HC Deb 30 April 1951 vol 487 cc846-50
Mr. G. R. Strauss

With permission, Mr. Speaker, I will now answer Question No. 18.

The House will recall my warning on 7th February that the Iron and Steel Corporation, on taking over from the former private owners on 15th February, were likely to be faced with a raw material supply situation which would make it difficult or impossible to maintain the recent level of steel output. I have now received a report on the situation, drawn up by the Corporation at my request.

During the last quarter of 1950, the iron and steel industry reduced its stocks of imported iron ore by 327,000 tons, pig iron by 20,000 tons and scrap by 195,000 tons, which in total is equivalent to a steel ingot production of over 400,000 tons. This means that, of the 1950 output of 16.3 million tons, about 15.9 million tons were produced from raw materials obtained during the year and over 400,000 tons by reduction of stocks.

Further reductions in stocks of imported iron ore, pig iron and scrap, equivalent to a steel ingot production of over 500,000 tons, were made by the industry in the first quarter of this year. During the last six months it has therefore used up about one million tons of its stock of steel-making raw materials. This source of supply will not be available to us for the rest of this year as stocks have now been reduced to a dangerously low level. Indeed, some furnaces have already had to be closed or damped down on this account

The intake of raw materials which, as distinct from the use of stocks, accounted for an output of about 15.9 million ingot tons in 1950, included an import of scrap, mainly from Germany, of over 1.9 million tons. The House will know that, although we are doing our best to obtain maximum supplies from Germany, there is no prospect of attaining anything like that figure this year. Against this we hope for some slight improvement in the import of iron ore which was reduced in the last six months by shipping difficulties; some small increase in the import of pig iron; some increase in the use of home ore which, however, because of its lower iron content, reduces output per blast furnace; and, most important, some increase in home scrap supplies. The success of the present national scrap drive is, therefore, of supreme importance and unsparing efforts must be made during the coming months to recover every possible ton.

These factors, however, even at best, can only offset part of the shortfall. In view of this and the exhaustion of reserve stocks on which we can draw, it is evident that steel production this year will be lower than last year. The greatest ingenuity on the part of manufacturers will be needed to overcome the shortage of steel. I am sure that all in industry will, in the national interest, do their utmost to ensure that, despite the difficulties, the maximum possible production is achieved.

Mr. Eden

The right hon. Gentleman told us that he thought iron ore supplies would now be improving. Am I right in thinking that the shipping difficulty has mainly been the need to import American coal, which has made it impossible for our ships to bring the iron ore from North Africa?

Mr. Strauss

The answer to the first part of that question is: Yes, the shipping difficulty is getting easier. In reply to the second part, part of the difficulty was caused by shortage of shipping due to the large carriage of coal, only in part to this country and much more to other parts of the world—to Europe—and the large shipping of wheat to India. Those are the main causes of the shipping difficulty from which we suffered during the last six months. It would be fair to add that during the early period of the shipping difficulty, when freights were rising, the steel industry were unwilling to pay the higher freights and, when they came into the market, they found it difficult to get the shipping they required.

Mr. Clement Davies

May I put a rather general question to the right hon. Gentleman? As he realises, this is one of a number of statements made either by the right hon. Gentleman or by the President of the Board of Trade. On Friday, I asked the right hon. Gentleman whether the Government would issue as full a statement as possible on these shortages, what, in their estimation, they will be, what will be their effect not only upon the armament programme but upon industry, and what policy they propose to pursue with regard to the general distribution of steel, because this affects the whole country and not merely the munitions programme.

Mr. Strauss

I told the right hon. and learned Gentleman that I would consider his proposition with my colleagues. I have not had time to do so yet.

Mr. Bellenger

My right hon. Friend will be aware, of course, that steel production in Germany is rising and that a portion of the surplus over that permitted by the Tripartite Agreement is to be allocated for defence purposes. Does he anticipate that he will be able to obtain some of those supplies to help to overcome the shortage in British steel production?

Mr. Strauss

We would like to, but we cannot say at the moment whether that would be possible.

Mr. Jones

Is my right hon. Friend aware that the statement he has now made to the House will cause grave disquiet among steel operatives in the country? Will he make certain that the new Steel Corporation is making every effort to use to the full our own indigenous raw materials, our own iron ore and our own coal, to offset the imports of the vital materials which it now seems we shall not get?

Mr. Strauss

Yes, home ore will be used to the full but, as I explained in my statement, its iron content is much lower and does not make up for the lack of imported ore.

Mr. Eccles

What is the right hon. Gentleman doing to see that the coming into force of the Schuman Plan does not add to the difficulties of getting French North African ore and Continental scrap?

Mr. Strauss

The implications of the Schuman Plan are being carefully studied.

Mrs. Braddock

Is the Minister aware that there are hundreds of miles of tramlines throughout the country which are being buried owing to the change over from trams to buses, and that the reason is that local authorities cannot afford to pay for labour to take up these tramlines? Could that matter be looked at to see whether anything can be done?

Mr. Strauss

Yes, arrangements are being made between industry and a number of local authorities for the recovery of tramlines, and certain special financial arrangements are being made. I hope that the scheme will be extended.

Major Legge-Bourke

Is it the policy of His Majesty's Government that if an economy has to be made in total consumption this year, that economy will not be made from the re-armament programme?

Mr. Strauss

Yes, Sir.

Mr. John E. Haire

Can my right hon. Friend say what are the difficulties in obtaining sufficient supplies of scrap from Germany?

Mr. Strauss

There are difficulties partly because there is not as much scrap as there was last year, although in our view there is still ample scrap for substantial exports. Discussions have been and are taking place with the German authorities, but it appears at the moment that we shall not get anything like the amount of scrap which we want and which we think we ought to have.

Mr. Dodds-Parker

To what extent has Treasury policy delayed or prevented the acquisition of supplies of rich iron ore?

Mr. Strauss

I do not know what the hon. Member is referring to.

Mr. Gibson

Do the proposed arrangements for helping the recovery of tramlines apply in the London area, where many hundreds of miles of tramlines are now being covered up?

Mr. Strauss

I do not know, but I will look into it.

Mr. Alport

Has the Minister given any guidance to manufacturers as to the priorities for steel distribution, not only as between exports and re-armament but also within the sphere of re-armament and within the sphere of exports?

Mr. Strauss

That is rather a different question. I am dealing with the supply of steel, and not its distribution.

Mr. Chetwynd

Can my right hon. Friend say what production he hopes to obtain this year?

Mr. Strauss

It is too early to do so yet. All I can say is that there is bound to foe some fall, but we are hoping to minimise it.

Mr. Niall Macpherson

Can the right hon. Gentleman tell us the prices being paid, respectively, for home scrap and German scrap?

Mr. Strauss

German scrap prices are much higher. The hon. Member will be aware that we have a firm control over home prices; it is as a result of that Government control that the price of iron and steel has been kept down during the last five years.