Orders of the Day — Steel Industry and Road Haulage

Part of the debate – in the House of Commons at 12:00 am on 12th November 1951.

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Photo of Mr George Strauss Mr George Strauss , Lambeth Vauxhall 12:00 am, 12th November 1951

I say that there is a profit to be made in the road haulage side of the industry, particularly by creaming off the best traffic, and that that would damage the railway system of the country.

I was asking why Lord Leathers, who had apparently changed his opinion, is taking his present view; whether he considers that this new line is right on its merits or whether he has swallowed the proposal reluctantly because of the commitments of the Conservative Party to the Road Haulage Association.

Does anyone with the slightest knowledge of the transport problem deny that the hiving-off of any substantial area of road transport from the unified transport system would have a most serious effect on the railways, on which the whole fabric of British industry and society depends? I ask the House to note what the "Economist" said in its issue of 3rd November about the consequences of any such hiving-off. It asks a number of questions, which I should like to read, and which I hope the Government will answer. It stated: The 25-mile limit can be abolished and the Commission can be instructed to divest itself of its road holdings as opportunity offers.But to do this will leave two large difficulties. First, what is to be done with the railways? Faced once again with the competition of a free enterprise road transport industry, and burdened with the inflated costs of a period of full employment, it is very doubtful whether the railways can be made to pay. Even if they could it is more than doubtful whether anyone would buy them.They must, therefore, remain in public ownership, and there seem only three courses of action open: to make road transport artificially expensive, so that the railways can compete; to prohibit certain varieties of traffic on the roads; or to pay a subsidy. The Government will have to choose which it wants. Which is it to be? Will the Government tell us? Are the Government prepared to make road transport artificially expensive? If so, let them tell us today. Or are they prepared to prohibit certain varieties of traffic on the road? If so, we ought to be told that this Conservative Government contemplates imposing such new heavy and severe restrictions on industry. Will the taxpayers be asked to pay more so that some road hauliers may make profits? I beg the spokesman for the Government to tell us which one of these inevitable consequences of handing over all or part of road haulage to private interests they propose to accept.

I should like to ask the Government one further question. Will they accept the demands put to them by the Road Haulage Association and published in the Press on 30th October? The Road Haulage Association is really a remarkable body. It knows what it wants and is determined to get it, uninhibited by any sense of shame or public decency. And it does not believe in wasting time in importuning the Exchequer.

Will the Conservative Party stand by its friends? The Road Haulage Association certainly considers the Conservative Party its friend. I well remember quoting to the House during the Second Reading of the Transport Bill an instruction sent out by that Association to all its members asking them to telegraph their M.P.s protesting against that Measure. The instructions were: On the morning of 17th December, without fail, send a telegram to your Member of Parliament, Conservative, Liberal or Socialist, condemning the Bill. You should remember that all Conservative M.P.s are on our side and word your telegram therefore, more politely to them than to the supporters of the Government. The Association has now, and not very politely, told Conservative M.P.s what it wants. In short, it wants swag. It suggests that there should be complete denationalisation of all road haulage, and the Chairman of the Association, Mr. Fowler, is quoted as saying that he considers nationalisation un-British. It also appears that what the Association wants is that those firms who were compulsorily bought out should get back their assets free, and that those who voluntarily sold their assets should have to pay to get them back.

It is, incidentally, a curious proposition that those who were prepared to cooperate with a Government in carrying out Parliamentary decisions should be penalised, and those who resisted rewarded Do the Government agree with this suggestion of the Road Haulage Association? And do they agree that the £20 million to £25 million, which according to that Association was the amount paid in compensation, should be written off, that is, should be given to the road hauliers by the public as a free gift—as a reward, for what? Service to the country? Surely not. Service to the Conservative Party? I do not know.

I hope that we shall be told to what extent these demands are to be met by the Conservative Party, and to what extent they propose to dislocate the transport system of Great Britain for the benefit of these private interests and in pursuance of their ideological doctrines.

I wish now to talk on a subject with which I have, in recent years at any rate, become more familiar, that is, steel. Again I want to ask a number of questions. What do the Government propose to do here, and why? Have they considered the difficulties involved and the dire consequences that are likely to result, We have been told that a Bill to bring about the denationalisation of the steel industry will be brought before us in February. Can the Government tell us today, not the detail—that would be too much to expect —but the principles on which that Bill will be framed, or has not any thought been given to that? We should particularly like to hear the comment of the Government on the extraordinary suggestion advanced by, of all people, the leader of the Liberal Party in this House, that the Government should try to circumvent an Act of Parliament by an Order in Council; and by such order take some steps now to anticipate the Bill which we are to discuss later.

We on this side of the House are, of course, wholly opposed to the denationalisation of steel, for reasons which I will advance in a few moments. But it is not only the Labour Party which asks the Government, in the national interest, to be wary of what they do in this connection. Staunch friends of the Conservative Party are saying the same thing. It appears that responsible and influential sections of Conservative opinion are alarmed by the threat to repeal the nationalisation of this industry, and appreciate fully that to do so is not only technically unsound as well as difficult, but may well upset the national apple-cart.

Let us consider what the "Financial Times," a paper which perhaps, as I know all too well, has more than any other consistently and vehemently—and I think sometimes a little unfairly—attacked the nationalisation of iron and steel. In a very interesting leading article which it published on 6th November, after making an observation which I believe is absolutely true— The process of unscrambling is always more complicated than the process of scrambling "— it goes on to say: The Conservatives must beware of the charge which they themselves used with great force against the Socialists in the debates of the last Parliament: the charge of distracting the industry at a critical time.The steel industry was not perfect before it was nationalised"— incidentally, what an interesting admission. Previously we have been told by the "Financial Times," all the Conservative papers and all Conversative Members in this House, that this industry was a paragon of all the virtues, that it was 100 per cent. efficient and that anybody who made any comment to the contrary must obviously be inspired by pernicious Socialist propaganda. —"it is not perfect now. A few sentences later the leading article says: The Conservatives have every right to endeavour to restore it. What is most important of all, however, is to ensure that whatever is done will have at least a reasonable chance of being widely acceptable. It would be worse than ludicrous if the steel industry was to find itself nationalised and de-nationalised with every change of Government. And here is the conclusion of the article: Nevertheless, though the Conservatives are bound to make their intentions plain, they will have to proceed with caution and conciliation. The efficiency of the industry in the future must weigh more with them than any arguments drawn from the contentions of the last two Parliaments. Though the organisation and the pattern of ownership of 15th February is bound to condition their thought, it should not be allowed to prejudice it. I suggest that this advice, coming as it does from a paper which reflects a substantial section of City and business opinion, is highly significant, to put it at its lowest, and I should imagine that its views will find a ready response among supporters of the Government who do not allow party prejudice to override their concern for the national welfare.

In the same issue of the "Financial Times," there is an informative article, the main feature article of the day by Mr. Harold Wincott, who, after making an obviously deep and professional study of the matter, writes about the difficulties which will confront the Government in seeking new private owners of the industry. I should like to quote one important sentence from the article: (Incidentally, if the Conservatives are toying with the idea of some form of dividend limitation on top of E.P.T., they may as well make up their minds they can either have steel de-nationalisation or dividend limitation. They can't have both.) Well, the Chancellor tells us that he does propose to introduce E.P.T., and although there is to be no statutory limitation of dividends he has emphatically expressed the view that it is contrary to the national interest that dividends should be increased. I assume that this injunction will be acted upon by the iron and steel industry—I can scarcely imagine that if they were de-nationalised they could ignore it—and it would seem that, in summary, the view of the "Financial Times" is that, while it does not like nationalisation a bit, its repeal would be both undesirable and, indeed, impossible.

We shall see. It may be that the ingenuity of my successor in answering the arguments of this journal and overcoming the difficulties which it foresees may prove greater than any of us at present anticipate. Or dare we hope that he will put his foot down, heed the expert advice that has been tendered to him from his more responsible political friends, and refuse to commit the follies and create the damage which the Prime Minister is pressing him to do? In either case it would appear to be unwise for anyone to assume at the moment that the de-nationalisation of steel will necessarily reach the Statute Book.

If the Government are unprepared to accept the advice of the "Financial Times," in spite of its staunch and loyal friendship for the Conservative Party, it will, I suppose, be less likely to listen to the views of the "Economist" whose views are now and again a little more objective. But this paper was just as fervently opposed to the nationalisation of the iron and steel industry. Perhaps for that reason, and because of its high standing among financial and industrial circles in this and other countries, the House at least will be interested in what it says on this subject. I will quote from the issue of the "Economist" of 3rd November: If there is an attempt to put everything back into the state it was in two years ago, then the net effect will be to substitute a very tight privately owned cartel for a very tight publicly owned cartel, which would hardly be an improvement. Whatever may be the objection on political grounds to the nationalisation of the industry and to Mr. Hardie's methods, there can be little doubt that the re-grouping and nationalisation of the industry on functional and technical lines that the Corporation is believed to have in mind, would be to the national advantage.The way to de-nationalise steel is not to try and sell it back in exactly the same parcels that were acquired (except where a whole plant was acquired from a single owner, as in the case of a technically integrated subsidiary) but first to do it up in different and technically more balanced parcels. This will take time, and the Corporation should be given say three years to accomplish the job …It is also perhaps worth sounding the warning that the only form of selling the industry back to the public that will be worth while, will be genuine sales to private shareholders venturing equity capital. If such capital is not forthcoming—and investors who are once bitten may perhaps be twice shy—it would be better to leave things as they are rather than to set up some sort of semi-public, semi-private corporation, financed by fixed-interest capital. A privately owned industry will be preferable to the present arrangement only if it is in diverse ownership, flexible and competitive to a higher degree than has prevailed since 1932. The de-nationalisation of steel will not he a simple operation, but a very complicated one! Indeed it will be, and it is clear from the extracts of the two papers I have quoted to the House that when the Government embark upon this task, they will have to face cannons to the right of them, as well as cannons to the left of them.

I now propose to tell the House what our attitude is to the Government's proposal to de-nationalise. We brought this industry under public ownership and control for practical reasons, which appear to us to be conclusive. They have often been stated here by me and by my colleagues, and I do not propose to repeat them at any length. In brief, in one sentence, I will say this. We took the action we did because, with coal and transport, steel is one of the basic industries on which the prosperity of this island and its people depends; because the interests of its private owners were frequently in conflict with the national interest; because it was a monopoly which, in the words of the leader of the Liberal Party in this House had all the faults of monopoly, but not the usual benefits of monopoly"; and further, because it was impossible to assure the necessary expansion of this industry and the adequate production of British iron and steel to meet our possible needs in war or to maintain full employment in peace unless this industry is planned and operated wholly and solely in the public interest.

So we devised a plan to bring this about and embodied it in a Bill which enabled the transfer of this industry from private to public ownership to take place without any dislocation whatever. In spite of the decision of the political leaders of the iron and steel industry, who, it will be remembered, at the time tried to make it impossible for the Government to operate the Act and to set up a Corporation, nevertheless the transfer has taken place—I do not think anyone can question this—with the utmost smoothness and success. Subsequently, I am glad to say, there has been a genuine and full measure of co-operation between the Corporation and the directors and managements of the steel industry.

In spite of the shortage of raw materials that confronted the Corporation, the Corporation has not only made a good start in carrying out the duties which Parliament imposed upon it, but it has already made many valuable changes. Therefore, I say that, whatever disagreements people may have had, or still have, about the principle of nationalising the iron and steel industry, the fact is that today this industry is working well under the new régime, and the fears expressed by technicians and managers that undue interference with their proper responsibilities and functions was likely to happen, have proved unfounded.

Are there, then, we are bound to ask, any sound practical grounds on which the Government are justified in dislocating the whole of this industry now? Can the Minister of Supply suggest one single measure taken by the Corporation that has been harmful? I can speak of many where their action has been demonstrably beneficial, and I think that the right hon. Gentleman probably knows about them now as well as I do.

There is, for example, the much needed step taken on the initiative of the Corporation, and referred to by the right hon. Gentleman at Question time today, to strengthen that vital section of the industry's organisation called B.I.S.C. (Ore)—the body responsible for acquiring foreign ores and scrap for the industry. Or we can take an even more striking example which, incidentally, reveals the faulty structure of the industry and its weakness under private enterprise? Then, when iron and steel firms had surplus funds at their disposal, they lent them to the banks at a nominal rate of interest. Those firms who needed funds borrowed from the banks, for which they had to pay out substantial rates of interest. Now there is a common fund which the Corporation has established into which all firms pay surplus moneys, and from which all those in need of loans draw their requirements. This is saving the industry £500,000 in interest rates only.

Is not this—and there are many others—a valuable improvement? Do the Government want to destroy all these and other changes for the better which the Corporation have initiated? I challenge the Minister of Supply to tell us of one specific example of change for the worse brought about by the Corporation under the nationalised set-up in the discharge of its duties. If he cannot accept that challenge, is not the only conclusion one can draw that the Government's proposals are not concerned with the welfare of this industry, but are based solely on doctrinaire prejudices?

The transfer of this industry from private enterprise to public ownership revealed many serious defects in its structure. Most important of all these defects —and I think this will surprise right hon. Gentlemen opposite—was its over-centralisation in Steel House. I believe that anyone with any knowledge of large-scale industrial organisation would say that great advantage would accrue by a measure of de-centralisation in this industry. That is exactly what the Corporation were proposing to do. [Laughter.] That is the scheme referred to in the article in the "Economist" from which I read. Hon. Gentlemen opposite laugh, but really they do not know. I do know what the Corporation had in mind.

The Corporation were proposing to group the industry, in part regionally and in part functionally, and they were beginning to work out a scheme to effect this with the best technical experts in the industry.