Orders of the Day — Iron and Steel Bill

Part of the debate – in the House of Commons at 12:00 am on 9th May 1949.

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Photo of Mr Peter Bennett Mr Peter Bennett , Birmingham, Edgbaston 12:00 am, 9th May 1949

I should like to start where the junior Member for Sunderland (Mr. Ewart) left off. He talked about the interests of the consumer, which is the particular interest that I wish to put before the House. I was not on the Standing Committee which considered this Bill, and during the period when it was at work I was abroad in connection with the production drive. I returned in time for the Report stage, and I heard a considerable amount of talk about protecting the consumers' interests. It is strange to me that the consumer has been considered so little under this Bill. During the Second Reading there was a certain amount of talk about the Bill being necessary in order that efficiency might be increased for the future development of the industry and, as one hon. Member paraphrased it during the afternoon, for more and more and cheaper steel.

Steel by itself is of no great value. It has to be manufactured, and the users of steel, which includes the companies with which I am associated, do not feel that this Bill is being introduced for their benefit. Of course, there may be many who approve of it, but they are singularly quiet about it. During my journeys up and down the country I have not met any of them, but I have found that there is universal condemnation of the Bill. Steel is the lifeblood of our industries. We who use steel have had our differences with the producers. We have always had differences with those from whom we buy. Buyers and sellers do not always see eye to eye, and it is the essence of business progress that we should have these differences, otherwise there would be complacency, and that would breed stagnation.

We who buy steel feel that the steel industry has done us well in the post-war years. A number of hon. Members today have condemned the pre-war record of the Iron and Steel Federation. The hon. Member for Montrose (Mr. Maclay) gave the House some of the facts, and reminded us of the very bad period through which iron and steel passed during the world depression. It will be remembered that in 1932, when tariffs were granted, the Import Duties Advisory Committee, known commonly as I.D.A.C., were appointed supervisors to see that the industry behaved itself and did not take advantage of the public. We saw I.D.A.C. and we had a promise from them that they would rationalise the industry, and when that process was completed all out-of-date plants would be closed down and we would get a more concentrated and efficient industry, which would provide us with still cheaper steel.

That did not happen, and I was one of those who went to see the I.D.A.C. people to inquire the cause. At that time I was working for the Government in certain directions and I was told the reason in private. It was that I.D.A.C. had Government instructions that they were not to close down any of the old-fashioned plants. It was not their decision; it was superimposed by His Majesty's Government, because they said that every ton of steel was going to be necessary when and if war came. When war did come, we were very thankful that those out-of-date and obsolete plants had been retained because even with every ton of steel we could produce we had not enough, and we had to go to America and ask for more. Hon. Members should not blame present managements for out-of-date plants now. There would have been a national reconstruction of the industry had it not been for the war emergency and the special orders of the Government.

Since the war, steel has been the bright spot. Speaking as a user of these materials, I should explain that we keep a very close record of all prices and I have a chart in my hand showing the prices of lead, zinc, fabricated parts, insulated material, brass, copper and steel compared with 1939. Lead and zinc are up really 600 per cent.; copper, brass, insulating material and fabricated parts are up about 180 per cent.; while steel —the hon. Member for Montrose Burghs talked about 70 per cent. but that is basic and we have to buy it manufactured in certain directions—is round about 100 per cent. on the average. We are certainly very grateful to the steel industry for what they have done. The House will understand me when I say that the users of steel have no desire for this Bill which is receiving its Third Reading today. We are convinced that the nationalisation of the industry is not being done in the industry's interests, but as a political measure, as has been repeatedly stated on the other side of the House. Being a businessman, I am very adverse to mixing up business and politics.

Another point I want to make is that certain promises were made that compensation would take account of the money that was invested in all forward planning and development. I feel very strongly because this has not been done. From my, experience, I can say that a Stock Exchange valuation is not one by which businesses can be bought. Perhaps hon. Members opposite have not had that experience, but in my time I have bought up other concerns and it cannot be done on a Stock Exchange valuation. Certain shares can be bought by that means, because the Stock Exchange is organised to deal with the odd lots which go on to the market. It is not organised to buy up large concerns. I feel very strongly on this point, because I was chairman of the Committee to which was remitted 15 months ago, the task of endeavouring to assist the Chancellor of the Exchequer in stabilising prices. We were to try to get reduced prices in order that wages might be stabilised.

We know what a difficult job it is to get prices down through the whole range of industry. We found that we had not very much success, so we put forward the suggestion that we might try to persuade industry to freeze its dividends so as to show willingness. We took a lot of trouble and it was a very difficult task, but we got industry to freeze its dividends at the request of the Government, in order to help in the national task.

I am not very popular in many quarters because the Stock Exchange valuation is to be used as the price at which shares are to be taken over by the Government. I listened last week to the arguments of my good friend the Parliamentary Secretary. It is to his credit that he has not done much gambling on the Stock Exchange. He tried to persuade us that profits which are ploughed back into industry are fully reflected in Stock Exchange prices. Well, it is not so, although there is just an element of truth in it.

The Stock Exchange looks askance at companies which distribute up to the hilt and do not put a certain amount of their profits to reserve. A company is expected to do that. When it has done that, and has dealt with its reserves, the Stock Exchange valuation is based upon the dividend paid. If a company does as has been asked by the Government, and as I persuaded them a year ago, and puts all their extra profits to reserve and uses them in the business, the Stock Exchange reaction is: "The dividend will remain where it is. Prices will be maintained." At some future date when they think that this policy is going to bear fruit and there is to be an increase in the dividend, they may anticipate it, and the shares go up. When a company says, instead of putting profit to reserve and ploughing it back: "We shall put a reasonable amount away and we shall use the rest to pay an increased dividend," everybody knows that Stock Exchange prices will go up.

Directors of companies who put the national interest first are being penalised. As for the argument of the Parliamentary Secretary that they will get gilt-edged—and he made a song about it—well, of course they will. They could have got gilt-edged and put their money in gilt-edged at any time, but they chose to go into equities because they wanted a bigger return. Now they are to be forced, against their will, to get gilt-edged when they want equities in order to get a bigger return. We are told that they must be public-spirited in the national interest. It is very easy to tell somebody else to be public-spirited, but they have suffered.

It came to my mind when I was discussing this question with other hon. Members that I have had to deal with cases in which there was a proposal to take over allotments in order to build houses or a school. No doubt other hon. Members have had a similar experience. I have had a spate of indignant letters. I have had to explain that the proposal was in the public interest, but people have not seemed to take it very well. They have always said that the houses or the school ought to be built somewhere else and that their own little plot ought not to be touched. It shows that the human element is very much the same wherever it is and whatever clothes it wears.

What worried me last week was the all-embracing power that the Government are taking. The Minister made it clear that he was going to be guided by Parliament and that it was absurd to think that this all-embracing power would be wrong- fully used by a Minister. The right hon. Gentleman will not always be there. We do not know who will be there in future. In this Bill we are giving statutory powers, through the Minister, to the Corporation to use the memoranda of companies to do anything they like or know. My hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has read out what can be done. We are giving statutory powers and the Minister would not have any check put upon them —so that the Corporation can do anything it likes. When the memorandum of a company is drawn up, the usual instruction, to the lawyers is that they should make it as wide as possible, "so that we are never held back by our memorandum."

Those are the powers on which the Minister has refused to put any limitation. He says that Parliament is the watchdog and that the Minister will never do anything he ought not to do. We have not had much chance with the other nationalised industries of being able to act as watchdog. The Minister of Transport has not given us much help when we have tried to criticise. He has said that these matters were outside the scope of Parliamentary control and that Questions could not be asked.

It is very dangerous to give statutory powers to anyone to do what can be done under the Bill, as drafted. Up till now, the Government have been nationalising services, things that follow on after the primary things. Now we are nationalising creative industry for the first time. We are nationalising the result of generations of enterprise and adventure, of trial and error, obstacles surmounted, financial difficulties overcome. It has been no easy road. This is the reward for all the struggle, adventure and effort that have been put into the industry.

I have been in business all my life, as I have said, except for five years when I was in a Government Department. I can therefore make a comparison. I know what it is like to run a business with colleagues who trust you, work with you and stand by you when things go wrong and in fair weather and foul, and with shareholders who, if you have done your duty by them, will trust you to do the right thing; I have had it, and I know what can be done in those conditions. I also know how difficult it is to get a move on in a Govern- ment Department. One must not make a mistake or take any risk, because of using the taxpayers' money. I can assure hon. Members that there is a vast difference.

We have been asked by Ministers to adventure, to go out into the world to make markets and to create business to get dollars. It is not really encouraging, particularly when one looks at this Bill and remembers the promise of more to follow. Perhaps the Minister has not heard the story of little Albert. Some of his colleagues may tell him the answer of the mother to the keeper who suggested that, having lost one child, she could have plenty more. That is what very many people are saying today. The mother's answer was: "Not very likely." I believe that the Government are doing a very great national disservice in introducing this Measure for political purposes, when we are living upon American dollars. Remember that 1952 will bring us to the greatest crisis in our national history. If there is not the full measure of adventure for which Ministers are asking today, the blame must to a certain extent be put upon the Government.

We often hear a young man say: "There is no chance in this country. I want to go to one of the new countries." We have often heard older men say: "If I had my time over again I would not stop in this country." I think they are wrong, entirely wrong. There are many reasons, and I often argue with them. I will give the House only one reason. We are often reminded that this is a democratic country. Thank God for it. We are not serving a life sentence. The gentlemen who occupy the Government Front Bench today will not always be there.