Sitting of 20 February 1936

Preamble
The House met at a quarter past four of the Clock, THE LORD CHANCELLOR on the Woolsack.
IMPERIAL CONTINENTAL GAS ASSOCIATION BILL. [H.L.]
Read 2a.
ROYAL NATIONAL PENSION FUND FOR NURSES BILL. [H.L.]
Read 2a.
GREAT ORME TRAMWAYS BILL. [H.L.]
Read 2a.
CORNWALL ELECTRIC POWER BILL. [H.L.]
Read 2a.
GRAVESEND AND MILTON WATERWORKS BILL. [H.L.]
Read 2a.
NORTH METROPOLITAN ELECTRIC POWER SUPPLY BILL. [H.L.]
Read 2a.
RICKMANSWORTH AND UXBRIDGE VALLEY WATER BILL. [H.L.]
Read 2a.
SWANSEA AND DISTRICT TRANSPORT BILL. [H.L.]
Read 2a.
EDINBURGH CORPORATION ORDER CONFIRMATION BILL.
Considered on Report (according to Order).

ORGANISATION OF INDUSTRY.
LORD MELCHETT LORD MELCHETT rose to ask His Majesty's Government whether it is their policy to give statutory authority to individual schemes of industrial reorganisation as exemplified by the Cotton
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Spinning Industry Bill, the Sugar Industry (Reorganisation) Bill, the North Atlantic Shipping Act and the Agricultural Marketing Acts, in cases where they are satisfied that such statutory authority is warranted, and whether they are prepared to consider the recommendations in the report of the Committee on the Reorganisation of Industry of the Federation of British Industries of June, 1935, in regard to schemes put forward by individual industries in which voluntary effort has failed; and to move for Papers.
The noble Lord said: My Lords, I have brought the Question that stands on the Order Paper in my name before your Lordships' House this afternoon in order to give the Government an opportunity of making what I hope will be an authoritative statement on the question of industrial reorganisation, which has caused a certain amount of perplexity among industrialists in various industries throughout the country. The industrial position to-day, although it is rapidly improving under the Government policy of tariffs and cheap money, still leaves a great deal to be desired. I should like to add my tribute to what the Government have done to assist the industrial community in the past few years in bringing us to the condition of prosperity that we now enjoy. Everyone who is engaged either in manufacture or in commerce is under considerable obligation to His Majesty's Government for what they have done. But it is now, during the times of prosperity, that basic reorganisation of industry should be undertaken so as to lay sound foundations for the future.
Industrial reorganisation is a subject that has been under much discussion in recent months. It is a complex and difficult question. I have no intention this afternoon of raising any abstruse economic points or of raising any of the more difficult aspects of this matter, important as they are to fundamental consideration and fundamental solution. I wish only to deal with simple and practical points raised by practical industrialists who are anxious to proceed with reorganisation. There have been several methods of approach to this problem of reorganisation, and I should just like to deal with one or two of them in order to make the position quite plain. Some eighteen months ago I introduced a Bill

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into your Lordships' House in order to crystallise in a practical form views held by a number of industrialists. That Bill was supported by an organisation called the Industrial Reorganisation League, which was specifically formed to study this question.
I should like to make it quite clear that the Industrial Reorganisation League was by no means a theoretical body. Large numbers of theoretical bodies have been set up for the study of economic questions in the last three years, but this particular body was a highly practical one, and had a council of some sixty-six members, all of them leading industrialists, practical men of business, most of them suffering under some inability to achieve that reorganisation which they desired. It comprised certain trade associations which I will name: The British Iron Founders' Association, the National Union of Mineral Water Manufacturers, the Federation of Roadstone Quarry Owners, the Birmingham Jewellers' and Silversmiths' Association, the British Metal Window Manufacturers' Association, the Builders and Plumbers Merchants' Association, the Metallic Bedstead Manufacturers' Association, the British Bath Manufacturers' Association, the British Fire Clay Association, and the British Trawlers' Federation. Your Lordships will agree that that is a very widespread and very important list of people engaged in trade and industry. There were also a number of important firms such as Richard Thomas & Co., the Imperial Tobacco Company, and the Bradford Dyers and Calico Printers. I do not think any one will accuse those associations or firms that I have named of being theoretical economists. The members of the Metallic Bedstead Manufacturers' Association, for instance, are not a theoretical body. They are a very practical group of people, who are anxious to make bedsteads, and who desire that the community should have by day that peace and security which the Government alone can provide and that comfort at night which it is their commercial interest to supply.
About the same time the Federation of British Industries, which is the largest unit of organised industry known in this country and, I suppose, one of the largest in the world, set up a committee to study the same question, of which I had the
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honour to be a member. That committee reported in June of last year and I will refer to the report in a few moments. As a result of those studies and investigations I did not advance a Bill at that time in your Lordships' House because I was anxious to acquire all the experience and information possible before proceeding to further debate. But meanwhile the Government had begun to approach the matter from a rather different standpoint. They appeared by their action, although it had never been specifically expressed in words, to be prepared to deal with industrial reorganisations of this type by means of introducing ad hoc Bills wherever they found that an industry was in a condition where in their judgment they thought it necessary, or where they thought that the statutory authority was desired.
At this point I want to make it perfectly clear that everyone who has studied this question is agreed upon one thing. That is, that wherever it is possible, voluntary association is by far the best method of proceeding. That is common ground to us all. I have been accused as the result of a Bill that introduced of desiring to "bull-doze" industry. Nothing is further from my mind. Wherever voluntary association works, or can be made to work, it is clearly the best method. It is much less expensive and much quicker. It is much more elastic in its operation. It has every advantage. We are all agreed on that. What matters are the cases where voluntary association has clearly failed. I have no doubt the Government much prefer voluntary association. It is far less trouble to them. For my part I am a great believer in it wherever it can be brought about. So far as the industries with which I am connected are concerned, the re-organisations which were necessary were mostly carried out some ten years ago, so that from that point of view I look at the matter purely from the national aspect.
The committee of the Federation of British Industries spent a great deal of time on their report, and a great deal of space in pointing out the excellence and importance of the voluntary system, with every word of which I agree, and I signed the report. I think one quotation from the committee's report, on page 12, is sufficiently important for me to read it in full:

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"At the same time we cannot disguise the fact that there are to-day highly organised industries of great importance to the community which, after years of patient effort, have completely failed to agree upon any system for regulating output in accordance with demand, and the only point upon which agreement has been reached is that such a crisis has arisen that unless some action is taken the future existence of the industry is at stake. To meet these cases we agree that the voluntary system must be supplemented, and that Parliament may properly be asked to sanction measures which will result in the enforcement of the scheme of the majority upon a dissenting and small minority."
It appears that the Government share the same view, and are acting upon the same principles. Wherever an industry can settle its own affairs they much prefer to leave that industry to do so, but where they are satisfied that it has wholly failed they appear, by their actions, to be prepared to introduce measures for the proper regulation of such industries.
It would, therefore, appear that there is no difference in principle between the Government and myself and my friends. We are all agreed that where the voluntary principle has broken down sonic form of statutory authority is necessary. And what I should be most pleased to hear from the Government is whether I have given a correct interpretation of their views. Is it the case that the Government are prepared to consider schemes where they are brought forward by majorities of an industry, and where they are satisfied that there is a real case for such schemes? A great many people, a great many trade associations, and a great many manufacturers are anxious to know if this is the case. If it is, for my part I am satisfied, and so are my friends. It is true we believe that special machinery should be set up to deal with these cases, but if the Government want to proceed ad hoc with each case and introduce a special Bill into Parliament in each case, so be it. Let us try that way first.
That brings me to the second part of my Motion. There are many of us who believe that if this procedure is followed Parliamentary time may easily be overwhelmed by the large number of measures that may have to be dealt with, but experience will show whether that fear is real or merely illusory. If there are not a large number of schemes, then Parliamentary time will easily be able to satisfy what is necessary. It depends
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simply and purely upon the number of genuine cases which, upon examination, the Government choose to take up. There is one further point, and a point of very material importance. It is that in all these schemes, and in all Bills brought forward under them, the views of the industry concerned should be properly ascertained, and that every opportunity should be given for consultation and for the industry to express its opinion. That is important not only to those who might be described as the promoters of a scheme, but also to those who are described as its opponents. It is equally important for either side or for any one else who might be interested.
The committee of the Federation of British Industries had this in mind when, on pages 12 and 13 of their report, they suggested that a special tribunal should be set up to consider every case as and when the Government believed it was ripe to be dealt with. I have had a chance of talking to officials of the Board of Trade on the point, and it is quite clear that the Board have no machinery for dealing with this matter at the present time. They may be able to improvise machinery, but it is clear they have not done so yet. There are cases under the present Cotton Spinning Industry Bill where many people are gravely dissatisfied. There are some eases where people claim that they should not come under the Bill at all. Yet they are incorporated in the scheme, and their only redress at present is to go to an official of the Board of Trade and put their case in front of him. If he will not listen to them, they have nowhere else to go except to try to move some Member of Parliament to take up their special case in another place, or to appear here where it may be too late. Surely that should be remedied, and the Board of Trade should have some special machinery for dealing with the matter.
To recapitulate, I want to make a special point of the fact that it is common ground to all of us that, wherever these matters can be dealt with by voluntary agreement, that should be done. Where the voluntary system fails it appears to be common ground to all of us that it has to be supplemented, and that Parliament can be properly asked to sanction a scheme. It is my belief, and it is expressed by

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other industrialists and is mentioned in the report of the; committee of the Federation, that the mere fact that a scheme might be promoted in the form of a Bill in Parliament is a very strong inducement to people to come into a voluntary agreement. The mere fact that such powers are likely to be taken is in itself the greatest safeguard against such powers being necessary. I should like to hear from His Majesty's Government whether we correctly interpret their attitude in this matter. I should like to hear also that they will give attention to the very important point that the Board of Trade should either improvise such machinery as they consider advisable or consider the seating up of a special tribunal to deal with things as and when they arise. Above all, they should make certain that no scheme is presented to Parliament in a Government Bill unless they are perfectly satisfied that a majority—in my judgment it should be not less than 75 per cent, of the industry—really desire such a scheme. I beg to move.
LORD TEMPLEMORE: My Lords, I must begin by apologising to the House if I am not sufficiently audible this afternoon as I have lately been suffering from a severe cold and I am afraid my voice is not as good as I should wish it to be. I am sure we are all very much obliged to the noble Lord for having brought forward this Motion to-day because he is so well qualified for the task. I am also much obliged to him for his courtesy in coming to me a few days ago and telling me the effect of the questions he was going to ask. A debate of this kind in your Lordships' House is quite useful and, contrary to the opinion of some of your Lordships, I agree with my noble friend the Earl of Radnor—I do not see him in his place to-day—who observed in the debate on the Motion of the noble Lord, Lord Ponsonby, on the 12th of this month, that he considered that people in this country still pay attention to what is said in this House and take an interest in what we do.
Your Lordships will remember that my noble friend brought up this matter, as he himself said, on October 31, 1334, when he put a Notice on the Paper in slightly different terms to the present one. His Notice or that occasion was:
"To draw the attention of His Majesty's Government to the unco-ordinated character
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of industrial organisation in this country, and to the fact that the principal industrial nations competing with us, in particular the United States of America, Italy, Germany, Japan and Russia, have introduced systems of rationalised industrial control, and to ask what plans His Majesty's Government have for rationalising the system of industrial control in Great Britain."
On that occasion the noble Lord—I think he will not mind my saying so—made a most able speech. I and several of my colleagues thought it a very pleasant speech because, curiously enough, he had some words of praise for His Majesty's Government. I will quote what he said. He was praising the Government for having abolished the gold standard and for the introduction of tariffs, and he went on to use these words:
"Since these two steps have been taken we have seen a really unbroken industrial progress in. England. We have seen a revival which has, in reality, led the whole world, and I think it is not in any way an exaggeration to say that the actions of the Government have made us the envy of the world so far as our present economic situation is concerned."
It is quite true that he went on to qualify that by saying that the Government had not done it soon enough, and that it had only been done owing to the 'representations of himself and of his friends in this House. Of course people who serve in Governments, even those who like myself serve only in minor capacities, will agree with me when I say that whenever anything goes wrong it is the fault of the Government, but when things go right, it is only because the Government have been kicked and gingered into action. On that occasion the noble Lord spoke of how well the country had done. If that was the state of affairs then, we can, after sixteen months, point to a period of almost unbroken industrial recovery. I venture to say, give the credit where you will, that the progess made in this country since October, 1934, when you consider the unsettled state of Europe and the poor state of overseas trade, is remarkable in the history of the world. The noble Lord went on to urge His Majesty's Government to organise industry much on the lines of a Bill which he introduced shortly afterwards at the beginning of the new Session but did not press beyond First Reading. It was called the Industrial Reorganisation

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(Enabling) Bill, as some of your Lordships may remember. On that occasion, my noble friend was answered by the noble and learned Viscount on the Woolsack, who was then leading your Lordships' House. I have been reading the report of the speech of my noble and learned friend on that occasion, with great benefit to myself as always when I read his speeches.
I see that in the course of his remarks he said that two main propositions presented themselves in considering the question of Government interference in industry and what is sometimes called rationalisation. These two points were, firstly, that as conditions in every industry varied, there was no one method which could be selected as suitable for the development and organisation of all industries; and, secondly, that since the people engaged in an industry knew best what were the particular needs of that industry, proposals for its development and organisation should normally come from the industry itself. My noble and learned friend went on to say that it was more suitable to proceed by evolutionary means within an industry rather than by revolutionary alterations imposed by Government from above. Those very sound principles, which were laid down by my noble and learned friend in his speech on that occasion, are still the policy of His Majesty's Government, and I venture to say that that may be observed in the introduction of one of the measures mentioned by the noble Lord in his Motion to-day—namely, the Cotton Spinning Industry Bill, which was only adopted by the Government on the demand of, I think, nearly 75 per cent. of the cotton spinners in Lancashire. I would make this point, that I am not at all sure that the reception of the Bill in the House of Commons on Second Reading and during its present progress through Committee give any great encouragement for any Government to interfere or to try to help in industry.
The noble Lord has asked me two specific questions, and I will try to give him as plain an answer as I can. In answer to the first part of my noble friend's Question I have to say that His Majesty's Government are not prepared, for the reasons I gave earlier in my speech, to consider any general measure of enabling legislation on the lines of the Bill introduced by the noble Lord in
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1934. Also they are not prepared to prescribe schemes of reorganisation for industry; but they are prepared to consider on its merits any scheme of reorganisation which may be put forward by an industry with substantial backing. Whether or not they will be able to implement any such scheme with legislation must, of course, depend first upon the nature of the scheme, and secondly upon the general reactions of any scheme upon the economic life of the country as a whole. In answer to the second part of the noble Lord's Question. His Majesty's Government are not convinced of the necessity for the procedure recommended in the report of the committee of the Federation of British Industries. It is already open to the President of the Board of Trade, without legislation, to consider a scheme for the reorganisation of an industry, and later on, if necessary, to introduce a Bill into Parliament. This is exactly what has happened in the case of the Cotton Spinning Industry Bill to which I have already referred.
To sum up, my Lords, I should like to point out, not necessarily to the noble Lord and those who think with him but to those whom I might call the extreme reorganisers, that there is a danger that they and those who think with them may overlook the fact that the first step in any scheme of reorganisation is almost always the negative action of preventing somebody from doing something. In other words, these schemes involve the compulsion of minorities, which, indeed, the Federation of British Industries say in their report should only be adopted in the last resort. Compulsion of anybody, as most of your Lordships will agree, is always a disagreeable necessity, and that is the reason why His Majesty's Government consider that no scheme involving it should be adopted until the rightness and necessity of that scheme are proved after long and exhaustive inquiry. That is the line which His Majesty's Government have pursued with regard to the Cotton Spinning Industry Bill, and that is the line which they propose to take in all future cases. Otherwise, indeed, it might be found that the cure proved worse than the disease. I hope I have given my noble friend a full answer, and that I have indicated the policy of His Majesty's Government and the direction in which they intend to go, even although their policy may perhaps

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not go as far as he and his friends would like. In conclusion, I am very much obliged to your Lordships for listening to my rather lengthy reply, but it is difficult to condense one's observations on a matter which is exceedingly complicated and at the same time of such vast and absorbing interest.
LORD MELCHETT: My Lords, I should like to thank the noble Lord who replied for the Government very much for what he has said, and to say straight away that I, and I am sure those for whom I speak, will be, perfectly satisfied with that reply. It is indeed everything that they could possibly expect. The Government appear to be proceeding upon exactly the lines that, if I may say so, I hoped that they would. It is true that some of us believe that there are other ways of doing it; it is true that some of us believe that other methods may one day have to be employed; but we are not so hopeful of rapid changes in this country as to believe that it is likely to come about Quickly. We are quite prepared for His Majesty's Government to proceed by experience, and I must say I was much encouraged by other remarks made by the noble Lord to believe that experience may in the long run prove that we are not quite so wrong as His Majesty's Government may think.
The noble Lord referred to the difficulty they were having with the Cotton Spinning Industry Bill. I quite agree. It is precisely for that reason that we proposed a method of procedure which we believed would avoid those particular difficulties. Never mind; the Government do not think our particular method of procedure would avoid the difficulties. Perhaps it would not. We cannot tell until it has been tried. Let them proceed by the present method, and they will find out for themselves. We have not the authority of the Government and can only make suggestions; it is for the Government to find out in practice what is right and what is wrong. For the present, if the Government will consider schemes when they are put forward and, naturally, only adopt them when they are fully satisfied with their soundness, we shall be quite content.
Of course, all these schemes imply compulsion. If may say so, His Majesty's Government are rather experts in compulsion. The Herring Industry Act
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passed by the present Government and by your Lordships' House goes to lengths that I should never dream of proposing in the wildest flights of my imagination. That is where you have been satisfied that such things are necessary. There are a great many more industries which require far more modest forms of reorganisation: nothing so drastic as that which has been done to the herring industry; quite modest things, that really are sound and necessary. It is to those industries that I believe the noble Lord's reply this afternoon will bring real encouragement to come to the Board of Trade with their simple schemes, in the hope that they will receive sympathetic consideration. As to the method of dealing with these schemes that have been brought forward—well, we quite agree for the time being to differ from the Government. Experience will show what is necessary, and evolution will produce the necessary machinery for handling this rather complicated matter. Meanwhile, if I may say so, I am extremely pleased with the noble Lord's reply, and I thank the Government for what they have said this afternoon. I shall be very happy to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

WATER RESOURCES AND SUPPLIES.
Order of the Day for the consideration of the Commons Message of Tuesday last read.
THE LORD PRIVY SEAL (VISCOUNT HALIFAX): My Lords, I beg to move the Motion that stands in my name.
Moved, That a Committee of seven Lords be appointed to join with the Committee of the House of Commons to consider and report on measures for the better conservation and organisation of water resources and supplies in England and Wales as mentioned in the Commons Message of Tuesday last, and that the Lords following be named of the Committee:

M. Aberdeen and Temair,

L. O'Hagan,

L. Sanderson,

L. Rochester,

L. Rhayader,

L. Milne,

L. Eltisley.

—(Viscount Halifax.)
On Question, Motion agreed to.
Ordered, That such Committee have power to agree with the Commons in the appointment of a Chairman:
That the Minutes of Evidence of the Joint Committee on Water Resources and Supplies in the last Session: Of Parliament be referred to the Commitee:
Then a Message was ordered to be sent to the Commons to inform them of the
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appointment of the said Committee by this House and to propose that the Joint Committee do meet in the King's Robing Room on Wednesday next, at a quarter past twelve o'clock.
House adjourned at thirteen minutes before five o'clock.

STANDING ORDERS COMMITTEE.
Report from, That the Standing Orders not complied with in respect of the following Bill ought to be dispensed with:
Cirencester Gas.
And that the Standing Orders not complied with in respect of the petition for the following Bill ought to be dispensed with, and leave given to introduce the Bill:
Yorkshire Electric Power.
Read, and agreed to.

YORKSHIRE ELECTRIC POWER BILL. [H.L.]
Presented (pursuant to leave given this day); read 1a, and referred to the Examiners.
IMPERIAL CONTINENTAL GAS ASSOCIATION BILL. [H.L.]
  ROYAL NATIONAL PENSION FUND FOR NURSES BILL. [H.L.]
CORNWALL ELECTRIC POWER BILL. [H.L.]
  GRAVESEND AND MILTON WATERWORKS BILL. [H.L.]

    NORTH METROPOLITAN ELECTRIC POWER SUPPLY BILL. [H.L.]
    RICKMANSWORTH AND UXBRIDGE VALLEY WATER BILL. [H.L.]
    SWANSEA AND 'DISTRICT TRANSPORT BILL. [H.L.]
    Committed: The Committees to be proposed by the Committee of Selection.

HUDDERSFIELD CORPORATION (TROLLEY VEHICLES) BILL. [H.L.]
  SWANSEA CORPORATION BILL. [H.L.]

    SWANSEA AND DISTRICT TRANS PORT BILL. [H.L.]
    WINCHESTER CORPORATION BILL [H.L.]
    HORNCHURCH URBAN DISTRICT COUNCIL BILL. [H.L.]
    MANCHESTER CORPORATION BILL. [H.L.]
    Report from the Committee of Selection, That the following Lords be proposed to the House to form the Select Committee for the consideration of the said Bills; namely:

    E. Mount Edgcumbe,

    E. Cawdor,

    L. Annaly,

    L. Mamhead.

    L. Milne (Chairman).

    Agreed to; and the said Lords appointed accordingly. The Committee to meet on Tuesday, the 3rd of March next, at eleven o'clock; and all Petitions referred to the Committee, with leave to the Petitioners praying to be heard by Counsel against the Bills to be heard as desired, as also Counsel for the Bills.

BACON (IMPORT REGULATION) AMENDMENT ORDER, 1935.
Report from the Special Orders Committee, That they have examined the Special Order as required by the Standing Orders of the House; that in their opinion the Order raises questions of policy and principle similar to those agreed to by the House when approving two previous Orders relating to the importation of bacon made under the Agricultural Marketing Act, 1933; that the Order is founded on precedent, in so far as Amendments to Schemes have already been submitted for the approval of Parliament under the Agricultural Marketing Acts, 1931 and 1933; that in the opinion of the Committee the Order cannot be passed without special attention, but that no further inquiry is necessary before the House proceeds to a decision on the Resolution to approve the said Order.
Read, and ordered to lie on the Table.

CLEARING OFFICE (SPAIN) ORDER, 1936.
Report from the Special Orders Committee, That they have examined the Special Order as required by the Standing Orders of the House; that in their opinion the provisions of the Order raise questions of policy and principle which have been accepted already by the House

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when passing the Debts Clearing Offices and Import Restrictions Act, 1934, under which the Order is submitted for approval; that the Order is not founded on precedent inasmuch as no other Order has been submitted for the approval of Parliament under that Act; that in the opinion of the Committee the Order cannot be passed by the House without special attention, but that no further inquiry is necessary before the House proceeds to a decision on the Resolution to approve the said Order.
Read, and ordered to lie on the Table.

DEAL AND WALMER GAS ORDER, 1936.
  DUNSTABLE GAS ORDER, 1936.

    FOLKESTONE GAS ORDER, 1936.
    LEEDS GAS ORDER, 1936.
    NEWTON IN MACKERFIELD GAS ORDER, 1936.
    BRIGHTON ELECTRICITY (GENERATING STATION EXTENSION) ORDER, 1936.
    MANCHESTER ELECTRICITY (EXTENSION) ORDER, 1936.
    WOODBRIDGE AND DISTRICT ELECTRICITY ORDER, 1936.
    Report from the Special Orders Committee, That no Petition has been presented praying to be heard against the Special Orders, and that there is nothing in these Orders to which they think it necessary to call the attention of the House: Read, and ordered to lie on the Table.