COMMON SENSE ABOUT NATIONALISATION
By NICHOLAS DAVENPORT
THE document on the 'Ownership of
Industry' which the Labour Party \, Executive propose to publish on July 18 would appear to be such a direct challenge to the City and the investor at large that I feel it needs some preliminary debunking. It should have been as important a social document as the recent memorandum on a State superannuation scheme but, being a clever compromise, a formula designed to satisfy the two opposing groups who are for and against more nationalisation, it will mainly have a nuisance value. But a document which directs a Labour Government to take powers to acquire a controlling interest, if it wants to do so, in any one of 600-odd companies with a capital of over £2f million will certainly be a great nuisance, even if the powers are never used. Its very vagueness will encourage a flight of capital abroad, for the one thing which upsets the investor is uncertainty. A new Labour Govern- ment would therefore have to impose immed- iately a licensing system for the export of capital to the sterling area as well as clap on more exchange controls in defence of sterling. To hold the existing rate of exchange in these circum- stances would probably need the calling-in of the remaining dollar reserves which the present Government has so far avoided using. And it is never a pleasant situation to be at the end of one's tether. So, while it may be a very desirable thing, as I suggested last week, to have some control over the movement of UK capital in the sterling area, it would be very foolish to set in motion a wholesale foreign flight from sterling. Therefore I start with this comment—that the Labour Party could not possibly afford to let this vagueness stand. It would have to make up its mind definitely and finally about how much nationalisation it intended to carry out, and with what technique, before it faced the next general election. Until this definitive statement has been issued the present compromise document can, I suggest, be ignored.
* * *
A great deal more thinking should have been done on this subject before a policy memorandum was issued. Leftish opinion is changing : the opposition to more monopolistic public boards operating independently of parliamentary control is steadily growing. It is now realised that it is quite unnecessary to set up a public board for Parliament to have effective control over an industrial company or an entire industry. The Government has a 51 per cent. interest in the British Petroleum Company, having originally bought shares from the Burmah Oil Company, and although it has only two directors on the board it has the real control it wants. (For that matter it would make no difference to its authority if it had a 31 per cent. interest.) If it wanted to control the steel companies in the same way all it need do is to acquire shares (not necessarily 51 per cent.) from the insurance companies which were morally forced to take up large holdings when the denationalisation issues were made. Many insurance companies would be glad to sell and would certainly not object to compulsory acquisition of part of their holdings. A 33+ per cent. interest with two official directors on the board of each company would give the Government effective control of the whole steel industry, especially if an iron and steel board were responsible for national planning and development. This technique would enable the individual 'companies to go on working under private management, would ensure the same high commercial efficiency as the Government now gets from the British Petroleum Company, and would stop any threatened flight from the £. What Socialist could object to that? Only, I imagine, the doctrinaire Marxian fanatic who is plainly not interested in our economic survival as an independent power.
* *
Perhaps this technique is precisely what the moderate, practical section of the Labour Party is hoping to adopt when its 'enabling' Bill has been passed. if so, it should say so and avoid the dangerous uncertainties which will follow publication of this document. If I may put further ideas into their heads they should be thinking out the sort of public investment trust (not under Treasury control, please) which would hold the shares the State acquires in steel or other com- panies. I noticed that a flied trust was formed a week or so ago to hold industrial equity shares for the set purpose of helping industrial company pension funds to spread their investment risks. It is obvious that a public investment trust would do the same thing for the State superannuation fund trustees. In fact, a public investment trust, if it had power to acquire select equity shares from deceased estates in addition to the shares of steel or other companies which the Govern- ment wanted to control, would be a wonderful 'growth' investment for the private investor. It would attract public savings far more readily than Savings Certificates or Premium Bonds. It might even be the answer to the national savings prob- lem—the way out of creeping inflation.
It is too optimistic to suppose that tfiis year's Labour Party conference will settle or even advance the settlement of these important economic and financial questions. It will take time for the party to rid itself of poisonous Marxian dogma about the ultimate socialisation of all the means of production and distribution. But our economic survival will not wait. It depends upon our great export companies in the engineering, electrical and chemical industries being free to develop without threat of Govern- ment take-overs and prepare themselves for the European common market. In all seriousness this country can afford only one more public board on the Morrison pattern—a board to take over the water companies. And that is not watering down British Socialism. It is giving it a cleansing draught--fitting it for the more practical type of Socialism which our precarious economy and threatened currency demand.
Previous page
