SECRET
C.P. (49) 132
10th June, 1949
Copy. No? 1
CABINET
IRON AND STEEL BILL: DATE OF IMPLEMENTATION
MEMORANDUM BY THE MINISTER OF SUPPLY
In C.P. (48) 227, I dealt with the question of the date of implementation of the Iron and Steel Bill, and in arguing for taking power to effect the transfer before a general election in the summer of 1950, pointed out that while in fact we should not wish to do so, the power would be a strong bargaining weapon. Subsequently my colleagues agreed that the date of transfer should be 1st May, 1950, or such later date within 18 months from the Royal Assent as the Minister might determine, and the Bill was introduced on this basis.
2. On 2nd December, 1948 (C.M. (48) 77th Conclusions, Minute 3), I reported to my colleagues my talk with Sir Andrew Duncan on the previous day in which, in return for an assurance than no transfer would take place before the Election, he offered (a) to secure the continuance of the Iron and Steel Board, (b) to state publicly that the Federation would press forward with the existing development plan and with preliminary work on a subsequent plan, and (c) (informally) to give technical assistance in the working out of the Bill. My colleagues felt that any such arrangement would be unwise. Meanwhile the Iron and Steel Board has dissolved, the Federation has stated that "the suspense created by the Bill had actually slowed down the development plans of the industry," and they have given no assistance on the technical details of the Bill.
3. Lord Salisbury has given notice that the Opposition in the House of Lords will insist on an amendment that the Bill shall not become operative till 1st October, 1950, and transfer not take place till 1st July, 1951.
4. The arguments in favour of adhering to 1st May, 1950, are:
(a) The present Parliament was elected with a mandate to nationalise this
industry.
(b) It is undesirable that the industry should be kept in suspense for longer
than necessary.
(c) It would be politically unwise at this stage to surrender voluntarily to
5.
the demands of the Tory Peers.
The arguments for postponement till after the General Election are:- (a) It will in practice be impossible to obtain members of the Corporation till after an Election, and therefore any proposal to transfer before the Election is unreal.
(b) Whatever the strict merits of the mandate, the delay of a few months can
have no ultimate significance.
(c) It will be alleged by our opponents that our determination to implement this controversial measure just before a General Election is undemo- cratic and indicates a lack of confidence in the verdict of the electorate on this question.
6. Both in the Committee and Report stages in the House of Commons the Opposition moved amendments to postpone the vesting day until 1st January, 1951. I resisted this on the grounds that we assumed the Lords will treat this nationalisation measure in the same way as they had treated others passed by the
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Pagmas 3 icef, they would give it their consent by Ragen25 of July this year. As it was obviously most undesirable in the interests of the industry itself that the period of suspense between the Royal Assent and the implementation of the Act should be a day longer than necessary we could not possibly accept a proposal which might involve a time gap of eighteen months. (Under Lord Salisbury's proposals it would be twenty-four months.) I rejected the argument that it was proper for the electorate to pronounce upon this Bill at the next election on the grounds that we already possessed a definite mandate for its passage. I adderl that in order to meet unexpected economic or political developments which might necessitate an alteration in the vesting day the Bill gave_the_Government authority to postpone that day until eighteen months after the Royal Assent.
7. The question now arises what attitude should be taken by the Government to Lord Salisbury's amendment. The Cabinet's view has been that while we should, for technical reasons, stand by the date of 1st May, 1950, it was recognised that, in fact, it would be impracticable to implement the Bill until after the election; partly because the time available between the Royal Assent (assuming the Lords postpone this as long as they can under the Parliament Act) and vesting day, would be inadequate to secure a smooth transfer, and partly because it would be impossible to get the leaders of the industry to serve on the Corporation or co-operate in any way, with a General Election in the offing. It seems to me, therefore, that two courses are now open to us :-
(i) The Government spokesman in the Lords can take an early opportunity of saying that although we believed that postponing the transfer of the iron and steel industry to the Corporation would be damaging, in view of Lord Salisbury's declaration that the Lords were going to insist on substituting 1st October, 1950, for 1st May, 1950, and the undoubted -power of the Lords to carry out this threat the Government had no option but to accept the situation. For the alternative would be a delay in the passing of the Bill until the Parliament Act operated, which would be in February or March next year, when it would anyhow be too late to make a smooth transfer of this industry to public ownership.
A further point to be considered would then be whether (a) to accept the actual amendments moved by the Lords preventing any implementation of the Bill before 1st October, (b) to make a declaration that the Government would not appoint a Board or transfer securities until after a General Election, or (c) to adopt some other way of effecting this purpose.
(ii) To resist Lord Salisbury's amendment on the lines that I advanced in the Commons. This would presumably mean that the Bill would get the Royal Assent after the Parliament Act procedure had been invoked, at the end of February or early March next year. At that stage, or some little time prior to it, we would then make the announcement that we were postponing the vesting day until 1st January, 1951.
8. The consideration as to which of these two courses should be adopted is one of high political strategy, in which the date of the General Election is an important element. In making a decision the Cabinet will bear in mind that if the first course were adopted, the passage of the Bill through the Lords would probably be far easier and would no doubt be effected by the end of July. Another point is that the longer we insist that 1st May, 1950, must stand, the more difficult will it become to choose the moment at which to declare that we have been forced to abandon it.
Ministry of Supply,
10th June, 1949.
G. R. S.