DICU
DROIT
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IRON AND STEEL
INDUSTRY
Presented by the Minister of Supply to Parliament by Command of Her Majesty
1952
HER MAJESTY'S
Page 155
Cmd.
LONDON
STATIONERY OFFICE
Page 155
173
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I. INTRODUCTORY
1. In the King's Speech at the opening of the present Parliament, it announced that legislation would be introduced "to annul the Iron and Steel Act with a view to the re-organisation of the industry under free enter- prise, but with an adequate measure of public supervision". A Bill to give effect to this policy will be presented to the House of Commons as soon as the parliamentary timetable permits. However, since it appears unlikely that this legislation can be passed during the present session, the Govern- ment consider it desirable to make a statement of their proposals so as to remove uncertainty in this regard.
2. In framing their proposals the Government have had regard to earlier arrangements for the supervision of the industry, first by the Import Duties Advisory Committee from 1932 to 1939, then by the Iron and Steel Control during the war and later by the Iron and Steel Board set up in 1946.
3. The Government have consulted the Iron and Steel Corporation of Great Britain, the Iron and Steel Consumers' Council, the British Iron and Steel Federation, the Trades Union Congress, the Joint Iron Council and the National Council of Associated Iron Ore Producers. The Government have also had discussions with a number of trade associations on matters affecting their particular sectors of the industry.
4. The Government's proposals, which are set out in the succeeding paragraphs, fall into two parts-relating respectively to the transfer of ownership and to public supervision. To deal with the first of these problems, it is proposed to create a Holding and Realisation Agency. The second will be the responsibility of a new Iron and Steel Board.
II. TRANSFER OF OWNERSHIP
Dissolution of Corporation
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5. The Bill will provide for the repeal of the Iron and Steel Act, 1949, and for the dissolution of the Iron and Steel Corporation of Great Britain.
Holding and Realisation Agency
6. The securities of the nationalised companies now vested in the Cor- poration will be transferred to a Holding and Realisation Agency.
7. The Agency, which will be composed of a small number of persons possessing the necessary qualifications and experience, will be appointed by the Treasury.
8. The Agency will have the duty to secure the return of these companies to private ownership and meanwhile to ensure their efficient direction, as explained in the ensuing paragraphs.
Disposal of Companies
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9. In disposing of the securities transferred to them from the Corporation, the Agency will be required to obtain the approval of the Treasury in regard to the terms of sales. Subject to similar approval, the Agency will have discretion as to the timing. Sales will start as soon as possible after the passing of the Bill. However in view of the magnitude of the financial operation greyed there may well take some
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10. Before disposal, the Agency may effect such re-groupings of the under- takings Pagatartofia5be capital structure agecompanies 253may be desirable. The Agency will be required to consult the new Iron and Steel
grd in regard to re-groupings,
1. In deciding the price to be asked, regard will be had to all relevant factors at the time of sale: Account will have to be taken of the important changes which have taken place since nationalisation in the physical assets, capital structure, reserves and trading prospects of many of the iron and steel companies, together with other considerations such as monetary conditions and the general level of security prices prevailing at the time,
12. In allocating securities offered for sale, the Agency will, notwithstand- ing the serious technical difficulties involved, give priority where practicable to applications from former shareholders.
Transitional Arrangements
13. During the period of transition, the Agency will be empowered with the approval of the Treasury to provide finance for companies whose securities they hold.
14. The Agency will exercise their power as shareholders in regard to the appointment of directors of companies but will not intervene in matters of day to day management. It is intended that, pending disposal, companies owned by the Agency should operate as far as possible on the same footing as their privately owned competitors, and should stand in the same relationship as them to the Iron and Steel Board.
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Finance
15. The Agency will pay to the Treasury the monies they receive from sales and dividends. The Treasury will provide such sums as are necessary to meet the Agency's outgoings.
16. Iron and Steel Stock will become part of the National Debt and will be re-named 34 per cent. Treasury Stock, 1979-81.
17. The Agency will be empowered to accept this Stock and most other Government Stock in payment for securities of iron and steel companies sold by them. Since the sale price will be fixed in relation to conditions current at the time of sale, these Government Stocks will be accepted at their then current market value.
Report to Parliament
18. The Agency will make an annual report to the Treasury who will lay it before Parliament.
Iron and Steel Board
III. PUBLIC SUPERVISION
19. In order to provide public supervision of the iron and steel industry it is proposed to set up an Iron and Steel Board with statutory duties and powers.
20. The Board, which will be appointed by the Minister of Supply, will be composed of not more than 12 members. Qualifications for membership will include experience in the iron and steel industry, in the engineering and other industries using iron and steel, and in trade unions. There will be an independent chairman and some additional independent members.
21. Members of the Board will be appointed for a maximum term of 5 years and agil be gligible fogge-appointment. Page 157 of 253
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Scope of the Board
22. It sagent theft 253the main process agfel 581025the iron and steel industry, set out in the Appendix, shall come within the purview of the new Board, thus bringing the whole industry again under the su vision of a single authority and ending the present distinction betw nationalised and non-nationalised sectors. The Board will not be concerned with the extensive engineering and other extraneous activities which, though not part of the iron and steel industry, were brought under the control of the Iron and Steel Corporation because they happened to form part of the activities of the companies which were nationalised.
Duties and Powers of the Board
23. The Board will have the general duty of supervising the industry with a view to promoting the efficient, economical and adequate supply of iron and steel, and will be required in particular to keep under review:
(a) development of production capacity:
(b) prices;
(c) raw material supplies;
(d) research and technical training;
(e) arrangements for joint consultation between management and em- ployees on matters of mutual interest other than wages and condi- tions of service; and
(f) arrangements for the safety, health and welfare of the employees.
24. Whilst the powers of the Board are intended to provide for the super- vision of the whole iron and steel industry, they will not extend beyond it, for example to the activities of steel-using industries or metal merchants.
25. In times of serious economic difficulty, special measures, such as the present emergency powers under Defence Regulations, may be needed to deal with shortages and problems of distribution affecting not only the iron and steel industry but industry as a whole. The action required in such circumstances clearly falls to be taken on a national plane by the Government, and not by a Board responsible for a single industry.
26. So long as the present emergency powers or similar powers under other legislation continue to be exercised, the Government will consult the Board in regard to their application to the iron and steel industry, and in appropriate cases may authorise the Board to exercise them on behalf of the Government.
Development
27. One of the most important responsibilities of the Board will be to supervise capital development. It will be the Board's duty to discuss with the iron and steel companies their plans, in order that they may be satisfied that individual schemes are consistent with the proper development of the industry as a whole and that any additional capacity or improved facilities required will be provided.
28. If a company should put forward a major scheme which in the opinion of the Board would seriously prejudice the efficient and economical develop- ment of the industry, the Board will have power to restrain that company from embarking upon such a scheme. Companies dissatisfied with the
the Minister of
Board's decision will have the right of appeal page stof Supply.
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29. On rounds ebeneral national interest ipmax at times by desirable to carry out schemes of capital development whichson commercial grounds no company feels able to undertake. It is therefore proposed to give powers to the Minister of Supply to arrange in such cases, after consultation with Board, for the provision and operation of the additional works or other facilities required.
30. The Government propose to give these positive powers to the Minister and not to the Board because, if the Board are to preserve impartiality in the performance of their duty of supervising the industry as a whole, they must remain free from responsibilities of ownership or
ownership or management in respect of particular concerns.
Prices
31. In view of the importance of iron and steel to the national economy, it is proposed to give to the Board power to fix maximum prices for sales in the United Kingdom. Discretion will be left to the Board to decide from time to time in respect of which products such price control is necessary. In addition it is proposed that the Government should have in reserve a power to intervene in the fixing of maximum iron and steel prices should the public interest so require.
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32. In order to avoid overlapping, the Board's price-fixing powers will not be exercisable in respect of any product for which a Price Control Order under Defence Regulations is at the time operative.
operative. On the other hand, the Minister of Supply will be required to consult the Board before making any such order in respect of any product or raw material of the industry, including scrap.
Enforcement of Board's decisions
33. The Bill will provide that all producers of iron and steel shall be deemed to have entered into a contractual obligation with the Board to observe their decisions in relation to development and prices. The Board's decisions will thus be enforceable by civil proceedings for an injunction.
Supply of Raw Materials
34. The Board will keep under review the distribution of raw materials, including scrap. In times of shortage, such as the present, when emergency powers are in operation, it is the Government's intention that the Board should control the distribution of scarce raw materials within the iron and steel industry under the authority of the Minister of Supply....
35. In view of the dependence of the United Kingdom upon supplies of high grade iron ore and other raw materials from abroad, the Board will have to assure themselves that the arrangements made by the industry for importation of the raw materials it requires and their distribution are satis- factory. The Board will be empowered themselves to take steps to secure the imports required, should they consider the industry's arrangements inadequate.
36. The Board may also if necessary arrange for the import of iron or steel, in finished or semi-finished form.
37. In order to avoid serious price discrepancies due to the higher cost of imported iron and steel and raw materials, the Board may arrange, with the approval of the Minister of Supply, for these to be sold below cost and for the loss to be recovered from appropriate sectors of industry, as is done at present age 159 of 25