Orders of the Day — Co-Partnership Bill.

– in the House of Commons on 3rd April 1925.

Alert me about debates like this

Order for Second Reading read.

Mr. REGINALD SHAW:

I beg to move, "That the Bill be now read a Second time."

I hope the House will give that consideration which it always extends to an hon. Member making a maiden speech in this House. In asking the House to consider this Bill, I feel that it is not really a Bill which is very contentious. Its object is to secure what I feel is the object of every Member of this House, that is, peace and goodwill in industry throughout the country and to lead the country to the greatest state of prosperity possible. Where we sometimes differ is in the method by which we would bring this to pass. In the "Western Mail" last week, there was a cartoon showing two English dogs standing over an empty plate, the dogs being labelled respectively "Capital" and "Labour," while a Dachshund was disappearing round the corner with a bone labelled "Trade." One of the dogs was saying to the other "Suppose we stop our battle until we find what has happened to our bone." That is rather what I think is worrying us to-day. There is undoubtedly an extraordinary amount of ill-feeling, I am sorry to say, on both sides of the question, on the part both of Capital and of Labour. The Capitalist is apt to think that Labour is trying to get the wages as high as it can and the work as low as it can, and the Labour view is the opposite, namely, that Capital wants to get all the work it can end pay as little as it can for it.

There is, therefore, a distinct feeling of antagonism between the two, and while the two dogs are fighting, I am afraid that, as is shown by our present trade returns, the bone of trade is going to other countries, and I think it is the duty of all parties to do all that they can to bring that bone of trade back to this country. In order to do that, I think we must try to find some means of bringing Capital and Labour together, so that we can get a mutual feeling of trust and understanding, and in dealing with a matter like this, we want to go to the root of the matter, to start at the beginning, and to see how this, suspicion has arisen. If the House will bear with me, I would like to go back about 100 years to the time before we had our present industrial system. About 100 years ago there were many small employers who had very few workmen under them, and there was what is known as the personal touch. Every workman knew his employer, and the employer knew his men, and, as a rule, the employer himself was an expert in his business. It was not then so much a question of capital and labour, as the personal touch. Moreover, owing to the number of small employers, if one employer was treating his men badly, it was much easier for them to leave that employer and find another, because there were always a good many in. the same town, unlike to-day, when we find a town, such as Bournville, entirely given, over to the making of chocolate, or Port Sunlight, which is entirely composed of soap works. In these circumstances a man has to change his house and home before he can change his employment, and that is more likely to cause antagonism.

Some hon. Members on the opposite side, I believe, can remember the time when a British working man was given a rough casting, and could see the machine he was making grow up under his own hand from start to finish. Consequently, he had an interest in his work in seeing what he was doing; whereas in these days of mass production it is quite different. I read an article a short time ago describing how a girl merely had to stand at a table, and, as a bolt passed by, put in a screw at the right-hand hole. She said that the temptation by the end of the day to put it in the left-hand hole was something terrible. No doubt the monotony of labour is one of the great troubles. The personal touch is also lost, because in a big firm a man is merely working for the firm. He does not know for whom he is working, or who is to get the product of his work. It induces a natural suspicion, and, if we want peace in industry, we have got to do away with this suspicion, and give the workman some interest in his work, beyond the fact that he is putting so many screws in the right hole, or cutting so many pieces of wood to the right shape.

It is really the object of this Bill to give the man some interest in his work beyond wages. There have been two schemes brought out. One is called profit-sharing, and the other co-partnership. The two schemes are sometimes talked of as synonymous, but they are really very different, because in profit-sharing the working man is only entitled to a percentage of any profits that arise. It is only the cash that he gets, so that his work still remains so much cash and so much work. Of course, there is the possibility of getting more cash, but what the workmen in this country really wants, I think, is an interest in his work. Now a co-partnership scheme enables the man, not only to take an interest and to get the money from the profit-sharing part of the co-partnership scheme but to actually become a shareholder. So that there are two alternatives. One is that the individual bonus be given in workmen's shares, and the other than the men, through their unions, should subscribe to firms. Whatever it is, the man will then become a shareholder, and, if he has sufficient shares, or if the workmen between them have sufficient shares, in the industry, they then become entitled to their share in the supervision and management, and they are able to understand, not merely that turning a wheel means so much wages, but the exact position of the firm in the markets of the world, and to see what they are working for, take an interest in the work, and work for the best end.

For that reason, I think a good many Members, not only on this side of the House, but, I hope, on all sides, favour some scheme of co-partnership. I quite admit that the scheme in this Bill is not in itself perfect, but I would ask the House to give it a Second Reading, because I think there are no difficulties which could not be remedied in Committee. The real object of this Bill is, in the first place, to do away with the obstacles at present standing between companies and co-partnership schemes, and, in the second place, to encourage firms to bring in co-partnership schemes. The difficulties in the way of co-partnership are, first, that some of the older firms are companies which can only start a partnership scheme, and issue additional capital, by getting another Act of Parliament. That is one objection. Another objection is that the older companies cannot issue new capital without, in some measure, altering their articles of association. To alter the articles is, of course, a big task, and very often an expensive task. This difficulty was got over in New Zealand by an Enabling Act that was passed, I think, last year. They got over the difficulty by saying that in co-partnership schemes the co-partnership shares issued to workers shall be of no capital value officially, so that they do not come on to the balance sheet, and an alteration of the articles of association is unnecessary. The objection to that is that it is apt to convey a false impression to the public at large as to the capital of a company.

Therefore, what we propose to do by this Bill is to give the companies the right to issue shares in furtherance of a co-partnership scheme without the necessity of altering their articles or getting an Act of Parliament. At the same time, we want to ensure that the co-partnership schemes in these circum stances are honestly for the benefit of the workers of this country as a whole, and we, therefore, suggest that a Commission be set up to which there shall be a member each appointed by the Employers' Federation, the Labour Co-Partnership Association, the trade unions, the President of the Board of Trade and the Chancellor of the Exchequer. I think a board composed of five such people would, at least, show to the workmen that the schemes were genuine ones before they were passed, and, if passed, we desire to give them certain advantages and help. The second Clause first of all points out that companies may issue such shares without an Act of Parliament, Royal Charter, or anything of that sort, and the next paragraph confines it to co-partnership rather than profit-sharing, because we feel that it is an interest in the work that labour wants rather than merely an extra dole of wages; it is not wages so much as an absolute part in the industry.

I do not say everything in this Bill is perfect, or that it does not need a certain amount of alteration in Committee. I hope, however, that hon. Members will give this Bill a Second Reading, allow us to take it upstairs and discuss it, and, if necessary, alter it. At the same time I do feel that we must do something, if only to prevent trade leaving the country. We have got to get: peace in industry, and there are various ways of doing it. We have to remember that in this country to-day the trade unions are a very strong factor. There are among our trade union leaders undoubtedly two different kinds. There are the leaders who believe in nationalisation by force. There are leaders who believe in nationalisation by the aid of such schemes as co-partnership, who believe, honestly as we believe on this side of the House—[HON. MEMBERS: "Name!" and "Order, order!"]

An HON. MEMBER:

It is a maiden speech!

Mr. SHAW:

As we believe, so these leaders and trade unions believe in co-partnership, because they feel, as I have already said, that what the working man needs is a fairer share in the profits of his industry. Some of them think that the best way this can be done is to make all servants of the State. I myself do not think that that is really the opinion of all of them. I am sure many of them would hesitate to turn every business over to the State. They feel, as we feel, that they want to have certain rights as individuals. While on the one hand there are trade union members in England to-day who feel, and resent, the tyranny of the masters as a, body, there, are those who believe that the tyranny of the trade unions might be worse.

If you get the trade unions of this country to take over some scheme such as this, it would be well, because, in my opinion, the trade unions are the people to do it. Some of the trade unions might take a good lead in investing their capital in industrial companies, take an interest in the work to the benefit of all, and get members of the trade unions on the boards of the companies. Thus they could themselves, as trade unions, educate their own members to take an interest in this work. With assistance such as this, of co-partnership throughout the country, we will, I think, get a better industrial peace than ever we will get by any form of nationalisation. I hope, therefore, that this House will be able to give this Bill a Second Reading, and so make a gesture of peace in industry.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

I beg to second the Motion.

2.0 p.m.

In rising to do so, I am sure the House would wish me to express our sincere congratulations to the hon. and gallant Member upon his able, excellent and clear maiden effort in this House. It is not an easy subject for anyone to deal with, and I am sure that the hon. and gallant Gentleman who has just sat down is much to be congratulated on having made a definite contribution towards what, in every part of the House we desire, and that is industrial peace. That is the reason for this Bill. Certainly those who, like myself, have been associated with co-partnership for the greater part of my life and have, in more recent times, been in this House, are conscious of the difficulties under which industry is suffering to-day. We do not say that co-partner-ship in the future, even if it were more generally adopted, is a panacea or cure for our industrial troubles, but we do say that the trade and industry of this country, at the present time, both on account of industrial unrest, industrial disputes, and various other reasons, is in such a condition that the whole of this House, every Member of this House, ought to do all that is possible to make some contribution towards a better state of affairs—that state which will enable labour as well as capital to earn a living and the trade of the country to find employment for the people who are in it.

I would ask the House just to look at this question from the point of view of where the party, to which I have the honour to belong, stands in this matter. I naturally look to the authoritative declaration of that policy which was put forward last year in a book which was entitled, "Looking Ahead." I find in that book under the heading of "Industrial Peace" this paragraph: A spirit of comradeship between employers and employed is vital. The Unionist Party will gladly take steps to promote feelings of mutual confidence among all those engaged in trade and industry, and will encourage the admission of the workers, by the application of the principle of co-partnership to a direct share in the success of tin undertakings in which they are employed. That being so, I feel that the party to which I belong, are indebted to my hon. and gallant Friend for introducing this Bill as a, definite proposal to carry out the policy which has been announced. I would now ask the attention of the House for a moment to a speech which is probably quite clear in all our minds, the one delivered by the Prime Minister exactly four weeks to-day. I find a copy of it in a booklet. It is headed: "Future Partnership." I find that the exact terms the right hon. Gentleman used in this matter were these: No man, of course, can say what form evolution is taking. Of this, however, I am quite sure, that whatever farm we may see, possibly within this generation, or at any rate in the time of the next generation, it has got to be a form of pretty close partnership, however that is going to be arrived at; and it will not be a partnership the terms of which will be laid dawn, at any rate not yet, in Acts of Parliament or from this party, or that.''—[OFFICIAL, REPORT, 5th March. 1925; col. 837, Vol. 181] I give the House that quotation because it has a direct bearing upon this Bill. In this Bill we do not attempt, in the words of the Prime Minister, to lay down the exact terms of partnership. We fully realise that every industry has got to work out its own salvation. Employer and employed in each industry have to thrash out this question for themselves. I hesitate—and I believe this Bill carries it out—to suggest other than that the utmost Governments can do is to provide machinery which will make it easier for firms and companies to adopt co-partner-ship. Further, this could be defined in the Clauses in the Bill. As suggested, Governments could offer some advantage within their control to those firms and companies who do adopt these proposals which are calculated to arrive at some measure of industrial peace, which, above all, are calculated to give those employed in the industry a human interest in their life work and some knowledge of the romance of trade, as well as a close daily contact with the drudgery of industry. That, at any rate, is the purpose of this Bill. If we are going to deal with the trade of this country at the present time we have to realise, as the hon. Member who introduced the Bill said, that we cannot go back to the old days of small and patriarchal industries recalled to the House by the Prime Minister four weeks ago. We have to realise that industry has taken the form it has, and that every indication is that the growth of greater and greater industries will go on. What have we to do in these circumstances? At present industry is conducted by "hands"; on the one hand, people called "hands," and on the other people called "heads"; there are heads and hands, totally separate, totally distinct, each with a perfectly different interest; and under these circumstances we can expect only what we find, a constant clash and a constant distrust between the heads and the hands of industry. What we have to arrive at, somehow, is making the industries of this country an association of human beings working together for a common purpose, or, better still, a partnership between the two great bodies and two great interests that are carrying on trade. We want to see them bound together in mutual sympathy and trust by working together for a common object. The first step towards that is that the hands must have a personal interest in the success of the business in which they are engaged.

It is not for this House to lay down exactly how that is to be arrived at in every industry, but I am convinced that the policy of informing the men who are working in an industry of as much of the history and the policy of the trade as can possibly be communicated to them will give them what I called just now, and what I feel I have had myself in all my business life, a share in the romance of industry, and will tend to make life fuller and brighter, at the same time helping to fight bad trade and unemployment. Many things can help. I believe the Summer Time Bill which we were discussing only a few days ago is a definite contribution to that end. It gives people some interest in life, the ability to enjoy the amenities of life outside the actual working hours in the factories in our great cities. Much as I believe in a Measure of this sort, its results can be nothing to the effect produced on the great mass of our workers by a personal and direct interest in the results of the work they are called upon to do.

Before I deal with the actual Clauses of the Bill I want to point out what, I claim, would be four direct results, not only that would be achieved by co-partnership, but which have been achieved by co-partnership in firms and industry where it has been adopted. It is most essential and most important in the state of British trade as it is to-day to lower the costs of production. Unless we can do that we cannot put ourselves in a position to compete in the markets of the world. If we lower the costs of production we can cheapen the price at which the product is sold, and that lowers the cost of living and raises the standard of life for the whole of the workers, and, it obviously follows, it increases employment. Anything which would increase employment would be welcomed, I am sure, by the Minister of Labour, whether he represents this party or the party who were in office last year. It would also increase the sum of things available for use and distribution. That is one of the objects of the policy which most Members opposite above the Gangway have at heart. I have almost borrowed the phrase from them. It is essential, to increase the sum of the material happiness of the people, to increase the number of things which are available for use, and to place them within the reach of the people who want them. Clearly, also, we should decrease the hours of work which are necessary. The proper way to reduce the hours of labour is not by compulsory laws, saying that in this and that trade such and such hours shall be the maximum to be worked, but so to unite the interests of capital and labour as to make work sweeter and the machine run better; and if we do that the necessary production will be obtained in a shorter number of hours. The waste in industry under the present system is practically incalculable, certainly it has never been calculated.

What is the present condition of co-partnership in this country? Although the system has not been widely adopted, in comparison with the total industry of the country, it is growing, and in various directions. The latest figures I have are obtained from the "Ministry of Labour Gazette" for September, 1924. It was there recorded that in 1923 228 firms were practising profit-sharing or co-partner-ship, and that the number of workpeople employed by those 228 firms was about 323,000. That may not seem many out of the great mass of the workers of this country, but it is the strongest argument for this Bill. If, as I will show in a moment, co-partnership has fairly taken root in one or two directions, and that in one or two trades it is flourishing, surely that is an argument for the Bill, and in favour of every facility being given for this system to spread itself more widely. I see that in the same year, 1923, the average amount of bonus paid per head to these 323,000 workers was £7 6s. That is not a vast addition to wages, but the House should remember that we are recording what may be termed the infancy of the movement, and not anything which can be regarded as a measure of what will be achieved if it is generally adopted. The percentage of increased earnings in 1923 was just over 5 per cent., that is to say, that if each of these 323,000 workers had earned £1 at the standard rate of wages in their trade they found that sum translated under co-partnership into a little over a guinea. That, at any rate, was something substantial, and, in making that calculation, it included the schemes which failed to make any bonus, and which numbered 59 out of 228. Those are included, so that the bonus was much higher than I have indicated. We have seen various schemes of co-partnership recently introduced. There is the almost classical one of -Messrs. Lever Brothers at Port Sunlight. I do not want to go into details, but that scheme has been worked out to suit that particular industry. Whether it would pass the co-partnership Commissioners under this Bill, I do not know. I do not say it would, but that is why it is necessary for us to set up Co-partnership Commissioners, and that is why we want a representative of the Treasury and the Board of Trade on the Commission, so that they can look after their point of view as to whether the case is a fair proposal for a co-partnership scheme before it is allowed to claim the benefits of this Bill.

Then there is the case of Messrs. Armstrong Whitworth, a co-partnership which has been going on for many years. There is also a well-known example which I wish to refer to and that is Messrs. J. T. and J. Taylor Ltd. This is a system established from the point of view of a man who gave his life and business to this interest, and he was determined enough not to be deflected from his purpose by any difficulties or criticisms, and he carried it out to a most successful issue, and set an example which has been followed widely in the Yorkshire woollen trade. I will give a list of the firms which have adopted co-partnership. They are Messrs J. Blackburn Ltd., P. and C. Garnett Ltd., Johnson and Balmford, John Mackintosh and Sons Ltd., J. and S. Rhodes Ltd., J. T. and J. Taylor Ltd., Joseph Smithson Ltd., S. Whitley and Co. Ltd., and Joseph Wilson Ltd. That is a substantial number of firms all in one trade in districts in Yorkshire which have adopted co-partnership schemes, and that shows that the example of Mr. Taylor has spread further than his own business.

I will now turn to the Bill itself, because I want to add a word or two to what the Mover of the Second Reading has said. The purpose of the Bill in Clause 1 is to try to do something to get an agreement between those who especially represent labour and those who represent a capital right at the very start. This is indicated in the form we have given to the Co-partnership Commission. We put on that Commission one member to be nominated by the Trade Union Council and one by the Federation of Employers in British Industries, so that they can thresh the thing out from the point of view of capital and labour as to whether the scheme is bad for capital or bad for labour at the start.

We also put on the Commission one member appointed by the Labour Co-partnership Association, because it seems clear that it is desirable to have one member of the Commission who may be regarded as an expert in co-partnerships and who would have full information as to what had been done and some idea of what can be done. The other two members of the Commission would be official members appointed, one by the Board of Trade and the other by the Chancellor of the Exchequer. It is obvious when you come to the proposals of this Bill that the Chancellor of the Exchequer would want to have a say on the Commission with regard to the schemes of co-partnership. As far as this Bill is concerned, it was desired to confine it to industries concerned in production. [An HON. MEMBER: "Why?"] Simply because we want to make a beginning, and if we were to include banking, finance, and investment companies we should be including a great group of industries—

Photo of Mr Fredric Wise Mr Fredric Wise , Ilford

Some banks have it now.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

Well I am not going to take away anything that they possess. It is not proposed to deal with banking, finance and investing companies, because they are a form of commerce which do not employ a large amount of labour. [HON. MEMBERS: "Oh, oh!"] I know they employ a great many bank clerks, but it is idle to say that, in proportion to their capital and their turnover, banks afford any comparison whatever with the numbers employed in the other great industries of this country. If we are able by this Bill to do something to sweeten industrial life and soften the relations between capital and labour it is not banks and insurance companies we shall have to deal with in the first instance. My hon. Friend the Member for Ilford (Sir F. Wise) can introduce a Bill afterwards if he likes dealing with co-partnership in banks.

Photo of Mr Fredric Wise Mr Fredric Wise , Ilford

We have got it already.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

Probably my hon. Friend will say that there is no need for any such Bill as this, because there is no unrest in the labour world, and there is no necessity to sweeten the life of those engaged in daily manual toil. I think I have answered that argument, and this Bill does not propose to deal with that class of commerce. With regard to Clause 2 I only wish to call attention to the fact that it provides that the Commissioners shall have the power at their discretion to withdraw their approval from any scheme which they are satisfied is not being given proper effect to by the company concerned. I think that will satisfy any hon. Members who may think that the scheme of the Bill and the co-partnership Commissioners will certify schemes as being perfectly honest schemes the terms of which may not be properly applied. Under Clauses 3 and 4 we put in this Bill two methods by which the Government can give a direct encouragement to companies to adopt co-partner-ship. Clause 3 provides for a reduction of Income Tax and Stamp Duties to companies adopting co-partnership schemes, and Clause 4 gives a preference to co-partnership companies in allocation of Government and other contracts.

It may be said as far as Clause 3 is concerned that you must not introduce a system of discrimination in the matter of a tax. That may be so, and it may be impossible to give that particular form of encouragement. I would like to point out, however, that the Income Tax is a tax upon all the profits of industry and an increase in those profits of one-third would make a three-quarter tax bring in as much as the whole tax to-day. If industry goes on a little longer on the lines on which it is going now, the Chancellor of the Exchequer will find it extremely difficult to collect those large sums which go to meet so large a part of the national expenditure every year from the profits of industry, which in industry after industry will be nonexistent. Therefore, from the point of view of the Chancellor of the Exchequer, if this system of co-partnership is going to do anything to sweeten the relationship between capital and labour and make the great industrial machinery of this country work better, it will be a very prudent remission of tax, because it will bring in a far larger amount on a three-fourths basis than he could ever hope to get on the basis of collecting the whole of the tax under existing industrial conditions.

Clause 4, I think, requires less justification than Clause 3. It seems to me to proceed exactly on the analogy of the existing state of the law. Public contracts are not given to firms and companies who do not pay, under the Fair Wages Clause, wages current in the trades and industries to which those contracts belong, and it is no revolutionary proposal to say that, if co-partnership be adopted by firms and companies under the scheme approved by the Co-partnership Commissioners, a preference—I do not specify exactly what the preference shall be—shall be given to them in the placing of public contracts. I think it would be very difficult to dispute that that is a sound principle. The rest of the Bill is only machinery.

Photo of Sir Wilfred Sugden Sir Wilfred Sugden , Hartlepools, The

While one is intensely sympathetic with the Bill, one would like the hon. Gentleman to be so good as to say who are the people in Clause 2, described as "The Federation of Employers in British Industry." What is that body? I would also like to know exactly what is the "Trades Union Council."

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

I think those questions might very well be asked upstairs in Committee. If the hon. Gentleman does not think that the Trade Union Council is properly described, or is the highest authority in the trade union world, then all I can say is that I want the trade unions of this country to nominate a commissioner, and I do not mind how it is done, providing that they themselves are satisfied. I have no doubt that there are several "i's" that are not dotted, and several "t's" that are not crossed in this Bill, but I do not think that this is the occasion to go into those matters. I certainly myself thought that the "Federation of Employers in British Industry" was the proper title of an association which I have often heard mentioned in this House, and that it was regarded on the opposite side of the House as being a kind of counter-balancing association to the "Trade Union Council."

Photo of Mr Herbert Williams Mr Herbert Williams , Reading

The proper title of the association is the "Federation of British Industries." It is not an employers' organisation, but an association of manufacturers.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

I am obliged to my hon. Friends for their interruptions, because they have introduced a note of hilarity into proceedings which were perhaps getting rather dull. May I conclude with one short quotation from a speech which was delivered in this House, on 8th May, 1912, by Lord Cecil of Chelwood. I mention him, because, as Lord Robert Cecil in this House, he always took an active interest in this question of co-partner-ship. I have always consulted him, and I know that he has worked hard both inside and outside this House to get this gnat means of reducing friction in industry more generally adopted. After two of the most serious strikes that have ever devastated this country, we were debating a Motion by the Labour party calling for a minimum wage and the nationalisation of industry as the cure for industrial unrest, and, speaking on an Amendment to that proposal, dealing with this question of co-partnership, Lord Robert Cecil said: I am convinced that unless co-partner-ship is the remedy adopted, there is no other remedy for the present condition of affairs. If you cannot induce capital and labour to work more closely together than they do at the present time, then your whole industrial system will be in serious danger."—[OFFICIAL REPORT, 8th May, 1912; col. 513, Vol. 38.] That was 13 years ago. I hold that it is not only from the point of view of labour unrest, but also from other points of view that our whole industrial system in this country at the present time is in serious danger. I do not think that the outlook for industry is rosy. I do not believe that we are within sight of employing those 1,250,000 unemployed. Therefore, it is as a definite contribution to the solution of our labour difficulties, to the restoration of our trade and the employment of our people, to the improvement of the standard of life and the remuneration for work, and in order to do something to add to the human interest in work by the people who are engaged in it, that I second the Motion for the Second Reading of this Bill.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

I am well aware that there are many hon. Members in all parts of the House who want to discuss a Measure of this kind this afternoon, and I will deal with one or two points of criticism of this Bill as plainly and as briefly as I possibly can.

Photo of Mr Shapurji Saklatvala Mr Shapurji Saklatvala , Battersea North

On a point of Order. I do not like to interrupt the right hon. Gentleman, but when shall I get an opportunity for moving the Amendment which stands in my name, and which is the only Amendment—to leave out the word "now", and at the end of the Question to add the words "upon this day six months"?

Photo of Mr John Whitley Mr John Whitley , Halifax

When the hon. Member catches my eye.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

I can assure my hon. Friend behind me that what I have to say this afternoon will be very brief indeed, and that his opportunity shall not be unduly delayed. I want to join in the congratulations to the hon. Gentleman the Member for Sowerby (Mr. R. Shaw) on the maiden speech which he delivered, and I wish it had been possible for some of us to go beyond that and express in some form or other agreement with the Bill which he has introduced. He recalled the change which has taken place in industry and commerce during the past 100 years. Of course, it is common ground that during that time there has been in some quarters what is known as a growing gulf between employers and employed, and that personal association has disappeared. During the past century, as I think every Member will agree, all kinds of efforts have been made by industrial idealists and others to find a remedy for that state of affairs. In that industrial idealism, co-partnership and profit-sharing have played an interesting, but, I am afraid, not a very important part.

The hon. Member who moved the Second Beading said that there was a distinction between co-partnership and profit-sharing, and, of course, that is perfectly true, but we are bound to admit, when we make that statement, that, of course, the two schemes in practice have been very closely bound together, and many people have argued that it is useless to introduce co-partnership separately from profit-sharing—that the control and profit-sharing would inevitably be combined; and that is the point of view from which I am looking at it for the purposes of our Debate this afternoon. In the cupboards of the Ministry of Labour there are, I have no doubt, innumerable reports dealing with the history of co-partnership and profit-sharing, and most Members will be compelled to agree that in the main it has been a rather tragic history. In profit-sharing schemes there has been breakdown after breakdown, partly because, in some cases, there were no profits to share, partly because it was argued by many people that a scheme of that kind applied only to a monopoly or quasi monopoly, and very largely because the workers who were affected had not a definite part in the concern. The mortality, therefore, among profit-sharing schemes has been very considerable, and I am afraid that that is true also of a good deal of the co-partnership enterprise which has been inaugurated from time to time.

The House begins to-day, therefore, with a rather adverse history in this class of industrial pursuit and in this type of industrial legislation. When we come to examine this Bill, I think it is clear beyond a shadow of doubt that in its various Clauses it makes really no practical contribution to co-partnership or profit-sharing at all. Let me take, first of all, the proposal of the Bill with regard to these Commissioners. By no stretch of imagination could any of the bodies mentioned be regarded as representative of Capital and Labour in this country. I pass over the fact that the bodies themselves are not correctly described in the Bill. That is a minor issue, but in any scheme of this kind it is perfectly clear that organised Capital and organised Labour must, be equally represented. Into this suggested body of Commissioners there is brought an association which, after all, is representative of neither Capital nor Labour, and there are brought in also nominees by other people, one of them the Chancellor of the Exchequer. That is rather an odd suggestion, having regard to the fact that the Treasury is usually not very popular either in this House or outside. I think the proposal of the Bill as regards these Commissioners is altogether impossible.

The Bill, however, goes beyond that in its later Clauses, and suggests such a general amendment of the ordinary legislation affecting companies as would enable companies, without further legislation, to adopt schemes of this kind. It appears to be perfectly clear, from the arguments which have so far been employed, that the promoters of the Bill have in mind what I will describe more narrowly as big industry or important industry, but to the exclusion of important and, in some quarters, dominating industries, which many of us had imagined would lend themselves much morn readily to some form of profit-sharing or co-partnership, if that be ever adopted within the industries which, apparently, the Bill has specially in view. The hon. Member for Barnstaple (Mr. B. Peto) quoted particularly the textile industry, which has, of course, been fertile in schemes of this kind; but the Bill definitely excludes banking, insurance and investment companies, and also the wholesale distributive and retail trades, all of which employ very large numbers of people in this country. In this extraordinary proposal which is introduced by the promoters, they seem to draw some distinction between clerical and, I take it, manual and other labour; but that is a perfectly fallacious distinction in any economic analysis of a Measure of this kind, because the real test is, first of all, what kind of co-partnership or co-management you are going to give, and, secondly, what you are going to do with the profits that emerge—and, of course, very large profits do emerge from these banking, insurance, and investment companies, and certainly from the great distributive trades and the retail trades of this country. On that ground alone, therefore, the Bill is a perfectly impossible proposition as it stands, and will, of course, destroy—

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

I hope the right hon. Gentleman will forgive me for interrupting him. I only want to say that the provision with which he is dealing is contained in a Sub-section only of five lines. It was put in for certain purposes into which I need not go. It does not destroy the Bill in any way; it enlarges it.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

The damage which a Clause does in an Act of Parliament is not measured by the number of lines it occupies. I have seen, in my brief time, incalculable damage done by a comma; and, of course, this is the very centre, the very core, of the controversy on which I am now engaged. Why should these very large concerns be excluded? What is the reason that led the promoters of the Bill to leave them out? Surely, it must be agreed that any form of co-partnership, if it is to succeed at all, must be comprehensive in character. On these two grounds, to my mind, this Bill completely fails. But the Bill proceeds beyond that, to a definition of the employé's bonus or share, and while it is true that the earlier part of the Bill is permissive, it is plain that this part of the Measure, once adopted, is to be obligatory. I take it that no hon. Member in this House desires to compel anyone to place his investments in a certain quarter. Certainly, no Member of the Scottish race would willingly agree to anything like that. But there is a form of compulsion as regards employés for the investment of this bonus in the concern or company, whereas I have always understood the argument of hon. Members opposite to be that we should promote in this country the freest possible investment of resources, wherever they are earned. It is always argued, of course, that the object is to extend the number of capitalists and get them interested in the investment of their savings.

That is a very debatable part of this Bill; but the really critical and, I think, the most important part of the whole scheme, is a desire on the part of the promoters to give some quid pro quo or concession to those companies in this country which promote co-partnership schemes. May I ask the promoters of the Bill why it should be necessary to give a concession to promoters of co-partnership schemes on the terms laid down in the earlier part of this Measure? They are not making any sacrifice. If the profits emerge, no doubt there is a slight re-adjustment of the method of their distribution, but, of course, nothing can be done until a profit does emerge. Why, therefore, should it be necessary to give a form of discrimination which must be a preference over other businesses in the country, which probably, quite innocently, do not lend themselves to co-partnership schemes, and which, presumably, will be penalised to the extent of the advantage which is given to companies under this Measure?

Even if that were not true, and I should think if it were it would be final, there is a perfectly conclusive Inland Revenue and Treasury argument as regards this proposal. Over and over again at that bench opposite—I do not care a brass farthing what Government has been in power—there has been a determination not to give a preference or a discrimination in favour of what I will call the destination of a profit. They have said they will tax these profits as they emerge. That is the only fair basis on which the Inland Revenue authorities can proceed. If you begin to look to what is done with profits or returns, or anything like that, you will have opened the door to new forms of concessions and preferences which will lead any Chancellor of the Exchequer down a very slippery and dangerous slope. That part of the Measure is impossible, and would be unworkable in practice, and would, in fact, defeat the end the promoters have in view. They go beyond that and they give a concession as regards Stamp Duty and capital issues, and they add to that a further concession under which a preference is to be given to those companies having schemes of this kind as regards Government and local authority contracts. That again is always a very difficult and, I think, dangerous task of legislation. Every local authority, which is representative of all the ratepayers in its district, and every Government, which is representative of all the taxpayers, has to place its contracts wherever it can do so most efficiently and most fairly to the interests that it represents, and it is not in any way a sufficient case for a preference for these companies that they have simply established co-partnership schemes, and besides have got over and above that the earlier preference in the Income Tax which is suggested. Those things have really no relation to co-partnership at all. If I had had anything to do with the introduction of this Bill, almost the first thing I should have said to the promoters is that they were killing their scheme by introducing extraneous and difficult matter.

There is a great controversy in the State about Socialism and public ownership on the one hand and what men and women call free competition, or the individualist system, on the other. As a Member of the Labour party and a Socialist, I do not see any solution of that great problem of ownership outside public ownership and I am, therefore, profoundly interested in the arguments which are used by Conservative Members that what we have to do to-day to meet that difficulty is to extend ownership among the masses along certain lines, in other words, to increase the number of capitalists in the State, the idea being to make every workman a capitalist and, I take it, difficult as the doctrine will be for some, every capitalist a worker. The second part I very cordially endorse. My only difficulty is that I am afraid it will be hard to persuade some sections of the population to adopt it. After all, what is the kind of practical reply to a suggestion of that kind and to all co-partnership schemes to-day? I think hon. Members are driven to take into account the tremendous change which has over- taken British industry and commerce. With a large number of small competing concerns in other days, when you had a form of personal association, you could go on with schemes of this kind up to a point, but the plain truth is that for a large part of British industry and commerce you have the trust and combine organisation. Everyone recognises that, and if there is going to be any investment at all on a large scale on the part of the people, and especially if it is going to compete effectively with the trust organisation of the Continent, the United States and other countries, it can only be invested to a large extent in that class of industry. I have not any doubt in my own mind as to the practical reply. It is not to bolster up the trust movement, with which we shall be compelled to deal in the near future, but to go out on sound and practical lines for an efficient scheme of public ownership and control, and I am satisfied that that is the only true co-partnership. The Bill is interesting because it has opened the door to a large-scale economic controversy, but I can only regard the Measure as a repetition of one of the little ideals of last century which I am afraid is no longer applicable to British industrial conditions.

Photo of Mr Shapurji Saklatvala Mr Shapurji Saklatvala , Battersea North

I beg to move to leave out the word "now", and at the end of the Question to add the words, "upon this day six months."

I agree with the Seconder of the Bill as to the ability with which the proposer put it to the House, and apart from the clearness with which he made out his case, I congratulate him all the more on the daring he has shown in making his first attempt in this House the introduction of a controversial Bill of this nature. I think the Mover and the Seconder have made out a strong case for Communism and a very poor case for co-partnership. The Bill points out certain existing evils of the present system. We are all agreed upon that. At the same time the sufferers from this evil are the workers, and in some respects the consumers, not the capitalist class consumer who can afford anything and everything, but the working class itself appearing again as the consumer. Then the Bill proceeds to suggest remedies which are not only no remedies, but which are going to add to the troubles and miseries of the workers as workers and then again as consumers. Whereas there is great loss to the industries of the country by the opposition of capital and labour, I thought we were now going to have a scheme by which there would be no opposition between capital and labour, as there ought not to be any opposition. Capital ought to belong to labour and labour ought to be the master and the control of labour. The factor which creates opposition between capital and labour is the unjustifiably existing capitalist, and the only way to remove opposition between capital and labour is to remove this interloper called the individual capitalist who owns the capital. [An HON. MEMBER: "Are not you a capitalist!"] Then remove me. Whereas such opposition increases the cost of production and the prices of all commodities, we agree that the interposition of a class calling itself shareholders, exacting a, levy from the produce which the producer has created, is adding to the cost of every article. I want to know how the burden is to be lessened by the burden being divided by two persons. What is the exact condition of life to-day? What were we told during the discussion on the Miners' Minimum Wage Bill? We were told that the miners could not obtain an increase in their wages because the industry does not produce sufficient profit. Therefore, a Bill to divide profits which do not exist will not produce anything. You are admitting in this Bill that you are concealing a part of the profit which is unjustly placed as a burden upon the consumer, but which, through some unknown direction of your own conscience, you are now willing to share with the hardworking toiler. But whenever a claim is put forward for the hard-working toiler, you say that there are no profits from which you can increase his wages.

This Bill, and the like of these schemes, have never been introduced or talked about in times of prosperity and booming trade. If there are profits to share, there are no profit-sharing schemes; but when there are losses, unemployment and hunger to share, then there is talk of profit-sharing schemes, putting an additional burden upon the employé, and asking him to be a partner in the difficulties of the trade; but not in the glorious and prosperous times, when the boom fills the pockets of the millionaires.

Let us make an attempt, for the sake of argument, to apply this Bill to the existing state of affairs. Supposing this Bill were law. How are you going to improve the fate of the miners? Do you suggest that you are making a profit there, out of which you are ready to give something to the miner in order to make up for his miserably, disgracefully low wages of to-day? How do you propose by passing this Bill to improve the fate of the jute workers in Dundee, and their shrinking trade? How do you suppose by passing this Bill to improve the fate of the engineering worker, who is earning a lower wage than the ordinary scavenger?

When we came to you with the troubles and sorrows of the workers and ask you to give them a liveable wage, you say that there is not the money in the industry from which the worker can be given a fair wage. But now there is this tall talk of giving him a share in the profits. We had a sum mentioned of £7 6s. per year. That would work out at about 6d. a day. It amounts to this, that you are asking the worker to join you at your banquet, but you have your fill first, and you offer him your snuff-box so that he may have a pinch of snuff at the end of the banquet. That is what he gets, although you would call him your co-partner at the banquet.

3.0 P.M.

Why do we not face realities? We were told by the Mover of the Second Reading that something must be done to prevent trade leaving this country. How would you achieve that? To-day you are laying your net over the Sudan. The Sudanese worker will be found by the British employer to be cheaper than the Lancashire cotton operative, and in another five years' time you will open spinning mills in the Sudan in order to take advantage of the cheaper labour there. How will this Bill of co-partnership prevent trade leaving the shores of Great Britain and being transferred to the Sudan?

Photo of Sir Wilfred Sugden Sir Wilfred Sugden , Hartlepools, The

The hon. Member is speaking on a subject of which I know something. I ask him to prove the statement that we are going to open up cotton mills in the Sudan.

Photo of Mr Shapurji Saklatvala Mr Shapurji Saklatvala , Battersea North

Your past actions speak louder than your protests to-day. Take the example of the jute industry. The Scottish workers were working well in the jute industry formerly. Bengal was the only country that produced raw jute. Some 4,000,000 to 5,000,000 bales of raw jute used to come to Scotland to be worked upon by the Scottish workers; but to-day their share of the work has shrunk to, sometimes, one-fourth or one-fifth of their previous trade, while, in the meantime, the patriotic British employer has opened 74 jute mills in Bengal. [HON. MEMBERS: "Free Trade!"] It has nothing to do with Free Trade in India. It shows the utter futility of Protection for the jute trade in this country. No amount of protection for the jute trade in this country would stop this scandalous system. There are 76 jute mills in India, and of these only two belong to the Bengalis, while 74 belong to Scottish firms. Now the hon. Gentleman the Member for the Hartlepools (Sir W. Sugden) wants to know why I suspect him of wishing to do the same thing in the Sudan.

Sir W. SUGDEN rose—

Photo of Mr John Whitley Mr John Whitley , Halifax

Unless the hon. Member gives way, an interruption cannot take place.

Photo of Mr Shapurji Saklatvala Mr Shapurji Saklatvala , Battersea North

I suggest that the unemployment in Dundee increases and that reductions of wages are going on day by day, while British capital and the British jute trade have left these shores, and will leave it in a larger degree. A hundred bills of co-partner-ship between the employers and employés in Dundee will not improve that position. The only thing that will improve that position is international Communism. The only thing that will improve that position is that the Bengali worker in the jute industry in Bengal shall have the identical conditions given to him as the Scottish worker in Scotland. Then the owners and controllers of capital will not run away from their own country and squat in other peoples' land.

I would go further, and I would insist upon carrying out in practice what is piously put forward in the first sentence of this Bill, that there should be no opposition between Capital and Labour. I would achieve that by removing those individuals who are not labour, who are not workers, but who presume to own and control capital. [HON. MEMBERS: "How would you do it?"] Hon. Members ask me how I would do it. I would advise them to go from this House a short distance and consult the trade union leaders from Russia, and they will tell them. [Laughter.] I expected that that suggestion would cause laughter among those who are accustomed to prosper on the work of other people, but the trade union worker in this country is beginning to see the limits of liberty, freedom and happiness that have been won by the trade union workers in Russia.

British trade is suffering at present for the simple reason that individual controllers of capital and individual owners of places of industry are so anxious about their profits that they prefer to close down places of work and send men and women into the streets to starve or to do what they like. The Co-partnership Bill is not going to help a crowd of unemployed men or women. From whom are they to obtain the co-partnership profits? The only remedy is to get hold of those individual controllers of factories and places of work, who are a failure by their own admission, and to let the State do the job which they can no longer carry on without starving men and women. We are told that in this Bill methods are put forward of dividing the profits. We are told that the masters are going to be magnanimous in dividing the profits—at present they have started doing so—at the rate of 6d. per working day, and because they are going to be magnanimous in dividing the profits they want a remission of 25 per cent. Income Tax. They want to take 8d. a day from the State and magnanimously give up 6d. to the workers. The other 2d. will, of course, be a matter of safeguard.

There is to be co-partnership, but it is to be a very limited co-partnership. Labour is not going to decide the remuneration of the directors, the brokerage of the brokers, the commissions of the nephews, cousins and sisters of the directors. The workers are only going to sit down in silence as co-partners in an industry and accept what margin is shown to them as the margin to be divided, and then they are to divide it according to law and order. There is to be no control by the workers in preventing the mineowners of this country from opening mines in South Africa, India and Southern China and producing coal there by slave labour at 5s. per ton, and then the miner is to be told that because it is possible to produce coal at the pit's mouth at 5s. per ton, somewhere else in the world, we cannot afford to produce coal here at more than so many shillings per ton. There is to be this limitation upon the worker, and with it on his back he is to have all the freedom and partnership with his master, and to have a share of the profits that can be collected with these limitations resting upon them.

It appears to me, without labouring the point further, that the real cause of the suffering of the working classes of this country, or any other country, is the control of capital by irresponsible individuals. I want to be perfectly clear. There is a lot of talk about good will between brain and hand. I think that the hon. Member's observation was very imperfect. It is a, cruel argument and a misleading argument to say that there are some people who work by brain and some people who work by hand. There is no worker who works by hand alone without work-mg with his brain at the same time. No engine driver, driving his mail train at the rate of 50 or 60 miles an hour in a blizzard, is working merely with his hands. No spinner, no weaver, no smelter, to miner, no carpenter, no bricklayer, no stonemason can do his work correctly if he does not use his brain just as much as the Lord Chancellor and the judges and lawyers and architects and chemists. Each individual worker works by his brain as well as by his hand, while a few lucky ones sit in easy-chairs and pretend to work by brain and refuse to work by hand. [HON. MEMBERS "Like yourself !"] Like myself. I do not claim to be an angel on earth. I claim to be full of all those vices, all those defects, all those drawbacks which the present hideous individual capitalist system imposes upon me. The only difference between me and hon. Members opposite is that I am willing to get out of it at the first possible moment, and that right hon. and hon. Gentlemen opposite are refusing to get out of the iniquitous position. In every industry there are workers by brain and there are other workers who work by brain and hand at the same time. We are not talking of the actual workers by brain inside each industry. Their right place is in trade unionism and not in co-partnership; their right place is in the workers' organisation and not in the Federation of British Industries. We are not talking of those actual directors of industry, expert chemists or engineers.

A reference was made to-day to the speech of the Prime Minister four weeks ago, when we were debating the trade union levy. I was personally sorry that our prosaic and matter of fact Prime Minister has also now found it necessary to resort to the poetical idealism of Carnarvon and Aberavon. The one thing that the Prime Minister did make clear to us was the established change that has taken place in this country in the relations between masters and men, even since the days of his youth. The patriarchal relationships have gone and a stiff relation of class interests has come to stay. It is not a quarrel between brain workers and hand workers. Workers are all workers. We admit them all as equal, and we say that the brain workers and the hand workers combined should be the sole controllers of capital, as well as of the products of capital and of the profits. That is our point. There are happy families living in Wales or Scotland or England who are to-day, merely as shareholders, sitting at home and enjoying large incomes from the hard work that some Chinaman is carrying on in the Hong Kong Docks, or some Zulu or Bantu is doing in the mines of South Africa, or some Hindoo or Mahomedan is doing in the jute mills or the cotton mills of India. We say that the shareholders who sit here and pocket all the profits out of these industries are neither brain workers, nor hand workers, and we are out to remove that class once and for ever. The Bill points to the evil of the opposition which exists between capital and labour, but at the same time it wishes, not only to perpetuate the existence of that evil, but even to strengthen that opposition between capital and labour by the arbitrary control of capital. The real controller of capital, the real owner of capital, is labour, and the right place for every man and woman within the circle of labour, is in his or her trade organisation, and not in the Federation of British Industries or in the chambers of commerce.

It was quite obvious that the Mover, and particularly the Seconder, felt that the Bill was not needed. Do these hon. Members really wish to tell this House that they are yearning to give the workers a little more, but that in order to do so they must have the assent of the House to a Co-partnership Bill. Let them get on with the job and do it. This Bill is not wanted, as far as the poor workers' interests are concerned, but it is wanted by others, because surreptiously it is another means of deceiving the worker and the consumer. The worker can obtain a higher share in the product of his toil without any such Bill. If he is wise enough he will obtain the full 100 per cent. by his trade union organisation fighting for him like the very devil. I suggest this Bill is wanted because it is another surreptitious move to get 25 per cent. remission of Income Tax and a preferential right to Government contracts. That is what the Bill is wanted for. We are not told what quid pro quo is expected from the worker, but he will be told to take his reduced wages, and if he can increase output and rival the concerns which are running on slave labour in other parts of the Empire, then he will have his share. We were told when the Chancellor of the Exchequer in a previous Conservative Government reduced the Income Tax that industries were going to be revived, unemployment was to be diminished and British trade was to be set upon its feet. Nothing of the sort happened. The workers were given notices of reduction more frequently after the Income Tax concession than before it, the number of unemployed increased, and there is always the doubtful song as to British trade not reviving again. Here we find another plea for the reduction of Income Tax put forward, this time in the name of the workers, along with a plea for the right to Government contracts, which contradicts the whole spirit of the Bill.

The Bill claims that the present system increases the cost of production and the price of commodities and it suggests that when co-partnership is adopted we are to expect a reduction in the cost of production and in prices. If that is going to happen, if the Mover and Seconder and supporters of the Bill believe that they are speaking the truth, they must know that those firms which join the co-partnership scheme will produce their goods at a cheaper cost, and they will naturally stand to gain Government contracts by the ordinary law of competition through their cheaper cost. They say in the Bill that when it is passed the cost will be cheaper, but in their hearts they believe the cost will be higher, and they will demand Government contracts by legislative right when they cannot obtain them by the law of competition and cheaper cost. If they believe that by this scheme the cost will be cheaper, they must be confident that every contract will belong to those firms which are in the co-partnership scheme, and that no contract will go to a firm which is not in it.

I find it impossible to move what is called a reasoned Amendment against the Second Reading of this Bill. The Bill is a conglomeration of unreason. The Mover said there are trade union leaders who like this system of co-partnership. It is not for me to explain the inner mind of the trade union leaders. Perhaps they are misunderstood, and when they mean co-operation between the superior staff inside a place of industry and the inferior staff, as we now know them, they do not really mean to support co-partnership, but even if they do, that is not my business. My duty in this House is quite clear, and it is not to think in terms of trade union leaders, or Labour leaders, or Conservative leaders. Those who want to work for the happiness and rights of the working class must work for Communism and Socialism of an international character. Those who want to work for catching the vote of the ordinary ignorant voter must continue to work for Co-partnership Bills. That is the common factor between some men on this side and the other side, if there are any, and I do not for a moment suggest that there are.

The co-partnership scheme, as it is put forward in this Bill or as it may be put forward in any other Bill, is not going to diminish unemployment, it is not going to make British industry rival the industries of other countries, and it will not be able to reduce prices to the consumers. If you say that this is all going to happen, then it is only an admission that all that stands in the way to-day is the profit of the master class, and if that is so, you are all the time declining to accept responsibility for the fact that unemployment, reduced wages, and loss of trade are all due to your incompetence or to your greed as a master class. If there are profits to share, why were you so cruel, and callous, and heartless a few days ago as to refuse to the miner even an ordinary living wage? Why are you prepared to give him a. share in the profits when you are not prepared to give him his right to a living wage? I submit that this Bill should be read six months hence. I am sorry that I cannot, according to the practice of this House, name a longer limit, but my heart really wishes that this Bill should be put off till such time as the class struggle and the class war takes place, and the working class comes out of it victorious.

Photo of Mr Joseph Compton Mr Joseph Compton , Manchester, Gorton

I beg to second the Amendment.

I want to draw attention to an omission, or, at least, what to my mind is an omission on the part of the promoters of the Bill. One, especially an amateur like myself, would have believed that for a Bill promoted in the interests of co-partnership, efforts would have been made to obtain supporters or backers for the Bill from all parts of the House. But, unfortunately, co-partner-ship, so far as this Bill is concerned, rests entirely with one side of the House. The hon. Member for Barnstaple (Mr. B. Peto) made reference to the speech of the Prime Minister delivered in this House four weeks ago, but he might have gone further, and gave us some other quotation from that memorable speech, because, if I remember aright—and I would not like to do the Prime Minister injustice—the Prime Minister made the very definite statement in his appeal that industrial problems in this country ought to be left to be dealt with by those who best understood them.

I think that statement was very definitely made by the Prime Minister If that be so, then one is surprised that the Prime Minister's own followers did not take some better advice in the promotion of this Bill, and in the names of the hon. Gentlemen who are supporting it. Take the first four names on the back of the Bill. They are learned gentlemen connected with the legal profession. I do not suppose that one of them understands industry to-day—in dustry as they propose to deal with it under the co-partnership system as laid down in the Bill. Of the others, three are ex-Army officers, one with some diplomatic experience, and only one of the backers of the Bill, the hon. Member for Barnstaple, has any relationship whatever to the industrial system proper as we know it in this country.

Photo of Mr Herbert Grotrian Mr Herbert Grotrian , Kingston upon Hull South West

I do not want to interrupt the hon. Gentleman, but he has referred to me as one of the people whose names come first on the Bill. It is quite true I am, as he describes me, a learned gentleman, but, at the same time, I am connected with several businesses—newspaper, electricity, and several others.

Photo of Mr Joseph Compton Mr Joseph Compton , Manchester, Gorton

I accept the hon. and learned Gentleman's explanation, but, in so far as having actual contact with the industry as the Prime Minister led this House to believe he expected industrial problems to be dealt with, I am afraid that the hon. and learned Member falls far short of the Prime Minister's anticipation. The Bill, as has already been pointed out, has many defects. As a matter of fact, I think the third paragraph on the first page is the only perfect one in the Bill, because it states that whereas it is desirable to restore to the wage-earning classes human interest in life and work and to place them in a position of economic equality with every other class. That, of course, is only in the Preamble of the Bill. There is not even a comma in any Clause of the Bill which goes towards the promotion of the economic equality which is described in the Preamble. Let me refer for a moment to the Commissioners whom it is proposed to appoint. They are five in number. There we have a position which undoubtedly, to my mind, is weighted very heavily against the workers. One member has to be appointed by the Parliamentary Committee of the Trade Union Congress and one by the Federation of Employers. These two, in my opinion, are the only two who understand anything at all about industrial problems. The other three, I think, will not add anything to the proposed Commission in respect to the matters with which it is proposed they should deal. There is one Commissioner to be appointed by the Labour Co-partner-ship Association. That association has gone through many vicissitudes. I think I am quite safe in saying that to-day there is not a trade unionist in the country who looks on the Labour Co-partnership Association with any kind of good feeling, and certainly a representative from that association to discuss questions of industry would not be favourably regarded by trade union members throughout the country. We have, then, two Commissioners to be appointed: one of them by the President of the Board of Trade for the time being and one by the Chancellor of the Exchequer. If there are any individuals in this country who ought to be kept outside industrial problems they are certain officials of the bureaucracy at Whitehall.

I have vivid recollections of an industrial Committee which was appointed by the Government in 1919. I happened, unfortunately, to be a member of that Committee. I can remember the many weary days—and on many occasions well into the night—when that Committee sat thrashing out industrial problems. That Committee was representative of the employers and workers. Each had equal representation. I can remember how we solved very many difficult problems and we brought forward recommendations, and sent them to the various Departments. One I remember especially well, which went to the Department of the Minister of Labour. The Minister agreed with his Department that we should bring in a Bill embodying the recommendations of the Committee, and he assured us that, in his opinion, the Bill would very speedily pass into law. The experts, the official draftsmen of the Department at Whitehall, got to work and went into the recommendations of the Committee. Let me say the Committee was one over which Sir Alan Smith was Chairman on the employers' side, and Mr. Arthur Henderson was Chairman on the workers' side. These recommendations were not majority and minority recommendations, but were recommendations art[...]ived at unanimously on the part of all the Delegates, and there was no difficulty, we felt, that should have been in the way of drafting a Bill by the men in this particular Department.

When, however, the Bill was presented to the Committee, we found that the expert draftsman had so managed the unanimous recommendations that the drafting of the Bill was unanimously turned down by both employers' and workers' representatives. A few more Bills were produced by the Department to try to meet the wishes of that Joint Committee. Finally, the then Minister of Labour the right hon. Gentleman the Member for Hillhead Division (Sir R. Horne) came to the Committee, and made a very definite statement: that if the Committee themselves would draft a Bill and take it entirely out of the hands of his Department he would see, if such Bill embodied the recommendations of the Committee, whether it could not be accepted by him and presented to this House. I can remember the week-end which was spent by the Committee in endeavouring to frame a Bill to meet the wishes of the then Minister. When this Bill was presented the Minister of Labour stated that, so far as he was concerned, he felt the Bill met the wishes of the Department and the wishes of the Government, but, he said, it required some little touching up by the experts behind the scenes, again the official draftsmen. That Bill, on which a week-end and two whole nights had been spent on by the Committee, after the official draftsmen had done their touching up, was found to be so far removed from its original form that it was unanimously turned down by the employers' and the workers' representatives. I think that interference by officials of Departments in industrial affairs is something we might very well do without in this Co-partnership Bill.

There are some other points in connection with the other Clauses which have not been touched upon. I want to deal with Clause 2, Sub-section (a), wherein it states that the scheme shall provide for the payment to all employés, of the company in adidtion to any share in profits (hereinafter called 'the employé bonus ") of wages at rates nor being less than the rates commonly paid in the district where the company carries on business for work of a like nature to the work performed by the company's employés. I think I should voice the opinion of Members on these benches when I say that in this Sub-section we thank the promoters of the Bill for nothing. There is no firm in the country that dares to offer to pay less than the standard trade union rates, except, an hon. Member, reminds me, Lord Weir, and Lord Weir has not yet reached the stage when the workers are ready to work for less; he cannot get his work done for less than the regular rate of wages. The Fair Wages Clause in all contracts is an accomplished fact, not only in any contract of any Government Department, but in any contract of any local authority of note we have the Fair Wages Clause insisted on, so that so far as this is concerned this Sub-section offers us very little. Then in Sub-section (b) it states that the scheme shall provide for fixing a basic rate of interest upon capital invested in the company's business such basic rate to bear relation to the risks involved in such business. My personal idea of profit-sharing would be to offer to the worker some real inducement not only to invest his surplus wages, if he had any, but to offer him some share in the control of the industry, certainly on not less than a 50–50 basis with the actual shareholders who have their money invested. We are not asking too much in asking for this. It may be said that those who have capital invested should have a larger share in the control and the direction of that capital, but we would point out that the worker invests his all in the business—not only invests his labour, but invests his life in the business.

I see some hon. Members opposite shaking their heads, and I would say to them, "How soon you can forget." There are women and fatherless children who, all through this week, day and night, have been standing at a pithead almost on the edge of the Tyne, weeping over the bodies, the broken bodies, of the men who are left lying in the black and flooded galleries of that mine. Those men have given a big investment to industry, and we say that it is not too much to ask that the worker should have an equal share with capital in the control of industry. Their share of the investment is laid down in Sub-section (c) where it says: For the investment of some part (not being less than one half) of he employés bonus in the capital of the company. The previous speaker dealt with the case for co-partnership made out by the Seconder of the Bill. I want to put another side of the question and ask the House if they can reasonably expect people employed in certain industries to make any such investment as that which is provided in this Bill? Take the instance of engineering. Take the case of an engineer in a shipbuilding establishment. He had 39s. as pre-War wages. It is true he had 7s. war wages added, but for 47 hours a week he now gets £2 6s. working as one of the highest skilled men in any industry. Suppose that by a system of profit-sharing he can earn on the basis mentioned by the Seconder of this Motion a matter of an extra 3s. per week. You are going to take 1s. 6d. of that from him and that leaves him with £2 7s. 6d. Supposing we have certain engineering establishments as we find them where encouragement is given by a lower rate of wages, whereby men through working piece-work or by a system of premium bonuses are permitted to earn more than a day rate, even admitting that they earn £1 per week bonus on the £2 6s., can you reasonably expect to take 10s. of that and send that man home to maintain a wife and family upon it. Any system of co-partnership will not be accepted by the workers so long as they are forced to work far such a low basic rate as that which obtains at the present time.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

The premium bonus system or the piece-work system has nothing whatever to do with this Bill.

Photo of Mr Joseph Compton Mr Joseph Compton , Manchester, Gorton

I do not suppose that this does enter into a co-partnership policy to any extent, but nevertheless, whatever may be obtained through any particular system of bonus, this co-partnership system, as provided under paragraph (a) of Clause 2, provides that, if there is anything over and above the district rate of wages, half of this shall be taken by the company and the other half by, the workman. We certainly feel that we could not in any way countenance such a procedure, nor could we give support to any Measure under which it was likely to obtain. Then, again, paragraph (d) is, to my mind, the most dangerous of all paragraphs of Clause 2. It says: That the employers' bonus, whether paid in cash or in stock or shores of the company, shall not be liable to for feature for any legal act or omission of the employé entitled thereto. We are very suspicious as to what is meant by forfeiture for any legal act Outside the legal profession a proposal of this sort is viewed with suspicion. One might well ask the question, Would a properly appointed conference between the trade union and the employers at which failure to agree was announced at the end of it and the trade union took the only course open to them, namely, of declaring a strike against a firm in which a co-partnership existed, would that be determined to be a legal act or declared a forfeiture on the part of the workpeople in so far as their holding with the company was concerned?

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

Certainly a strike is a perfectly legal act if it is taken in defence of the rights of the workers.

Photo of Sir Henry Slesser Sir Henry Slesser , Leeds South East

Would not the breaking of the contract by striking involve the loss of all claim to the bonus? It is a contractual question.

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

I am not qualified to discuss the question with the right hon. and learned Member, but the purpose of this Sub-section is to protect the workers in a strike or any other legal action which they may take, and if it does not do so, it can be strengthened in Committee.

Photo of Mr Joseph Compton Mr Joseph Compton , Manchester, Gorton

I am much obliged to the hon. Gentleman for making that clear, but, apart altogether from the question of a properly-constituted strike, there are many other points which crop up daily in the workshop, and which, if the employer were so disposed, could be regarded by a certain legal mind as being a violation of this particular Clause. Those in positions similar to my own, having to deal with trade union affairs from one end of the country to the other, meet with a hundred and one difficulties in the course of a week or few weeks, and we can see, if this paragraph be carried in its present form, that it will lead to endless trouble, and undoubtedly militate against the workmen if they accept the co-partnership scheme or are employed under it.

We are told that this Bill will give an opportunity for more production. I am not so sure about that. I can remember, shortly after the termination of the War, that we had the railway stations and the various public hoardings from one end of the country to the other placarded with views and statements of trade union leaders and representative men of that character asking the workers to come out for more production in order to assist the country in pulling through a most difficult period. I think it can be safely said that in so far as the workers were concerned in almost every industry that request was loyally obeyed and acted upon, but I can remember certain incidents in connection with it where extreme feeling was created in the minds of the workers against their own leaders. I have in mind several firms who continued to issue these leaflets to their workpeople every Friday afternoon when they were paid. Inside their pay envelope was a little leaflet giving the views of trade union leaders with regard to production and urging them to produce more. It so happened, when depression fell upon these firms, that there was not sufficient managerial common sense to act in the fashion in which employers of all people might be expected to act. The men on receiving their insurance cards at certain works had their pay envelopes handed to them and inside, together with the back money to which they were entitled on being discharged, were these leaflets asking them to increase production and to make all the efforts as displayed on the posters to which I have referred.

Sub-section (3) of Clause 2 states that In deciding whether or not they will approve any scheme submitted to them under this clause the Commissioners shall be entitled to take into consideration whether where such consultation is practicable the employees of the company submitting the scheme have been consulted thereon and are in favour thereof. I want to direct particular attention to the words "where such consultation is practicable." Is it to be supposed that, if this Bill passes into law, a firm or company can put into operation a profit-sharing scheme, and impose it upon their employés, and endeavour to get outside this Clause by saying that it was not practicable to have a consultation with their own employés? I think that that is a very dangerous precedent. Surely, if there be anything at all in co-partnership, if there be anything in the very name, or if there is going to be any real attempt at co-partnership, the promoters of this Bill ought to see that the other co-partner is taken into consultation, and that he is at least enabled to place his views before the representatives of the employer. Subsection (5) says that the Clause shall not apply to certain undertakings, namely, banking, finance, insurance, or investment companies, or any other company which for the main purpose of its undertaking employs only clerical labour, or to any company engaged in wholesale of retail distribution. One is inclined to ask, if it is going to be a good thing for the industrial workers of the country, why it should not be extended to every other class of worker? Whatever may be said as to the clerical side of business, we have the clerical side in industry as well as in banking and the other operations that have been mentioned. One could hope that it would be extended even to the legal profession. One cannot come to this House, especially in the forenoon or early afternoon, without witnessing a scheme or schemes of co-operation even amongst the legal profession itself. If one happens to go into the outer Lobby and watch the lawyers' labourers coming down the stairs from the committee rooms, they will find co-partnership in practice. They will see clerks carrying the brief-bags of very eminent gentlemen who are still upstairs or who have left just in advance of them. There you see co-partnership or cooperation in actual practice; but the extra production is not handed over to the consumer. So far as these gentlemen are concerned, we have yet to see a bill of costs which makes allowance for co-partnership, either in clerical work or in actual work done in the fashion which I have just mentioned.

Clause 4 is, to my mind, the most dangerous Clause in the whole Bill. It provides for giving a preference, and it states: After the sixth day of April, nineteen hundred and twenty-five, preference shall be given in placing all contracts by any Government Department or Local Government Authority to firms or companies which have in operation a scheme approved under Clause two of this Act, unless at the time when such contract is placed there shall be no firm or company with such a scheme in operation which is able and willing to accept and carry out such contract. Anyone with experience of Government Departments—and I feel sure we shall have the support even of Gentlemen on the Government Front Bench on this—anyone with any knowledge of the giving out of contracts, and especially the huge contracts that are given out by Govern- ment Departments or large municipalities, must deplore any such Clause as this. I have experience as a member of six years' standing of the Manchester City Council. In that body we have a large representation of political thought similar to that on the benches opposite, and we believe in following out a good old Manchester motto promoted by those pioneers, who decided that, if Manchester could not be removed to the sea, the sea should be removed to Manchester. When the engineers had brought the sea to Manchester through the Manchester Ship Canal, we decorated the walls, the tramcars, and everything that could be decorated, with the motto Manchester goods for Manchester docks, and these good politicians, even to-day in the Manchester City Council, believe that we should carry that motto further and should say, "Manchester contracts for Manchester contractors." Some of us have had a big battle for a long while to keep that motto up. We appreciate to the full that just as, we carried the decision of the Manchester City Council that Manchester firms should have a preference over contractors in any other part of the country, so you would be creating a huge Manchester ring which would undoubtedly, if opportunity offered itself, to use a corn-monism, bleed the city white, and I feel sure that if Clause 4 passes as it is we should undoubtedly be setting up preferences and enabling the formation of new rings and trusts which would undoubtedly react to the detriment of the Government and of local authorities.

A statement was made in the House the other day which shows that there is not to-day, even in face of the statement of the Prime Minister, that real feeling for co-operation or co-partnership which ought to exist prior to the promotion of such a Bill as this. One of the main supporters of the present Government is the President of the National Federation of Employers' Organisation, who, until recently, was Chairman of the Shipbuilding Employers. He was in this House two days ago and made a very important speech, of which there is a full report in yesterday's "Times," to the Commercial Committee of Members of this House. Just to show the spirit which animates certain sections of the industrial community to-day, in my opinion he went rather out of his way to attack what are known as the sheltered trades, and he instanced certain sections of workpeople when he might, as a large employer, have been very well occupied in directing his remarks to certain sheltered trades more applicable to his own standing and his own position. Take the position of the ship, building trade. He might very well have brought the shipowners of the country under the position of a sheltered trade. Undoubtedly they have been sheltered all through the period of the War. He might very well have taken his cue from the Prime Minister's speech and looked more to people in his own class in life. He might even have pointed to shipbuilders, bad as shipbuilding is, the way out rather than the proposition of longer hours and still lower wages for the workpeople engaged in the industry. He might have pointed to the amount of owners' shares which they created during the War period. It is because they expected dividend to rank on these bonus shares that the shipbuilding industry is in the position to-day of not being able to compete in the markets of the world.

It being Four of the Clock, the Debate stood adjourned.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 3.

Adjourned at One Minute after Four o'Clock until Monday next (6th April)