STEEL STRIP MILL (SITING) (Hansard, 31 July 1958)

§ Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)

I turn back from the higher matters that have just been discussed to those connected with our daily life, and our bread and butter. I must begin by thanking the Parliamentary Secretary to the Ministry of Power for attending, at some considerable inconvenience to himself. I do not know whether he will be able to give a great deal of information. From what the Paymaster-General has been saying in Answers to Questions I would hardly expect it, and if I find the hon. Member giving a short reply I shall not take it amiss, but I shall be grateful for any information which he can supply.

On several occasions the Welsh debate touched upon the question of a strip mill. I do not want to give the impression that I am putting forward any sort of nationalist case against Wales; it is merely that there is very considerable interest in this matter in Scotland, and since the Welsh case has been put I thought that it would be beneficial for the Scottish case also to be put. I do not presume to think that I can express the Scottish case, but I think that the majority of Scottish people would take roughly the same point of view as I do about most of the matters concerned.

The first official statement about the fourth strip mill came in the publication, in July of last year, of a special report by the Iron and Steel Board. It says very plainly that at some stage it will be necessary to construct a new hot strip mill with the complementary iron and steel plant and cold rolling facilities for the manufacture of sheet and tinplate It says this because it makes a certain calculation, adding together two particular points. It says, in the first place, that by 1962 demand is likely to have fallen 1723 below productive capacity; that the deficit will be roughly 400,000 tons per annum, and that by 1962 the amount of obsolete capacity will be about half a million tons. It adds the two together and says that in 1962 or thereabouts there will be a need for further productive capacity to the extent of 900,000 tons. On the basis of that figure it says that there may be a question about the economic figure for an installation of this sort, but the figure of 900,000 tons is quite evidently an economic one.

Beyond that, one assumes—indeed, I believe the Board itself says this—that in course of time the amount of production is likely to go up beyond 1 million and perhaps beyond 2 million tons. That is the core of the interest which Scotland, as well as Wales, has in this mill. It is an enormous project. It is not merely another simple investment; it is not merely the establishment of another simple industry. It is a tremendous step in the country's economy, whether Scotland, Wales, Lincolnshire, or any other area benefits in the end from the establishment of the mill.

The Government have made public the fact that they have taken one decision; they have decided that this strip mill will be established. I hope that I am right at least as far as that. Beyond that, it seems that we are left in the dark as to the decisions which the Government have taken. We are told that there is a divergence of opinion between the Board and the industry as to when the mill should be establshed. Industry thought that the demand would not be reached by the time the Board thought that it would. In other words, that the establishment of the mill could well be postponed for at least a few years.

That was a divergence, not of policy, not on the main issue of establishing a mill, but simply on the matter of a comparatively few years, three or four, or, at the most five or six years. I wish to ask the hon. Gentleman whether that divergence has been resolved. Does the Board and industry see eye to eye now about when the mill should be established? In point of fact, because of the time factor involved in building the mill, and getting it into full operation, the Board points out that that divergence would tend to disappear in any case, 1724 because it would take five to six years to build the mill and longer still before it was going at full stretch. However, one would like to know whether the divergence of opinion has now been resolved.

There is also the matter of form. When the Prime Minister saw a deputation of hon. Members representing Scottish constituencies, a year ago, one of the things he said—it was very interesting and rather mysterious at the time—was that the form of this project had not reached the point of final establishment. In any case, I had intended to ask the hon. Gentleman whether the form of the project had now been decided, but I must now ask him that with rather more emphasis, because I have just seen the Scottish edition of one of this morning's newspapers which reports that there is a possibility—it links the Secretary of State for Scotland with the possibility—that the project will be split into two, and that half will go to Scotland and half to Wales.

I must put to the hon. Gentleman that the very statement of such a possibility will cause considerable interest in Scotland. I use the term "interest" as a word which does not raise any question; it will be more than interest. It would be very beneficial if the hon. Gentleman could give us some information about that. I have no technical knowledge of the issues involved, but I gather from reading the statement of the Board that there is a possibility of dividing the project in that way.

So far as a layman can judge, that is possible. During the Welsh debate, earlier this evening, one of my hon. Friends referred to this possibility, so that apparently it is not out of the question. As a layman, one asks that question first. Apparently, it is not impossible. It would allay anxieties in Scotland, and, I have no doubt, in Wales, if the hon. Gentleman would say something about it.

Now may I raise the specific question of the site? The firm concerned, Richard Thomas and Baldwins, has made no secret that it wants the mill established in Wales. That has been put forward by at least one hon. Member opposite as the main reason why the Government should come down in favour of a Welsh site. But I hope that the Government will not follow that kind of advice. This is an enormous investment 1725 project, and not the kind of thing which should be decided by one firm. I think that the Cabinet has already made clear that it intends to make up its own mind. I hope that any suspicion which may exist—it does exist in some quarters, although it is not widespread—that the Cabinet will simply endorse the company's decision, is mistaken. I do not believe that the Cabinet is likely to do so, but it would help if the hon. Gentleman could give us a firm assurance that the Government will not be influenced in that way.

The site at Grangemouth, which is just outside the borders of my constituency, has been surveyed by the Board and found suitable. Interest in this project is not by any means local. Naturally, there is great interest in my constituency and my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann) has stressed the great simportance attached to it in her constituency. The same is true of the rest of Scotland. There is tremendous Scottish national interest in the siting of this mill. It is a decision which the Scottish nation has been waiting for with justifiable impatience.

When we ask for an indication of when a decision can be made, we are not doing that for fun. There is cause for anxiety and worry. Last December the Minister of Housing and Local Government and Minister for Welsh Affairs stressed that this was urgent. The Minister of Power is reported to have said in May of this year that there was no urgency about the matter. I do not know with what correctness he was reported, but the report appeared in the Scotsman, which is not a paper normally given to careless reporting. If that is so, one wonders whether we are to have some guidance about whether there is any immediacy in the minds of the Government about this matter. Following whatever leads they can get, the Press have been telling us that there is a likelihood of a decision in three weeks or a period of that kind. It leaves the Scottish public wondering what is the situation. Hope deferred maketh the heart sick". There is something of that situation just now.

Now I would say one or two things about the advantages of siting the mill in Scotland. We can dismiss any argument in our public discussion that the whole 1726 thing is purely a technical matter of steel making and that we have to site the mill where the technical processes can best be carried out. The Government have made it quite clear that they take a wider view of the matter than that. We can also dismiss the question of simple relative costs of production, which, between the Scottish site and the Welsh site, is not great. What advantage there is, is likely to be in favour of the Welsh site.

From our point of view, what is in question is not simply the economics of steel production but the economics of the national activities that would be concerned. It might be quite possible to establish the plant in Scotland at a higher cost in steel production, but there would be very much greater gain by way of ancillary industries and other user industries which would gather round the plant in Scotland, but not in Wales. That is the basis on which the decision ought to be made. Scotland needs a decision of that sort, and that is the reason for the great interest in the matter.

It is not simply a matter of increasing Scottish prosperity, or of doing something additional for the Scottish economy. There is a strong feeling in Scotland that there is a tendency for the major economic interests to drift to the South. Our population has been drifting a bit to the South, and out of the country, too. Our unemployment rate is still double the ordinary economic rate, but even that is after a very heavy outflow of unemployment. We are inclined to feel, with a great deal of justification, that we need an additional impetus to our economic life.

Our steel production specifically has been falling in recent years proportionate to United Kingdom steel production, and we are not now producing anything like the proportion of the total United Kingdom steel that we used to produce. We have not been getting an equal or fair share of the newer industries. We have an electrical industry and one oil refinery, which is by no means the sort of proportion one would expect. There is a general feeling, which, I think, is well justified, that the Scottish economy is lagging a good deal behind the economy of United Kingdom generally. I do not say that it is not prosperous or that it is by any means a depressed economy, but there is in Scotland a great 1727 deal of slack, of unused human resources and that kind of thing, that could well be taken up by the establishment of a major new industry of this sort.

However, we feel that the advantages of the Grangemouth site are more than simply its technical suitability—which apparently it has—for steel production. The labour, for instance, is there in Falkirk, which is near Grangemouth, and is part of my constituency. The main industry, light iron castings, has been suffering a very considerable decline in recent years. Very close by is the shale industry, which is in the same situation. There is a great deal of spare labour of the proper type, the skilled artisan type, which could well go to the kind of work involved in steel production and would do it extremely well.

The transport situation is very favourable. Grangemouth is well situated in relation to roads and railways and the docks are closer to the Scandinavian ore fields, on which we will presumably still rely, apart from the amount of home-produced ore. In addition, the local councils have expressed themselves as extremely willing to provide all the services which would be necessary.

We feel that in Scotland we have a good case. We do not know all the factors. We do not know what weight is given to each factor, for example, what weight is given to the strategic question of having three strip mills out of four situated close together in South Wales and whether it would be better to have them more widely separated over Britain. We feel that to establish the mill in Scotland would be to establish it in a situation which there could be considerable growth of ancillary industries, which would not be likely to happen if it were established in South Wales, where already there are two similar mills.

We feel that the recent history, the twentieth century history of Scotland, has been such that a mill of this sort would be the very kind of thing which Scotland needs. One trade union leader said, and I quite agree, that it would be the biggest event in the economic life of Scotland for fifty years. Quite possibly, it would be the biggest event for the next fifty years, also. Because of the magnitude of the project, and the importance it would have for Scottish economic and social life, we 1728 are anxious to have all the information possible that we can have about it from the Government.

§ The Parliamentary Secretary to the Ministry of Power (Sir Ian Horobin)

I wish to thank the hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) for raising this matter particularly from the Scottish point of view, and for doing it so shortly. He was good enough to say that he would not take it amiss if at this hour I did not reply at great length.

If I was in a position today to announce a final decision on a matter of such importance it would be necessary, and the House would expect, to have a very substantial discussion of all the great issues involved so as to justify to the House and to the public the relative weights given by the Government to reasons for making a final decision. But, as my right hon. Friend the Minister of Housing and Local Government and Minister for Welsh Affairs has already said, we are not yet in a position to give a final decision. I therefore propose to be fairly brief.

I agree entirely with what the hon. Member has said about the scale of this matter and its importance. Earlier, we were discussing for over an hour one-seventh part of £7 million. This is a matter of between £100 million and £200 million. It is, therefore, two or three Trawsfynydds. It is an immense affair. For that very reason one has to be most careful because one cannot alter a decision once made; one cannot do a little bit here and a little bit somewhere else. Whatever we do, the mill cannot start producing until somewhere in the early nineteen-sixties. That means that a few weeks or a few months are well spent in endeavouring to balance the considerations accurately. I do not think that at this stage we need bother too much about the exact amount of the deficit in sheet and tinplate we expect at that time.

As everyone knows, the circumstances have altered somewhat in the steel industry and other industries recently, but this is a long-term matter. Something like 1 million tons will probably be needed in the early 1960s. Without going into which exact year in the early 1960s and exactly how much more or less than 1729 that will be required, I think that one can safely say that an amount substantially of that size will be required. As it takes, in any case, about five years to get the thing going—this answers one of the points the hon. Gentleman made—it is becoming definitely urgent, not in the sense that it must be done today or during the Recess, that a decision be taken.

The Government have been twitted once or twice about delay. I am prepared to say to the House that the Parliamentary Secretary to the Ministry of Power is, no doubt, a very important Minister, but if he were a dictator, he is very clear in his own mind what we ought to do and where we ought to do it. Wild horses would not drag from me which of the various choices I should come down on. I think I may say that, after taking all the best advice available to me, I have not been able to come to the conclusion that it ought to be in Oldham, East. I only wish that I could. Beyond that, I cannot go.

There are, in these difficult decisions, very many different opinions held by different people who approach the matter in different ways, and we must hope that the final conclusion will be the best for the country as a whole. Having referred to my own views on the matter, I ought to say that I have been in touch with my right hon. Friend the Secretary of State for Scotland, because I did see, and was rather startled by, the Press reports to which the hon. Gentleman referred. My right hon. Friend has authorised me to give the most categorical denial that he made any proposal of that sort. That is not to prejudge the issue as to what form the mill might take, whether it should be in any particular place, be divided or not divided. But he authorises me to say categorically that he made no proposal of that sort, because no decision has been come to. It is important to have the record straight in that respect.

As the hon. Member for Stirling and Falkirk Burghs said, there are at least four major candidates, two in Wales, one in Scotland, one in Lincolnshire, each having strong points in its favour and having advocates in the House. We must consider the possible sterilisation of enormous quantities of coal. We must consider 1730 the advantages in the matter of raw materials. We must consider location in relation to the ultimate consumer, who is mainly in the Midlands, and a number of other matters. We must consider all the social questions to which the hon. Gentleman himself referred and to which some Welsh hon. Members referred earlier in discussing unemployment and so forth.

I must remind the hon. Member and the advocates for different parts of the country who base their case on social reasons that one not unimportant reason for building a steel mill is that it should produce and sell steel. I emphasise the word "sell", because we are encountering more and more competition as the world develops today. It is absolutely essential that, when this mill is built, it should be able to sell its steel in competition with all comers. It is no good landing Wales, Lincolnshire, Scotland or anywhere else with a "white elephant", in an attempt to solve unemployment problems, which will be uncompetitive just when one wants it to be competitive. We must, therefore, balance extremely carefully the social arguments with the economic arguments which, as the hon. Gentleman has said, have been pressed very strongly upon us by the various authorities and the industry itself.

I think the hon. Member said that he hoped that the alleged views of Richard Thomas and Baldwins would not weigh too heavily with the Government but that they would make up their own minds. I do not dissent from that, but I must remind him and the House that somebody has to build the works. The Ministry of Power cannot build it and certainly cannot work it. I do not say that it will, but if the industry unanimously comes to the conclusion that it does not want to build the works, because it does not think it will work in a certain location because it thinks that it is uneconomic, that is a consideration which must weigh very strongly with the Government. It is not a selfish consideration in the case of R.T.B., because they are still nationalised. They are almost, so to speak, a public department in this matter and possibly even have a public conscience.

What I am putting briefly to the House and to the hon. Member is that we are 1731 most conscious of the social arguments that have been very properly put in favour of Scotland, West Wales, and so on. We are also very conscious of the fact that colossal sums of money, probably a great deal of it public money, will be, for good or evil, permanently tied up in this works once it is built and a very large sector of the British steel industry will be dependent upon the success of it.

Therefore, I do not think that, in view of the seriousness of the issues involved and the complications, the House on the whole would be fair in criticising the Government in taking a little more time to make up their minds on the understanding that time is not unlimited. A great many other interests in different parts of the United Kingdom are awaiting a decision in this matter. The Government are very conscious of that and When they can feel that they can take a decision—and however long we work on it we cannot be certain that it will be right—having done their best to decide these issues, the decision will be made and announced. I am only sorry that I cannot announce it tonight.