HL Deb 16 March 1967 vol 281 cc461-88

5.1 p.m.

Order of the Day for the Third Reading read.


My Lords, I beg to move that this Bill be now read a third time. It is a Bill which, as your Lordships know, has been the subject of careful and rather lengthy debate in another place, but we have also given it a careful examination here, even though our debates were less prolonged. One thing on which I think we would all agree is that the debates we have had here on this Bill have been both expeditious and free from acrimony. At the end of the Committee stage the noble Lord, Lord Erroll of Hale, who I understand unfortunately has been unable to come to-day, said how agreeable it had all been. That was a strange thing to say about a major Bill for nationalisation, but I think this is a word we should apply to all stages of the Bill, and possibly it is a little late in the day for me to introduce acrimony—although I have some up my sleeve should this be necessary when I come to reply.

This does not mean, of course, that there have not been genuine and indeed strongly-held differences of opinion. Nor does it mean that the debates have not been constructive and useful. I freely admit, and indeed I welcome the fact, that the Bill has been improved by its passage through this House.

It might be helpful if I were to summarise the changes we have made in the Bill, because they help to illustrate the way in which our thinking has gone and the willingness of the Government to meet genuine, constructive criticism. All the changes tend towards increasing the flow of information reaching Parliament about the steel industry and the activities of the National Steel Corporation. There were, for example, the Amendments originally put down on Committee in the names of the noble Lord, Lord Erroll of Hale, and the noble Lord, Lord Windlesham, requiring the Minister to define by Orders subject to Parliamentary procedure those private sector development projects in the basic field of iron and steel making, which required his consent. There was also the Amendment put down by the same noble Lords extending the scope of the Corporation's annual report to cover all subsidiaries and not just the publicly-owned companies. Therefore, the Amendment required the Minister to inform Parliament whenever he decided not to take action on a representation made to him by the Consumer's Council, which is an important protection in certain areas of industry.

Moreover, I suggest that the Amendments were not the only useful result of our discussions. There were, what I think it is fair to say—even though I made some of them myself—some really important statements of Government policy. For example, there was the important statement made in Committee by my noble friend Lord Shepherd about arm's-length trading. He then said that the Corporation, in providing the information required by Clause 25, would inevitably have to explain a good deal of the basis of trading inside the public sector, and in this he also promised that the Minister of Power would discuss with the Corporation the possibility of including in its first report to the Minister, which he has to put before Parliament, a statement about the principles of this trading. In either case, Parliament would be well informed about the public sector's trading practices, and this information would—and I should like now to take the interesting point made by the noble Lord, Lord Windlesham, on Report—cover book sales. I hope this assurance meets the concern expressed by the noble Lord.

There was also the statement which I made on Report about the publication of information in the Corporation's accounts about loans by the Corporation to publicly-owned companies engaged in diversified activities. Finally, and appropriately, in view of the main concern of these Amendments and assurances, there was the statement which I made on Report about the Government's answerability to Parliament for the operations of the nationalised steel industry.

I think that all these Amendments and statements reflect substantial agreement on all sides about the way in which the Corporation should be treated. They illustrate the two principles on which we are all agreed. I am not suggesting, of course, that the Opposition agree with the fundamental question of nationalisation, but granting that, I think we are all agreed that the Corporation must act as a tough commercial body and that accordingly it must have reasonable freedom to take its own commercial decisions. The second principle, however, is that Parliament must, wherever appropriate, be kept fully informed so that where the Minister and, through him, the Corporation are answerable to it Parliament can exercise its power effectively. Partly as a result of your Lordships' Amendments, I think we have now got the balance between these two principles about right.

Another fairly constant theme in our discussions has been the need to maintain a strong and healthy private sector. Here again, although there has been suspicion on this subject, I think we have reached a measure of general agreement. Members of the Government in both Houses have given assurances that they want to see a strong private sector, and these assurances I am glad to repeat now. Indeed, we want a strong private sector not only for its own sake but because we think some of the competition which it will be able to provide will itself be a valuable stimulus to the public sector.

During the passage of the Bill through your Lordships' House various Amendments were incorporated and assurances given which demonstrated the Government's desire to have a competitive private sector, and in particular there was the new clause, now Clause 30, which establishes a formal procedure under which private sector steel producers can complain to the Minister about what they think are unfair trading practices by the Corporation. There were also the very comprehensive undertakings I gave on Report about the disclosure of information received by the Minister from the private sector under the Bill. I hope that these provisions to protect the private sector will help to refute the charge that this Bill opens the way to "back-door nationalisation".

There is no provision at all in this Bill which empowers the Corporation, once the act of nationalisation is completed, to buy up other companies except by mutual agreement with those concerned. The suggestion which we met and dealt with at an earlier stage, that the Corporation could start buying up the rest of British industry wholesale, is totally un- realistic. If noble Lords wish me later to say something more on the subject of diversification and the protections that exist, in particular that the Corporation will not be able to extend its interests without the Minister's approval, for which he is answerable to Parliament, I shall be willing to go into this further.

The House might like me to refer to the only Amendments on which disagreement was pressed to a Division—the Amendments excluding the debentures of the Schedule 1 companies from the scope of nationalisation. It was made plain from this debate that there were strong differences of opinion. The noble Lord, Lord Conesford, although we were not able to satisfy him, will, I am sure, agree that we did not dodge the issue, and, as I said on that occasion, we were not nationalising the debentures in a fit of either pique or absent-mindedness. But the Government have again gone into this question very carefully in the light of what has been said, and I must tell your Lordships that the Government still find it impossible to accept these Amendments, and that my right honourable friend the Minister of Power will advise their removal when the Bill is sent back to another place.

I think perhaps I should also mention that the question of Commons Privilege may arise on these Amendments, although this is of course something entirely for consideration in another place. I think it is very likely that the noble Lord, Lord Conesford, will achieve what was the minimum of what he set out to do, which was to ensure that this matter was further discussed on the Floor of another place.

I should like to say a word about an aspect of the Bill which has received little attention in this House, perhaps because there is general agreement. This is the aspect of industrial relations. I very much welcome the fact that my noble friend Lord Citrine raised the point in connection with industrial training, which has drawn my attention to the fact that this tremendously important side of the steel industry has not come under much consideration by us here. As I say, this is because I believe there was no real conflict. As your Lordships know, Amendments were incorporated in another place which mark an important advance in the development of joint consultative and conciliation machinery in the nationalised industries.

These Amendments resulted from the Government's anxiety that workers in the steel industry should have a real and lively sense of participation in the most important decisions affecting the industry. They also reflect the Government's conviction, now increasingly held by both unions and employers, that the old conception of industrial relations as an arena where two independent, and indeed hostile, powers, management and labour, negotiate or disagree is out of date and dangerous.

If I may say so, the noble Lord, Lord Citrine, has made as great a contribution as anyone in this country to that improvement, both in the fights that he made on behalf of the workers in harder times, and in the approach to this wiser, as I am sure he will agree, attitude of mind that is prevailing to-day. We are anxious to encourage the growth of a feeling that management and labour must cooperate positively and regard themselves as jointly responsible for the industry in which they work. It is vital for the country that the two sides of industry should develop, where it is not already in existence, this way of looking at their problems. I am very hopeful that the provisions of the Steel Bill will mark a real step forward in this direction.

This co-operation will be all the more fruitful if management and unions can each play their own distinctive part in the working of the industry. The Bill leaves with management the ultimate responsibility to manage, and therefore with the unions the ultimate right to take appropriate action to protect their members' interests. But the new provisions should ensure that the workers in the industry have a real and effective opportunity to make their views heard before decisions affecting their livelihood are taken.

One of the spheres to which the Corporation, both as a good employer and as an efficient business, will have to devote a lot of attention is that of training and education. In Committee my noble friend Lord Citrine asked why the usual references to training and education were omitted from this Bill. The reason is that there is already an Iron and Steel Industry Training Board in the iron and steel industry, set up by the Minister of Labour under the Industrial Training Act 1964, and it would be inappropriate for the Minister of Power also to have statutory functions in this field similar to those of parent Ministers under other nationalisation Acts.

However, this will not affect the fact, it goes without saying, that adequate training and education for its employees will be one of the Corporation's most important responsibilities, in consultation with the Training Board. Indeed, I can tell the noble Lord, Lord Citrine, that I have considered whether even at this late stage it might be worth while putting something relating to this in the Bill. But we have moved on since the earlier days of nationalisation, and from my own experience of industry I am sure that any progressive organisation, as I believe the National Steel Corporation will be, is bound to regard this as a major function, quite apart from the statutory obligations that may be laid by the Industrial Training Act.

I could also have said a few words about research, but I will only comment that in 1963 the Iron and Steel Board said that a substantial increase is called for in the research effort of all branches of the industry". In their last Annual Report they said there had been an improvement. But clearly this is a very important field, and it is clearly a field in which the two sectors of industry must co-operate, and that is why my right honourable friend proposes to set up an advisory council on research and development covering both sectors.

I have put some emphasis on the importance of good industrial relations and training because of the difficulties the industry is now going through, difficulties which, as my right honourable friend the Minister of Power warned in another place, are likely to continue in the immediate future. These difficulties are not connected with ownership. For several years the return on capital employed has been lower than in manufacturing industry generally, and a mere glance at the interesting diagram in the Benson Report shows the sudden tumble of profits in relation to capital employed which occurred in 1961. Although there have been certain recoveries, it has never reached the 1960 peak.

As I say, this position of profits is not connected with the question of ownership, but it will, I think, be agreed by your Lordships that this problem arises from the world of surplus capacity, which has increased from 12½ million tons in 1955 to 74 million tons in 1965. Again, there are the profit figures for 1965–66 of eight major steel companies which showed a drop in profits from the previous year, from £67 million to £40 million. Since then figures for two more companies—Park Gate and Round Oak—have been announced, and they do nothing to change this picture.

There may be arguments in relation to the pricing policy that exists at the moment, but I think all this, in the round, is a striking confirmation of the worldwide nature of the difficulties that have come about; and these are shown again in the decision of Krupps to go public. There has also recently been further confirmation of the difficulties faced by the European steel industry in the debates on steel in the European Parliament on January 31 and February 1, when fear was expressed that the situation, already bad enough, would grow still worse. All this makes it more urgent than ever that the British steel industry should be rationalised and put into a posture in which it can compete the most effectively, and although I agree that there is disagreement as to the way to proceed there can be no disagreement as to the urgency.

There is a basic structural weakness, which is peculiar to Great Britain, among the major steel producing countries, and this must be put right quickly. Nobody, and certainly not the British Iron and Steel Federation, disputes the need to establish larger companies or units to help us catch up with our competitors abroad, and to ensure that we enjoy the advantages of scale of which we hear so much on so many occasions and which are so valid in the modern steel industry. It is clear that there have been differences of opinion about how this should best be achieved. The Government's view has been that public ownership of the major part of the industry is necessary. This view, and the Bill based upon it, has now been accepted in principle by both Houses of Parliament. I hope, therefore, that in view of the admitted urgency of putting the industry right we shall be able to seek to put the arguments of principle behind us, and that everybody connected with the industry, whatever his feelings on the question of ownership, will work together for its future under nationalisation.

I think the constructive discussions we have had show how, despite these big differences of view on ownership, it is possible to co-operate to achieve the success of the steel industry, and that this will be the spirit in which managers and men in the industry are approaching nationalisation; and that, working together in collaboration with the Government, they will succeed in overcoming the problems which face the industry, and thus will enable it to play its full part in securing and sustaining the health of the British economy as a whole. My Lords, I beg to move.

Moved, That the Bill be now read 3a. —(Lord Shackleton.)

5.25 p.m.


My Lords, with this debate we come near the end of the consideration of the Iron and Steel Bill. As the noble Lord, Lord Erroll of Hale, said on Second Reading, however distasteful this measure has been to us on this side of the House, it is one in which we have reluctantly acquiesced, and we have set ourselves to improve the Bill. In this we have met with the cooperation and the courtesy of the Government, and I should like to express the thanks of the noble Lord, Lord Erroll of Hale, and myself to the noble Lord, Lord Shackleton, and other Ministers who have been concerned. I should also record the apologies of my noble friend Lord Erroll of Hale, who is unable to be present in the House for this final stage this evening.

In the course of the five days, or part days, which have been spent on this Bill, 84 Amendments have been tabled from this side of the House, and the Government have tabled 29 Amendments of their own. Out of the total of 113 Amendments, 43 have been accepted. Therefore, I would agree with what the noble Lord, Lord Shackleton, has said. The extent to which, on a major controversial Bill of this sort, the Government have been willing to make some fairly substantial changes, both in the content of the Bill and in the assurances which have been given in your Lordships' House, has been gratifying.

In the earlier part of his speech, Lord Shackleton listed a number of the more important changes, and with his list in general I agree. For myself I would put the emphasis rather more sharply on three legislative changes, alterations in the Bill itself, which are of particular importance. The first is the removal of the representatives of the National Steel Corporation from the Consumers' Council, in the interests of greater independence. The second is the substitution of an Order, subject to the Negative Resolution procedure in Parliament, instead of a notice setting the level above which the private sector will require ministerial consent for the installation of extra production facilities. The third is the addition of the new Clause 30 by the Government, following Opposition pressure in another place, establishing a formal complaints procedure for the private sector in the steel industry.

In addition to these concessions, there have been a number of smaller but still important changes: the information on subsidiary companies, for example, which is now to be included in the annual report; and certain ambiguities of wording which have been removed, both as a result of Government Amendments and of Opposition Amendments. I would agree, likewise, with what the noble Lord said about the number of assurances that have been given. Indeed, he has just used the words, "really important statements of Government policy", which is a stronger term even than the word "assurance". These are undoubtedly important. They have been noted by Members of this House and of another place and, most important of all, by people active in the steel industry itself. Finally, we have had on Third Reading the first comprehensive statement in either House of Parliament of ministerial accountability to Parliament for the steel industry after nationalisation. All this is to the good.

I would summarise by saying that the Bill leaves this House a better Bill in a number of respects than it was when it arrived, even after its marathon progress through the House of Commons. But we take no pride in it. On these Benches we are to-day, as we have been for twenty years, resolutely opposed to steel nationa- lisation. The irony of this particular Bill, at this particular time in the development of the steel industry, is that it is so irrelevant. Nationalisation alone will solve no problems. Indeed, as Mr. A. J. Peech, the President of the British Iron and Steel Federation, said at the annual general meeting of the Federation yesterday: nationalisation may delay rather than speed progress". Present-day trading conditions, as Lord Shackleton himself has said, call for rationalisation of the steel industry in Britain and of the steel industries in many other countries as well. What has been happening in Germany over the last year or so is perhaps the most effective emphasis one can give to that statement. Resources need to be regrouped, and all this is accepted by the steel industry. The pattern for the future which was so clearly set out in the Benson Committee's Report is already being followed. There has been the merger between Stewarts and Lloyds, Dorman Long and South Durham, which has been discussed at various stages during the Bill. There is also the very forward-looking "Anchor" project of the United Steel Companies, a £78 million development at Scunthorpe and Immingham, using the deep-water access at Immingham to import cheap foreign ores. These are instances of where the steel industry has already begun to move in the direction charted by the Benson Report.

The only consolation I see in this Bill is that I believe it will be the last of the old-style nationalisation measures we shall see in Parliament. A new generation has grown up, inside the Labour Party as well as outside it, who want to see Clause IV returned to the museum shelf. They want to see the attention of the Labour Party, and of the country, addressed to the real issues of what is the most appropriate form of organisation and control in each particular instance. Let us hope there will be no more cases where the solution will precede the appreciation of the problem.

Many noble Lords, on both sides of the House, will agree that relationships between Government and industry are now so vast and so complex that there is seldom a straight choice between private enterprise on the one hand and public control on the other. Things are not that simple. There is an infinite variety of ways in which Government can, and does, influence industry and industrialists in what they believe to be the public interest. There are dangers, which we discussed in the Committee stage and again on Report, in this phrase "the public interest", but none the less it is undeniable that many ways do exist for Government to influence industry. Similarly, there are an infinite number of ways in which industry and industrialists can respond to these pressures. The interplay between these two forces is crucial, both to the management of the economy and to economic growth.

I believe that the Government already have at their disposal, or can acquire, all the powers they need to make their interpretation of national policy prevail over private economic interests if they wish to use them. I believe that nationalisation is both too costly and too rigid an instrument for the Government to continue to look to public ownership, in the Clause IV sense, as the most desirable means of making particular industries accountable to the community for those services which can properly be expected of them. But what a price to pay! As in some doomed pagan society, the steel industry is to be the last great ritual sacrifice. After that is out of the way, this modernminded Government will no doubt move on to other and more flexible ways of achieving public accountability. The aircraft industry, road haulage, telecommunications, ports, water supply, are all subjects which are being currently discussed, and in which old-style nationalisation remedies seem to play a surprisingly small part. But for steel, no. Basic industries call for basic measures. Reason has to take second place to the traditional generations-old canons of the Labour Party Constitution. That is why, in our view, this is a bad Bill and an irrelevant Bill. That is why we on this side of the House deplore it.

5.35 p.m.


My Lords, I rise for a few moments for I feel that a Back Bencher from this side of the House should say a few words about this Bill. As I said on Second Reading, I do not approve of it at all, but like some of my noble friends I have done my best, since it was approved in principle on Second Reading, and since the Government had a mandate for it at the last Election, to try to improve it. We have only been a small team on our side, but we have had the great advantage of having some extremely good advice given to us, and during the Second Reading debate we had some excellent speeches by Members of this House who are directors of steel companies. I should like to thank the noble Lord, Lord Windlesham, and all noble Lords who have contributed so much to this Bill. In the 33 years that I have had the honour of serving this House I do not think I have ever heard a better "second leader" than the noble Lord, Lord Erroll of Hale, in helping with a most complicated Bill. His mastery of the Bill was extremely good, and he has been most tolerant throughout. I should also like to thank the Deputy Leader of the House for his courtesy in helping us with many difficult points in the Bill.

My view is that rationalisation could have been achieved without nationalisation. However, the Government have decided to do this, and we can do nothing more. I am pleased that with the cooperation of the Government we have been able to make some Amendments in this House. I have sometimes despaired on recent occasions, when we have been very careful in the number of Amendments that we have sent down to another place, that every single one on which we have not been able to reach agreement in this House has been rejected in another place. Therefore, on this occasion I feel that we have done something to make this Bill a more workable proposition. With those few words, I will now resume my seat.

5.38 p.m.


My Lords, I think my first words must be to disagree briefly, but firmly, with the description of this as a "bad Bill". Noble Lords opposite seem to be more and more inclined to the view that, when a matter of principle has been decided in another place, this House should accept that principle although preserving its right to amend. This Bill happens to be a Bill in which the principle of nationalisation of iron and steel was specifically put to the Electorate in the programme of the Labour Party. The industry was nationalised in 1949, and if chaos was subsequently created in the industry the members of the Conservative Party must bear responsibility for the reckless way in which they de-nationalised it. I hope they will not be encouraged to make another attempt at de-nationalisation in respect of the present Bill. I believe that it is a good Bill and well drafted. It is a Bill which attempts to nationalise the industry, while at the same time having full regard to the need to preserve a strong private sector.

On February 28 when the Bill was in Committee, I expressed some concern at the omission of any reference to industrial training and education. The Minister gave me an answer "off the cuff", as he put it, and I must congratulate him on his accuracy of recollection, because in the letter he was good enough to send me afterwards I noticed that what he said came very near to the exact wording of the Industrial Training Act 1964. I was very surprised that I could not discover in the original Act of 1949 any specific reference to education and training. I could not understand that, because in earlier legislation, in respect of coal, gas and electricity, there were specific references to the responsibility of these public corporations to provide for adequate education and training and for the improvement in the general skill of the employees concerned. I wonder whether—I will not put it any stronger than that—in paraphrasing certain parts of the Acts covering the three industries which I have mentioned in respect of conditions of employment, there might have been some slip-up, because it so happens that in reference to the conditions of employment in the Bill itself the phraseology runs very close to that of the other nationalised industries.

Education and training were put in a separate part and given separate emphasis by reason of doing that, and I wonder whether it has been fully appreciated that education and training are as vital to the success of the industry as any other wording could be. All the other nationalised industries which I can recall have it as an obligation to carry out effective education and training in consultation with the trade unions and representatives of the employees.

I do not in the least suspect the intentions of the Minister in charge of this phase of the work, whether it is the Minister of Labour or, by connection, the Minister of Power, but it happens that Ministers change and Governments change, and it could easily be argued that the very absence of these words affecting education and training, and the explanations which have been given, could furnish a reason why the important work of education and training was not pressed with, perhaps, quite the same emphasis as it would otherwise have been had the words appeared in the Bill itself. I know that it poses a dilemma for the Government, having got the Bill this far. to alter it in any way, but I really feel that there is all the difference in the world between a public corporation which has an obligation to the community as a whole, and private companies, or public companies, to put it more accurately, who are affected by the Bill. I say that because I cannot escape the feeling that, although the Industrial Training Act and the board which it subsequently set up for the iron and steel industry put a responsibility on all of the organisations, there is always a danger of the minimum being done under, as it were, such composite bodies.

I make no bones about it. I think there is an obligation on the public boards to set examples in these matters, and to go in for a considerably extended amount of provision for education and training, as well as other items of welfare and that sort of thing, to raise the status of industry itself. It cannot be denied that industry has been negligent in this matter, and while there are some splendid examples of private companies who have spent a great deal of money, and devoted much time and skilled attention to establishing effective measures of education and training, and also to provisions for thorough consultation, to my knowledge no industry has ever gone so far to make the provisions which now exist, for example, under the Electricity Act. I would say, I hope without boastfulness—and I thank the Minister for his personal references to myself—that the extent to which training and education, and joint consultation and analogous matters, have been carried on in the nationalised industries, is far beyond the average that can be found in any industry in the country and, indeed, it can be cited as an example to the world itself.

If the obligation were put in the Bill, with a duty on the boards, it would be discussed at all the various levels with a sense of participation by the employees, and I regard that as extremely important. I do not care whether organisations are of a public character or a private character. I have no doubt whatever that in the years to come there will be more and more need for keeping employees in the closest possible association with the industries in which they are employed. If that is not done, I cannot see any real future for British industry. We are long past the stage of autocracy in industry, as in society generally, and I feel convinced that it is a good thing for employees at all levels, the works level, the district level and the national level, to have their machinery not prescribed by a training board, although that is a very useful thing, but so that they themselves, apart from any question of instruction which they may get from a training board can engage in the spirit of the Act in these very important functions.

I regard the Bill as a very considerable improvement on anything which has preceded it in regard to iron and steel. If one refers to the Schedule 4, Part V, on page 81 of the Bill, one will see how closely in all respects, except education and training, the Bill is trying to follow well-established precedents, showing a modern outlook and an approach to labour problems which I wish were more generally followed by private employers. I repeat that if, even for psychological reasons, this reference to education and training, with the insertion of only three words, had been included, I feel convinced that it would have given the employees a greater sense of belonging than they will have by leaving the matter entirely to an industrial training board.

I do not say these words in any sense of grievance, or anything of that kind. I feel that, if only there were to be a bigger moral obligation—which would be a continuing one and not varying in interpretation by changes of Ministers, sometimes with hostile views of the problems and certainly very often not in any sort of concordance about it all—the employees would regard it as conforming to the kind of principles to which employees in electricity, gas and coal have become accustomed.

5.49 p.m.


My Lords, I venture to ask your Lordships to allow me to intervene at this moment. The Bill which is now in its closing stages, so far as your Lordships are concerned, has taken a very long time to reach this stage; in fact, it is a matter of years. It is curious—and this is something which I raised on Second Reading here—that the right honourable gentleman the Minister, in introducing the Bill on Second Reading in another place, said that if he had only known how many people could have been included he might have introduced a separate Bill. We realise that the Minister has every intention of making things as easy as possible in the industry which now comes under his surveillance. But I cannot help repeating what I said before: that I have a good deal of sympathy with the Government for the position in which they are. It has taken, as I said, a matter of years to get this Bill through. The amount of literature which Hansard has had to prepare is enormous—and a great deal of it has nothing whatever to do with the manufacture of steel—because so many points have been raised about how it is all to be worked.

There is one thing that I should like to emphasise—and it has already been referred to by my noble friend Lord Windlesham. He quoted the speech of the President of the Iron and Steel Federation at the annual meeting yesterday, but I will read the next sentence, which, if I am right, my noble friend did not quote. Having said how unnecessary the Bill is, the President continued: However that may be, Parliament has made its decision and steel-makers will do everything in their power to make the new system work as well as possible". That is to say, those who are engaged in this great and important industry are more determined to continue to make it successful than they are swayed by political considerations, whatever they may be. The Minister is already saying that he is anxious to do everything to help that part of the industry which has not been nationalised but I am sure he realises that it is one industry.

In moving the Third Reading the noble Lord, Lord Shackleton, made on remark with which I wish to disagree. It was rather suggested, if I understood him aright, that the nationalisation of the industry will help to improve relations between those engaged in it. I hope I may be pardoned for saying that I have a great deal of experience about this matter. I was for many years in the industry, and I was always in touch with those feeding the furnaces, or whatever it was. I was always told, "This is the way things should work. If it is nationalised, it is all right, so long as we have the same management". There is a tendency, not only in this great industry but all through, to talk of "sides" of industry. I will never accept that. I say that we are all one. We are all one team; we all have the same determination to do the best we can for the job we are doing. It does not need an Act of Parliament to bring friends together.

The noble Lord, Lord Shackleton, turned towards my old and very dear friend Lord Citrine, and said something about this. I am sure that he would support me in saying that those relations will not be disturbed by anything, and that we look forward to continuing our great industry, in spite of the fact that we have lost a great deal of time. It would have been quite easy for the Government, instead of getting together a very large sum of money and putting before Parliament a most elaborate Bill, which has taken years to come through, to ignore this dreadful dogma of nationalisation and to encourage rationalisation. In fact rationalisation was held up because it was known that the industry was going to be nationalised, and that those in the industry would have to take orders from somebody else at some time.

My Lords, that is all I have to say about it. We have improved the Bill; and I say again that those in the industry will do everything in their power to continue to make their industry something to be proud of and something which is of great value to the nation.

5.55 p.m.


My Lords, if the noble Marquess will not mind my saying so, I found his a very attractive speech. He will not expect me to agree with every word of it, but the spirit of a man who wants this industry to work for the best, and who wants all the people in it to play their full part and to serve their country and the world through their knowledge and their skill, is something that I find very feeling and very attractive. I say this to the noble Marquess. I sat for 19 years for a constituency which included a large steel works. They were an extremely skilful and knowledgeable collection of people. They were bitterly opposed to nationalisation—and I mean the word "bitterly"—at any rate for some time. I have every confidence that they will now accept what is, after all, on any view of the matter, a democratic decision, and will do their best to serve their country and the world in this particular matter.

My Lords, this is the third Iron and Steel Bill that I personally have seen and spoken about. I think it is a better one than the first, and that the second one was an unworkable compromise which had much too much politics and much too little sense in it. But, be that as it may, the point is that, as I see it, we are now going to get the steel industry under public ownership. This is said to be a ritual sacrifice. That is not right. It is not a ritual sacrifice. It is an attempt to combine two things. One is the technical progress and management of the industry, including questions of research and the like, and including, too, questions of the relationship between labour and management, upon which my noble friend Lord Citrine spoke so eloquently just now. That is one side.

The other is that this is an industry of vital importance to this country; and what seems to me to be very important is that it is an industry which is changing itself in a changing country. We are not living in a world in which broad political generalisations that were valid, say, ten or twenty years ago are necessarily, or even probably, valid in the same sense to-day. It is all very well to talk about decisions of principle. I am afraid that all too often they are decisions of prejudice—and prejudice, as I see it, so bemused by some apparently simple notion as to forget that you have to change your institutions and change them in accordance with the changes among the men and women who are living in this country, who are finding new things, who are applying new things and who are developing new things.

If I had to find a fault with the technical side of the steel industry, it would be that I think it has been slow to adapt itself to change in this country; but I am not going to deal with that now. I think, too, that one of the hindrances in its path has been the very curious capital structure—a structure of companies, if you like—which has grown up in a very different state of affairs and which has not been adapted with sufficient speed. We are told that Stewart and Lloyds are now going to amalgamate with South Durham. Well, they might have thought of that a long time ago and not at the moment when a steel nationalisation Bill was going through Parliament. And all the attacks which have been made since 1963, which was rather a landmark in this respect, have been a little halfhearted and a little cramped by the financial and company structure of the industry.

My Lords, why I was so pleased, if the noble Marquess will not mind my saying so, with what he said was because of the public spirit of it. This Bill is going through now. There may be what is comparatively a minor point raised about what to do with debentures, but it is clearly going through. As I see it, it is not going to be altered by a succeeding Government; I do not think the history of the industry would encourage any such alteration. It seems to me that it is our duty as citizens to do all we can here and in public and in anything we say—not to suppress our differences of opinion; I would not ask for that to be done—to see that the industry as now constituted gets through its impending difficulties. It is certainly going to have them. This is a hard world for the iron and steel industry and the reason why it is a hard world is because of the question of capacity. There is too much capacity in the world at the moment. This has always been the difficulty of the steel industry, and will continue to be the difficulty of the steel industry.

In my view, the first reason for public ownership of the steel industry is partly that you have to relate the capacity of the industry and what it is doing by way of developing or restraining that capacity—because there are such things as outdated plants—to the general economic state and progress of the country as a whole. This is so vitally important that it is right, not only that the industry should be in public hands, but that it should be in hands of persons who are fully answerable to Parliament—and I welcome the changes that have been made in this respect—representing the people of the country. It has a certain uniqueness about it. The second reason is the question of power. It is really related to the other reason.

An industry as vital as this one—which not only employs a large number of men but plays an essential part in our industrial life—should not be left in the hands of any men but those who can be brought to book and made to answer by the people as a whole.

My Lords, if this is poisonous Socialism, then it seems to me that those who think that have really not kept up with the march of events in the world at large and in this country. I trust that those who have objected—whether we call it an objection on principle or for reasons of prejudice—are now going to rise to the occasion and to say, "Well, when all is said and done, we may have been wrong." Certainly, a large number of Members on this side disagreed with us. The lights of democracy in the world are a trifle faint nowadays, but here is a matter of vital importance which has been discussed for twenty years which has excited the attention of the electorate as a whole and particularly of those men who have been working in the industry, in whatever capacity. It has been discussed fully; it has been debated fully; every possible point has been taken.

I would not suppose we have got it dead right; but as a legislative Assembly we have had a remarkably good try. I hope that what democracy has decided is not going to be confused by clouds of prejudice or by the inability of any of us to recognise—as I myself fully recognise—that we are not always wrong, though we may often be wrong, when we have an unanswerable principle behind us.

6.4 p.m.


My Lords, I should like to take up the noble Lord, Lord Citrine, on a point he made at the beginning of his speech. He appeared to give the impression that, because the Government had a mandate from the people at the last General Election, this House ought not to have amended the Steel Bill at all. If we are not here to amend Bills, why are we here? Is it for our beauty? I hardly think so!


My Lords, may I intervene? The noble Viscount has it completely wrong. I have said in this House time and time again that when a matter of principle has been decided in the House of Commons we have no right, on that major question of principle, to reject the decision of the Commons. I have been asked specifically on at least one occasion by the noble Lord the Leader of the Opposition whether I took the stand that there was no right on the part of this House to amend legislation which came from the Commons. Of course I answered, No.


My Lords, the impression the noble Lord gave me was different; but if he meant otherwise, I apologise.

I should like to say that I heartily agree with my noble friends on the Front Bench that this is a bad Bill. There is no commercial reason for it at all. It is Party dogma; it is the desire for power that goes with the control of the steel industry. I only hope that the Government, having now captured the goose that lays the golden egg, do not strangle it. But if they do not strangle it, it will not be to their credit; it will be to the credit of the people in the steel industry. As my noble friend Lord Aberdeen and Temair said, everyone in this great national industry will obviously try to make it a great success. But whether they will be able to do so, with the dead hand of nationalisation on it, is a moot point. I only hope that they will be successful.

The noble Lord, Lord Mitchison, spoke a great deal about prejudice. But so far as I am concerned there is no prejudice. The only things I am worried about are the facts. Some £1,200 million was written-off on the railways and in other nationalised industries. It all comes out of the taxpayers' pockets; it all lowers the general standard of living in this country. It is all very well for the noble Lord to say that we are prejudiced; but it is a matter of hard economic facts.

6.9 p.m.


My Lords, may I, in these final few minutes, try to restore the spirit of harmony which has prevailed throughout the greater part of these debates? The noble Viscount may know something about strangling geese with dead hands; but I would rather come back to the real issues that are before the House. I think we ought to be conscious of the fact—though it is rather hard to realise it in this placid atmosphere, with fewer than two dozen noble Lords present—that really history is being made to-night. One of the great basic industries of this country is being taken into public ownership. All I have to say ranges around the question of compensation; and because of that I perhaps ought to declare an indirect interest. I possess no steel shares myself, but I am one of a committee of two public men which is responsible for the investment of a £10 million pension fund, and in our investments we probably hold three-quarters of a million pounds worth of steel shares. So to that extent I have perhaps an indirect interest.

What I want to say is this—that no debate upon the nationalisation of an industry would be complete unless something was said about the widows and pensioners and orphans who hold equity shares in that industry. We have had them trotted out from time immemorial. In this case I think they may be congratulated on the good fortune that is bestowed on them by the compensation clauses of this Bill. Those clauses are really generous. They have placed the compensation basis of shares at a level slightly higher—in some cases considerably higher—than the value which the City, through the Stock Exchange and the merchant bankers, placed upon them. And the alternative, if the shareholders had not been compensated in that way, was a rather grim prospect, because we know that many steel plants are now working at only 70 per cent. or 80 per cent. capacity. We know that our share of the world export market is going down. We know that competition from all quarters is stiffening. We know that every other main steel-producing country in the world has plants bigger than ours, more attuned to the needs of the mass production of to-day.

In Japan they have a plant turning out 7 million tons a year—twice as big as our biggest plant. In France they are reorganising the whole of their steel industry into three massive plants, each turning out 7 million tons. In America they have nine plants which are bigger than the biggest plant that we have in this country. A similar state of affairs exists in Germany. If the industry were left as it is to-day, my Lords, the outlook for the equity shareholders would be very poor indeed. I think that they may congratulate themselves on the basis of the compensation which is being handed out to them. If I should happen to be wrong in that diagnosis, I ask noble Lords to bear in mind that the chairman of the Conservative Party organisation announced that he was a big buyer of steel shares for his unit trust at the time of the General Election, and only a few days ago one of our City editors said that Mr. du Cann, who was buying steel shares for his unit trust at the General Election, is still buying them now.


My Lords, may I ask the noble Lord how many of those great companies abroad are nationalised?


My Lords, I do not know—the noble Marquess probably knows. But he really supports the indictment against the steel industry of to-day. Whereas in other countries privately-owned steelworks have seen the desirability—nay, the necessity—of merging and amalgamating and building up gigantic plants, the steel industry in this country, under its private leaders, has not seen fit to do so. One of the main reasons for this Bill is not to carry out the provisions of Clause IV of the Labour Party Constitution, transference of ownership, but to amalgamate these private companies into bigger units so that they can meet their competitors abroad on equal terms.

My Lords, the noble Marquess has lured me away from the one simple thing I wanted to say, which is that compensation in the case of this Bill is very generous indeed. Because of this I can support it with an absolutely clear conscience.

6.14 p.m.


My Lords, I had not necessarily expected to speak again, but there are certain points which call for a reply. I should first like to express my appreciation to the noble Lord, Lord Wolverton, and to the noble Lord, Lord Windlesham, for their remarks. Although in the latter stages we returned to an earlier type of disagreement, I think we have managed together pretty well on this matter. I listened with the greatest attention to everything which the noble Marquess, Lord Aberdeen and Temair, had to say. No one has a wider or more remarkable experience of industry. I recommend any of your Lordships who have not done so to look at the career of the noble Marquess as recorded in Who's Who, which shows the depth of his industrial experience. I think that perhaps the noble Marquess read more into my remarks on the subject of relations within industry than I would have wished him to.

I did not, in fact, suggest that industrial relations in the steel industry were bad; I merely said they could be made better. I must say that not all the steel firms have records equal to those of the leading firms in the steel industry. I do not want to go further into this, and to suggest that industrial relations in the steel industry are other than good, but there are some forms of industrial relations which are even better.

The important part about this Bill in this respect is that it represents a further advance in association in a way which has an element of almost revolutionary quality in relation to the trade unions. The unions have always supported joint consultation, and at the same time—I am almost nervous to speak on this matter in front of the noble Lord, Lord Citrine—they have always recognised that the responsibility for management lies with management. There is a further recognition, in the appointments to the Corporation, and indeed in the Bill and in the negotiations, that trade unions and representatives of the workers will carry a greater degree of responsibility. In this respect I would say to the noble Marquess that he may wish there were not two sides of industry, but the fact remains that the great achievement (if that is the right word) of capitalism was to divide the country into two sides of industry.

If we are now advancing in the direction in which the good heart and experience of the noble Marquess suggests that we should, this is something to be welcomed. I have no doubt at all as to his own feelings, and indeed anyone with industrial experience knows it is possible to identify the worker much more deeply with the welfare of his particular undertaking. Nor is this identification something which is necessarily given more willingly to publicly-owned industry than to privately-owned industry. I fully concede that. It is a function of management. It is perfectly possible that a publicly-owned industry, if not conducted well, might not have as good relations as the best of privately-owned industry. But, as is indicated by the advances made possible by this Bill, and by the organisation of the industry, it is very much our purpose that there shall be even greater identification and greater co-operation. This in no way reflects on what the noble Marquess and his friends may have achieved in the firms with which they have been associated, but I felt that his remarks called for that further explanation which I hope will be welcome to him.


My Lords, I accept what the noble Lord says.


My Lords, I thank the noble Marquess. If I may turn to my noble friend Lord Citrine, I would say that the points he had in mind were carefully considered, particularly in relation to industrial training, during the drafting of this Bill. I was not quite sure whether my noble friend was comparing this Bill with the 1949 Act, or rather with the other Acts of Parliament, such as those concerning electricity about which he knows so much, but it is true that in the 1949 Act the responsibility laid on the Minister in the appropriate section (I think it was Section 4) was that there should be consultation and some degree of power to ensure that training was provided; but there was nothing in the 1949 Act comparable to the provision in the Electricity Act. The provisions in Clause 31 for promoting efficiency and welfare must cover training, but it would be in the hands of the Corporation. As the result of the Industrial Training Act the statutory responsibility no longer rests with the Minister of Power but with the Minister of Labour.

I will see that my noble friend's views are brought to the notice of the Corporation. Indeed, his earlier remarks on this question gave me some slight pause, and I considered this further. I will give him a definite undertaking that the Minister will take steps to ensure that the Corporation will pay full attention to education and training, and that the experience of other nationalised industries is made fully available to them. In giving that assurance, let me say that I have no doubt that the Corporation will recognise their responsibility in this matter.

I was interested to hear the forthright speeches of my noble friends Lord Mitchison and Lord Leatherland. My noble friend Lord Mitchison has played a significant part in this Bill. He succeeded in ensuring that the Committee stage lasted nearly a reasonable length and he certainly helped the Government by his knowledge. I welcomed part I of the speech of the noble Lord, Lord Windlesham, but I did not particularly welcome part II. I do not intend to enter into a discussion of the merits of nationalisation either with him or with the noble Viscount, Lord Massereene and Ferrard—who I must say produced the "Saying of the Week" when he said that there was no prejudice on his part. I should like to ask him whether he has even read the Benson Report.


My Lords, I have not read the whole Report; I have glanced at it.


My Lords, I am a little surprised that the noble Viscount has participated so actively in our discussions, particularly on the question of profit, without having read a Report which clearly establishes a certain area of argument. We are agreed that a fundamental reorganisation of the iron and steel industry is absolutely necessary. This has been agreed by the Federation and by the Benson Committee. There has been no free competition in the steel industry for more than thirty years and during nearly all that time the industry has been in private ownership. We must settle the uncertainty about the future of the industry.

What I cannot yet see is how noble Lords opposite anticipate that the necessary reconstruction, which so notably failed to be carried out in the past, can be carried out urgently enough without a single owner. This means to us inevitably public ownership. I do not believe that noble Lords on the other side would welcome a single, private monopolistic owner. They are caught in a dilemma on this. The noble Lord, Lord Windlesham, was good enough to suggest that the Government were showing a degree of flexibility in other fields of ownership. It is true that the aircraft industry is not to be nationalised. It is not even to have the Government majority holding that the Plowden Committee recommended. The aircraft industry does not occupy anything like the crucial position in the economy that the steel industry occupies. Furthermore, it is subject to a degree of control by the simple fact that the Government are their largest customer. But we believe that there is a fundamental case for reorganising iron and steel as a basic industry.

If all that noble Lords want to do is to make modest improvements in efficiency to the structure of an industry which they believe is basically right, they are correct in opposing nationalisation, but we believe that it is not possible to make the fundamental changes on the scale and at the pace required without public ownership. I would remind noble Lords that there are well over 200 companies involved, each with its own special interest to look after, and each legitimately concerned with protecting the interests of its shareholders. Some will have to suffer from rationalisation on the scale required, and all will have to put the interests of the industry as a whole before their own.

Nothing has shaken my belief that nationalisation is the only possible operation. I do not believe that it is reasonable to ask privately owned companies who have an obligation to their shareholders to sacrifice those interests in a way that might be disastrous to the proper position of the company without proper compensation; and the only way they can be compensated and a structure set up which will ensure the reorganisation of the industry at a speed and to the depth we need is by bringing the industry at one stroke under a single management. This is the only right solution. It has the great merit of being the simplest solution. It has also the merit of giving almost complete freedom within the terms of control exercised by the Minister to reorganise on whatever scale and at whatever speed is necessary. The iron and steel industry is basic to our economy as a whole, and in our view such a basic industry must be owned, not by private shareholders, but by the nation as a whole.

As a tailpiece, may I say to noble Lords who have been prophesying doom that there have been reports in the Press that anxiety has been expressed recently by the European steel industry about the power of the competition they will get from a unified steel industry in Britain. May I also offer the comforting thought to the noble Viscount, Lord Massereene and Ferrard, that on the day when we pass this Bill through its final stages, sterling is standing higher than it has for a long time past.


My Lords, but probably we shall not get into the Common Market because we are breaking all the rules.

On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.