Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
I beg to move,
That this House deplores the decision of Her Majesty's Government to proceed with the sale of Richard Thomas and Baldwins, Limited, to private interests.
Today, we invite the House to discuss the Government's decision, commented on by the Chancellor of the Exchequer in his Budget speech and by the Minister of Power himself when we discussed the Colvilles loan some time ago, to denationalise the publicly-owned company Richard Thomas and Baldwins, Ltd., which, as we all know, is the last large section of the steel industry still owned by the public.
Now that we know of this decision and also of the decision to sell S. G. Brown, Ltd., perhaps the first question we should ask the right hon. Gentleman is whether the issue is to be floated on the London or the New York Stock Exchange, or whether we shall have a typical British compromise of 51 per cent. and 49 per cent. all over again.
However, complex the economics of the steel industry may be, this debate should be quite simple to follow. We pose the single question consisting of the one three-letter word "Why?" Is it because Richard Thomas and Baldwins, as a publicly-owned sector of the steel industry, is failing the nation? I challenge the right hon. Gentleman or any of his hon. Friends to say that it is. As we have no response to that challenge, obviously they accept that Richard Thomas and Baldwins is not failing the nation. The first point, therefore is made.
The 1950s were one of the strangest periods in British political history. We saw at that time at least £2 million spent by the Tories and their industrial allies in propagating the idea that nationalisation had failed. Tory Governments were in charge for nine of those ten years. No Tory Government denationalised or even attempted to denationalise a single industry on the ground that it had failed. If Tory propaganda on the subject were true, I should think that an excellent case would exist for impeaching the Prime Minister for conniving at the retention of 10 per cent. of British industry in a form which had failed.
There was recently issued by the firm of publishers known as Macmillan the report of a Nuffield study. In this interesting book we see highlighted the extent of industrial expenditure on this type of propaganda, most of which, I suppose, is paid for by the Chancellor anyway. We learn that the Conservatives spent nearly £500,000 in 27 months prior to the General Election. Speaking of expenditure by their industrial allies, the report of the Nuffield study goes on to tell us that the amount spent on the anti-nationalisation campaign was enormous by political standards. It was about four times what the Conservative Party was spending on advertising in the same period, and fourteen times the Labour Party's outlay on public relations. It was £400,000 more than the total expenses of all candidates in the General Election.
The total, we are told, was £1,435,000. of which the Iron and Steel Federation spent £287,000 and Stewarts and Lloyds spent £269,000, which means that private steel spent about £556,000. Yet the nation is invited to deplore the intervention of trade unions in politics. When we see this kind of thing developing, we are entitled to wonder whether political democracy can function efficiently in such conditions.
At the time when the Labour Government were introducing Bills to take certain industries into public ownership, we were constantly reminded by the Tories and, indeed, by the right hon. and learned Member for Montgomery (Mr. C. Davies), on behalf of the Liberals, of the remark by my noble Friend, Lord Morrison of Lambeth, that it was for the nationalisers to prove their case. Against a barrage of propaganda, we did so, at least as well as the spoken word can do it against what was probably the most vulgar and expensive cacophony ever heard in Britain. I do not say that we succeeded. What I do say is that we diligently tried to prove the case for public ownership. Whether we succeeded or not is another matter.
Today, however, we demand that the same principle be applied and that the denationalisers prove their case. It is their initiative which we are discussing here, the initiative of the denationalisers of Richard Thomas and Baldwins, and our challenge, which I hope the nation will watch carefully, is that they prove their case for the denationalisation of Richard Thomas and Baldwins.
In any event, before we discuss the merits or lack of them in the Government's decision, we should query their ability to denationalise Richard Thomas and Baldwins. If they manage it, this will be the first large sector of the industry in which they have succeeded. On 2nd May, I asked the Chancellor of the Exchequer
how much in the way of securities is still to be disposed of by the Iron and Steel Holding and Realisation Agency compared with the cost of the original acquisition.
The Economic Secretary replied:
On 13th July, 1953, the Agency took over securities amounting to £252 million"—
and then he puts in very nicely—
together with loans and obligations to lend of a further £112 million, making a total of £364 million. The corresponding figure at 30th September, 1959, was £213 million."—[OFFICIAL REPORT, 2nd May, 1960; Vol. 622, c. 51.]
The Economic Secretary is a very coy young man. I wonder whether he forgot the sort of petty cash item of £120 million of public money to Colvilles and Richard Thomas and Baldwins, making, on his own showing, £333 million of public money in what they are pleased to call a denationalised industry? We may ask, on this £112 million which he trots out, whether it is not the fact that practically the whole of it was public money in the first place.
I prefer the estimate of the hon. Member for Kidderminster (Mr. Nabarro). When we were discussing the Second Reading of the Iron and Steel Bill, he said:
…we repealed the Steel Act, but we have not denationalised steel. We have increased the State stake in steel from £250 million in 1952 to £360 million today."—[OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1504.]
These are the proofs, I take it, of successful denationalisation.
We are, therefore, in the position in which the Government agree that they cannot get the industry financed by private money even in the sector which is reputedly in private hands. After seven years they just cannot get private money into it and, therefore, by their actions, as in the case of Colvilles, they admit that they can get much needed expansion only by pouring public money into the industry.
I should like a straight answer from the Minister. I imagine that some hon. Members opposite will be interested in the reply.
Do the Government intend to follow the present pattern of selling equities while I.S.H.R.A. holds large amounts of fixed-interest loans? We should like to know whether that is the pattern which we will see emerge after the denationalisation of Richard Thomas and Baldwins.
From these facts it is perfectly clear not only that Richard Thomas and Baldwins, as a nationally-owned section of the steel industry, has been demonstrably successful, but that the attempt to denationalise the industry has been a complete and utter failure. These being the facts, to pretend that the Government intend to denationalise anything but the profits fairly shrieks of hypocrisy and humbug.
If we cannot get that admission from the Government—I doubt whether we will—the Investors' Chronicle, not, I assure the Minister, a Socialist publication, is more outspoken. On 15th April, 1960, a very interesting article appeared in this paper. It stated:
Fairly soon now it is almost certain that the last of the major steel undertakings still owned by I.S.H.R.A. will be denationalised. The ordinary shares of Richard Thomas and Baldwins will be a very welcome addition to the list of leading growth stocks. Much has happened since R.T.B. prepared itself for devesting five years ago by severing its intimate links with the Steel Company of Wales. In particular, the group, which has a notable history and record, is on the threshold of another major leap forward, involving a total capital outlay of some £150 million, to front rank status in size as well as prestige.
Later, the article states:
While Richard Thomas and Baldwins was closely linked with the Steel Company of Wales most of the available development money went into Margam.
I will say it did! Let us look at the results from the Steel Company of Wales. The profits declared for the year to 3rd October, 1959, were £23,300,000. For the last six months they are in ratio even higher. Every penny of this would still have been profit if it had remained with Richard Thomas and Baldwins.
The article continues:
Over the past five years some £33 million has been spent on capital account, the bulk at Ebbw Vale.
How we all wish that the voice of Ebbw Vale could make this case for us. We must go on hoping. The article also says:
At Llanwern, near Newport. Richard Thomas and Baldwins is now building its new integrated works with an initial capacity of nearly 1½ million ingot tons at an estimated cost of £110 million and due to come into full operation in April, 1962.…The first stage can readily be expanded to produce 3 million ingot tons a year and the plant can then be more or less duplicated to double that output again.
This interesting article concludes:
Here, then, is a major steel undertaking with a sound established business, producing 1¾ million ingot tons a year about, in the words of Mr. Spencer, to 'explode into spectacular expansion.'…Superimposed on the existing assets is Newport, where, again to quote Mr. Spencer, 'six or more million tons a year is the possible production in the foreseeable future.' And Richard Thomas and Baldwins expects to finance Newport with only temporary borrowing. By any standard, this looks like an outstanding growth concerned.
If I were asked to write an epitaph on the lies about the failure of nationalisation, I could not possibly have done it better myself.
Let us now consider the returns of Richard Thomas and Baldwins. I have a list of profits declared since nationalisation took place. From 1st April, 1951, to September last year, I estimate that the public net profit from Richard Thomas and Baldwins stands at £70,732,000. The capital and reserves when nationalisation took place stood at £19,900,000 and in September, 1959, at £56,892,000.
The net fixed assets immediately before nationalisation were £15 million. In September, 1959, they were £44,844,000. These returns are the only reason for the action which we are discussing. Taken in conjunction with the Steel Company of Wales, which is an integrated pant of Richard Thomas and Baldwins, this action represents the greatest carve up of public assets by private piracy since the sacking of the monasteries.
I quote these figures not because I accept the argument that the ability to amass huge surpluses is of itself the sole criterion of industrial success, but because I wish to show to the people that they have no occasion to belittle their own ability to produce, own and control the great industries of our country. To surrender these proofs of the success of public enterprise to the safe keeping of a type of ownership concerned only with the profits which can be extracted from the industry is an abdication of the responsibilities and rights of an enlightened democracy. Just as the Government prefer private American capital to ownership by the British people in the case of S. G. Brown Ltd., so they here prefer Mr. Clore and his friends to the British people in ownership of Richard Thomas and Baldwins.
May we have a little more information about Mr. Clore? There was a very interesting article in The Guardian of 7th April in which it was suggested that Mr. Clore was interested in the sale of Richard Thomas and Baldwins. It pointed out that it was understood that he had offered £20 million for Richard Thomas and Baldwins—the £20 million he proposed to turn into beer a little while ago. He is not a particular or fussy man. The article stated:
Our understanding is that he has offered to buy £20 millions' worth of Richard Thomas and Baldwins' shares provided he, or more likely his private company, Investment Registry, is the vehicle for selling the rest of the shares to the public.
The value of Thomas and Baldwins' shares…may be between £35 million and £40 million. If this plan were to be accepted as it stands Mr. Clore may, if only for a time, control Thomas and Baldwins.
The take-over bidders are preferred to the British people in the ownership of our great industries.
The quotation continues:
The impact on the steel industry, the Labour Party and the City would be shattering. Mr. Clore is respected in the City for his great acumen and perhaps feared for much the same quality. The idea that the Thomas and Baldwins issue would not be handled in the conventional manner, through merchant banks with long steel connections, would seem an affront to the City Establishment.
However much the public have been duped by the propaganda of the failure of public enterprise, obviously Mr. Clore is not duped, for that gentleman of great acumen is certainly prepared to back it to the full extent of £20 million.
During the passage of the 1953 Act, we were told by the right hon. Gentleman who is now Minister of Aviation that the Iron and Steel Board would exercise overall control of the industry's policies. I pose the question now: how would the authority of the Iron and Steel Board survive if the last of the great publicly-owned firms was denationalised? During the passage of the 1953 Act, the right hon. Gentleman admitted that the Board had no real power in development matters. He argued that the Government did have power.
On the Second Reading of the Iron and Steel Bill, on 25th November, 1952, the present Minister of Aviation said:
It is, of course, true that, in the rare case where a difference of opinion persists, the Board will have no power to order the carrying out of a development scheme which the industry considers to be economically unsound. The Board will, however, have the right to report the matter to the Government, who are, by this Bill, given the power which does not exist at present, to provide additional capacity if the national interest requires it"—[OFFICIAL. REPORT, 25th November, 1952; Vol. 508, c. 270–1.]
Denationalisation will further weaken the Board in its battles with the industry because the threat contained in the 1953 Act, that if the industry refuses to cooperate the Minister of Power may undertake the production of steel, will lose all credence.
The party opposite may say that that is a biassed political argument, that it is not likely to happen in practice and that our argument is purely theoretical. Indeed, the steel inquiry by the Spectator for 1958 makes precisely this point. It states:
Unless there were at least some publicly-owned companies we doubt whether…ministerial powers"—
that is, to establish steel plants—
could be effectively exercised. For without such a publicly-owned sector the Ministry would have to recruit the technical and managerial staff from the private companies.
The Spectator went on to say that this consideration, together with doubt as to whether the industry was willing to provide a margin of productive capacity, led the Commission to suppose that
the companies which I.S.H.R.A. now holds should not be denationalised but should, as a permanent arrangement, constitute a publicly-owned sector of the industry and for that purpose be owned and controlled either directly by the Minister of Power or by a public board responsible to him.
Not only is it not merely a theoretical issue, but the nation is now in the gravest possible difficulty. Even with its existing powers, the Board was defeated by the steel owners in its efforts to get a fourth strip mill until it was too late. Only now has the Board got it, on condition that it is built with public money. We know that it is being built in two parts, one by Richard Thomas and Baldwins from public money, to be sold out if the Government's intention goes ahead, and the other by Colvilles, again with public money, loaned at better terms than those
on which the public can borrow its own money.
Let us look again at the way in which the victory of the steel owners over the Board shows itself. I speak now of sheet steel. I have been questioning the Minister and the Parliamentary Secretary about this for some time. Sheet steel concerns Richard Thomas and Baldwins very much indeed. The Iron and Steel Board's first Development Report, for 1955, stated, in paragraph 47, that
it appears desirable to be prepared for a demand which will increase by as much as 50 per cent. during the period 1953 to 1958.
The Board thought that output by the end of 1958 would be 2,650,000 tons. We never got that expansion. The figures for 1958 have not been published as far as I can find, but my calculation, based on home deliveries for 1957 plus the cutback in exports to the pre-1957 figure, leads to a 1958 production figure of 2,350,000, which means that there was 300,000 tons less capacity in 1958 than the Board in 1955 thought would be necessary.
When we ask questions concerning sheet capacity, we are always told—I was told it again today—how rapidly the industry is increasing its supplies of sheet. Let us look at the real picture, taking 1955 as the base year—and 1955 was a crisis year in steel. In no quarter of 1956 did we again reach the 1955 figure. In the first two quarters of 1957, as also in 1958, we failed again to reach the 1955 figure. Even in the first quarter of 1959, we were below the figure for the first quarter of 1955. As for the overall position, at the end of 1958 we had reached the overall total for 1955, and whereas the Board had asked for 2,650,000 tons by the end of 1958 we were able to get only 2,484,000 tons by the end of 1959, or 166,000 tons short of our requirements for 1958.
The crisis was covered by a Government-inspired recession which kept down demand for sheet at a cost of 9·7 per cent. unemployment and widespread short-time working among tinplate and sheet steel workers, while exports of sheet were deliberately cut back in 1958 to the pre-1957 level. I am sorry to have to give so many figures, but I want to prove the case factually by Government statistics as far as possible.
Although I have been discussing sheet imports, it is important for the House to realise that steel imports as a whole are increasing rapidly. In the first quarter of 1960 they were 192,000 tons, compared with 65,419 tons in the first quarter of 1959. The March figure alone was 80,000 tons, costing £5·7 million. If that rate is maintained throughout the year, the cost to us will be £68½ million. In sheet steel, the increase over the first quarter of 1959 was 110,000 tons, with increased costs of over £8 million. Total imports of sheet steel were 142,000 tons, an increase of 355 per cent. over the first quarter of 1959.
I have argued with the Parliamentary Secretary about the balance of payments. He seems to think that the balance of payments is doing remarkably well from sheet steel. The cost to the balance of payments of the inability of the Board to win its fight for expansion of sheet steel is becoming serious. The highest import costs in any quarter prior to 1960 were in the third quarter of 1955, when we paid £7,324,000 for imports and received £7,109,000 for exports. In the first quarter of 1960, however, we paid over £10 million for our imports and received £8,420,000 for exports, a deficit of £1,600,000.
The graph, which rose so dramatically in March, would appear to be going even higher still, for we now have the benefit of the April and May returns, and we find that during the first five months of 1960 we imported more sheet steel than during the whole of any year since 1951, with the exception of 1955, which was a year of crisis. In the balance of payments of that year, troubles were caused by our inability to supply enough home-produced steel.
It is not very comforting to realise that during the first five months of this year imports were nearly double those of the first five months of 1955, the crisis year. In January, 1960, sheet steel imports were 6 per cent, higher than in the previous highest month since 1951. In May this year they were no less than 73 per cent. higher and in May they leapt up by £850,000 or 23 per cent. above the average for March and April.
By any standards these are critical figures. Whatever year we take since the production of figures for sheet steel, we now are in a far and away more critical period than in all those years. One can show that in five months we are exceeding the total for imports in every year only with the exception of 1955. I submit this is a most critical position indeed.
Is it not remarkable that with all the publicity which the steel industry has been putting out in the form of full-page Press advertisements, films, and so on, we have never heard a word about this critical position—in all the publicity it has been putting out? If attention is confined to manufactured goods, the volume of iron and steel imports rose faster between the first quarter of 1959 and the first quarter of 1960 than for any other type of import. Therefore, we are somewhat suspicious when we find that this question of steel imports has been muted for so long in the financial columns of the Press.
Of course, the Chancellor has now changed all that. The large growth of imports within which the steel imports play such a vital rôle have now forced him to a 6 per cent. Bank Rate and a further credit squeeze. Steel denationalisation and the so-called compromise of the 1953 Act has a great deal to do with the present measures from which the nation is now suffering.
What is the Tory answer? Denationalise Richard Thomas and Baldwins and give the Steel Board even less control than it has now. I have already informed the House of the estimates of the Board in its development report and its suggestion of a new strip mill were rejected by the employers. Following the defeat over the timing of the new mill, the Board's 1958 Report states:
Assuming no interruption in production, supplies are expected to become sufficient about the end of 1959 to meet the demand for sheet for the motor industry and others, and then remove the need for imports.
How does that stand up to the Government figures I have given to the House this afternoon? What it amounted to was a complete, abject surrender by the Board because of the lack of strength to combat the private steel interests. Having argued that this position was brought about because, even with Richard Thomas and Baldwins as a threat to the private steel owners, the Board had not sufficient powers and although I do not want to indulge in too much quoting, I will try
to prove it. If we take the Board's first Development Report, bearing in mind the need for a fourth mill, we see it stated:
Bearing in mind the extent of hand mill production meantime estimated as needed to meet the probable demand in 1958, and the possibility of a further rise in the demand for sheet and tinplate, it is reasonable to conclude that additional strip mill capacity will be required in the near future. This problem, which is under review by the industry and the Board, is one which cannot be resolved quickly because of the many separate considerations involved.
That is, separate interests.
But, in any event, the Board need not have feared the problem was going to be "resolved quickly", because a dispute arose with the industry, and according to the Board's second Development Report:
It is common ground between the industry and the Board that at some stage it will be necessary to construct a new hot strip mill…But there is a divergence of view as to when this development should be undertaken. Such installations involve heavy capital cost and there has to be a minimum load to justify their being brought into operation. The industry consider that the Board has overestimated the demand for sheet and tinplate in 1962 and have perhaps under-estimated the supply from existing strip mills because of the assumed high rate of production of light plate from these plants.
We had a remarkable publication shortly afterwards in response to something my hon. Friends published. It was known as "Steel Fact and Fiction", which the industry issued, and in which it stated that the industry thought that
a new mill would be needed by the mid-1960s.
I submit that not only is there no case for denationalising Richard Thomas and Baldwins, but that it is blatantly obvious that in the interests of the whole nation Richard Thomas and Baldwins should be maintained in the public sector. If the compromise, so-called, of the right hon. Gentleman the Minister of Aviation meant anything, it meant that the Board itself, in his estimation then had sufficient power. I challenge him now to tell me whether he still thinks it has sufficient power to cope with the steel owners.
The greatest irony of all is that the publicly-owned firm of Richard Thomas and Baldwins, which has now been asked to undertake the task of producing the largest extension of sheet capacity, is to be sold out to the private steel owners who themselves are responsible for our troubles—at the very moment when the management of Richard Thomas and Baldwins is engaged in the task of getting us out of the mess into which the private sector has landed us.
"Anarchy" would be a mild expression for this kind of thing. This case most certainly proves that the national interest requires an immediate transfer of ownership of steel not from the public to the private sector, but in precisely the opposite way round.
Hon. Gentlemen opposite will have their opportunity to reply to this. I challenged them to do so before I got as far, but they sat mute.
We have never believed that the 1953 Act would work. We are now proved to be utterly and completely correct, and we maintain that because the Government were wrong the nation is now having to pay the price of their failure.
What does private enterprise in the steel industry mean, anyway?
Order. The hon. Member for Kidderminster (Mr. Nabarro) knows that if the hon. Member in possession of the Floor does not give way he must resume his seat.
The Tory argument used to be that when numbers of firms were competing for business the profit motive resulted in increased efficiency. However, in the steel industry a quarter of a century has passed since that sort of competitive private enterprise vanished completely.
By a strange irony, Richard Thomas and Company, as it then was, was the last steel organisation to attempt to maintain that sort of competition by private enterprise which the Tories believed in. The story of how the steel
ring smashed Sir William Firth, then chairman of Richard Thomas, when he tried to produce a modern steel mill to compete with them, is very well known. The Ebbw Vale Works, weighed down, as it then was, with out-of-date Baldwins plant and functioning inside the ring and not in competition with it, was the only way Firth could get the £6 million he needed for development. It is interesting to remember that the condition imposed by the Bank of England was that a special control committee should be set up, with Montagu Norman as chairman, to ensure
the working of the plant in co-operation rather than in uneconomic competition.
Now, by a strange chance, Richard Thomas and Baldwins represents the last chance the public has of exercising any real influence over the private steel owners. In taking this action the Tories are running true to form. They have not the remotest intention of re-creating that competition they boast about. They will not take a penny off the price, nor will one ounce more of steel be produced. The whole operation is for one purpose only, to transfer the profits from the public purse into the pockets of the equity shareholders. It is a sordid and despicable transaction. This is not responsible government. It is official vandalism. Indeed, when engaged in comparable activities, Dick Turpin had the decency to wear a mask.
The pattern that we see emerging in many of our large industries is not dissimilar to that which I have just described in the steel industry. It is a pattern of private monopoly and semi-monopoly, financed in varying degrees from public money, but from whose profits the public is debarred. The handing over of a few paltry shares which can never influence control by the workers is irrelevant to the whole issue. During the lifetime of this Parliament we shall see a wide extension of this development to many more industries. This being so, the old argument between public ownership and competitive private enterprise in these industries which constitute the commanding heights of the economy will be soon as dead as the dodo. In such industries the only question facing the nation is the straight one of private or public monopoly.
As I have said, this is a sordid story. It is important that the Labour Party, despite the fact that we have not the financial resources which I have described as being possessed by the party opposite, should now bend every effort in every city, town and village to get the real story of Richard Thomas and Baldwins across and to re-create the enthusiasm for justice and right which is the basis of the Labour Party itself. Let us tell the story and let the nation decide.
I am very proud to take part in a debate in which the first Opposition speaker, the hon. Member for Newton (Mr. Lee), has aroused the only sign of enthusiasm that any of us has seen in the last nine months. My hon. Friend the Member for Kidderminster (Mr. Nabarro) will have to watch his step for fear of losing his title of official leader of the Opposition.
The hon. Member for Newton mentioned a publication which, I think he said, was named "Steel Facts and Fiction". That could be an adequate description of his own speech. He kept our feet firmly on the ground for some time by quoting a number of figures, and then there were flights of fancy about the rape of the monasteries and about the activities of Mr. Charles Clore which seemed far removed from our task today. Perhaps I may be able to clarify the hon. Member's mind about fantasy and fact.
The debate is concerned with an Opposition Motion on the Government's intentions regarding the firm of Richard Thomas and Baldwins. I will try to deal with some of the points that the hon. Member for Newton mentioned, but in view of the general criticism of the course which the Government have been pursuing over the last few years, and also the need to place our intention with regard to Richard Thomas and Baldwins in the widest possible context, I should like to begin by restating our convictions on the broad question of the denationalisation of steel.
The Government believed that there was absolutely no reason why public supervision should depend on public ownership. In fact, they believed that the question of ownership had nothing to do with the effectiveness of public supervision which could be equally effective, if not more effective, under conditions of private enterprise. The Government therefore set up the Iron and Steel Board, which had the minimum powers necessary for the balanced development of the industry and to try to avoid waste of national resources.
It is quite correct, as the hon. Member for Newton pointed out, that it was always our intention that the real power of the Iron and Steel Board would depend not on its ability to give orders, but its ability to lead and persuade in the industry. It was always expected that if the Board and the Federation differed the Board would report to the Government, and it was given express powers under the Act to act and provide additional capacity if it was necessary.
The third leg of the Government's policy was the creation of the Iron and Steel Holding and Realisation Agency as the Treasury's holding company in order to dispose of the nationalised companies. I still believe, and all of us on this side of the House still believe, that that was not only a sensible but a flexible plan, because it laid down no hard and fast rule or programme and it aimed at exactly the right blend between centralised direction, which the industry needs, and the freedom of operation within that framework which we believe essential to achieve the industry's best performance.
These were our convictions a few years ago and they remain our convictions today. [Interruption.] We are fortified in this conviction by victories at two General Elections after which we can claim—and I hope that the House will take this to be made with due moderation—that public opinion has not shown itself enthusiastic to preserve the nationalised structure. In fact, we claim a far stronger mandate for completing denationalisation than the party opposite ever had for bringing it into public ownership.
I might perhaps deal with the question of how much has been achieved so far. [Interruption.] Here it is possible to give several different answers. I feel that the fairest answer is in terms of the financial transactions, that is, in the net reduction of the investments and obligations which the Agency took over. There has been a reduction in £364 million taken over of £160 million, or two-fifths. This is not a wholly adequate basis for judgment, because the 1959 industry was a good deal larger than it was in 1951 or 1953.
We are, therefore, led to the next question of whether or not, in the circumstances of the last few years, we should have disposed of more. It was clearly impossible to ignore the need to reinvest during the time that disposals were taking place in order to develop the industry and provide the steel needed by the nation. [Interruption.] Therefore, the Government had to take steps to ensure that companies sold could find the money which would be necessary for their further expansion. [An HON. MEMBER: "Colvilles?"] During the whole of the period of disposals there has been considerable uncertainty about the future of steel, which I hope has, to a large extent, now been dispersed.
These uncertainties had an appreciable effect on the market, and made necessary the reinvestment of a large part of the sums which were realised from sales. In those circumstances—[Interruption.]
In the common interest, I hope that we may proceed with the debate with a little less interruption. Many hon. Members wish to speak, and the amount of noise going on is affecting progress.
On a point of order. I distinctly heard the hon. Member for Cardiff, South-East (Mr. Callaghan) say to my right hon. Friend, "You are thieving the lot." As that casts an approbrious aspersion upon the Chair, would you not cause the remark to be withdrawn, Mr. Speaker?
What I said was that the Conservative Party was thieving the lot. All I am doing is bringing up to date the speech made by the right hon. Member for Woodford (Sir W. Churchill) when, fifty years ago, he spoke of the Conservative Party putting its hands into the public purse. It has been doing it ever since, and it is still doing it.
I was serious in making my appeal just now—to both sides of the House, without distinction—that, in the common interest, we may proceed with this debate without so much interruption. I intended that as a serious request, and I do so intend it, and give warning that I so intend it.
If the hon. Member for Cardiff, South-East (Mr. Callaghan) can manage to be a little quieter he may realise shortly what are the Government's plans for the industry. The only effect of interventions is to make my speech rather longer than it would be, and reduce the number of hon Members who can take part in the debate.
In the circumstances of the last few years, with the uncertainties to which I have drawn attention, the Government had to make the best bargain they could. They had themselves declared that their policy was denationalisation in the general interest of the economy, and there was and is no question of this being frustrated by the uncertainties created by the Opposition's declared intention of renationalising the industry if they can. During this period demands for capital far exceeded supply, and steel offerings therefore had to compete in not very absorptive markets. Purchasers were at some risk, in that the right hon. Member for Vauxhall (Mr. Strauss) told them what the consequences might be if they purchased.
I would like to come to the future intentions of the Government with regard the industry. If the hon. Member for Cardiff, South-East knows them already he has no need to listen, but the House as a whole would like to know what our plans are. [Interruption.]
On a point of order. Is it not usual for right hon. and hon. Members to rise to their feet when they are intervening, and not continuously to interrupt, from a sitting position, as they are interrupting my right hon. Friend who is trying to make his speech?
Does it not seem as though the view of the Government and of hon. Members opposite generally is that when they are giving away public possessions we are supposed to keep quiet, whereas when anything else happens they may do as they please? Is not this becoming ridiculous? They are simply paying their debt for £500,000 spent in public advertising before the General Election. Why should we not say so?
Two points are involved here. One is that I really do request that hon. Members rising to points of order should take some care that they are points of order. The other is that I noticed, during an enjoyable afternoon, that there was quite a lot of interruption from behind the hon. Member for Newton (Mr. Lee) when he was speaking. No doubt there will be many interruptions from both sides of the House. So that we may get on decently with the debate, I would merely request that interruptions should be kept to a reasonable minimum.
On a point of order. It is very difficult for hon. Members at this end of the Chamber to hear what my right hon. Friend is saying in view of the constant interruptions that are being made.
I would willingly pay tribute to them, also. I was merely saying that I joined in the tribute which the hon. Member for Newton paid to the management and not to others.
The present development at Newport, in particular, may be relevant to the timing of the disposal, but it can in no way affect our conviction that the industry should be returned to private enterprise. I have considered carefully the argument which the hon. Member for Newton adduced, that the Government should have what he did not describe but what I shall describe as the chosen instrument, to increase capacity if necessary, and that this chosen instrument should remain in the possession of the State, to be used by the Government when they think it necessary. This argument is highly over-rated, because even if a nationalised firm were kept in existence it might neither be in the right part of the country nor produce the right goods to be used if the occasion demanded.
My opinion is that the Spectator inquiry, which the hon. Member mentioned, gave far too little weight to the achievement of the object for which the Board was set up, namely, to induce additional capacity at a time when it became necessary.
I said that this could be turned into a theoretical argument, but I was not doing that. I was saying that we are very short of sheet and that the right vehicle to use in this connection is Richard Thomas and Baldwins, as admitted by the right hon. Gentleman. This is not theoretical. We are short because we have not the control of the Iron and Steel Board by which we can force a vast increase in the production of sheet steel.
The company was in public ownership, and I cannot see that the posit ion would have been in any way different if it had been retained in public ownership merely for the reason he suggests, especially, as I have said, since it might neither have been in the right part of the country, nor produced the goods for which extra capacity was necessary.
I should like now to be allowed to finish. I have a certain amount still to say, and there are a number of other hon. Members, no doubt, who would like to take part in the debate.
As I have pointed out already, this company is only part of the Government's holding in the steel industry. I have said on several occasions recently that our plans for the completion of the denationalisation of the industry must be considered as a whole. On the Second Reading of the Iron and Steel Bill, on 18th February, I said that
…the programme of disposal will continue but…the manner in which the programme is carried out, and the timetable to which it will conform, must be matters of judgment on which it is not possible to lay down rules in advance."—[OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1450.]
A month later, the Economic Secretary was, as usual, more explicit. He said:
The hope of the Government is that, within the lifetime of the present Parliament, the Agency will complete its duty of substantially returning the industry to private enterprise."—[OFFICIAL REPORT, 22nd March, 1960; Vol 620, c. 366.]
My hon. Friend and I, and also my right hon. Friend the Chancellor of the Exchequer, have emphasised that it would be neither desirable nor right to specify a detailed programme or timetable, because the programme of disposals must necessarily take account of a number of factors. The first is the state of the market.
I am glad that the right hon. Gentleman is as anxious as I am to get a good bargain for the State.
The second factor is the existing demand for different kinds of security. The third is the nature of the undertakings. The fourth is the requirements of the Iron and Steel Act, 1953, which gave the Agency the responsibility of ensuring that the consideration obtained is financially adequate. I hope that that will have the right hon. Gentleman's support, too.
If the right hon. Gentleman will let me speak, I am only too ready to tell him. He was very busy talking at the beginning of my speech, when I gave the reasons why we believe this to be right. The right hon. Gentleman was not listening.
I would not wish to put the Minister or the House to any inconvenience, but if the right hon. Gentleman thinks that I missed the reasons for getting rid of these companies, I would ask my colleagues to be so kind as to allow him to repeat what he said. I should like to hear what the reasons are that I have missed. Will the right hon. Gentleman repeat them? There will be no objection to that, I am sure.
Because it would achieve the blend which we think right between centralised direction, which the industry needs, and freedom of action within that framework. Those are roughly the words which I used earlier. I hope that that makes the matter quite clear to the hon. Gentleman.
On a point of order, Mr. Deputy-Speaker. You referred to "hon. Members", as if I had been shouting. The right hon. Member for Belper (Mr. G. Brown) has been shouting nonstop at the top of his voice. When you refer to "shouting" ought you not to make it clear that it has been coming from the Opposition Front Bench?
Perhaps I may be allowed to proceed.
The Government's holdings in the steel industry—perhaps this will bring the right hon. Member for Belper down to earth—which are administered at the moment by the Iron and Steel Holding and Realisation Agency, fall into three categories. There are the nine smaller companies which provide no special problem. The Agency is pursuing negotiations, and one company has already been sold. Secondly, there are the various fixed interests securities which are still held by the Agency—
Can the right hon. Gentleman tell me why this Government of businessmen think it worth while having £3 million invested in Guest Keen and Nettlefold at 4½ per cent. when the ordinary shareholders who acquired the equity have had capital gains equivalent to 50 per cent.?
The whole of the investments would have been disposed of long ago if it had not been for the uncertainties created by the hon. Gentleman and hon. Gentlemen opposite.
The third category is the firm of Richard Thomas and Baidwins itself, which we were discussing at one moment this afternoon. [An HON. MEMBER: "Why not admit that it is just cash for the boys?"] The general shape of our disposals programme in the future obviously depends on the relative priority given to the sale of the various fixed interest securities and to the disposal of Richard Thomas and Baidwins. Richard Thomas and Baidwins is a large, important and prosperous company.
I have something even better for the right hon. Gentleman, because when present developments are completed the firm will be much larger and more prosperous. I hope that the right hon. Gentleman has got the point.
Since 1950, about £50 million has been spent on buildings and plant and machinery, and the firm will spend about another £150 million in the next two or three years.
—and it is to build a new one with ample room for extension at relatively low cost. The company's major scheme of expansion includes a fourth strip mill at Newport and other developments at Redbourn and Ebbw Vale. These development schemes have not remained unchanged either in their scope or in the pace which is thought desirable for their execution. [HON. MEMBERS: "Why not leave them alone?"] It would be a very bad plan to leave them alone.
Because the need for expansion has been clearly shown. [HON. MEMBERS: "Why?"]I will explain why. The original plans for this company have been changed. For one thing, the demand for sheet steel has grown rapidly. The House was told last December that the capacity of the Newport mill would be increased from 1·1 to 1·4 million tons—
—and its production of finished sheet from 620,000 to 855,000 tons a year. [Interruption.] I am explaining to the right hon. Gentleman why these developments were necessary—because of the expanded demand for sheet steel.
If the right hon. Gentleman can just possess himself, I think that he will get the answers in about five minutes' time.
It was then planned to bring the Spencer Works into production in April, 1962, instead of the original plan of mid-1963, and it is now hoped to improve on the revised target and to start production late in 1961. This will mean an earlier return from this large investment, with substantial gains to the company, in terms of earnings, but it has, naturally, increased the company's need to borrow.
We have already discussed in the House the increase in the maximum amount of the loan from the Ministry of Power, from £60 million to £70 million, and the House already knows that the Agency is providing finance for developments at Ebbw Vale, Redbourn and Panteg. All those familiar with large-scale schemes of capital development of this kind will be aware of the almost inevitable need for modification, and in this case particularly the need, as I have attempted to explain—I hope that I have now made it clear to the right hon. Gentleman—is mainly due to the need to meet public interest by providing adequate capacity at Newport as quickly as possible.
What the right hon. Gentleman has not made clear is why this prosperous company, doing everything that is required and which is to get an earlier return than was otherwise thought possible, has to be handed over to private enterprise in order to get that earlier return. I still have not got this point. It could borrow this money as a public entity at least as easily as a private entity. It is doing all that the right hon. Gentleman asked it to do, and he commends it to us, enormously to the discomfiture of his hon. Friends, but I am still not convinced why the Government have to give it away because it is doing so well.
I thought that I was being too optimistic about the right hon. Gentleman. He has contained himself in patience for three minutes but not for five. If he had waited another two minutes, he would have got the answer. Unfortunately, he has disturbed, not from my point of view but from the point of view of the House, the trend of the argument about cost.
I understand that the latest estimate is that the Newport strip mill will cost £119 million and not £110 million, as estimated a few months ago, mainly for two reasons. The first is that the company will now install a more powerful continuous mill in place of the semi-continuous one; and, secondly, because the project is to be accelerated, as I have tried to explain, and, therefore, there are inevitably involved increases in the actual civil engineering costs.
There will be other requirements, such as working capital and interest, which will have to be met either by long-term capital or by short-term borrowing before investment bears fruit. All that I can at present say about the need for additional finance is that the Government are considering the best means of making certain that Richard Thomas and Baldwins receives finance, if required, and that if this should lead to any variation of the agreement of the Ministry of Power with the company I will, as I undertook, and as my right hon. Friend the Leader of the House undertook in March, certainly make a statement to the House. The right hon. Gentleman has given an undertaking that there would be time for a debate.
We have listened to an account of the development taking place at Richard Thomas and Baldwins, and those who travel to South Wales see signs of it at Ebbw Vale, Redbourn and other places. There are two simple questions to which we want to know the answers. First, will these plans be in any way handicapped by the fact that this company is publicly owned? Secondly, what possible disadvantage can there be for the development of the plans, which are already maturing, if it is sold to private hands? Why now change this prosperous company at this stage, when it is making such rapid progress?
I should have made a collective appeal for a few minutes' more restraint because I think that the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths) and his right hon. Friend the Member for Belper (Mr. G. Brown) will find those questions answered if they will wait for two more minutes.
In the light of these developments which I have described to the House, the Government must clearly decide whether to give priority to the devesting of Richard Thomas and Baldwins or to the completion of devesting of the denationalised companies in which the Government still hold considerable investments.
This is a matter of priorities in which the Government must exercise judgment but, whichever comes first, it is our intention to press on till denationalisation is complete. [HON. MEMBERS: "Why?"] It may be that the sale of the equity capital of Richard Thomas and Baldwins could be more advantageously carried out when the present plans are further advanced and there are more tangible signs of the company's increased earning capacity.
I am glad that the right hon. Gentleman is still anxious that the State should get a proper price for the assets. On the other hand, there may be positive advantages in deciding to go ahead with the disposal of the fixed-interest securities in preference to the immediate sale of the equity holding in Richard Thomas and Baldwins.
The conclusion of the Government is that they must remain free to decide their programme and timing in the light of all the circumstances, but it is still the firm intention and, indeed, in the words of the Economic Secretary, the confident hope that the work of the Agency will be substantially complete before the next General Election.
The right hon. Gentleman, from the point of view of argument, has just made a pathetic speech to the House. It was subject to a good deal of interruption which perhaps he did not like at the time. I am not sure that he was not lucky to have interruptions because, in a sense, if he had had to make his speech and put his arguments uninterrupted they might have appeared to the House to be even more pathetic than they did.
What he attempted to put before the House was no argument at all for what the Government were doing. I can remember only two attempts at argument which emerged from the right hon. Gentleman's speech. The first was that the Government had believed in denationalisation of the steel industry for eight years and that it must, therefore, be a correct policy. The second was that the Government had won three elections. If that is to be an argument, the House might as well cease to exist, because, the Government having won an election, there is apparently nothing more to be said about any question. Certainly, the right hon. Gentleman made no attempt to argue beyond that. In his rather confused arguments about the financial structure of the company at the end of his speech, I did not even understand him to be attempting to argue anything stronger than that the company would not be worse off under denationalisation than under nationalisation. But the right hon. Gentleman attempted no positive argument.
To make a firm case for this sort of action, the Minister would have had to have argued one of two things. He would have had to say that the Government believed that the steel industry should be run as a competitive private industry, with each firm competing with the other, and that that was the Government's aim. The right hon. Gentleman attempted to do no such thing, because that is not the Government's policy. Indeed, not merely nobody with knowledge of the industry but nobody at all thinks that it is possible or desirable to run the steel industry in that way. There is no question of doing away with some form of public supervision, ineffective though it may be, and some form, extremely generous as it appears to us, of public money for the industry.
The alternative would have been to have argued that Richard Thomas and Baldwins was in some way handicapped compared with other firms through being still under national ownership. But there was no suggestion of that. I am not sure whether it is the most efficient firm in the industry, but clearly it is one of the most efficient, whether judged on growth or on profitability. The right hon. Gentleman did not attempt to argue that the company was less efficient and had put up a worse performance than other firms which were denationalised.
Why are the Government taking this action? This is a dogmatic act of denationalisation. Hon. Gentlemen opposite are the people who are doctrinaire. I do not think that I would be accused of being excessively doctrinaire about nationalisation, but this strikes me as one of the most shockingly doctrinaire acts which we have had from the Government for a very long time.
How do hon. Members opposite believe that British industry will develop? I am not absolutely clear what solution we want for every industry, looking ahead for thirty years, I think it extremely unlikely that the purely private corporations, the purely private firms, with largely functionless private shareholders and with managements responsible to practically nobody, are likely to be a permanent form of organisation.
This is an extremely retrograde step by the Government. If the Government want the issue to be judged on its merits, the issue of public or private ownership, or something between the two, what could have been better than, in an industry like the steel industry, for some time to have continued with a controlled experiment in which we could have seen what was happening in different parts of the industry and how the private firms compared with the public?
No doubt my hon. Friend is right. People want to get at the profits. It also suggests that the Government are not anxious to allow this controlled experiment to proceed and to permit people to judge the performances of the public and private sectors.
Apart from the fact that in the long run it might be embarrassing to have a member of the Cabinet who could never be employed, except in South America, it suggests that the Government approach to the steel industry is increasingly like that of the industry itself, which is presented to the public almost exclusively in terms of an advertising public relations operation and not in terms of the facts of what is happening.
That ties in with the Government's dogmatic desire not to allow this experiment to proceed so that the public can judge objectively between the sections of the industry. Instead, we have a professional propagandist like the right hon. Gentleman to wind up the debate.
My hon. Friend is being grossly unfair to the Chancellor of the Duchy of Lancaster. After all, the right hon. Gentleman is the principal recipient from this transaction. He and his party's propaganda machine have obtained all the advantage from the steel owners' expenditure. He is the most interested party.
I am grateful to my hon. Friend. That is undoubtedly so and the right hon. Gentleman's gratitude must be real. However, it could conceivably have been more tactful if his gratitude had been silent rather than stated.
One of the most extraordinary remarks which the Minister made was that he wanted to denationalise Richard Thomas and Baldwins not because he did not believe in public control of the industry, but because he believed that public control through the Board could be more easily exercised under private ownership. I am not sure whether he meant more effectively exercised or in what sense he was using the word "easily", but I take it that he intended the House to think that he meant "more effectively" controlled. That is an extraordinary proposition and, very wisely, he did not attempt to argue it. It is not a proposition which is in any way self-evident.
I take the view that the Board has been much too ineffective, even with that section of the industry which is publicly owned. The right hon. Gentleman and my hon. Friend the Member for Newton (Mr. Lee) referred to the Spectator steel inquiry. The right hon. Gentleman did not attempt to suggest that the facts there stated were false, but he challenged the conclusions. What has emerged absolutely clearly from that inquiry is that for two years the Board was totally ineffective about getting the required expansion and the fourth strip-mill started at the time required.
Slowing down expansion for two years is just the same as stopping expansion altogether for the period affected and there is no doubt that if there is a shortage of sheet steel between 1962 and 1965 —and there will be unless under the present Administration we are to have permanent all-round industrial stagnation—it will be largely due to the fact that this delay was imposed on the Board by the industry. Therefore, we have the situation in which the Board has not been as effective under nationalisation as we would have liked it to have been. How can it be imagined that with the whole industry denationalised the Board will possibly be more effective?
I hope that we will hear no more from hon. Members opposite about the desirability of taking the steel industry out of politics. We have heard a great deal about that in the past. I am bound to say that the steel industry and some other industries do not do all that badly under the pressure of being somewhat involved in politics. It is not all that obvious a proposition to say that a little political pressure is necessarily bad for an industry, but, apparently, that is the view of hon. Members opposite. If there were any question of taking the steel industry out of politics, which would have been difficult in any event, it has been made completely impossible by what the Government have now done.
This is a dogmatic and doctrinaire action which has shown who are really the doctrinaire people on nationalisation and, inevitably, it will have a very bad effect on the relations between politics and the steel industry for many decades to come.
If only the hon. Gentleman will give me a chance, I will try to do so.
The first thing that he said was that he could not say what the industrial structure would be thirty years hence—whether the function of the shareholders plus the Executive without control of the holdings would continue thirty years hence or not. I think that the hon. Gentleman is quite right. No one on either side of the House can say what the industrial structure will be thirty years hence. It may well be that just as, I think, the Communist world will learn a lat from our society, we may learn something from the way it runs its industrial system. But that is something which is beyond the knowledge of anyone.
Secondly, the hon. Gentleman asked why Richard Thomas and Baldwins should not be left as it now is to compete with the remainder of the steel industry which has been denationalised. I think that there is an awful lot to be said for that point too. To me, it is very attractive.
The last point which the hon. Gentleman made was this. He asked why on earth we are denationalising at all. The simple answer to that is that we were elected so to do.
Hon. Gentlemen opposite believe in free speech and fair play. I am asking for fair play, because I am going to say something shortly which they may not like. I have been a Member of the House of Commons since 1945. In the last four elections which I fought—in 1950, 1951, 1955 and 1959—denationalisation was one, though not the only one, of the major issues put before the public.
No, Jack, let me finish.
Steel was the most prominent among the denationalisation issues. On every public platform, on the wireless, on television, in the Press and by pamphlets we on this side of the House, in a free democracy, stated our case—as hon. Members opposite stated theirs—with great strength and conviction. We did our best to state our case. The public accepted our point of view and we were returned in a manner unprecedented in the history of this country's political life. We were returned four times with an increased majority on each occasion to carry out the very policy about which hon. Members opposite are complaining.
If the hon. Gentleman thinks that I slighted him he is wrong. I regard him as being better mannered than to engage in such language.
All I say to hon. Gentlemen opposite is that—
I will withdraw what I said, but I hope that hon. Members opposite will allow me to make my case.
The hon. Member for Stechford asked why we were pursuing this policy. My reply to that is quite simple, honest and straightforward. It is that we on this side of the House were elected four times by the people of this country to do this very thing. Furthermore—and I say this especially to the right hon. Gentleman the Leader of the Opposition—I understand, according to Press reports, that in Hampstead they have their Sunday morning sherry parties and that the intelligentsia of the party opposite have said that they are going to alter Clause 4 because of the victories that we on this side won on this very issue.
I am not coming off it; it is the fact. We are carrying out this policy because the people said that we should do so. Therefore, I am quite prepared to argue about the policy behind it. What I am most interested in is how this policy is to be carried out. That is something which I think hon. Gentlemen opposite might be interested to hear about.
First, I would point out to the House that the Agency has sold some eight or nine large industrial organisations. Hon. Gentlemen opposite should be asking questions about the organisations which have already been sold. As far as I can ascertain, they were sold at prices that to the present holders will yield today a profit of something between £200 million and £300 million. That is a huge figure, and in the eyes of many hon. Members opposite a shocking figure.
The next question hon. Gentlemen opposite should ask is why those people who bought the iron and steel shares of companies that were denationalised have done so extraordinarily well out of them. Were the shares offered much too cheaply? I think that they were, and I do not want that to happen in this case. But why were they offered too cheaply? I thought that the right hon. Gentleman the Leader of the Opposition made a statement—and not only a statement but a threat—that if the Labour Party was returned to power it would renationalise the steel industry and give back to the owners of those shares the same price that had been paid for them originally.
What was said was that when, if ever, the industry was re-nationalised and if compensated by another form of Government—neither the Government opposite nor a Government formed by the party of this side—it was possible in the future that the present state of affairs and the prices paid would be taken into account at that time. That is what was said.
I am not exactly clear what that means. It was said at the time that the shares would be taken back at the prices at which they had been originally sold. I will give the right hon. Gentleman the Leader of the Opposition the Press cuttings about it. In my opinion, it was that threat which caused the Agency to sell its shares so much below what, I think, was their real price, something which I am hoping that my right hon. Friend will see does not happen this time.
Another question which ought to be considered by hon. Gentlemen opposite, and to which they should have an answer, is, who bought those shares? We are told that they were bought by speculators in the City of London, by the money-for-nothing boys. The right hon. Member for Belper (Mr. G. Brown) said on that occasion that the people concerned were putting their hands into the till.
Let us start with the most important people who would sympathise with the point of view of hon. Members opposite. The National Union of Mineworkers held in 1957 no less than 700,000 iron and steel shares on behalf of its pension fund.
Yes, equity shares. In 1959 the union increased that holding to over 1 million shares, knowing full well that this Government were going to carry out a policy of denationalisation. It knew where to put its money, and I congratulate those looking after the pension fund of the National Union of Mineworkers on what they did.
Is the hon. Gentleman suggesting that it is a good thing if any particular body or section of the nation makes a profit out of a public company which is transferred to private enterprise? What is the argument which he is putting forward? Is he saying that it is a good thing, because someone makes a profit out of a State holding?
I am sorry if I did not make myself clear. I was trying to show that the shares were not bought by the few privileged speculators in the City of London. That is all that I was attempting to do.
The Co-operative Insurance Society was reported to have held 350,000 United Steel shares and sold half at a handsome profit. These were the speculators. They are the Opposition's supporters, not ours. At the present time the C.I.S., as far as I can make out, holds 529,000 of these shares. The greatest holders of shares in companies that have already been denationalised—and who will, I suppose, purchase shares in Richard Thomas and Baldwins—are the insurance companies and the guardians of pension funds.
We have had a most slighting reference to Methodism. Is the hon. Member not to attack Anglicanism as well? I understand that the Church of England Commissioners have similar holdings. Only about 3 per cent. of these shares are held by these institutions—public institutions whose trustees are not enjoined to take political or religious points of view.
I will give way to no one else. This is not fair. I am not attacking anyone. Indeed, I commend these people for their wisdom. I am trying to show that it is not the sharks of the London Stock Exchange who have these privileges, but many supporters of the party opposite. The other biggest holders were the Church Commissioners. The Economist estimated that at one time. in 1957, they held 1,148,000 shares. Today they hold 2,190,000 shares. I say, good luck to the Church Commissioners for having the wisdom to purchase these shares. By so doing, they have helped to raise the salaries of men who are almost the lowest paid in the country. [Interruption.]
The other fact which the Economist produced was that in 1957 it was estimated that one-third of the iron and steel shares in companies which had been denationalised were held by people with less than 500 holdings—in other words, the small holder.
One each. One-third were held by holders with more than 10,000 each, and the other one-third were held by people with What I call medium holdings. According to Members opposite, this is putting a hand into the public till and snatching the profits which should belong to the community. I put the reverse side. This is very relevant, because the same type of people who bought these shares also, unfortunately, took the advice of the Socialist Chancellor of the Exchequer in 1947 and purchased £480 million of 2½ per cent. Treasury bonds. Those now stand at 44.
If the hon. Member means the National Union of Mineworkers and the Co-operative Insurance Society, I say, "Yes." It is estimated that the fixed interest bearing stock holders who hold more than £20,000 million mostly of British Government stocks, quoted on the London Stock Exchange, have lost something between £10,000 million and £15,000 million, owing to the depreciation of the currency, since 1939. This is some compensation to them for the immense losses that they have incurred.
On 26th January I put a Question to the Chancellor of the Exchequer, and a similar one on 24th May, asking that, when Richard Thomas and Baldwins equity was sold, the fixed interest bearing stock should not be left in the hands of the Agency. The Chancellor said he would see that my representations were passed on to the Agency. At the present time, the Agency holds £125 million of debenture stocks from companies already denationalised. Mostly, these are redeemable stocks and will be able to look after themselves, because they will be paid back at par at somewhere about 1985.
The Agency also holds £31 million of irredeemable preference stocks, mostly carrying 4½ to 5½ per cent. interest, which today, in my estimation, are not worth more than 16s. apiece. That means that the Agency stands to lose £6 million to £7 million on the stocks it still has on its hands. In addition, Richard Thomas and Baldwins still has £786,000 nominal of 4 per cent. debenture stock of its own.
I suggest that when this offer is made, a holding company should be formed and compelled to buy from the agency that £31 million of preference shares that have been left with the Agency from the other companies already denationalised, so as to save the public purse from losing the money which at the moment it stands to lose. In addition there should be put into the holding company the £¾ million of Richard Thomas and Baldwins' own debentures, and then the holding company should be offered these shares in terms of equity.
We would thus not have, as a result of this transfer, what we have had as a result of previous offers—the public getting equity and the Agency being left with the fixed interest bearing stocks standing at a discount. This should be avoided at all costs in this case. I ask the Chancellor to bear in mind that when the time comes he should pay some attention to this because, since we have agreed on this side that the policy is to be carried out, it should be carried out with the greatest consideration for the public well-being.
I am only a young Member of the House, but I do not think that I need apologise for saying that we heard from the Minister today a most pitiful apology for the denationalisation of Richard Thomas and Baldwins. Time after time he was asked to give his reasons why this great company in public hands should be returned to private hands, but he failed to give a single concrete reason. It has been said that the duty of the Opposition is to oppose. The Opposition have an even greater duty than usual in opposing this Measure, and it would be an enjoyable experience to take part in a debate of this kind were it not for the tragic results of denationalisation on this great industry.
I am a Member for a great steel centre where the Steel Company of Wales has a history of close association with Richard Thomas and Baldwins. I have a personal mandate to oppose the denationalisation of Richard Thomas and Baldwins. My majority, and those of other Members from South Wales, went up substantially at the last election on an issue fought in South Wales—the issue of the renationalisation of the steel industry. As I came up today on the train we passed Newport and its great development. There I saw all the signs of advance and was proud that it was public money that was financing it today. I was also angry that, while public money is being spent there, that great works is to be handed back to speculators and investors.
During the election we saw great slogans from the steel companies which were exhibited from one end of the land to the other. All these were paid for by the money provided by the steel companies and were used in the fight against democracy in this country.
What is the record of the industry in the past? As a Government we on this side of the House had the onus of proving that we were right to nationalise a particular industry. Today the boot is on the other foot. The onus is on the Government to prove why they should denationalise Richard Thomas and Baldwins. I do not know whether the Chancellor of the Duchy of Lancaster will be able to do any better, but the Minister failed to prove why Richard Thomas and Baldwins should be returned to private hands.
It has been said by my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) that the reasons are doctrinaire, that it is part of the dogma of hon. Members opposite and particularly those who sit below the Gangway. There are no other reasons, apart from the purely doctrinaire reasons. No substantial reason has been advanced to show why this firm should be returned to private ownership.
My right hon. Friend the Member for Llanelly (Mr. J. Griffiths) asked what conceivable disadvantage would there be to Richard Thomas and Baldwins were the company to remain in public hands. There is the other side of the argument. What advantage is there to Richard Thomas and Baldwins to be returned to private hands? None of these questions have been answered yet, and I hope that the Chancellor of the Duchy of Lancaster will be able to do much better than the Minister has done.
Looking at Richard Thomas and Baldwins in isolation from the remainder of the steel industry one could ask, has the firm been inefficient? Has any charge of inefficiency been levelled against it in its seven years history as part of a nationalised concern? If that had been the case the Tory Press would have had the story in the papers ready for the debate today, but everyone knows that this firm can hold up its head proudly, because it has been as efficient, if not more efficient, than any other steel company. It has played its part in production and also produced profits. If the making of profits is an important criterion, the great crime of Richard Thomas and Baldwins—the greatest crime in the Tory calendar—is that as a nationalised industry it has made a profit.
If the company had not made a profit would there have been a rush of buyers? If the company had made a loss, the story might have been different. We do not see a great rush of buyers for the railways or the coal industry. Had this company been producing a product for the steel industry which happened to be essential for the nation but which was unprofitable to produce, would the Government have denationalised it? I am sure they would not. The great crime of this company is that it was a highly efficient and profitable nationalised industry, and hon. Members opposite could not stand the sight of this firm in private hands and so it must be returned. Richard Thomas and Baldwins is in the dock because it has perpetrated this foul crime—
Writing in the Financial Times some time ago, Mr. Lewis Chapman, President of the British Iron and Steel Federation, described the present set-up. He wrote:
All but eleven companies have been returned to private hands "—
this was written some time last year. I have the date if hon. Members wish to know it.
Although the Agency is ultimately responsible for the direction of the companies which it still holds, control is in fact exercised by their boards of directors which are substantially the same in composition as they would be if the companies concerned were not nationalised. These firms operate very much as private concerns.
That is the considered opinion of the President of the Federation. Where is the difference? What conceivable advantage can there be to Richard Thomas and Baldwins or to the nation if this company is returned to private hands, apart from the profit motive? That is the crux, indeed it is the only part of the Government's case. The company is operated efficiently and, as was said by the President of the B.I.S.F., it is operated not very differently from the way in which it would be operated in private hands. But, because private investors and speculators cannot partake of the profits of this great concern, it must be returned to private hands.
The whole of the steel industry has never been charged with inefficiency during the short time in which it has been nationalised. One may go through the record of all the companies which have been denationalised or one may consider six or seven of them. It shows that since denationalisation the steel companies have made colossal profits and this money could have been the property of the nation had the companies remained in public ownership. I will not go through the list in detail. I have made a survey of certain companies including the Lancashire Steel Corporation, Ltd., Stewarts and Lloyds and so on, and all of them show a great accretion of profits.
United Steel was denationalised in November, 1953. In 1954 the declared profit was £11 million. In 1959 the figure had doubled to £22 million and capital reserves went up from £47 million to £96 million. The Lancashire Steel Corporation, Ltd., Stewarts and Lloyds, John Summers and Sons, Ltd.—they are all the same. The capital reserves of John Summers went from £21 million to £46 million. The net fixed assets of Dorman Long and Company increased from £26 million to £54 million. For Colvilles Ltd. the increase was from £14 million to £44 million. The net fixed assets of the Steel Company of Wales, which operates in my constituency, have gone up from £119 million to £164 million and indeed the dividend rate has gone up from 4 per cent, to 10 per cent.—
These figures, of course, have been published for many years past and are well understood by every hon. Member. But what merit is there in them? We all believe in increasing profitability and matching it with increased production; and, to attract the additional capital wanted, we believe in increasing dividends. If any hon. Member opposite does not believe in those canons of industrial efficiency, he is a fool.
The merit of these figures is that they show that all these companies have been able to add greatly to their capital since they were denationalised. Had they remained in public hands, the nation would have benefited from these accretions of capital.
Would not my hon. Friend agree that the tendency to increase the profits and reserves has been greatly augmented because of the steep increase in the price of steel?
Certainly, but I do not wish to go into that technical argument at the moment.
Richard Thomas and Baldwins has also added to its capital reserves. In 1954 the figure was £34 million. In 1959 it was £56 million. The fixed assets went up during that period. This is the record of a nationalised company which has made great profits and has been able to add to it during the seven years it has been nationalised. I hope that it will not be similar to the Biblical story of the seven fat years being followed by seven lean years. I hope that will not happen, for the sake of this great company, which, it is obvious, is to be thrown to the wolves like all the other companies I have mentioned.
Had they remained in public hands, the nation would have benefited and not individual speculators and investors. Today the Temple is filled with moneylenders in the shape of these investors and speculators. Not only are they in the Temple but they are taking it down brick by brick, sheet by sheet and billet by billet and sharing the spoils among their friends. In the case of Messrs. S. G. Brown, Ltd, which we are to discuss tomorrow, according to replies given by the Home Secretary last week, certain conditions are to be attached to the resale—conditions attached to the firm itself. I am entitled to ask whether any conditions will be attached to the resale of Richard Thomas and Baldwins.
Will this firm be allowed to take part in future General Election campaigns and put its money to the support of the party opposite? I think that the least that we are entitled to ask, when the party opposite is denationalising this great company, is that there should be a clause prohibiting the company from using its money for political purposes in future.
If I may continue my argument, only a short time ago, we were discussing the granting of loans to Richard Thomas and Baldwins and Colvilles. I am entitled to ask whether, if Richard Thomas and Baldwins or any other steel company in future has plans for further expansion, they are to come to this House again, even though in private hands, and ask for more money.
Sir Ellis Hunter, Chairman of Dorman Long, Ltd., wrote in the Financial Times last August:
The processes of nationalisation and denationalisation and still more the threat of renationalisation have inevitably meant that some, but only a minor part of, finance has been supplied from public sources. There has never been a shadow of justification or suggestion that if once it were freed from the threat of renationalisation, the industry could not do just as well as other highly capitalised industries, such as oil and chemicals, in financing its own development
Is that the case? Can we get an assurance from the Minister that Richard Thomas and Baldwins will not come in future to ask for more money? I hope that the Chancellor of the Duchy of Lancaster will give us that assurance, and that before the end of the debate he will bear out these wise words of the Chairman of Dorman Long Ltd. I am sure that, if the time comes for a further expansion in the steel industry, this and other steel companies will come to this House again and ask for more money.
If I may deal with the argument that I was putting in regard to Richard Thomas and Baldwins, I think it is obvious to everyone that this company has the prospect of making a very large amount of profit and producing a great quantity of steel in the future. Is there any reason at all why we should allow speculators and investors to dip their hands into this pot of gold?
Here, therefore, a successful public concern is to be handed back to private hands. There has been nothing like it since the Spanish Main. Drake, Raleigh and Captain Morgan will go down in English criminal history as juvenile delinquents compared with the vultures who are now hovering around ready to pounce on the future prospects of the great profits which this industry will make.
It may be as well at this time to question the very basis of many of the speeches which have been made already suggesting that when the steel industry was nationalised it was brought under full public ownership and control. If we analyse what is meant by full public ownership, we find that we can define it as follows. First, the organisation and structure of the industry and the business of management itself. Then there is control of investment and of further production plans. Next, there is control of prices; and last, and I would have thought least, there is the ownership of the shares of the industry itself.
We should look at the case of Richard Thomas and Baldwins and at the steel industry as a whole to see whether these criteria are affected by the proposed sale. I think we can leave out the management and the organisation of the steel industry, because it did not alter under nationalisation and the steel industry has continued to do extremely well both before and during nationalisation, and even after its resale, which is perhaps the most important thing of all.
We have seen other nationalised industries in which management does not tend to go forward so rapidly, and perhaps if we leave it much longer we shall kill the seeds of future management. The National Coal Board is a case in point where it has not been found possible always to get the right management, which shows the very real difficulty to which I refer. We have had seven years of experiment—and this is the answer to the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins)—in the nationalisation of these companies, and I do not see very much difference as a result of what happened as between those companies nationalised and those companies which have already been sold back.
With regard to the hon. Member for Newton (Mr. Lee), he seemed to spend half of his speech praising Richard Thomas and Baldwins and saying how well they had done since nationalisation and the other half attacking them, partly for the alleged shortage of sheet steel which we have at the present time. The hon. Gentleman cannot have it both ways, and in some ways it was tragic to see how the iron had entered into his soul.
I should like to point out some facts about this question of sheet supply. In 1958, 202,000 tons were exported. In the very year in which the hon. Gentleman was complaining that we were not able to build enough capacity in order to meet the needs of the nation, we exported 202,000 tons. The hon. Gentleman also referred to the delay in the starting of new works. It is not at all clear whether the delay in starting new strip mills has been the fault of individual companies such as Richard Thomas and Baldwins or whether it Ihas been the fault of the Iron and Steel Board itself. There is no direct evidence to show who was pushing whom or which was the cart and which was the horse. It would be unwise, in any case, always to take the peak demand in sheet steel or in any other category of steel. We would do well to remember that it is better for the American sheet steel industry to have a little idle capacity from time to time rather than that our own should be in that position.
A nationalised board is not always the best body to feel the pulse of the market, to know which way demand will turn and whether there is likely to be an increase or a reduction in demand. Let us look at the National Coal Board in this respect. The Board failed to produce enough coal for many years and is now producing too much coal, and it has been unable to make long-term production investments fit with demand. The same failing is evident in the handling of the sheet steel problem today, and perhaps that is a reason which I can give the hon. Member for Stechford for denationalising the industry.
One big effect of the present system of control of the steel industry is to make the raising of capital extremely difficult. Many times from these benches we have had the argument that the threat of nationalisation was one great factor why Government loans had to be made during the last two or three years. I accept that argument, and I am quite certain that it is one of the main reasons why we have had to keep that part of the steel industry which is publicly owned and has not yet been returned to private hands. It is as well to remember what Lord Morrison said—"We will not pay again for what has already been paid for." Whether that is an accurate quotation or not I do not know, but it still meant that would-be investors were not prepared to risk their capital at that time.
There is another reason why it would be difficult for this industry to raise money, and that is maximum price control. There we come to the third criterion I have mentioned, the question of control of prices in the steel industry. It was accepted in 1953 that this was necessary, and it worked on this basis for seven years, although the Government majority was then very small, it has been buttressed in two successive elections by the electorate who have demonstrated that they want a complete return to private enterprise, not only with regard to ownership, but on the other important questions of control of investment and maximum prices.
Please let me develop my argument.
Germany has a very similar steel industry to ours, and it has not got any form of public control nor public control of prices. The industry, however, has always been completely in private hands, but the Germans have continued to increase production at a faster rate than we have and have made a very successful job of the industry. In most cases the prices are slightly above ours. It happens—this is an exception to which I do not know the answer—that their price of sheet is very much more than ours. I query why the price of sheet in this country has fallen from £52 16s. in 1958 to £51 1s. in 1959. If sheet has been so scarce, why has it been necessary to drop the price by £1 15s.? Surely it is a very bad piece of economics when a commodity is short immediately to drop the price.
We have much to learn from Germany, and the fact that Germany has been able to allow its steel industry to serve the nation without any of the paraphernalia of pseudo-nationalisation which still surrounds our industry. That is something we should be slow to pass by. Lastly, I come to the question of ownership—
They have overall restrictions, but that does not affect internal prices.
I now turn to the question of ownership, which is perhaps the least important. All that has happened in the last ten years in Richard Thomas and Baldwins is that its shares were bought by the State and they are now about to be sold hack. I am surprised that it has taken so long to make this small change, which is a nominal change, in the question of who owns the stock. The important thing, surely, is who makes the decisions and controls investment and prices in the industry? There is still £21·9 million, which is the valuation of Richard Thomas and Baldwins in I.S.H.R.A. today. There is a further £20 million-odd in eight other companies which I.S.H.R.A. still holds. I urge my right hon. Friend who is to wind up the debate to hand back the rest to the private sector as soon as possible, because I do not believe it is necessary to take so long over it.
Many hon. Members opposite have suggested that the Government should not hand back the equity but rather hand back the fixed-interest stock. Some steel shares have done very much worse than others, and some equity shares, not in steel, have gone down. Just because we had a period of increased prosperity that does not mean that the price of steel shares will never go down. We know the Government take the first crack by having fixed interest preference shares, if they must have any at all, which will have their dividend paid first. Keeping the equity is entering the gambling field, of which hon. Members opposite are so frightened. Shall we have the Government buying Premium Bonds next, setting up gaming tables in the middle of Wales or running a horse at Ascot? We do not want the Government to gamble with our money, but to get rid of all their holdings in this industry as soon as possible.
I should like the Government to get out of ownership in the steel industry and to let as much of the equity as possible go on the market year after year, and then the fixed-interest loans, until, as they have promised, by the end of this Parliament there will be none left in public ownership.
The trouble about controversy is that it makes people exaggerate so much on one side or the other according to which side they happen to favour. We have had an example from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who criticised the Coal Board, he being against nationalisation in general, on the ground that it had to seek the material for promotion from outside the industry. Has he never heard of all the insurance "wallahs" and others outside the steel industry who happen to control the greater part of it?
I hope that the hon. Member will not think that I am lecturing him unduly, because we are all liable to this sort of blindness when we want not to see something on the side we happen to favour. We are blind about its defects and can criticise only the defects on the other side. I feel that the Government will be doing a real disservice to the country if they press ahead with this so-called denationalisation of Richard Thomas and Baldwins. Denationalisation is a term which needs some sort of definition, because it means so many things. Certainly, Richard Thomas and Baldwins has never been fully nationalised, at any rate since the present Government came into power, although it has been fully nationally owned. A great disservice will be done to the whole country if this branch of the steel industry is taken out of public ownership by the Government.
This is a time when, in spite of contrary appearances this afternoon, political party controversy in this very great industry had to a large extent been stilled, but the whole thing has now been brought up again. The whole thing, by the action of the Government, has been thrown back into the cockpit of party politics once more. I do not think that that is a desirable thing. Labour was accused of doing this very thing ten years ago by the people who are now doing it themselves and was accused with very much less reason then, so far as I can see, than that with which I now accuse them. It is a terrible thing that there should be these bandyings about of industries by Governments from one side of the House to the other, when the real good of the industry and of the country is so easily forgotten in the process.
Apart from the obvious answer of "lolly", I wonder why the Government have been moved in this direction. We know that hon. Members opposite have a belief that there should be private enterprise and private ownership of all the industries in the country, but are they not carrying that a little too far when they have been able to produce no reasons, apart from their beliefs, why this industry should be handed back to private ownership when the result will be—this cannot be, has not been, and I am sure, would not be, disputed by any hon. Member opposite—that the nation or the State will be deprived of profits it otherwise might have had?
I am sure that hon. Members opposite do not wish to deprive the nation of profits; but it certainly seems as if they do when, although they do not mind foreign investors taking shares in British industries, they prevent, by such actions as those which we are discussing, the nation having the profits from Richard Thomas and Baldwins. I believe that at heart they, like me, want to see the best thing done for the country. Surely one good thing, since we want to arrive at the result which is best for the country, is to try to avoid political controversy as much as possible and to have a means of testing which system is best for the country. The very action which they are taking today will deprive us of that means of testing, because here was a company which was a nationally-owned branch of the steel industry, and an exceedingly successful branch, running alongside privately owned steel industry so that comparison was possible.
I have one of the major undertakings of Richard Thomas and Baldwins in my constituency, and everybody knows how extremely successful it has been. All the old arguments which were used against national ownership have been proved wrong in the case of Richard Thomas and Baldwins. As we have been told many times today, even if we did not know before, it has made profits at least as well as the companies the equity shares of which are privately owned. It has done as much good in producing steel for the country as have the other companies, and just as much good for those occupied in the industry, whether in management or as workers. [HON. MEMBERS: "Better."] It may be said that it has done better. I do not want to exaggerate and I say, "Just as good". It has done just as much good in wages, conditions and superannuation schemes.
It was a very proud moment for me when that happened, for I represent the constituency which contains the Redbourn Works. When other people were on short time, Redbourn managed to go ahead. All these things have been done by this nationally-owned company.
I submit that the only fair deduction—and I want to be fair, as I believe do most hon. Members—is that the question of public ownership or private ownership is an irrelevant question to those points which I have been mentioning. It may have other relevancies, but not to the conditions under which people work, the prospects of management, the profits or the production. In the period when the whole industry was nationalised, production increased by just as much as it had ever increased before.
Records are still being broken by the nationally owned Richard Thomas and Baldwins, although the company does not receive all the somewhat vulgar publicity which the publicity "merchants" give to the records being broken by the firms which are in private ownership. These things have all been shown to happen just as much under public ownership as under private ownership. From that point of view—and I am discussing it only from that point of view—the question of public ownership is irrelevant. It is irrelevant to those matters which most concern those occupied in the industry.
There is, however, a great point in which the question of public or private ownership is not irrelevant—the great point of who gets the profit. That is a point to which the question is extremely relevant. No spokesman from the Government side of the House has made any attempt to show why the State should be deprived of the profits when apparently it is accepted as quite in order for private individuals to have them.
I am being objective in my speech, and I hope that hon. Members opposite will not think that I am being other than objective if I refer to the June issue of Socialist Commentary, which contains an extremely interesting report of a survey of public opinion on the question of national ownership and national control of industry. This was a most objective survey, as far as I could tell, in the way in which it was arranged and organised and in which the results were published. The most striking feature was that the people who were asked these questions on national ownership and control of industry—they were all outside the House—were very much less interested in the question of national ownership and control than are many hon. Members on both sides of the House. It is in the House that the heat is engendered on this subject, and in my opinion the Government's action about Richard Thomas and Baldwins is raising this heat even higher than before, which is lamentable.
It was found that the majority of the people questioned in this survey thought that there had been a success for national ownership and control in gas, electricity, air transport and nuclear development. That was the majority view of people of both the main political parties who were asked. It is also true that the majority of people of both parties who were asked what they thought about the coal and railway industries said, regardless of party, that these industries were not a success. A substantial minority of Conservatives who were asked thought that coal and the railways would have been no better under private ownership and control. All this should be an example of objectivity to us. In those circumstances, is it not lamentable that the Government have tried to rekindle all the flames of this controversy when there are things to be done which are so much more important?
Is it too late to hope that, even now, the Government will not go ahead with this proposal? If they wish to see that a fair experiment is conducted as to the way in which national ownership affects the conduct of industry and the way in which private ownership affects it, all they need do is to leave Richard Thomas and Baldwins alone. They need not go as far as I should like them to go and permit Richard Thomas and Baldwins to be not only under national ownership but also under national control. I should like to see that, but I dare say that hon. Members opposite would not. Very well. Why not at least leave the experiment alone, to see how it works out? When the whole industry was under national ownership and control there was no noticeable increase in inefficiency; I need not put it any higher than that. Profits and production were just as big as ever. In fact, they continued to increase.
There is no reason whatever why the Government could not have decided from their own unchallengeable position to allow this experiment to continue. The full national ownership and control which existed under the Labour Party existed for so short a time that it was inconclusive. I think that it was a great success, but I am prepared for the purposes of the argument to admit that the time was too short for the experiment to be conclusive. It could have been continued longer on a much smaller scale by leaving Richard Thomas and Baldwins alone.
Are the Government so afraid of the excellent way in which Richard Thomas and Baldwins has been conducted that they dare not allow it to continue for another few months or years to let us see how conclusive the experiment is? It is a tragedy that it should have been disturbed. I hope that we shall not go further into controversy and that the Government will allow this set-up of Richard Thomas and Baldwins to continue in order to show permanently whether national ownership is a good thing and whether it has and, if so, what effect on efficiency, production, and the conditions of work of the workers in the industry.
If they would do that, not only would they still party political controversy on this matter, but they would be able to turn their attention to something much bigger. We are living in an age when we are moving away from national sovereignty. The world must have order enforced by a supernational authority, otherwise we shall go tottering over the edge of the precipice of self-obliteration. What are the Government doing about all this? They are putting an end to an experiment which, as far as it has gone, has been a great success. Will the not drop the tinkering and get on with far more important things which, perhaps, could save the peace of the world?
The hon. and learned Member for Brigg (Mr. E. L. Mallalieu) has lectured the members of my party for plunging the nation into further controversy over steel. Nationalisation is a controversial topic. No one knows that better than the Leader of the Opposition, struggling as he is to secure some sort of unanimity in his party on the text of Clause 4.
Of course it is the essence of democracy. My point is that it is, therefore, a little hard that the hon. and learned Member for Brigg should comment so adversely on the Conservative Party causing controversy by carrying out election pledges which not once, not twice, but thrice, they have been returned to the House to give effect to.
Has the hon. Member taken any consensus of opinion of the members returned for steel constituencies? Such people know the life they are leading and know what they want. They cast a vote with some knowledge.
May I get on with my speech?
The hon. Member for Central Ayrshire and a colleague of his ask which of my hon. Friends represent constituencies concerned with steel making. This debate is about Richard Thomas and Baldwins. I have two Richard Thomas and Bald-wins' steel works in my constituency. They are the original Baldwins' iron works. I do not claim that they are large. Obviously they are not the size of Margam, because Kidderminster makes mostly carpets, not steel. At least, it makes carpets as well as the steel makers make steel.
I wish that the hon. Member for Central Ayrshire would not conclude that there are no representatives of steel works on this side. If he wishes for an even more clear case of the antipathy which existed at the 1959 General Election to his party's policy of renationalising steel, let him study the trends in the constituency of Flint, East, where there are about 14,000 steel workers and the present Labour Member was returned by the hairbreadth majority of 75 votes.
May I finish and then I will willingly give way?
If the hon. Member for Central Ayrshire wants a further example of the antipathy to nationalisation in a steel constituency, including heavy engineering and chemicals, let him do a little amateur psephology and study trends. I am sorry that I have upset my right hon. Friend the Chancellor of the Duchy of Lancaster so much by referring to amateur psephology. Let my right hon. Friend turn up The Times Guide to the House of Commons, which lies on the table in front of him. If he refers to the Cleveland Division of Yorkshire, he will see that it was won at the General Election before last by a Labour candidate by 5,481 votes, won at a by-election by a Labour candidate by 181 votes, and lost at the General Election in 1959 to a Conservative, largely because of the antipathy of industrial workers in the Cleveland division, comprising for a large part workers at I.C.I. at Billingham, to the general theme of nationalisation.
The Leader of the Opposition is exactly right. He wants to alter Clause 4. If he ever hopes to be Prime Minister, he had better alter it, and alter it quickly, because if he fights another General Election with Clause 4 in its present form he will suffer an even worse defeat than he suffered in October, 1959.
There are differing local circumstances in many constituencies. I have selected two constituencies where the ant-nationalisation vote was very powerful. If the hon. Member for Workington (Mr. Peart) cares to consult the official record, he will find that what I have said is borne out. I refer him in his psephological consideration to the book entitled "The 1955 General Election", by Mr. David Butler, in which he will find all these nationalisation c2nsiderations considered in some detail.
As a contrast to what has happened to the Labour Party, the majority of my hon. Friends and myself were returned to the House with increased majorities in 1955 and 1959 on an anti-nationalisation ticket. I am not in any doubt about that.
The hon. Member for Penistone (Mr. Mendelson) is nodding. He may have been in politics and public life a great deal longer than I have, but I started my opposition to nationalisation as the principal theme of my Conservative philosophy fifteen years ago, at the end of the war. Before that I had other things to do. For fifteen long years, including the whole period when the Labour Government were in office between 1945 and 1950, namely, for five years before I became a Member of the House, I was a platform speaker all over the country, stumping the country against nationalisation. I still do. My faith is pure white as the driven snow.
I believe that the hon. Member is making a serious point and I am treating it quite seriously. I suggest to him in equal seriousness that in a General Election there are many issues and complex results. In a good many steel constituencies, where my hon. Friends and myself fought mainly on steel, such as Rotherham and Penistone, our very large majorities were either maintained or increased. In others, there were different results. Many factors operated in the General Election and the hon. Member has no real evidence for singling out common ownership as the decisive factor.
I am grateful to the hon. Member for his intervention. One cannot separate these issues precisely. All I am proclaiming is my own individual faith, and on that ticket or those tickets I have contested five consecutive General Elections. I am not in any doubt about the views of industrial workers in my constituency, including large numbers on the workshop floor who support the views I express and believe that nationalisation is not in the best interests of the community.
My complaint to my right hon. Friend the Minister of Power is not that he is proceeding too quickly in the denationalisation of steel but, on the contrary, that the dilatory behaviour since last October of Her Majesty's Government in disposing of the assets of Richard Thomas and Baldwins has resulted in heavy losses to the Exchequer. Of course, all steel shares after the General Election win by the Conservative Party in October, 1959, rose very sharply. They continued to rise, reaching a peak in the first week of January, 1960.
I.S.H.R.A. was created for the disposal of steel assets in 1953. I should have thought that six years, by the autumn of 1959, that is to say, immediately after the last General Election, gave adequate time to complete preparations for the disposal of Richard Thomas and Baldwins' assets and that, in the exceptionally favourable stock market conditions of last October and November, Richard Thomas and Bald-wins could have been put on the market immediately, to take advantage of the high prices which would then have been forthcoming for the assets. Here we are, nine months after the General Election, still dithering as to whether Richard Thomas and Baldwins is to be denationalised. [An HON. MEMBER: "Dithers?"] Yes, my party occasionally dithers. The party opposite wobbles like a jelly. I would sooner have an occasional dither than a permanently wobbling jelly.
Let us consider what has been lost. I have looked up the position of four of the major steel companies which have been denationalised. The £1 ordinary shares of the Steel Company of Wales are quoted in the Financial Times this morning at 44s. 6d. Their price in the first week of January was 55s. 9d. They have declined by approximately 20 per cent. If Richard Thomas and Baldwins were marketed next week, the share prices would bear relation to other steel equities in denationalised steel companies and yield a much lower price than was available last January.
The second example is United Steel, the biggest steel organisation in this country today, of course, and the most diverse in the character of its steel products. The price today of its £1 ordinary shares is 75s. 9d. Compared with their peak in January last, of 86s. 4½d., they show a decline of approximately 12½ per cent. The third example is John Summers Ltd. of Shotton. The price today is 70s. for the ordinary £1 shares. The price in the first week of January last was 80s., a decline of approximately 12½ per cent. The fourth example is Stewarts and Lloyds. Their price today is 45s. 6d. Their price in the first week of January last was 63s., a decline of approximately 27 per cent.
Why did not the Government denationalise Richard Thomas and Baldwins between the second week of October and the second week of January, thereby obtaining higher prices, not the relatively depressed prices of today, all of which are substantial percentages below the best prices which would have been then obtainable for the equities?
The hon. Gentleman has referred to the comparatively depressed prices of steel company shares. Could he tell us how much extra would have been obtained for the State if the Government had not been in such a rush to issue all these shares? The shares of Stewarts and Lloyds at 20s., for instance, have been divided once, and they are 45s. now, so, at least, there would have been 90s. there. Is it not the fact that in all these cases there would have been four or five times as much money coming into the public purse if the Government had not been in such a stupid hurry?
I cannot answer a question like that about finance precisely because it would involve me in working out, for the period since the date of denationalisation, the aggregation of net profits and the sums which have been ploughed back into each company; but, of course, the amount involved is very large.
I intervened in the speech of the hon. Member of Aberavon (Mr. Morris), who was kind enough to give way to me. I believe in a high level of industrial profits. I believe in a relatively modest distribution in the form of dividends. I believe in two parts out of three of net profits being ploughed back into the business for expansion, and I believe wholeheartedly in capital gains. All of these are signs of strength and the expansive capacity of our national economy in which steel is the fulcrum.
It is not possible for the steel companies to raise the huge sums of money which will be required in the next few years for the continued expansion of their activities and output unless the dividend yield is fairly attractive and there are prospects of growth and capital appreciation. The more the private shareholder can make by steel investment both in terms of capital appreciation and in the form of dividend, the happier I am.
I am in very good company. I am not alone. My hon. Friend the Member for Louth (Mr. C. Osborne), who is so expert in these matters, referred to the investments of the Church Commissioners and of the famous financial institutions, including the insurance companies. There are the investments of manifold pensions funds, of the National Union of Mineworkers, to quote one example. There are the investments of practically all the trade unions which invest their funds where they are likely to secure two major benefits, first, capital appreciation, tax-free, for the future good of their members and, secondly, a substantial rate of dividend based on good earnings and profits records. I warmly compliment the National Union of Mineworkers upon its perspicacity.
I hope that the Leader of the Opposition, who understands so thoroughly all the niceties of these investment matters, will not be unduly derogatory about the diversification of shareholding interests in the largely denationalised steel industry today. The number of shareholders is very impressive indeed. I took out a summary of the position in eleven major steel companies which have been denationalised. I will not weary the House by giving the names of the companies. The total number of shareholders is over 207,000. The overwhelming majority of them, 90 per cent., own less than 500 shares apiece. Of course, every day that goes by, with the intensification of activity in the unit trust movement, more and more small shareholders are attracted to the stock market and the diversification is becoming even more widespread.
How can it be claimed that the denationalisation of this last major steel company, when at least eleven are already in total private ownership, is likely to lead to its falling into the hands of "a few sharks", as one hon. Member opposite called the owners of these shares? Other hon. Members have called them profiteers. Others have impugned the investors' motives by saying that they seek only "lolly".
I think that the Leader of the Opposition would do well to buy 300 copies of the admirable pamphlet published by his hon. Friend the Member for Grimsby (Mr. Crosland) a few weeks ago, "Can Labour Win?", which I read with avidity and re-read last Sunday evening. I commend it to hon. Members opposite—"Can Labour Win?". They should think well before they continue denigrating the interests of the private investors, who, after all, are the majority of the population of this country today, including wage earners, through the various investment organisations the unit trusts, pensions funds, and so forth. [Interruption.] I think that the hon. Member for Newton (Mr. Lee), who is now muttering, was a member of the national committee of the Amalgamated Engineering Union, was he not?
I am much obliged.
The A.E.U.. of course, has made financial arrangements for investment of its pension funds. What does it do with its accretion of funds. It employs my friends in the City, the stockbrokers, to tell it where to invest its money in order to gain two benefits—the greatest possible capital improvement free of tax and the best possible dividend yield. Why is the hon. Member for Newton so rash as to comment unfavourably on the financial activities of his own union? He is very foolish. I shall have to come to Newton soon and address his trade unionists. [An HON. MEMBER: "Stick to carpets."] I am not going to stick only to carpets. I represent other interests in this House.
The whole point which the hon. Member neglects is that they do not share in it by nationalisation.
This also applies to the coal industry. The right hon. Member for Ebbw Vale (Mr. Bevan), when he spoke some years ago about the structure of nationalisation as it then existed, pointed out that the nationalised industries were unaccountable in the sense that they were accountable to nobody. Is any hon. Member satisfied with the Parliamentary accountability of any of the nationalised industries?
We all know full well—I know as a businessman—that if we try to increase Parliamentary accountability over the publicly-owned industries what happens is that we cannot get competent people to run them because they are looking over their shoulders to see what the politicians are likely to say about them. That is a thoroughly bad state of affairs. We have denationalised in name only the greater part of the steel industry. It is not a practical proposition to retain in public ownership, as is suggested in the Motion, the balance or residual of the steel industry, including Richard Thomas and Baldwins.
I use the phrase "in name only" very deliberately. I have been severe in my criticism of the delay in denationalising Richard Thomas and Baldwins. But I want the Chancellor of the Duchy of Lancaster, before winding up the debate to apply himself to another aspect of this matter. On 22nd March, the Economic Secretary said:
The hope of the Government is that, within the lifetime of the present Parliament, the I.S.H.R.A. will complete its duty of substantially returning the industry to private enterprise. We are very hopeful that conditions will be such that the Agency will be able to make significant progress during the course of this year."—[OFFICIAL REPORT, 22nd March, 1960; Vol. 620, c. 366.]
I am somewhat worried about the magnitude of this task. I say quite unequivocally that the objective of the Conservative Party should be the completion of the denationalisation of steel by 1964. We have already been at it for seven years. If the task is completed by 1964 that means that it will have taken eleven years.
It is not untrue to say that when we started denationalisation in 1953 the inventary value of nationalised steel assets was £252 million. I have looked up the last Annual Report of I.S.H.R.A. to September, 1959. It contains some fairly revealing figures to which my right hon. Friend the Minister of Power has not referred. I should like to refer to the Iron and Steel Holding and Realisation Agency's Report and Statement of Accounts for the year to 30th September, 1959. The book value of the remaining I.S.H.R.A. subsidiaries at that date was £41 million. The Report states that the Agency's investment in fixed interest securities, including debentures, loan stock and preference stock, of companies ceasing to be nationalised amount to another £150·5 million.
The hon. Member for Greenwich (Mr. Marsh) seems to be in difficulties. He is frowning at me. May I guide him? Has he the Report in his hand? If he has, he will see that the total of the figures mentioned on pages 6 and 13 is £191·5 million. To that must be added the loans to Colvilles and Richard Thomas and Baldwins, which caused so much controversy a few weeks ago, to the extent of another £120 million. Therefore, the total State investment in steel notionally is £311 million compared with £252 million when we started denationalisation seven years ago.
I have no desire to embarrass my right hon. Friend the Chancellor of the Duchy of Lancaster. He is one of my oldest friends. He is smiling benevolently at me. He sat on the back benches with me ten years ago. He has made much greater progress in this House than I have.
I agree that he has not made the same progress outside, but that is neither here nor there. I do not wish to embarrass my right hon. Friend, but when the Tory Party started to denationalise steel the State's stake was £252 million. Based on the last I.S.H.R.A. Report, plus the amount of the steel loans which have been voted through this House, the total is now £311 million, and the Economic Secretary said on 22nd March that we propose to complete the denationalisation of the steel industry.
I want to be certain here, because I happen to be one hon. Member who is gravely worried about the attitude of the Conservative Party in this matter. Will we really be able to unload £311 million on to the market in the next four years, at an average rate of £78 million, which is a very large sum of money? I am not alone in my apprehension. Has my right hon. Friend the Chancellor of the Duchy of Lancaster referred to the leading article in the Financial Times of 25th February, which voiced similar apprehensions, or to the leading article in the Economist on 2nd April under the heading "I.S.H.R.A.'s Task"?
I should like to quote from the opening paragraph of the Economist's article. It states:
Others besides Mr. Nabarro have been perplexed about the current oddities of finance for the steel industry. The Government has landed itself in a circus act, and the ringmaster from Kidderminster has been having an enjoyable time flicking his whip at this spectacle of two horses being ridden in opposite directions. To be committed to the denationalisation of steel and committed also to the provision of £120 million of public money for the erection of new steel plants to be under private control suggests certain equestrian dangers.
The Financial Times, the Economist and myself are, therefore, unanimous in suffering a good deal of apprehension as to the practical possibility of the Conservative Party honouring its latest pledge, which is to unload £311·5 million of I.S.H.R.A. assets and loans on to the market within four years. I hope that statements of pious intention in this matter will not be thought sufficient.
I believe that we should complete the denationalisation of steel by 1964. I strongly oppose the Motion. The whole of my party will be as convinced that we are right in pressing for total denationalisation, as indeed, the majority of the party opposite is convinced that Clause 4 should remain intact in the constitution of the Labour Party. Before the hon. and learned Member for Brigg lectures members of my party as to their attitude to nationalisation, I suggest that he endeavours to pour oil on the troubled waters of his own party's constitution, notably in the context of Clause 4.
I have been in this House for ten years, as has the hon. Member for Kidderminster (Mr. Nabarro), but I cannot recall a debate in which virtually all the speeches from the other side of the House had so little contact either with the Motion under discussion or with the preceding speech. The sole exception is the hon. Member for Kidderminster who, in the midst of his jovial utterances, gave the Minister a lecture on arithmetic. I prefer the sums done by the hon. Member concerning the public capital that is still in the steel industry to the tortuous figures given by the Minister in opening the debate from his side of the House. If the hon. Member for Kidderminster does just a little more research, he will find that in addition to the figures he has given I.S.H.R.A. still has obligations to make advances in certain circumstances to other companies. Therefore, his £311 million is almost certainly an underestimate.
My hon. Friend the Member for Aberavon (Mr. Morris) has referred to the historic links between the Steel Company of Wales and Richard Thomas and Baldwins. With my hon. Friend, I share representation of that great basin of coat and steel in Mid-Glamorgan, embracing 13,000 miners and nearly 20,000 steel workers. Those who produce the 21 million tons of coking coal which Margam now consumes every year, equally with the steel workers, cannot tolerate the flippancy with which the hon. Member for Kidderminster and others talk of these serious issues.
The case stated so ably by my hon. Friend the Member for Newton (Mr. Lee) has not been tackled. He rested his case on three propositions. The first was that, judged by any possible criterion—efficiency, expansion, profitability or anything else—Richard Thomas and Baldwins has a great record under public ownership. My hon. Friend's second proposition was that inevitably Richard Thomas and Baldwins, chosen by the Government themselves as the instrument of major expansion of the steel industry in the coming years, cannot do the job without massive sums of public capital. Thirdly, my hon. Friend the Member for Newton argued that the relationship of the steel industry to the community, to the balance of payments and to economic expansion requires as a minimum a public sector of the steel industry. I hope that the next hon. Member who speaks from the Government side will address himself to these three points.
The experience of Richard Thomas and Baldwins over the last nine years has demonstrated that the steel industry needs no functionless investors in order to be efficient, to expand and to serve the nation well. To Mr. Henry Spencer and all the managers, technicians and workpeople employed at Ebbw Vale and elsewhere, the nation owes a debt of gratitude. To add coupon clippers and functionless investors to Richard Thomas and Baldwins, however, will simply slow down the rate of expansion.
During the last nine years, Richard Thomas and Baldwins made a profit of £70 million before tax. It is small wonder that today we have not heard the normal Tory propaganda about the losses of nationalised industries. If one considers the growth over the nine years in the capital and reserves of the company or its net fixed assets, with the growth of capital and reserves from £20 million to £57 million and net fixed assets from £16 million to £45 million, one sees that the removal of the functionless investor makes expansion more rapid. It is as well to remember that in the early part of the nine years, when Richard Thomas and Baldwins was linked with the Steel Company of Wales, any capital that was available was inevitably used in the development of the great Margam steelworks, which is on the edge of my constituency.
The efficiency of Richard Thomas and Baldwins was clearly recognised by the Government when they chose R.T.B. to be the instrument with which to build the fourth strip mill. This project, which the Minister has told us today will cost £119 million and not £110 million as we had believed, is to be financed by a loan of £70 million and further loans from I.S.H.R.A., from the public purse.
In the last debate on this topic, the hon. Member for Kidderminster made great play of the fact that the Chairman of Richard Thomas and Baldwins had expressed the view that that concern would be able to repay the loan by 1971. That does not impress me. We have had experience in the Steel Company of Wales of what happens when a company is said to be denationalised, but between two-thirds and three-quarters of its capital is publicly owned. The figures for the Steel Company of Wales are that £40 million has been put up by shareholders and, to date, £88 million from the purse of the taxpayer. In the case of Richard Thomas and Baldwins, if the issue of shares is £30 million or even £40 million, rivalling the Steel Company of Wales' issue in 1957, in the years to come between two-thirds and three-quarters of its capital will be publicly owned.
I follow the point the hon. Member is making. He will, however, bear in mind that the ordinary capital of Richard Thomas and Baldwins is at present just over £10 million, at face value. Its book value, from the point of view of I.S.H.R.A., is about £21 million—that is, £2 per share. It is popularly expected, however—I think rightly—that when it is issued, that £10 million of shares will be at about £4 per share, to yield £40 million. That is a profit DI £20 million to I.S.H.R.A. which is worth talking about.
The hon. Member should realise that, when I referred to £30 million or £40 million, I was putting the same popular valuation on the ordinary shares of Richard Thomas and Baldwins.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) spoke of the German industry. I was fascinated to see a leading article in the business section of the Economist a few weeks ago giving an account of the new efficient works being built at Llanwern, which will use the L.D. oxygen process pioneered in the nationalised steelworks of Austria and about which my hon. Friend the Member for Rotherham (Mr. Jack Jones) has told the House on many occasions.
What we have discovered is that as a result of the maximum prices fixed by the Iron and Steel Board to cover the entire industry, in the nature of the case, firms with the most efficient modern plant can plough back enormous sums. These should be used for reinvestment, but in this context of a new species of economic organisation, of so-called private enterprise, in which the majority of the capital is from the public purse, what, in fact, will happen is that the surplus profits will not be ploughed back but will be used to pay off the loans from the public purse, and at that point the tax-free capital gains about which the hon. Member for Kidderminster is so pleased will increasingly accrue to the private shareholder. Therefore, in the context of Tory economic policy, when it is said that the £70 million loan is likely to be repaid by 1971 it is tantamount to saying that those who buy the ordinary shares of Richard Thomas and Baldwins will get tax-free capital gains approaching that figure.
This is not theory. In March 1957, when £40 million of ordinary shares of the capital of S.C.O.W. were sold, who knew the future? But we now know in three short years that tax-free capital gains of between £45 million and £50 million have been made. That is why I said to the hon. Member for Kidderminster that, while none of his colleagues put up a case, he had put up the Tory case—
—because in his normal freebooting way he was pleased to hoist the Jolly Roger.
There is the third case which my hon. Friend the Member for Newton put from our Front Bench about which there has been no comment, let alone reply, from the other side of the House, and that is the place of steel in the economy.
I was born in the Cotswold Hills, near to Oxford and not very far from that long stretch of iron ore deposits in north Oxfordshire and Northamptonshire. I well remember in 1937 Sir William Morris, Lord Nuffield, on the basis of his experience in the motor industry, denouncing the British Iron and Steel Federation and its monopolistic policies in this phrase:
A ramp, a perfect ramp, an absolute ramp. Fat cigars and nothing to do.
Since denationalisation, the features of the tight private monopoly pursuing restrictionist policies are appearing again. We have the chief executive of the Society of Motor Manufacturers and Traders, Mr. Stanley Clark, in The Guardian of 17th May this year, while not going quite as far as Lord Nuffield in 1937, saying:
Cold reduced sheet steel from home sources has been scarce for years. It has been estimated that consumption by the motor industry is about a million tons a year, of which from 30 per cent, to 40 per cent. has to be imported. Forecasts that home supplies would meet demand have never been realised. Last year it was prophesied that demand would be met in the second half of 1960; but from reports this prophecy seems just as unlikely to be fulfilled.
One hon. Member opposite sought to reply to my hon. Friend the Member for Newton by referring to British exports of steel. I thought every hon. Member knew that if Britain is to live its steel industry and the other manufacturing industries must achieve a substantial export surplus.
I was coming to that point a little later in the argument.
The British steel industry, apart from the ingrained skills of its workpeople, technicians and managers, has great natural advantages. In the South Wales coal field, there are enormous supplies of prime coking coal close to the coast, so that high grade imported ores can be used and the export trade can take place relatively easily. In these circumstances, one cannot be satisfied with the performance of the private steel monopoly unless it is making its true contribution to the British economy and the British export trade.
When one remembers the difference of opinion, if not the struggle, between the Iron and Steel Board and the Federation from 1953 to 1954 onwards about the need to build the fourth strip mill, and then when one looks at the figures of the imports of sheet steel from 1955 onwards, one cannot but conclude that, in the collapse of the General Election boom of 1955 and the difficulties today which have given rise to a 6 per cent. Bank Rate and the rest, the most important single factor has been the failure of the steel industry controlled by the monopolists to expand sufficiently.
When one looks back over the period since steel denationalisation and analyses the fits and starts of the economic policy of the Government, first the runaway boom and then 7 per cent. under the right hon. Member for Monmouth (Mr. Thorneycroft), then the boom of late 1959 and early 1960 and the 6 per cent. of the present Chancellor; when one sees that the probable loss in wealth production of Britain in the last eight years through these policies of the Tories has been in the region of from £3,000 million to £4,000 million, if comparison is made with the rate of economic growth under the Labour Government, or the rate of growth in the six countries of the Common Market in that period—-one comes to the conclusion that it is highly probable that the monopolistic policies of the Federation have been responsible since the denationalisation of steel for a loss of British wealth production of between £1,500 million and £2,000 million. That is a fearful price to pay for the doctrinaire attachment of the party opposite to what it calls free enterprise, which is really restrictive private monopoly underpinned with the taxpayers' money.
The truth is, of course, that steel, along with fuel and power and a number of other industries, are what some people in recent times and many other in ancient times have called the "commanding heights" without which it is quite impossible for a modern economy to be controlled and planned for full enjoyment and expansion.
Under the threat of nationalisation, of course, the steelmasters have behaved very differently than they behaved many years ago. A strong trade union movement and nationalisation, or the threat of it, have had a considerable reforming influence, but I think the House and all steel workers should remember that in December, 1958, 22,278 or 5 per cent. of the folk in the industry were unemployed, and my hon. Friend the Member for Rotherham said in a recent debate that 60 per cent. of the men in the industry were working short time.
Yet today we face something approaching a famine in certain types of steel. Once again we see that the interests of the functionless shareholders and the criterion of profits are not synonymous with the interests of the British people as a whole and of the long-term planning of the British economy.
Therefore, on all three counts—the internal record of Richard Thomas and Baldwins during the nine years of nationalisation in efficiency, expansion and profitability, the need for most of its capital in the coming decade to be provided by the taxpayer, and the importance of the public ownership of steel in the grand stretegy of planning for full employment and expansion—on all these counts there must be an end to the policies of economic anarchy carried out by the Government opposite.
In listening to the vigorous debate that we have had today I noticed that the hon. Member for Ogmore (Mr. Padley) acted with considerable restraint. He did not use the expressions "sharks" and "lolly", but contented himself with the words "functionless shareholders", among whom we must include the National Union of Mineworkers and other bodies of that nature about which we have heard so frequently today.
The National Union of Mineworkers does not hold shares in these companies. The union jointly administers the Miners' Pension Fund scheme with the industry. The 8,000 miners in my constituency who are producing a large part of the 2½ million tons of prime coking coal which is going into the industry are not functionless. They are entitled to anything that can be got from the prosperity of mining and of the steel industry.
I thank the hon. Member for giving way and letting me get on with my speech. The shares in this industry are not controlled by the mines but by the fund.
I am glad that the hon. Member did not say that the shareholders in the industry have been milking these great companies of their profits. It might so easily have been said that Colvilles gave a dividend of 13¾ per cent. to their shareholders out of the ordinary equity capital and that Brown Bayley's paid the same, that John Summers paid 14½ per cent., United Steel 15 per cent., and Whitehead Iron and Steel 25 per cent.
If that had been said, less than justice would have been done to the functionless shareholders, because, of their own free will, these shareholders agreed to plough back into the industry, in the case of Brown Bayley's 27 per cent. of the equity, in the case of Colvilles 40 per cent., of John Summers, 29 per cent., United Steel 30 per cent. and Whitehead Iron and Steel 37½ per cent. This is a very considerable plough-back into the proceeds of the industry in order that further expansion can be made. This act of self-denial is a matter of great significance.
Does the hon. Member not think that these people were doing very well? They were making so much that they were able to plough back. At the same time, the people whom the hon. Member talks about had increased the price of steel by 33 ⅓ per cent. above the price when the industry was handed to them and had received on an average 13 per cent. on invested capital as against:3 per cent. under the nationalised industry.
It is interesting that they have put back into the industry almost, and sometimes more than, double the amount they were taking out. That is a satisfactory method of reinvesting in industry and making certain that when its expansion comes the money is available.
I am obliged to the hon. Member for that interruption. Where a dividend decision is taken, that decision is approved at a meeting of shareholders. Every member of the company receives a card on which he is entitled to vote for or against that decision.
I was not wrong and I will continue.
At this time when the industry proposes to expand by 28 per cent. of productive capacity in the next five years, from 25 million tons to 35 million tons, it is essential that this money should be available. The industry is dealing with competition from within the European Coal and Steel Community, where production has expanded from 40 million tons in 1950 to 70 million tons in 1960 and is designed to expand to 100 million tons in fifteen years' time. It is essential, therefore, that this ability to plough back by means of these actions should increase the equity value of the industry and make it possible for further expansion and investment to take place.
It is often said by the right hon. Member for Huyton (Mr. H. Wilson) that the nation is denied a stake in the industry. This is far from being the case. The nation has provided the investors. I very much welcome the fact that so many more are becoming private investors today, either directly in the industry or in the large insurance companies which buy shares in these companies. People are buying shares also in unit trusts and through unions and union pension funds. More people than ever are becoming members of these companies. Whilst we are allowing and encouraging more people to own shares in industry, the nation does not compel them to do so. That is one of the issues at stake today. If more trade unions had invested in the industrial equity of the country they would have done very much better than by investment in Government debt. This is a crucial matter for consideration at this time.
Statements have been made not only in the House but by the Governor of the Bank of England that today War Loan has sunk to its lowest level so far. The Governor said that at the same time there is an imbalance in the economy, and far too much money is chasing too few equity shares. This is one of the vital reasons why the Government, at this time or when market conditions are ripe so that the country can get the maximum benefit, should sell the assets that they control.
At three General Elections the electorate have said that they do not wish to have a nationalised economy, just as British and foreign investors—and it is vital to attract foreign investors—have said that they wish to invest not in Government debt but in equity stock. It is time to consider again the true function of Government activity. We would all agree that Government activity is right in the social services, in the provision of medical services and of hospitals and, on occasions, in the setting up of industries in areas where there is local unemployment. One welcomes the making of Government debt to achieve these objects. We on this side of the House have been called doctrinaires today. This is an interesting change of events. If I am a doctrinaire it is only in this: we seek to give the maximum liberty to get ahead, both to the individual and to the community, and also seek to help those who fail as individuals or as industries or as areas. That I consider to be one of the vital functions of Government. The Opposition have put down a Motion of censure on the Government for carrying out the clear mandate of the British people as expressed at three General Elections. I say that this is not a Motion of censure against the Government but a Motion of censure against the nation for rejecting the Opposition on three occasions.
The right hon. Gentleman the Minister of Power made a very pungent remark when he said that for the first time since the Tories were returned to power the Opposition had found something on which they could be united and enthusiastic about. We are perfectly entitled to be enthusiastic in our opposition to this blatant taking-over of Government assets at a time when the Government are complaining that they are short of money and that expenditure is rising. Yet they are taking away the opportunity for the State to earn money, which is now to be handed over to men like the hon. Member for Kidderminster (Mr. Nabarro) for instance.
I have to hand it to him, however, because he is at least prepared to tell the blatant and naked truth about the situation. He makes no bones about it whatever. In the last debate, he said that this was a "blue chip". He said that Richard Thomas and Baldwins was a prosperous concern and that he wanted to buy some shares in it.
That is a completely different story, however, from the one which he would have told the country fifteen years or even fifteen months ago. He would have told the electorate that if the Government dared to touch the steel industry, or any unit of it, it would become decadent, inefficient, a burden on the resources of the State, and would not be worth touching with a barge pole. That was the story that people were led to believe. The hon. Member can "kid" Ministers but not me, and he knows full well that the opportunity to prove the value of a nationalised steel industry has never been given a real chance, yet that story went down with many people.
Before the last election a number of my constituents were kind enough to ask my advice upon the advisability or otherwise of buying steel shares. I warned them that it was highly speculative. I said that I thought the Conservative Party would win and I advised buying the Steel Company of Wales. They are appropriately lubricated financially today.
The hon. Member gave sound advice to people prepared to invest in something which has proved to be a national asset.
I want to come to the simple issue. My hon. Friend the Member for Ogmore (Mr. Padley) has spoken about it. He recalled that when he was a boy he saw the rolling downs under which was the God-given iron ore. I was born in my constituency and I saw the miners going to work to hew from the bowels of the earth God-given coal given for the benefit of mankind. In Derbyshire, I saw hills from which the limestone comes. The coal, the iron and the limestone are, we are told, all things given by a munificent Almighty for the benefit of man. It never occurred to me, as a child, that the benefit of all this would go to a particular man, or section, or party, or gang on the Stock Exchange. I was led to believe that
The earth is the Lord's, and the fulness thereof;—. and they that dwell therein.
Who are to get the benefits of the results of the labours of men and management in the steel industry, which is still under public ownership? That is the issue today. The results of the work of men and management of Richard Thomas and Baldwins—their sweat and toil, thinking and planning, and managerial efficiency—must be directed either into the pockets of the relatively few or into the pockets of the State. The hon. Member for Weston-super-Mare (Mr. Webster) told us that it was a tremendous advantage that the National Union of Mineworkers, the Prudential Assurance Society and the
Co-operative Insurance Society should have money invested. If it is good enough for 250,000 investors, why is it not good for the nation? If it is good for the few, it cannot be wrong for the many. The Government always give away their own case. They want to decide where the line of demarcation shall be.
Years ago, when I was on the Government Front bench, I remember being told by that wonderful old statesman the right hon. Gentleman the Member for Woodford (Sir W. Churchill) that if we dared to touch the steel industry it would be a flop. Since then, however, we have heard of nothing but the success story of the industry generally and of the amount of expansion which is still required. Why is this expansion still required all these years after the war?
It is rather Tory lack of planning. We should have had this expansion before the war. If they had planned the industry to meet the needs of a modern society with full employment, this expansion would have been provided years ago. The Tories, however, never did believe in providing for a fully employed democracy.
if they did, why did they not do it when they had the opportunity? That is the answer to the hon. Member for Kidderminster on that one. The fact is that the country needs, beyond a shadow of doubt, things that should have been done years ago when, instead, we had men walking the streets singing "Bread of Heaven feed us" and hoping that it would. They could have been in a great scheme for expanding the capacity of the steel industry.
We have had much humbug about the tremendous success of Tory efficiency. It was, however, the pressure of the Socialist Government, of the trade union movement and of ordinary men and women demanding better standards of living that brought about this efficiency in the steel industry. I do not decry the present steel industry. It is better than it has ever been. The people are happier than they have ever been. Why? Because of the six years of Socialism, of the demand for better things, and of the provision of superannuation and death benefits, etc.
I humbly claim to know something about this, for I am welfare supervisor for one of the big corporations which operates them. I wish to pay tribute to those who have, after many years, seen to it that many things have been provided in tune with the political atmosphere which demanded that they should be so provided. I must pay tribute where it is due for this improvement.
The issue is simple. If Richard Thomas and Baldwins had failed, as was predicted in the time of the Labour Government, then the Tories would have said that they would denationalise the firm as quickly as possible because they wanted to get efficient management and proper business methods. They would have returned it to private enterprise as soon as they could. The hon. Member for Kidderminster has virtually said that we did not nationalise it soon enough from the Tory point of view.
I thank the hon. Member and I accept that. I stand corrected. I am grateful for his help on this occasion.
The hon. Member for Kidderminster complains that the Government did not denationalise Richard Thomas and Baldwins quickly enough. He is right. Every day that public ownership of that great concern has continued proof of our advocacy has been brought home to the people. If the sordid, despicable advocacy that we have heard today for taking away from the State some of its finest assets could have been presented to the nation by means of the radio, the public platform, the loudspeaker, and so on, in every constituency, five or six weeks before the General Election there might have been a very different result.
There is talk of what happened in the steel constituencies. The situation of the steel industry was such that a decrepit, ancient old steel worker like myself could poll many extra votes. My steelworker constituents, who have an average wage of f15 or f16 per week, rolled to the polls in my support because they knew that my advocacy on behalf of my party was correct. It was a simple story of God-given gifts being turned into useful articles which could be sold and exported to provide our means to live, with the State benefiting thereby.
I am not against reasonable profits being made. Every company must have them. As to the idea of ploughing back, one ploughs back not for the sake of doing it but for the purpose of investment. The hon. Member for Kidderminster would ensure that part of what he could have as a dividend was ploughed back, because, as an astute businessman, he wants to continue to have a high return.
Tax-free, of course. Far too much is given to those who could afford to do without it, and there is too much tax on those who cannot afford to pay it.
I would have hoped that to prove their case the Tories would have allowed at least one major company to go ahead and make a miserable failure. Then the Government could have said, "Here is our case. This company has failed. The experiment is what we said it would be—a flop—and it cannot be allowed to continue." However, that is not the case. The exact opposite is the case. The experiment has been very successful. The case that a nationalised steel concern can be a wonderful success has been proved to the hilt, with profits accruing to the Chancellor to do what he wants with them.
There is plenty that the Chancellor could do with the £71 million profit that Richard Thomas and Baldwins have made over the last few years. I have in my constituency, which is prosperous as a result of the steel and coal industries, old folk who could do with a shilling or two of the money which will be "fiddled" and played with on the Stock Exchange the day the loan is floated. The money which is going to the Chancellor of the Exchequer would give a little more to those who are really in need. Instead of that, when the loan is floated we shall find the "sharks" there with their mouths wide open waiting for this blue chip to be swallowed up. It is such a good one that the Tory Government have said, "You are good enough to be backed for another £70 million and now another £119 million of public money." The business is as good as that.
Finally, there is the question of investment and the talk about the miners, the Prudential and the Co-operative Insurance Society having their money in the industry. Is there a Tory Member who can stand up and tell me whether any £1 of that money represents an opportunity to go to a directors' meeting to control the works where the money is invested?
The mineworkers' Provident Fund owns more than 1 million shares, preference and ordinary, in various steel companies. Does the hon. Gentleman really mean to say that the National Union of Mineworkers is too feeble or too flatulent to go along to the annual meetings of the steel companies and make its voice heard? If so, what an indictment of the miners!
The hon. Gentleman has made my case. He has told us that the representatives of the miners could go along to a meeting. What would be the result? It ought not to be necessary for lame, crippled and sick miners to invest money anywhere to obtain the means to live. There should be a national obligation to do something for men who have given of their best in the national interest. I will not go into that any further now, because I should be ruled out of order.
The Tory Government have today given the Opposition an opportunity to paint a true picture of a successful nationalised steel industry against the dismal, miserable picture which they have put into circulation during the last twelve or so years. They have said that industries will become decadent if put under public ownership. I am proud of the workers and the managements who have made such a wonderful success of the steel industry. The cheques signed for and on behalf of Richard Thomas and Baldwins are backed by John Bull, and the workers have been proud to work for John Bull. The workers are more patriotic than some hon. Members opposite would have us believe.
It is very enjoyable to take part in this debate. We should be grateful to the Opposition for giving us the opportunity. They have this afternoon, as they will probably do again tomorrow afternoon, shown that the answer to the ownership and organisation of any of the basic industries of the country is to them written in the word "nationalisation"
Every speech we have had from the opposite side of the House has shown us once and for all exactly where hon. Members opposite stand on nationalisation. I suggest, therefore, if I may contradict the advice given by my hon. Friend the Member for Kidderminster (Mr. Nabarro), that the Leader of the Opposition need not waste any more time trying to alter Clause 4, because after today's display the electorate will certainly never believe him.
We have also been told by hon. Gentlemen opposite that if we really believed in efficiency as a watchword we should leave nationalised this one company, having denationalised all the major companies which were originally nationalised. One never heard this argument on their lips when they were in power. We never found them suggesting that there should be one steel company, one coal mine or one railway which should remain unnationalised. Frankly, the argument rings a little hollow from their lips today.
The trouble about independent commissions is that we always support them when they support our point of view, and it is not so much for their conclusions as for the evidence which they unearth and lay in front of us that we value them. Hon. Members opposite were asking the Chancellor of the Exchequer to abolish Schedule A tax even though the Royal Commission on Taxation of Profits and Income recommended that it should be retained.
I agree with hon. Members opposite when they raise the point of the onus of proof and suggest that the onus of proof lies on that side which wishes to alter the status quo. However, I suggest that in this case the onus of proof does not have to be established on whether Richard Thomas and Baldwins should be denationalised or not, because that stage in the onus of proof was passed in 1953 when the House of Commons decided that all the steel companies should be denationalised and gave to the Iron and Steel Holding and Realisation Agency the job of selling them all. The House was able to give that job to I.S.H.R.A. because the electorate had decided in 1951 that the iron and steel industry should be denationalised after a General Election campaign in which nationalisation figured very prominently.
Here one can, of course, speak only for oneself. One fights one's own election. One knows far less about what is happening in other constituencies at the time of a General Election than practically anyone else in the country if one is a candidate, and one sees only the general unfolding of the national campaign.
However, as a supporting speaker for numerous candidates in 1950 and 1951 and speaking for myself in 1955 and 1959, I can say that nationalisation was mentioned on almost every conceivable occasion in my constituency, and the consensus of opinion at my meetings was that nationalisation was something not only of which we wanted no more, but of which we wanted much less as soon as possible. When the hon. Member for Rotherham (Mr. Jack Jones) said that the result of the election would have been very different if the electorate had been told what we were proposing to do today, all I would say to him is that the 1959 results were after the denationalisation measures which we had taken in the preceding six years.
Would the hon. Gentleman tell me whether at the many meetings when he supported other speakers and when he was speaking for himself in his own constituency, he was so convinced that nationalisation was such a complete lack of success that he advocated denationalisation of the coal industry and of the railways?
No, because I knew that no one would buy them. I never believe in wasting lime trying to sell to people what is unsaleable.
I must bring in a personal note. A large number of hon. Members have made remarks in speeches or interruptions about "sharks" on the London Stock Exchange. I have to tell the House that I am a member of that body, but whether or not I am particularly shark-like I do not know; but I can tell the House that the firm of which I am a partner has never been a member of any of the consortia of brokers who have been parties to denationalising any iron and steel company. Therefore, I think I can talk without having a pecuniary interest.
As the hon. Member for Rotherham rightly said, we cannot on the question of nationalisation go around without having some distinct set of principles on which to act. That is, of course, the difficulty with those members of his party who are trying to alter Clause 4 at the present time.
I object to nationalisation and would always, therefore, try to denationalise wherever possible on five counts at least, and there maybe more. We have heard a lot this afternoon about the function of the shareholder who does not control. Who controls any of the nationalised industries? We do not. Heaven knows, we have had enough debates recently upon who controls the financing of the nationalised industries, who controls their price policy and who controls the general breakdown into managerial units. We have had even at present to set up a Committee in relation to the railways because twelve years after nationalisation none of us is able to produce the real answers.
The whole trouble with nationalisation is that although the hon. Member for Rotherham and I may technically each own one fifty-millionth part of the steel industries or railways, and although we may be able to ask certain questions, but only certain questions, in this House of Commons, it is a fact that we have no control whatsoever over the way in which the nationalised industries work unless the Minister gives a directive to the chairman or the board in charge.
The present Minister of Power has recently appointed—on 1st June this year—Sir Thomas Williamson and Mr. Harry Douglas, the trade union leaders appointed part-time on the Steel Board. Thus, he has direct control of the Board which, in him, is supposed—I use the word advisedly—to have the control of the whole of the industry. So the Minister has direct responsibility for the appointment of, the replacing of, or the sacking of people who, in turn, are responsible for the running of the industry.
That is true, but the Minister can do it only occasionally, as such people are appointed for long terms of office, whereas the shareholders can do it annually at their meetings. The reason they do not do so is because companies are going well. Let us look at the companies which do not do so well. Shareholders felt quite angry at the Stoll Theatre annual meeting, and not so long ago we remember reading about the Gordon Hotels and a number of other companies where the shareholders had gone to meetings because they were not pleased with the way in which the directors were managing the companies. I believe that the control to which the nationalised industries are subjected is less than the control that the shareholders can exert on an ordinary public company and, above all, the control which the institutional investors, such as the pensions funds and insurance companies, can exercise when they get together because they are unhappy.
Secondly, there is the question of political interference. I believe that the nationalised companies are always subject to political interference and that it has a had effect on management. I believe that a large number of people do not want and would not accept the position of being heads of the nationalised industries because of the continual buffeting they get in the cockpit of politics.
Thirdly, I do not believe it is necessarily true that even the Conservative Government are always right, and I do not believe that it is always necessarily right that the Government should have total control, which is the aim of nationalisation, over too large a section of the economy.
Fourthly, I do not believe that without private property, shares and bricks and mortar, we can have a fully functioning democracy. If everybody is at first or second remove the employee of the State, we shall never have a group of people sufficiently financially independent to be able to stand up to the Government of the day and tell them exactly where they can go.
Fifthly, there is the difficulty of financing the nationalised industries. In the present Budget we are to have an over all deficit of nearly £400 million. That deficit is of about the same magnitude as the amount of money which the Treasury is to lend to the nationalised industries. It is true to say, therefore, that if there were some other means of financing the capital investment of these companies it would be possible for taxation to be reduced.
In the iron and steel industry we have the extraordinary position of an industry which is very largely denationalised in terms of ownership, but where the Government have lent and are proposing to lend, very large sums of money even to the denationalised companies. I believe that possibly there is a point here which we should get clear in our minds—when is it right for the Government to lend money to private industry? There are only two cases when it is defensible. One is when, because of political reasons, the industry is unable to raise money on the open market. That was the position of the steel industry from late 1956, until the last General Election, because hon. Members opposite were stumping the country and demanding the renationalisation of the industry and uttering vague 'threats about what would happen to the surplus income which shareholders who had bought denationalised shares would have received over and above the 3½ per cent. received from Treasury Stock, formerly Iron and Steel Stock. Hon. Members opposite were making threats about the price at which they would demand the shares to be handed over, and iron and steel shares fell to a remarkably low level.
I have the figures of the lowest and peak prices for iron and steel shares over the years in question, even including 1959—after which time, according to the Gallup poll, the Tory Party's fortunes started to rise—when the shares of Dorman, Long were as low as 17s. 44d. After the election, they were as high as 53s. 10½d.
Will not the hon. Gentleman also agree that the shares of at least four of the major steel companies have fallen since the election in comparison with their price in 1959?
I do not think the hon. Member is right, because although peak prices were paid for certain quantities of steel shares on the day of the election results, quotations in the newspapers show that my hon. Friend the Member for Kidderminster was right when he said that the peak prices were reached at about the turn of 1959–60, then declined, and came up again before the increase in the Bank Rate last week I think the hon. Member will find that a peak was reached from which they declined and towards which they again started to rise but which they have not reached a second time.
My argument was that, because of the political threats of the party opposite, the steel industry was unable to raise money on the open market for a very long time; but now that the iron and steel industry is favoured by investors, the Government seem to be going a little lightly on the industry and ought to be making the industry finance itself by going to the capital market rather more.
I believe in high dividends and in high wages, but the corollary of high dividends is that a company goes to the market to raise the extra money which it needs. The Government should tell the steel industry that its shares are now favoured by the electorate, that the political threat may now be considered not to be in the electorate's mind, or in the minds of shareholders, who in most cases will be able to provide the cash which the industry needs.
The second case in which it is right that the Government should provide the money is when, because of social policy or some other reason, the Government ask the industry to build a strip mill, for instance, in an area in which the industry would not build it of its own free choice. It is then right for the Government to make a contribution, the contribution of the community, towards the building of a plant in an area of high unemployment. For example, I believe that much of the commitment of the Iron and Steel Holding and Realisation Agency towards the expansion of Richard Thomas and Baldwins can be covered by the last case, but I would like more information about that.
We have been told about all the capital gains which have been made. It is very easy to job backwards, as we say on the Stock Exchange, to look up in the newspapers what shares went up and to say how much would have been made if only we had bought those shares which did go up. However, if there is any jobbing backwards to be done in this matter, it has been caused by the Labour Party. Steel shares were low because of the Labour Party's threats. They rose to a level which some might consider more or less reasonable and which some might not when the electorate believed that that threat had been removed.
I can only say that the number of clients, of whom I knew, who had money waiting to go into the market to be invested in steel shares on the day the Labour Party was defeated in 1959 was sufficiently large for me to be certain of that.
The hon. Member has just repeated what several hon. Members have said on this and other occasions, namely, that the possibility of a Labour Government depressed the value of steel shares. Is he not aware that over and over again, particularly during last year, the Labour Party said that all shareholders would get fair compensation? If the shareholders, because of political prejudice, did not believe that promise made by the Labour Party, that was their fault, and the hon. Member must not blame the Labour Party.
The right hon. Gentleman has not got the matter in perspective. Before we had that statement we had a statement from the then right hon. Member for Lewisham, South, now Lord Morrison of Lambeth, that because at that time shareholders were getting a return of 7½ per cent. on their investment when they had been getting only 3½ per cent. on the stock which they had surrendered, they would have to pay the extra amount of interest received. The right hon. Member made a number of speeches suggesting that that was what he would like to do and a number of other speeches were made and reported in the Press with that end in view. There is then the question of what is fair compensation. The right hon. Gentleman probably believes that all the compensation paid for assets nationalised when his party was in power was fair, but other people do not, so we shall not get very far arguing along those lines.
There was then the extraordinary argument that it was wrong to denationalise steel because it was now more profitable than it was some years ago. If it is so profitable now, we all rejoice that it is, but that profitability is not related only to Richard Thomas and Baldwins. It is spread throughout those sectors of the industry which have been denationalised as well as those which are still nationalised. If it is more profitable and the prices of the shares are higher, let us take advantage of it.
We have heard much about "giving away" and much about "robbing the public". The hon. Member for Aberavon (Mr. Morris) said that he had heard nothing like it since the Spanish Main, but his hon. Friend the Member for Newton (Mr. Lee) beat him to it by talking about nothing like it since the dissolution of the monasteries. Whether when something is given to somebody else there is a robbery all depends on the price paid.
There is something in the view of my hon. Friend the Member for Kidderminster that the Iron and Steel Holdings and Realisation Agency, or the Government, has rather missed the peak. I do not know whether it is the Agency's or the Government's fault, but the Agency at any rate is partly responsible. Of course, one never hits the peak. If one could always sell at the top one would spend all one's time in the South of France with one's pair. But the fact remains that after the election there was a great demand for steel shares, and I believe that at that time a large number could have been sold to the general public, particularly as the Governor of the Bank of England was then saying that the Stock Market was too high, because the best way to get the Stock Market down honestly is to sell anything which one has to sell.
It is then said that the company cannot be denationalised because of its capital commitments. If we are living in an expanding era, that argument will always be valid, so it can be put on one side. I believe that there is not sufficient reliance on the function of the shareholder, who is the maker and provider of new capital. Then there was the dreadful problem of fixed interest securities. Nobody will buy preference shares, even in the iron and steel industry, at any price which I.S.H.R.A. dares to ask and some sort of package deal will have to be arranged whereby there is offered a unit containing so many ordinary and so many preference shares. I do not think I would support the recommendation of my hon. Friend the Member for Louth (Mr. Osborne), but I do think that for Richard Thomas and Baldwins one ought to see that the whole of the issued capital should be offered to the public at one go.
I apologise for taking up the time of the House, but I wanted to put on record why I disagreed with nationalisation; why I wanted the denationalisation of the remaining assets to go forward fast and why I believe that the Government are not being as speedy in this matter as I and those who elected me would like them to be.
I listened with interest to the hon. Member for Basingstoke (Mr. Denzil Freeth), who said he was a stockbroker. The hon. Gentleman was preceded by another hon. Member from his side, who, so far as I am aware, is also a stockbroker. It is not without relevance that this debate is arousing a considerable amount of interest among stockbrokers on the other side of the House. They will be well-informed an these matters and they will take special interest and have a special knowledge. This is a matter which relates to buying shares on the market, and one in which all the Stock Exchange operators, whether jobbers or brokers, naturally are interested.
The hon. Gentleman failed, as have other hon. Members who spoke from the benches opposite, to make the case for the denationalising of this company. We are not here arguing the general case for nationalisation. We on this side of the House are trying very hard, certainly I am, to express in the most sincere way that surely the time has come to show which is the right way to handle this difficult problem. Here we have an objective case. Here we have the possibility of showing which is the better method or perhaps a combination of methods.
I am satisfied that I know which is the better method and the hon. Gentleman is satisfied that he knows. But both of us are satisfied in theory. Here we are not dealing with theory, but practice. As was said once by my right hon. Friend the Member for Ebby Vale (Mr. Bevan), in a most telling comment—I wish that my right hon. Friend were present today—it is not necessary to gaze at the crystal when one can read the book.
Here is a company which everyone is agreed—no one has challenged this among the hon. Members opposite, not even the Minister—is doing everything right according to Tory philosophy. It is producing steel. It is producing profits. What more is wanted of this company? What is wrong with it? It is highly efficient. It has the most modern plant. It was the first company to start its own school to train the workers and management within the company. It is highly regarded throughout the country and internationally. What is wrong with the company?
One of the points I tried to present to the House was that a nationalised industry has to rely totally on the Government for any injections of fresh capital. A private company does not so have to do. I suggested that the Government were allowing public companies to rely too much on the Government.
The position is precisely the reverse. The hon. Gentleman was present at our debates on the Colville legislation. In fact, it is the private company, the private steel company, which has to come to the Government for capital.
We said at the time that there was no problem about the advancement of £70 million of the £120 million to Richard Thomas and Baldwins. This was a bookkeeping entry. We did not have all these rows about the right rate of interest. We did not need to maintain the view, which we sincerely held, that Colvilles was bribed by the price paid and the interest charged to carry out a function on behalf of the nation. Here is an instrument by which the national need could be satisfied without any argument about whether it is fair or unfair on anyone's criterion. It is a pure book-keeping entry. One takes it out of one pocket and puts it in another and, hey presto, more steel is produced.
What better conjuring trick could one ask for? I say, therefore, that the hon. Gentleman has not dealt with the real difficulty which we are trying to place before hon. Members opposite. I say to the Government that, of course, they cannot put this company on the market now. Even the Government will recognise that. They cannot put it on the market now, because in the present state of the market that would be indefensible with all the development in progress which we know is going on. In the words of the managing director, it is exploding into expansion, or there is an explosion of expansion—he said some words like that—and when a company is in that stage, when it is expanding enormously, nobody can attempt to value the shares properly or say what is their true value and what is the inherent value. It should be given time to settled down and show what it can produce.
At present, there is no question that the Government should not consider for a moment putting the company on the market. There was a certain amount of interruption during the Minister's speech. It came from both sides of the House. I should be the last to deny that a little came from the Opposition Front Bench and I do not exactly know what the Minister said. But I believe that he said that he was not proposing to sell at the moment, or was going to consider the priorities of putting on the market the preference and loan capital of other companies in relation to putting on the market the equity capital of this company. Therefore, this is the first step in retreat from the onslaught of his hon. Friend the Member for Kidderminster (Mr. Nabarro).
We have to make clear that it would be simply dishonest—I do not think that a lesser word could be used—to the country to do so and there is no greater thing than honour which every hon. Member here values. It would be plainly dishonest on the part of the Government to attempt to sell Richard Thomas and Baldwins, or to put it on the market in any form at all, at present, however they try to split up the capital. But that is only an argument against doing it at present.
There is the further argument about the method by which the Government propose to deal with the matter. The Government should realise that the dealings which I.S.H.R.A. had with regard to previous placings have given rise to serious doubts. Presumably, I.S.H.R.A. is the instrument to be used again. I do not like the way in which the most recent sale was dealt with, the Habershon one. I will deal with the figures simply. The sale price was £1.1 million for an article which was bought from the owners ten years previously and was being resold to the owners. The difference involved over the ten years was a mere £90,000. If we take into account the increase in the value of money; if we take into account the increase in the value of all steel company assets, I say quitecategorically that I find it impossible to conceive of a situation in which this company could properly be sold at an increase of a mere £90,000 out of £1.1 million to a private buyer, because it was arranged with a particular company. This was an I.S.H.R.A. transaction and I hold it in serious doubt.
The Government should realise that they may win in a Division in this House, but that does not solve the doubts in the minds of people. It does not answer the real arguments. Arguments are not dealt with by numbers, but by the weight of argument.
Surely the owners of this company, had they retained their compensation stock, would not have realised anything like £1,100,000. In other words, the stock given in compensation for what they handed over was, unfortunately, less valuable when the property was returned. The hon. Gentleman was complaining that the property had increases in value only by £90,000. In fact, the compensation stock had diminished in value by almost 50 per cent.
The hon. Member for Gloucester (Mr. Diamond) has been critical of the way the sale was made. Would he suggest how such a sale should be made, provided that it is decided to sell?
I repeat the answer of a responsible Member of Parliament. It is practicable to discuss matter of this kind with Members of Parliament. In fact, one of the things for which we are here is to protect the nation's purse. This may be a novel concept to a Conservative Member of Parliament, but it is not to me. One of our jobs here is to protect the nation's purse, and if the hon. Gentleman wants us to be satisfied that one of our national assets is being disposed of fairly he should give us arguments and the opportunity to probe and of finding out. That is what we are here for and why we have Committees upstairs.
Why not? There is a variety of methods of dealing with this, and I do not regard this as a matter on which it was necessary that I should have been fully briefed before I got up to speak; but I can think of a variety of ways of dealing with it.
What I am saying at the moment is that we have no opportunity of making any comment or finding out any of the facts about these sales, and they are beginning to smell a little. That is a plain word. I have got a professionally trained nose to notice such smells. It has been trained for thirty years to notice them before they got to the general stage. I am saying that this is beginning to smell, and the hon. Gentleman should not like that any more than I do. This is part of the chosen instrument of the Government in disposing of national assets.
There is another reason, and I am not alone in this, because The Guardian took the same view about this particular company, concerning the lowness of the price at 'which previous offers had been made. The hon. Gentleman is a stockbroker and will know whether I am right or not in saying that in all others, except the very first case of Stewarts and Lloyds, or from about the third issue up to today's date, issues have been made at such prices that when the day of issue came, everybody rubbed their hands and rushed to the offices of the brokers and the issuing houses to make application. There was even a picture in The Times showing huge queues of people trying to get shares. Why did they queue up? Because the price was too high? Not at all. Why did Mr. Clore want to get in first? Everybody knows that these prices were most attractive.
The hon. Gentleman is certainly fair-minded and I am sure that he would not want to mislead the House. I have the list here of the 13 issues, and I will show it to him. Except in the case of Colvilles, there is not one of these shares quoted which did not subsequently have a lower price than the price at which it was offered when the offer was made. The hon. Gentleman must take it from me that that is correct.
Of course, what the hon. Gentleman says is correct, but it needs explaining and a little investigation. Of course, the regular pattern is that you "stag" a share, which goes clown immediately afterwards. Everybody rushes in to buy, and as soon as dealing starts they all sell out with a very nice profit, which does not produce another ounce of steel though it produces a very nice profit for all the "stags" They sell out and the price sinks. What is the price now of any of these shares as compared with the price at which they were issued? Am I wrong in saying that the price of all these shares is infinitely greater than the price at which they were issued? If I am wrong, I will yield to any hon. Gentleman opposite.
The hon. Gentleman is not wrong on the facts, but he is wrong in suggesting that it is possible for everybody who rushed in to apply for these shares to get allocations, so that the price goes up, and then everybody rushed to sell them and to get out with a profit, and that the shares thereafter came down to a price below the issue price. If he is assuming that after every issue the price immediately goes up and then falls away again, there must be a great many stale "bulls" about.
I am not talking about "bulls". I am talking from personal knowledge, having been engaged professionally to make applications. I know that one had to get dozens of different forms and get a lot of different names to put in the applications, because one knew that the price was so low that the demand would be so great that each person would get only a very small allocation. Therefore, if one wanted to make a big profit, one had to apply in a large number of different names.
There is no reason to dispute what I am saying. Why do we not accept the fact, and ask what went wrong? I am not saying this about I.S.H.R.A. without cause, for I have in mind two or three cases in which fantastically low prices enabled everybody to make their temporary profits, as I have shown, by "stagging"; or else a permanent profit, as anybody who compares the prices of the issue and today's depressed prices will find out for themselves. I say that there is a bit of a smell about all this and I do not like the Government proposing to adopt the same machinery without an opportunity of looking into it. I am talking, not of the theory, but out of the experience of the practice used in regard to various steel shares issues.
There is another reason against doing what the Government propose to do. They have failed to justify themselves. Not one hon. Member, except the hon. Member for Kidderminster who gave the real reason, has mentioned a single argument in justification of denationalising this company at the present juncture. They have mentioned the general theory of the mandate, as if that would affect it, and as if anybody really believes that the last General Election was fought, on the wireless and on television as it was mainly, and in the newspapers, on the limited topic of Richard Thomas and Baldwins. Of course, my hon. Friend the Member for Penistone (Mr. Mendelson) was quite right in saying that it was nonsense; it is not right to attempt to regard it as a general mandate. If it is a general mandate, the only question I want to ask is this. Why, all of a sudden, under this mandate of the Government, are they selling Richard Thomas and Baldwins, a very profitable concern, when they are not selling a single railway line or a coal mine?
If it is a general principle that the party opposite was authorised or instructed by the electors to get on with the job of denationalising, and, as one hon. Gentleman said, they won the election on the grounds of hostility to nationalisation, why do they not get on with the job they had been instructed to do? Why pick only on the one that is highly profitable, and give us these thoughts, which I am sure should not be engendered at all, except that the hon. Member for Kidderminster told us that this is the main argument; and, of course, he is right. It is the profit in it. It is a great pity that here, when we have this opportunity of considering the best way in which to run one of the most fundamental industries of our country, they do not tell us what has gone wrong.
Why could not the Conservative Party just rise above its electoral platform philosophy and try to be a forward-looking Government, saying, "Here is an opportunity of showing which is the better way of producing steel efficiently and happily and to the advantage of the nation and of all concerned"? Why should they not have considered that, and have taken a leaf out of the book of the Continent, where, in France, we find that they have found it very satisfactory and profitable to produce motor cars by companies partly nationally owned and partly privately owned?
What is wrong in making experiments of this kind? If the Government decided that it was not all that wise, they could say at any time they wanted, "We have given this a fair run. We have changed our mind and come to a decision to put it on the market." As they know, the longer they delay putting it on the market the better for everyone it will be. Just think of the millions there would have been below the line in the Budget if, instead of rushing into denationalisation as a result of political pressure right in the early stages, the Government had waited for the companies to get sorted out and to demonstrate their profits. Then there would have been four times, five times, or ten times as much as has been realised—
All right, I will settle for five times; the argument is the same. We all know that, eventually, more would have come to the credit of the Budget and the national resources had the Government delayed and not rushed into selling as a result of political pressure.
I am not to be taken off the solid point by a purely political argument. We have all got replies to that. My hon. Friend had pointed out the inadequacy of the reasons for believing that it was a political threat which affected the industry. I am dealing with the substance of the point. The hon. Member for Basingstoke knows as well as I do that these companies were sold at less than real value in terms of the skills of the workpeople, the management and plant—they were sold much too cheaply by the nation.
If, because of market reasons at that time, it was not possible to get the full value, the Government should have waited. There are two ways of selling things. When one is a managing director one takes one's time, judges the ground and gets the best price. When one is a liquidator one also has to sell properties. One is not then interested in the welfare of anyone, but in the single idea of getting as much money as one can get out of it. Then one flogs it for all one can get. I am against flogging, against flogging of prices and flogging of people.
So we could have justified an opportunity, which rarely presents itself to Parliament, for allowing the nation to try this experiment if the Conservatives had wanted to do so. We cannot persuade them to agree with us when at the moment we are in the minority, but they could have tried the experiment and seen which is the best way of producing steel most efficiently for the country. They have done none of these things. They have not produced any arguments and I am afraid that, sooner or later, they are going to sell this company.
At this stage I ought to read what that well known Left-wing fellow traveller, the City Editor of The Times, had to say on this topic. He said, as recently as 20th June, when talking about the timing of this sale:
Judged on purely economic or investment grounds a strong case could be made for deferring it for at least another year. But for obvious reasons, economic or investment considerations may not be the only determining factors; political pressure may, and probably will, bring it well forward.
I could not put it very much better than that myself, and that comes from the City Editor of The Times.
We feel it is a shocking thing when we have a company which has shown itself to be efficient and everything which my hon. Friend the Member for Newton (Mr. Lee) said about it that the Government should succumb to the dividend strippers. Here is not a question of trying to improve a national asset, or to improve the national purse. That would be done by delaying the sale. It is not the case of improving the lot of a single worker. It is the case of improving the private purse of the dividend stripper, the man who wants to take the profit and the dividend out of the steel industry, and leave the burden of the main part of the capital to be carried on by the nation as a whole, exactly as at the present time. As every hon. Member who has spoken has made perfectly clear, no one has attempted to denationalise steel. With very few exceptions the Government have not sold companies but have only taken the dividend, the guts, the profitable part, and have said, "Here is the equity."
The hon. Member called it an equity, but I use a plain term—the dividend. They have stripped the dividend and given it to private ownership, leaving the public with the major amount of the capital. We have been told that for all practical purposes, after this great promenade and show of denationalising, it will leave as much public money in the steel industry as when the party opposite won the election in 1951. There is as much capital there today but the profits, very nearly the whole of the profits, have been returned to private ownership and belong to the few instead of to the many. This is what the Government are proposing, or I suspect they are proposing, to do sooner or later with this company. I can only say that it is regrettable in the extreme.
I have several times had the pleasure of following the hon. Member for Gloucester (Mr. Diamond), and on this occasion it is a particular pleasure because I addressed a question to him which he did not answer. I do not need to repeat it, but frankly I think he was being a little naïve—and he is not a naïve person—in some of the arguments he addressed to the House.
The particular argument with which I am concerned is the suggestion that the question of denationalising steel should have been postponed for some unspecified period, say, five or six years, when in fact there are fourteen major steel companies, thirteen of which have already been denationalised.
"So called" if the hon. Member likes, but that has taken from 1953 to 1957. Dealing with an estate of this size, the hon. Member would probably not be willing to say that it is wrong to deal with any part of it when the decision is taken. I think most people consider that on matters like this, which are matters of judgment, no one can read the book because a book is not written. Therefore, when one has taken a decision that a sale is to be made, the sale has to be spaced in time. All the hon. Member's obliquy would have been justified if all the sales had been made in 1953. But in the capacity of a public trustee he would have been in trouble with the beneficiaries if he had waited until 1959 before starting with the sales of equity. The beneficiaries would have said, "What becomes of us when the Labour Party gets in?" That is a point the hon. Member rather skated over.
In my youth, like so many hon. Members of this House, I was thrilled by the pictures painted by someone called Lady Butler, who depicted many famous battle scenes in the history of the British Empire. I always remember her picture of "The Thin Red Line". One of the tests for this lady artist was the apparent danger in which she found herself, and certainly in depicting "The Thin Red Line" of brave British soldiers in red jackets fighting it out the artist's easel seemed to be in the middle of the actual scene. I feel today as if I were visiting some great battlefield, painted by this lady. The night has come down over the battlefield. There emerge unde feated from their foxholes the British soldiers who fought it out so gallantly on the day. The battle has passed them. In many cases they are suffering wounds. But still their determination is the same. They are rallying, but their battle cry is, unfortunately, the battle cry which has proved unsuccessful for the last ten years. I cannot help feeling that the battle cry which did not bring success in 1950, 1951, 1955 and 1959 will not bring it in 1960, either.
If you will bear with me, Mr. Deputy-Speaker, I will recall some lines of the famous poet, Hilaire Belloc:
The daybreak on the failing force,
The final sabres drawn;
Tall Coltman, silent on his horse,
Superb against the dawn.
As I see it, this is the final rally. They are fighting for the last of the fourteen nationalised steel industries. Thirteen have been denationalised, but these boys in their red jackets will not give up; they still fight for the fourteenth, and they have put up a magnificent battle today.
I cannot give way. I must make my speech now.
The battle has been rather one-sided, because the word "nationalisation" has attracted such odium. But, in fact, the process of nationalisation as we see it in the railways and in the coal industry has never been applied to the steel industry. All that happened in the steel industry was that the shares in the steel companies became nationally owned, but, owing to the subsequent General Elections of 1950, 1951, 1955 and 1959, the companies kept their separate entity and their separate management, and the change from the State as a shareholder back to the public as a shareholder, as will be the case on denationalisation, seems to be one of degree and not of kind.
In fact, as we well know, under present conditions control lies with the management. Industry today is not simply a vast collection of machinery. It is not even the vast number of trained men working in it. It is a dynamic force, and it must have a dynamic direction. Unless we have a dynamism, machines depreciate and men deteriorate, and with a lack of leadership grave disasters can occur although the assets apparently remain intact.
As my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said—and I need not dwell on it—the nationalised industries have not attracted, at all levels, the quality of management which they attracted before they were nationalised. I am glad that the hon. Member for Rotherham (Mr. Jack Jones) paid his tribute to the steel industry, because he of all people knows about it, and he would be the first to agree that the management of the companies in the steel industry has not been affected by nationalisation.
The hon. Member has asked me a question, and I am prepared to answer it, but he must give me a chance to answer it. It is to be sold because of the pledges of the General Elections of 1951, 1955 and 1959.
We have heard a great deal about expenditure on advertising in 1959, but I did not hear much about it in the 1950, 1951 and 1955 elections. It is clear that the public as a whole do not like the idea of nationalisation and have voted most conclusively on the issue. That is why this process, which was started in 1953, must be brought to its logical conclusion.
If the Government are to denationalise the whole industry, is not the logical conclusion that the public money which is invested should be safeguarded? If we are entirely to denationalise the industry, why is it that large sums of public money still have to be put into the industry?
That is a very good point, and I am grateful to the hon. Member for raising it. It brings me to the second part of my argument. I agree that the public money which has been put into the industry should be repaid, and in certain cases it is being repaid by the industry itself. In other cases, in my opinion, the fixed-interest stocks held by I.S.H.R.A. should be sold. We have been told by my right hon. Friend the Minister of Power that it is the intention to terminate the operation in the next two or three years. We were severely criticised by the hon. Member for Gloucester for selling stocks at the wrong time, and no doubt he will agree with me that this cannot be a good time to sell fixed-interest stocks. If he agrees, then it must be clear that I.S.H.R.A. has an over-riding duty to dispose of the stock it holds at the most satisfactory time, using judgment in the matter. I have no doubt that if an undertaking is given that it will be done by 1963, then it will be done.
This is the fundamental point. How can it be consistent to give an undertaking that I.S.H.R.A. will get rid of all these shares by 1963—and a lot of money is involved—and at the same time have an obligation to dispose of these assets at their best possible price in the interests of the nation? The two may be wholly inconsistent with one another.
The hon. Member is again being less bright than usual. It seems to me that if he had three years in which to sell property, then, using the greatest possible care, even he himself would be able to sell it and three years is the time given.