to think I am defending something which I should regard as entirely indefensible. If the Government to-day were to say, "We think this is nothing to do with us. Let nature take her course"—or whatever the expression may be—"and let there be a fight. We have no responsibility in the matter", then I would say that certainly you had better have an inquiry. But I am sincerely hoping that that is not what the Government are going to say, although I do not know what the Government are going to say.


The Government are not saying, "We have no responsibility in the matter". They are not going as far as that. They are going as far as to say, "Even if we think there is something we can do about it, we must wait some years and see, until the damage is done, and then, after the damage really is apparent, we will introduce legislation and act accordingly". But to carry one's mind forward, what will it be possible for the Government to do in those circumstances? By that time, on the case that is made, there will be a monopoly; it will be a monopoly carried out by one company, not two—the Imperial Chemical Industries. There will be one group of shareholders and the two concerns will have been integrated. What possibility is there of a Government's being able to take effective action short of nationalisation? And that, of course, I am sure the noble Earl would not contemplate for a moment. He said so. So what is the good of saying, "Let us wait some years and see what happens, and then act"? I say the Government are not acting responsibly in taking that view.

I am dealing specifically with the noble Earl's speech because I think he made the best case that could possibly be made—and I say this quite sincerely—for doing nothing at the present stage.


No. If the noble Lord will deliberately misunderstand and misrepresent me, I really must leave those Members of the House who heard me to interpret my speech, which I thought was pretty clear, and those who did not to read it to-morrow and see what my version is and what the noble Lord is saying now.


The noble Earl must not say that I am deliberately misunderstanding him. It may be my stupidity, or it may even be possibly the way in which he put his case, but I am not deliberately misunderstanding him.


I accept that: not "deliberately".


As I understood him, he is accepting the position that, having had some discussion with the parties, the Government have decided to take no action. That is all I was saying.


It was not what I said.


No; but the noble Earl went on to say that the only possible course of action, if they did take it, would be by way of a public inquiry.




Then I will leave the noble Earl alone. What he thinks he said and what I understood him to say are so far apart that we are not really in a position to debate it.


Read it to-morrow.


However, there was some talk of the difficulty of holding a public inquiry, and the suggestion that it would not be practicable or feasible to have a public inquiry because disclosures would be made which would be damaging to the trade, to the industry, of the the different concerns. But, my Lords, if a case goes to court, and the Monopolies Commission take action, there is a public inquiry, and all the relevant facts are gone into in order to decide whether it is a case in which action should be taken. The kind of inquiry we think should be held is no different in principle or character from the kind of inquiry which would be held if the Monopolies Commission acted. While it may not be practicable in the present circumstances for the Monopolies Commission to intervene—they may not have the powers—I nevertheless have in mind, and I am sure my noble friends have, that the kind of investigation which would be necessary to determine the issue of public interest is simply the one which would be conducted if the Monopolies Commission had the power to order such an investigation. So I do not think we need be deterred from holding an inquiry by the danger that it would have to be in public.

My Lords, that is the simple issue. Has a prima facie case been made out for the holding of an inquiry before action is taken? I would ask further that, in any event, is any possible action that might be taken in some years to come likely to be of any value at all in repairing the damage which, if it is created by this merger, will have been inflicted upon the public of this country? We feel—and I think most of us who have spoken take this view—that there is a strong prima facie case, at least, for such an inquiry being held. The general public is concerned about these matters. There is a feeling of uneasiness among the general public, and I would say that the Government would have been wise to have an inquiry on that ground alone. If the Government had been satisfied that such an inquiry would be desirable and valuable, I have no doubt that the public spirit of both companies would have enabled them to hold up any further discussions on the merger till the result of such an inquiry had been declared. So I hope, even at this late stage, that the Government will see their way to reconsider their decision and decide that some form of public inquiry should be held into this merger.

6.32 p.m.


My Lords, before I embark upon the reply which I have to make, I have to tell the House that, when I learned relatively late yesterday that this was to be my task. I caused a message to be sent to my bankers asking whether I had shares in either of these two concerns. I thought the answer would be "No", but the answer was "Yes"; I have shares in the Imperial Chemical Industries, and my wife has shares in Courtaulds. I do not think that this circumstance has deeply affected my judgment in the matter, but it is quite clear that first I should declare my interest in the matter, and also that I should apologise for having spoken on December 20 without having done so. The reason, I am afraid, is that I was unaware of the lively interest which I ought to have been betraying on personal grounds in this proposed merger.

This has been a thoughtful and temperate debate, and I, like other speakers, am grateful to the noble Viscount for putting down the Motion for Papers. If he will allow me to say so, I think it is a very satisfactory method of debating the subject and is preferable to the kind of ragged discussion which sometimes follows Ministerial statements if this course is not taken. I think we all recognise the importance of the questions involved. They go to many issues which lie at the root of industrial and economic organisation. So far as I am concerned—and I hope this may almost be the theme of what I have to say—the more often they are discussed in Parliament, the better; and the more often they are discussed in a spirit of good humour, as they have been discussed to-day, the better. This, of course, does not necessarily mean—and here, I am afraid, I am to some extent repeating what I said to the noble Lord, Lord Shepherd, before Christmas—that I think there ought to be, at this stage, at any rate, an inquiry, because my view, for what it is worth, is that Parliament is not at all ready to be shed of this matter yet, and that the true interest of the country and of Parliament is that Parliament should retain seisin of a discussion of these matters, and not try to delegate its responsibilities to somebody else by an inquiry of any kind.

I would also make only these two general qualifications. The matters are so important that I think it is at least as important to act rightly, or at least not to act wrongly, as it is to act quickly. I personally have such absolute confidence in our Parliamentary system that I have no doubt whatever of our complete ability to tackle any aspect of this problem, at any time, in what may seem to us to be the proper manner. Therefore I am not one of those who, on that count at any rate, would move into premature or precipitate action. I should also think, although I recognise the immense importance of a merger of this particular size, that it is still, on general grounds, preferable to deal with questions like mergers on general principles, rather than try to legislate for a particilar case. This is a general principle of legislation, and although I recognise that, on a merger of this particular size, there are arguments, and powerful arguments, for dealing with it as sui generis, I would not depart from the general idea that general principles of legislation should be pursued rather than ad hoc action.

We discussed this matter, as I have already said, just before the Recess. There were not so many noble Lords present then as to-day, and I am afraid I took the opportunity at that time of giving some general thoughts to the House. But for all that, I will not repeat myself to-day. On the contrary, I will try to deal with the issues raised to-day on a more pragmatic, if on a slightly more superficial, level. Since December 20, when we discussed the matter last, the situation has changed in one respect: the two companies, which were at that time, unless my memory plays me false, thought to be in some kind of agreement, have broken into public conflict, and one has threatened to appeal to the shareholders of the other above the heads of its board. Personally, I deplore this development. The spectacle of two great public companies of such immensely high national and international reputation, and with such a splendid record, each of them, thus at conflict is, I think, both unedifying and undignified, and I could wish that they had not chosen this particular method of conducting their affairs. But my business is to handle the matter as it is, and not as I should like it to be, and from this point of view I should like to define the attitude of the Government.

The first thing I should say is to make it plain, if it required to be made plain, that the only thing which interests any of us on either side of the House is the public interest. Private interests are, of course, important things, and I think we all recognise that, but in matters of this particular kind, and I would say generally in matters of this kind, the particular interests involved—the shareholders, the boards, the staffs, the individual customers and users of the product—are probably fairly well able to look after themselves. And even if they were not, it is at least not self-evident that it is the Government's business to look after them at all here.

What we have therefore to consider is the public interest first, last, and all the time, remembering, as I think we should remember, that the public interest may just as well require that we should stand aloof from a matter of this kind as that we should involve ourselves in it at any particular stage. I would entirely agree with my noble friend who spoke below the Gangway that we cannot throw off responsibility in this matter. Nor can we fail to interest ourselves in the matter; nor can we fail to inquire into the facts and make up our minds about the matter. All these things are our duty. There I would agree with the noble Lord, Lord Walston, although I would not go with him in his conclusion that it is our duty to impose a burden of proof on one side or the other. I think that our business is to ascertain where the balance of advantage lies in any particular case, and to say so without hesitation.

I would go all the way with my noble friend below the Gangway when he demanded that, if the Government get the idea that the public interest requires our intervention, either officially now, or unofficially now or in the future, either before or after any merger of this kind, we should not hesitate to act in accordance with what our conviction may be. I have not, and the Government have not, the smallest doubt that, if the public interest required it, and if Parliament were behind us, we could act effectively at any time.

I entirely agree with my noble friend Lord Swinton that we have many powers already and have great influence already. Every Government of this country ought so have influence in such matters. It may be true that we have not the power which we have in relation to the aircraft companies, because in fact we are the principal customer of the aircraft companies. But I have no doubt at all that if the Government were to say that this thing should not go forward, responsible business interests would probably see to it that it did not go forward. And if the Government. with Parliament behind them, said that this should not go forward, either it would not go forward, or Parliament would be able to take action which would be able to prevent it from going forward. Of course, it might be to some extent that we should require new legis- lative powers, but I have no doubt that, if Parliament felt that way, we could get them. Therefore, I do not rely upon absence of powers at all, though it was perfectly proper for my noble friend Lord Mills and for my right honourable friend in another place to inform both Houses of what is the legal position. This is important, but it is not decisive.

It is worth saying, however, that, apart from the case which the noble Lord, Lord Shepherd, endeavoured to raise, based on the prices of certain raw materials used in the manufacture of man-made fibres, no one, neither the noble Lord, Lord Grantchester, from the Liberal Benches, nor any noble Lord opposite, has brought forward any positive evidence that any mergers of this kind which have taken place in the past have, in fact, operated against the public interest. I am perfectly sure that in a debate of this kind, if there had been such concrete evidence, it would have been brought forward by somebody, and probably by numerous noble Lords, before this.


My Lords, this is one of the difficulties which the noble Earl, Lord Swinton, mentioned. We do not know the facts. I set out a case that a monopoly position existed in the production of chemically man-made fibres and that there was a disparity of prices through a fairly large range between I.C.I. and those on the Continent. Therefore I say that there is a case for our looking into the facts—whether they are working against the public interest, and whether that is due to inefficiency or to the problems of the industry.


My Lords, what I was saying was that there have been mergers in past years, perhaps not on the same scale but certainly on a very substantial scale, and I should have thought that if there had been any evidence to suggest that these mergers had operated against the public interest, noble Lords who are critical of such things would have been the first to bring it before us. But I have neither read in the newspapers nor heard this afternoon, nor ascertained from another place, that evidence has been brought forward that these mergers are intrinsically bad. And I must say that I should be reluctant to invite a public inquiry into a subject on which there was no positive evidence that there was any public mischief.

I do not share the dogmatic convictions of many noble Lords upon these subjects. As your Lordships know, I do not entirely accept the economic and political philosophy of the noble Lord, Lord Grantchester, or that of noble Lords opposite. I should think that Parliament would be unwise, in the absence of any positive experience or evidence, either to dogmatise itself a priori or to encourage a group of independent experts to dogmatise.


Then what is the other body the Government have set up into matters like take-over bids? What are they doing, if it is not something similar to what we want in this case?


My Lords, I hope that the noble Viscount will not press me, because I shall come to it in my argument. In a few words, this body is reviewing the experience of five years' working of the Restrictive Practices Act and more than ten years' working, since 1948, of the Monopolies Act; and I think that that is a very reasonable thing for them to do.

If I may make a slight digression, the noble Lord, Lord Shepherd, endeavoured to construct an a priori case based on the prices of certain raw materials of fibres. On the whole, I agree with my noble friend Lord Balfour of Inchrye in deprecating an attempt this evening, probably too late this evening, to go into technical merits of this kind. Nor do I think that I am entirely qualified to do so. It seems to me that the argument, as an argument—because these are criticisms, some of which emanate from Courtaulds, which I think can hardly be treated as entirely impartial in the matter, of a situation which has obtained in spite of the merger—falls because, whatever evil may be indicated by these figures, it is not an evil to be anticipated as a result of the merger. As I shall endeavour to show the noble Lord, Lord Shepherd, my own view is that adequate safeguards already exist in this field, and in due course I shall seek to enumerate them.

It is said—and it has been said forcibly and cogently by the noble Lord, Lord Silkin—that if a merger took place, we should be too late, because it would be impossible (as the noble Lord, Lord Shepherd, phrased it) to "unscramble the eggs." I must say frankly that I do not accept this particular argument. No doubt it is true that if the shareholders of Courtaulds accepted the offer of the board, if they persist in making it, we could not restore to the individual shareholders the shareholdings with which ex hypothesi they had parted with willingly. But it is not conceivable that the public interest would require that we should do that. What the public interest is concerned with, what it would be concerned with, either before or after a merger, is whether the existence of a management complex as large as that of the merged businesses is in the public interest, or whether it is more in the public interest that the management of the industry should be divided into a number of smaller units. I absolutely reject the idea—


Smaller and competing units.


I would say, with respect, that the noble Lord, Lord Silkin, and his noble friend Lord Shepherd have overstated the extent to which competition either exists or can exist at the present time. As I pointed out to your Lordships on December 20, in this particular field, what are called, in the jargon of the trade, monopoly conditions already exist, and though it is true in a limited sense that some of these fibres compete, in the sense that they can be used for the same purpose, this is only marginally true: in the main, the fibres exist for difference purposes and occupy different parts of the field. Although there is an element of competition in the present situation, it is not so large as to entitle us to rely on it, and I think it would be positively dangerous to exaggerate its extent.

But what I am concerned with is the idea that if the public interest required us to intervene at any stage in either direction we could not do so. At any rate, in my view, that is a most dangerous heresy for a Parliamentarian to accept: it is tantamount to saying that a British Government, with public opinion and Parliament behind it, is not master in its own house. I, for my part, wholly reject that idea. The question, therefore, is: what is it that the public interest requires?—and it is here that noble Lords have put forward various pleas for an inquiry. These pleas have taken different forms, and I think it is material to say so. The noble Lord, Lord Grantchester, wanted a general inquiry, with fairly wide terms of reference, into the whole subject. This was not what the noble Lord, Lord Silkin, was asking for, because obviously an inquiry of the type asked for by the noble Lord, Lord Grantchester, would take a considerable period, probably years, to go into.

What the noble Lord, Lord Silkin, was asking for, both now and when he questioned my noble friend when he made the statement, was something which would entitle the Government to ask I.C.I. and Courtalds to hold their hand while the inquiry was going on which must mean some kind of inquiry particularly directed to this individual merger and which would be completed in a few weeks: otherwise, the merger would be completely frustrated, even if it were in the public interest. So far as that plea is concerned, I should have thought that it was answered by the argument of my noble friend below the Gangway, and I am content to rest on what he said.

A third suggestion was made—and it was most interesting—by my noble friend Lord Balfour of Inchrye. But what he was asking for, if he will allow me to interpret him, was not really an inquiry in the sense that the noble Lord, Lord Grantchester, or the noble Lord, Lord Silkin, was asking for an inquiry. What my noble friend wanted was a piece of constitutional machinery which would judge matters of this kind and then enable the Government to form a mind on it.


To judge from two aspects, I suggested.


I think that was a valuable suggestion, although I will venture a criticism of it a little later in my speech. But that is a different type of thing from asking for an inquiry. As the noble Viscount has just reminded us, there are inquiries going on at the moment. My right honourable friend thought it right to say in his original statement, and has made it quite clear, that after five years of experience of the Restrictive Practices Act, 1956, and a longer period of experience of the Monopolies Act, the time has come for a general review of the working of those Acts, in the course of which if defects in our machinery emerge—and they may—we can put them right. That is going on. So far the demand for an inquiry is met by such a review, to some extent; at any rate, I would say that the requirements of the noble Lord, Lord Grantchester, were met by that review. That has been acceded to, and we accept it. Whether or not noble Lords accept the type of inquiry, they will accept the fact that an inquiry is going on.

So far as my noble friend Lord Swinton is concerned, it is true that my right honourable friend did his best both to ascertain and to communicate to his colleagues the particular facts of this merger; but for the reasons which my noble friend gave, I do not think he could go further than ascertain the facts for himself in a confidential form and seek to place some of them, at any rate, before his colleagues. Such an inquiry is not at an end, because the transaction is not at an end and the situation is developing. But I would wholly agree with my noble friend that it is my right honourable friend's duty to perform that function on behalf of the Government, on behalf of his Department and on behalf of the country.

I should like to make this comment about demands for inquiries—although perhaps in this sense I might be a little more controversial than I should wish to be in the rest of my speech. I sometimes wish—although I know that noble Lords are under no illusions on the matter—that the public would rid itself, once and for all, of the idea that an inquiry is the solution of every difficulty, real or imagined, which can give rise to anxiety. I am not myself in the least minimising the value of inquiries. In my own small Department the other day I had the misfortune to enumerate no fewer than seven major inquiries which I had either set up or intended to set up in my limited sphere in the near future.

In the immensely complex structure of modern government the inquiry has come to stay as a means of elucidating issues, finding facts and making recommendations of policy; and I poke no fun at it at all when I say that it has limitations, and it is as well that we should make up our minds what these limitations are. But before we institute an inquiry of the kind for which the noble Lord, Lord Silkin, was asking, we have to ask ourselves whether there is any rational answer which within the course of a few weeks an inquiry could reasonably be expected to make to any intelligible question which was demanded of it. If not, an inquiry is not merely not, in this instance, a reputable instrument of government, but it would simply be an abdication of responsibility—a device for misleading the public as to the real reasons for action or inaction.

I think I should mention—only to dismiss—some side issues which have come into this debate and which I do not think should detain us in examining the main subject. One is the fear expressed by the noble Viscount the Leader of the Opposition and the noble Lord, Lord Shepherd, that these great corporations might go on to misuse the powers which their great economic strength already enables them to use, in other directions—caustic soda, fertilisers and other things. I would say, first, to the noble Lord, Lord Shepherd, that the merger will not of itself strengthen or weaken them in those directions at all. Courtaulds are not producers of these substances; they are produced by I.C.I. or by other firms. Indeed, if it had an effect, it might be to weaken the dangers to which the noble Lord, Lord Shepherd, referred, since if the merger goes through the corporations will certainly be pre-occupied for a long time with the problems emerging from the merger rather than with other matters.


My Lords, this is something in which. I am very much interested. Courtaulds are producing the fibres which are woven into fabrics. Therefore, on the production side, if the merger goes through and they are not able to buy competitively, say, from overseas or from alternative buyers, it will mean that the fabric produced in their mills will rise in cost and be less competitive. Therefore I.C.I. may get their production disposed of, but the weavers and the finishers will be worse off.


lf, in fact, the merger went through, it would not be much good I.C.I. having monopoly production if they were unable to sell their products.

The second and, I think, conclusive point is that it is precisely to deal with that kind of potential misfeasance by monopolies that the Monopolies Commission exists, and my right honourable friend would, of course, have no hesitation, on a case being presented, in referring it to the Monopolies Commission, and in suitable cases he can use the tariff weapon which is equally in his hands. Those, I think, are the proper ways of dealing with the particular dangers to which the noble Lord referred, because they have no direct relevance to the merger under discussion. I would also say that I personally am not impressed quite so much as are some noble Lords with the size of the proposed new entity. It certainly would not he particularly large as compared with the American Du Pont. As regards textiles, I think it would not be out of proportion to the French, if not also to the Italian, combine.

Certainly, for the reasons I gave on December 20, I am not so impressed as the noble Lord, Lord Grantchester, with the absence of competition, or the alleged absence of competition. I agree with him that competition is a desirable spur to efficiency. But, as I tried to argue to the noble Lord, Lord Shepherd, before Christmas, the effective competition of to-day and to-morrow is not necessarily between the two firms which we are discussing and which already enjoy monopoly conditions, but between the British giant or giants, the American giant or giants, and the Common Market giants. Merger nowadays in the technical areas of the production and management unit does not destroy competition, and it does not necessarily create monopoly; it simply enlarges the size of the units between which competition exists. The competition between the rival coalmine owners has disappeared, but coal still has to compete with oil. The competition between the rival railway companies has been eliminated, but railways still have to compete with road, and sea with air.

I am not impressed, therefore, with attitudes of mind which seem to me not to differ from my own in fundamental philosophy, but seem to stem too much from an assumption that the conditions in which perfectly agreed principles were applied in the last century, and the first half of this, will continue to apply in the same way in the present and the future. My view, for what it is worth, is that an inquiry, to be effective, either way, for the purposes of this particular merger, would have, within a few weeks, to try to ascertain and answer a question which I do not believe will ultimately be decided until after years of commercial experience and public political discussion, inside and outside Parliament. If we were to set up an outside inquiry here we should, I think, be setting up an inquiry which was doomed to be inconclusive. What is very much worse, we should be inviting Parliament and the political Parties to abdicate their great responsibility as the arbiter of the public interest and, in the case of Parliament. the Grand Inquest of the British nation.

Secondly, I do not want to waste much time over the actual methods employed by Mr. Chambers and Sir John Hanbury Williams in conducting the discussion which has now broken out between them. Some of them may well be open to question and, even if they were not, I have already confessed to a certain distaste at the spectacle of these two respectable corporations criticising one another in public. These things are interesting but not relevant to the matter we have in hand. Nor, I think, is it really relevant to determine the desirability—as to which I personally have some doubts—of appealing to the shareholders of an undertaking over the heads of the board which is supposed to be representing the interests of the undertaking itself. I think there may be a public interest here, but if so it is the very thing, among others, which is within the terms of reference of the Jenkins Committee and must await their Report.

What we have to consider to-day is exactly the same issue as it was when it was first raised by the noble Lord, Lord Shepherd, before Christmas—that is, before the boards were openly at variance. The fear that is expressed is that the public interest will be disregarded, however the merger is established. The demand which is put forward is that a public inquiry should take place before it goes through. It is this demand which, frankly, we have not accepted, and it is this fear which we must try to allay. I think noble Lords have attempted to speculate as to the harm to the public interest which might take place if the merger came about and if it were operated in a particular way. But I believe that what noble Lords have not sufficiently appreciated is the manifest and, to some extent, irretrievable disadvantage to the public interest of the Government's intervening in a matter of this kind, whether by making requests to the parties, or by taking positive action, or by setting up an inquiry if they did not possess adequate reasons for doing so.

The first thing I would say is that some mergers—and it may be this one—are based upon technical requirements which dictate an optimum size for units or production and management. I think this fact was recognised by the noble Lord, Lord Walston, when he said that we were moving towards larger units throughout the twentieth century. We should be hamstrung in our ability to compete with the great industrial complexes which exist overseas, in America, Europe and, above all, I would say, behind the Iron Curtain, if every time something of this kind on a large scale was contemplated the presumption was made—as the noble Lord. Lord Walston, actually and explicitly invited us to make it—that prima facie it was against the public interest, and that Parliament ought to handle it unless it was established not to be so. I think we have to get used to the new patterns of technological industry in our midst and examine the developments in the light of experience and have full confidence in our Parliamentary system of government, so that we shall, when the time comes, and we feel it to be necessary, apply the Biblical maxim, "By their fruits ye shall know them."

There is another evil to I must draw attention. Nobles Lords opposite are sometimes shocked at speculative operations in industrial securities which take place on the Stock Exchanges and elsewhere. I am not here either to endorse or to criticise that viewpoint this evening, but I think we can all agree that, whatever else Governments should do, they should, wherever possible, abstain from action which encourages speculation, or which is calculated to depreciate or give a rise in the valuation of some shares to the advantage or disadvantage of others. I wonder whether noble Lords have really considered the effect on the stock markets. Let them be under no illusions as to what would happen. Every word of my right honourable friend the President of the Board of Trade would be scrutinised for its implications, and share values would go up and down in accordance with every rumour as to what was going on inside the inquiry, even if it were not in public, and would go on all the worse if it were being held in public. Do noble Lords want that to happen? Do they think that there is a case for bringing that about? Obviously conditions might exist which justified our taking this disadvantage on board. But there are few things more contrary to the public interest than uncertainty of this kind, either commercially or technically, and it is uncertainty of a prolonged and indefinite nature which this policy of an inquiry is calculated to create.

Or take what actually happened in another place last Tuesday. One set of honourable Members sought to impugn and, I think, another to defend the expertise of the managements of each of the two boards concerned. One said that I.C.I. was a dead hand; another, I think, criticised Courtaulds. What really could be more intolerable or more contrary to the public interest than that on every occasion when an important merger was discussed, the Government should first form and then announce their views as to the relative values of the two boards? Yet this is exactly what we should be driven to do if we created the precedent demanded by noble Lords opposite.

I must mention—I am afraid I cannot do justice to it at this late stage—the interesting suggestion made by my noble friend Lord Balfour of Inchrye. I think very likely that the day may come when something of this kind may emerge from our government machine. But I would say this to my noble friend—end it seemed to me that this was the criticism of his proposal at the present time and in the form in which it was put. If we should create a body which is going to pronounce on the desirability, even from the two limited points of view which he mentioned, of mergers of this kind, they must be given by Parliament definite criteria to go upon. The difficulty with regard to that at this stage of our development is that we cannot oiler to delegate to others criteria about which public opinion has not yet crystallised. We are the parties who decide, the two Chambers of Parliament. If it goes to some kind of general census of opinion based on experience, and evidence as to what is desirable emerges, I think very likely something of that kind will be just the sort of suggestion which may be valuable, but I doubt myself whether we have yet reached that.

I had it in mind to say rather more about this subject but I have already detained the House too long. I would simply close by saying that our attitude in the matter is not due to weakness or vacillation; it is not due to tenderness or partiality to one side or the other; it is not due to some doctrinaire adhesion to the orthodoxy of laissez faire or private enterprise. Nor do we seek in any way to avoid responsibility for what must necessarily be a standing Government charge to see that no harm is done to public interests by the operations of private industry.

My Lords, what we have done is due to the conviction based on what we believe. I have sought to show adequate reasons that at this stage and for this purpose the public interest is served, at any rate for the present, by silence not based on ignorance but on discretion, by aloofness without disinterest, rather than by intervention or external inquiry, and by complete confidence, should the public interest require a change of policy, in the ability of Parliament to discharge its functions as the Grand Inquest of the nation.

7.11 p.m.


My Lords, I am grateful to all the Members of this House from either side who have partaken in this debate. I think it has been worth while, if only to have enjoyed the oratorical performance that we have just received from the noble Viscount the Leader of the House. I thought a great deal about it as he was going through his speech and I do not remember any time in my memory hearing so much packed into a speech and with such a continuous, flowing process of oratory since I first heard, in my early Parliamentary life, the late Lord Birkenhead; and when he made up his mind to defeat something, whether he believed in it or not, he defeated it. As I listened to the noble Viscount to-day I was very much persuaded to think about him. Still, I do congratulate the noble Viscount on this: he had a great brief, but one could not mistake the personality which had been put into the brief. Whatever were the ingredients, it was his performance. I should have liked to be able to say that I was so persuaded that I could go even further, but I do not get even nearly as far as that. I am not at all persuaded that our case has been met. As my noble friend Lord Silkin said, the very evidence which has been submitted from the two concerns themselves gives a prima facie case for an inquiry, and we have not been moved from that by the oratory of the noble Viscount the Leader of the House.

When we come to look at the explanations which have been given as to why the Government do not wish to do anything at this present moment, I am struck by two facts. There is nothing left in the statement given by the noble Lord, Lord Mills, which can support that position, except that we are relying, in the meantime, upon other supplies coming in by import from abroad. Whatever explanation could be given, I think the imports, some of them valuable, coming in will also be the products of companies abroad which are subsidiaries or otherwise of these two concerns.

I still have not seen any answer on that point, therefore, which destroys our prima facie case, but on the general philosophy which he indicated, the noble Viscount then seemed to bring my memory back to our operations in the wider sense of whether industry should be large or not. Nobody hopes to be able to keep back the floodgates of this growth in size, whether it be in the sphere of a local supermarket or the development of an organisation which supplies the great markets of the world. Nobody thinks he is going to keep them back. But we have still to protect the public interest. That is vital, and that is where we are not getting a policy at the moment to prevent what may be a tragedy and disaster.

I am glad to note that the noble Viscount the Leader of the House feels sad in his heart at the spectacle, as it is called, of these two great organisations being in this position at the present time. But if he goes back to consider the philosophy of this matter, and the position of nationalised industries and the way in which they were talked about to-day by the noble Lord, Lord Hawke, let him not forget that you have done things before without an inquiry. You did not have a public inquiry as to whether you should hive off the great and growing part of the Transport Commission, the road transport. But you can tell us to-night that the railways have still to face that competition. That does not seem to go in exactly the same line of argument that we have been listening to to-night. Nor can you say that with regard to a firm of which I have personal experience, Browne's, who were producing compasses, of which we were so short, and the product was so poor in quantity that we had to take them over in the war without any inquiry or any real consultation. The Government reversed the decision without reference to public interest and only on the basis of private profit.

However, I do not want to make another long speech, but I was so intrigued by the arguments produced by the noble Viscount that I felt he ought to know exactly how I was feeling. I admired tremendously the oratory with which he stated a case so poor in content. We will not withdraw the Amendment and certainly shall not bother the House to divide, but we shall let it be negatived.

On Question, Motion for Papers negatived.