Iron and Steel Industry
Iron and Steel Industry
Special mtg. because understand some members felt they hadn't suff. opportunity to express their views.
Grateful for this opportunity. Serious misgivings, not on merits of Scheme to wh. we are pledged, but on timing. Serious warnings of immed. econ. prospects. Import cuts & more drastic measures still - wh. mght. affect standard/living. Must therefore further spirit of national unity, or at least avoid further dividing it. Some signs of improved feeling eg. Deakins speeches. Efforts of R.A.B. & M/L. are bearing fruit. This Bill wd. cause gt. division of opinion. We are not pledged to do this now. Implementn of election pledges must take a/c of subsequent events.
Some wks ago I urged tht. on these grounds both Bills shd. Be deferred. Too late now to p'pone T. Bill. Cd. however defer Steel. Wd. deepen rift betwn. Parties at a critical time. Shall we succeed in selling assets back? No evce tht. we shall. Some indicns (opinion) tht. we shan't. If this fails, we shan't have de-nationalised. And failure wd. be regarded as gt. disaster. Max. irritn with minimum result.
B/P. is to have 1st priority - dangerous situation. 20% increase in exports. Can't hope to achieve that w'out fullest support fr. labour.
a) wages: may price us out of export mkts.
b) strikes in any major industry: climate not v. satisfy.
Feeling of controversies in transport: E.T.U. may bring politics into power status: A.E.U. & docks. Wd. prefer therefore to avoid controversy. T. Bill. Hope we shall be ready to make concessions to reduce opposn while m'taining essentials. S. Bill. Second controversy & some bitterness. Is it now or never, for that Bill? I hope not. Is it worth the risk? Shall we sell assets? How much desire for it? Wd. much sooner p'pone controversy.
Can manage T. Bill: chance of selling assets. But on Steel: shall we succeed? Bill ending in fiasco will help no-one. Chance of returng. assets to pre-enterprise seem small. Are we certain tht. any firms will buy back? Outside investors (insurance cos., trust cos., pension funds) are doubtful: have they bn. sounded? What prospect tht. eg. Prudential will buy? Surely we shd know before we go on. Threat of Opposn to reverse it. We cdn't provide in Bill any guarantee v. this, by compensn or otherwise. Bill may be followed, after gt. controversy, by a fiasco. Why commit ourselves now, by issue of W. Paper. Leave it open until autumn.
Can R.A.B. tell us what the City thinks re sale.
Had A.E.'s views (written) read.
Controversy - E.P.L. & T. Bill - is such tht. Steel Bill won't make it worse. E.P.L. infuriated many who will be made even more angry if we don't go on with Steel. That is view of F.B.I. repd to me. Our pledge on Steel was so firm tht. we must do it. tho' I'm not commd on time.
City. They evolved the Agency Scheme.
Period: many years before complete sale can be finished.
A major share sold wd. be all right. V. little wd. be disastrous.
Not more than 1/3rd in near foreseeable future.
But depends on state of market. Tho' you can't expect to sell much of this in a hurry.
Insurance cos. at present aren't keen.
What evil fr. going on? Disunity - when unity so sorely needed.
If 1/3rd sold only, it wd. be a terrible flop. Confusion in industry.
Any way of p'poning it shd. be embraced.
May not secure unity. May only be mocked, for flinching.
Believe we must go ahead.
a) P'pone decision until autumn.
b) Announce soon abandonment of denationalisn.
c) Seek to negotiate settlement w'in the industry.
a) Gt. loss of prestige wd. be involved by (a). Widely known tht. announcement is impending e.g. by T.U.C. Ll.Davies. Recent P.Q. by Strauss.
If we say nothg., we shall be known to be wavering. Fedn will make outcry.
If we then went fwd., it wd. be said we were run into it by industry & b. benchers.
Industry wd. assume we had abandoned de-natn. Fedn wd. give up their resistance to Corpn. Managements wd. accommodate themselves to natn. Vickers & others who have kept capital to re-invest wd. invest it elsewhere. At best, we shd. prolong uncertainty in industry.
b) Firm pledge, confirmed since we took office by P.M. and members of Cab. We shd. be breakg. that. Strong feeling in Party, who want us to go fwd. T. & Ind. Group have bn. given, by me, categorical assurance tht. we are going on. Wd. shake Govt's foundn with b. benchers unless we cd. give promise on (c).
c) Best answer if it were possible. Compromise tht. wd. take into a/c diffies of sale & need for certainty in industry's future.
Is it possible? Sure we can't get it, if we show hesitn. Our only hope is to declare our policy firmly. From firm posn on their side & ours we may be able to negotiate - not from hesitation.
Once Labour see we mean to go on - with, I think, Lib. support - they may be ready to negotiate to save some of their own work. W'in last 3 days have talked to Ch. of Corpn (Green), who has come a long way. He thinks he cd. carry Corpn with him on basis tht. Corpn sell off, under Act, any activities not w'in Sch.II: no creation of Agency: Bill to enable Corpn to sell more than they now can: Bd. shd. be created & Agency be no more than shareholding.
Urgency - Session ending.
Announcemt. of abandonment will not earn good will.
Read pledge in Br. Strong & Free.
Is there any need to incur charge of breach of faith?
R.A.B. doesn't think this will imperil b/paymts. effort.
How does this compare with cuts in def. p'mme? and imports?
If we abandon this, Tory Party will be rent.
This is normal Party row compd with gt. national issues over b/paymts.
Natn was act of partisanship - H/L. veto cut down to allow of it.
If we go ahead, we fulfil pledges: by presentg. W. Paper.
Effect on Steel industry of uncertainty. Ellis Hunter said - there is uncertainty now, developmt held back: suppose this to be contd to '53 or '54. L. Evans, who wd. support, won't be there much longer.
Publn of W. Paper won't make pol. relns any worse.
P'ponement will certainly discourage industry.
Can we go on governing w'out a theme.
Taken from C.C. 68(52) - Meeting held on 14 July 1952.