HC Deb 06 November 1958 vol 594 cc1219-30

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gibson-Watt.]

8.42 p.m.

Mr. Arthur Palmer (Cleveland)

I am glad to have the presence of the Parliamentary Secretary to the Ministry of Power at this rather unexpected early hour, so that I may raise with him a matter of very great concern to my constituency. I shall be grateful if he can answer a number of questions which I hope to put to him.

I am referring to a matter which is, as I say, of great concern to my constituents and my constituency—the future of iron ore mining in Cleveland. As I am sure the hon. Member will know, Cleveland is one of the historic iron ore districts of the United Kingdom. It was because of the discovery of iron ore in the Cleveland hills, in the nineteenth century, that the great steel industry of Middlesbrough and later, of Tees-side generally came to be founded.

There was a time when Cleveland was one of the major ironstone fields of the country. I believe that up to 1920 it was the biggest single source of ore for the British steel industry. Of course, it had the advantage also of close proximity to the excellent Durham coal. I think that we can all accept that that time has long since passed, and that for many years the steel works of Tees-side have been supplied in the main by sea with higher quality ore from foreign countries, particularly from Sweden and North Africa.

It is true that in the Cleveland hills much of the workable iron ore has been extracted and that what is left is difficult to obtain and is of relatively low iron content. However, that is typical of the whole of the British home-produced ores. Despite low iron content, about half the ore at present used by the British steel industry comes from home sources; so that if that is argued, as it often is argued, against the Cleveland ore it is an argument which may be used equally against British ore generally. Up to 1945, the iron and steel industry had gone through a bad time including the depression in the 1930s, though there was a very great deal of activity during the war years when it was necessary to use all the ore obtainable from home sources. In 1945, there were 2,000 to 3,000 men working in the Cleveland fields. The last decade has seen that number more than halved. I accept that there has been a process of running down, but it has been a relatively slow run-down.

A year ago I asked the predecessor of the hon. Gentleman what was likely to be the future of the Cleveland field. He could not give me an exact answer, but he said that the iron ore left at Cleveland was estimated to amount to about 30 million tons. He made the point, and we must accept it, that the future life of the field would depend on economic conditions. But at that time there was no indication of the decisions recently taken which may, unfortunately, drastically shorten the useful life of the field and, therefore, seriously impair the employment prospects of my constituents who work there. These people are, in the main, not young men. They are older men who have given a lifetime of service to this valuable industry and, as may be expected, much as they may try to adapt themselves to new work, that will not always be easy.

The decision to which I refer was when it was announced unexpectedly to many, including myself, last August that the subsidy paid for the production of Cleveland ore would be withdrawn. I confess that I am ignorant of the exact arrangement of this subsidy and its extent. I have tried to find out, but it is not easy because, apparently, this matter is bound up with the general trade practices of the iron and steel industry. There may be excellent reasons for secrecy. I understand, however, that this subsidy has been paid out of national funds which have been available generally to the industry for a number of years, to assist and to make economic the production of the iron ore in the Cleveland field.

I find, also, that there is a bit of a mystery about who took the decision, whether it was taken by the Iron and Steel Federation or by the companies concerned. But it has certainly been taken, as I accept, in consultation with the Iron and Steel Board. Under the de-nationalisation legislation of 1953, the Iron and Steel Board has the overriding responsibility of looking on the affairs of the steel industry in the light of the national interest.

The effect of withdrawing the subsidy has already been to close down one of the mines concerned, the Loftus mine, which is worked in conjunction with the iron and steel works of the Skinningrove Iron and Steel Co. As soon as the subsidy was withdrawn the company found that it no longer paid them to work the Loftus mine. I do not complain of the decision of the local management as such. I discussed the issue with them, as well as with the trade union representatives of the workpeople.

The management received me with courtesy and we went over the whole business. I can quite see that, from its limited point of view, the company had no alternative but to close the mine. which is to be sealed off for all time. Perhaps that is a pity. For all we know a situation may arise—if there were another war, for example, which does not bear thinking about— when it might be necessary to get at some of this Cleveland iron ore. Nevertheless, the decision has been taken and the mine has been closed down finally.

In addition to the closing down of one mine, the decision has brought about short-time working in a number of other mines belonging to Messrs. Dorman Long. Those mines have all gone over to short-time working. The result of all this has been to decrease the opportunities of employment thus leading to lower wages for my constituents who still work in these mines.

This brings me straight to three questions that I want to put to the Parliamentary Secretary. First, who took the initiative in this decision? That question is of interest to us all. Secondly, was there consultation with the Government and with the Ministry of Labour before the decision was taken, and were the social aspects looked at as well as the purely economic aspects? Did someone responsible consider these matters, or was an arbitrary decision taken by relatively unknown persons? Thirdly, why was the decision made now?

Some hon. Members, maybe the hon. Gentleman, regard subsidies in principle as devices of the Devil and do not like them. I do not take that doctrinaire attitude. I look at subsidies on their merits, and think that some subsidies are good. It all depends upon the particular subsidy. But in this case it was not a question of the subsidy being brought into existence for the first time, because it had been going on for many years. Surely this was the wrong time to withdraw it.

In Cleveland and on Tees-side generally unemployment is growing fast. Let me give figures to show the background against which this decision was taken. The total unemployment in the Tees-side Cleveland area, as given towards the end of October, had advanced from 2,666 a year ago to the present total of 7,294. That is a general increase in local unemployment of about three times. I worked out the percentage and I think it comes to a 170 per cent. increase. The growth of general unemployment locally has been obvious for some months. I should have thought, therefore, this was the wrong time to remove the subsidy.

We have had a subsidy for production over so many years when there was high, booming employment. Surely it could continue, at any rate until the recession in the steel industry was overcome and things were moving forward once more. I should have thought if a subsidy which affects employment has to come off the time when it should come off is when there is relatively full employment, not at a time when employment is at its lowest. It seems that what has been done is to wait for a decline in local employment and then to aggravate it.

Those are three principal points with which I hope the hon. Gentleman will deal in his reply. There is a further point of a more general and national character. The Iron and Steel Board has stated in several of its Reports, including the special Report on Development, in 1957, that it desires the country to make the maximum use of home-produced ores, but, from reading its Reports, it is also evident that the steel producers, the steel companies, have been nothing like so enthusiastic on the issue. One cannot make out exactly the day-to-day relationship between the companies and the Iron and Steel Board, but one gets the impression that, while the Board would like to see more home-produced ore, the steel companies are a little reluctant to go ahead because, from a more narrow business point of view, that would not always pay.

How then, does the Cleveland decision to withdraw the subsidy, approved by the Iron and Steel Board, square with the general national interest in the matter? I think that one is entitled to an answer. Is this an issue on which the national interest has had to take second place to narrower considerations? I do not know, but perhaps the Parliamentary Secretary could give us some information on that.

One would have thought that some kind of defence and strategic interest is also involved. As I have mentioned, the time may come when we shall need all the ore we can get. Is it wise to bring about a condition which may lead to the permanent closing of the Cleveland field? Finally, I must mention the matter of other employment in the area. I know that that does not directly concern the hon. Gentleman, but is something for his right hon. Friends responsible for the Board of Trade and the Ministry of Labour. Nevertheless, I should like to put it on record, in passing.

In my constituency, there is excellent local co-operation between industry, trade union representatives, local authorities and local community organisations, together with the development boards. I am sure that from the purely local point of view everyone will co-operate to the maximum to create other sources of employment, but in spite of anything that can or will be done to bring light industry to my constituency, it remains a serious mattes for such small communities as Cleveland when an old-established iron ore industry disappears.

The provision of other sources of employment becomes urgent. It is sometimes said that the great new chemical works of I.C.I., at Wilton, will provide all necessary employment in the Tees side area when the ironstone mining finally goes, but that great works covers a very wide area and employment there involves much travelling to many of my constituents. It is not always easy for them to manage this travelling when wage packets are much smaller, as they are at present. Moreover, the chemical industry is itself a basic industry, and if there is a general recession in trade it will feel the draught as the steel industry will.

I appreciate that questions of other employment are not the direct responsibility of the Parliamentary Secretary, but I give notice that I shall raise these matters elsewhere on behalf of my constituents. In the meantime, I ask for an answer on the other questions from the Ministry of Power because, as I understand, the Minister has a particular responsibility under the Act of Parliament which established it for mineral deposits. In the present conditions, which are half-way between nationalisation and denationalisation, he has also a rather looser responsibility for the affairs of the iron and steel industry generally.

9.3 p.m.

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

The hon. Member for Cleveland (Mr. Palmer) has raised an important constituency point very moderately and reasonably and, in the course of his remarks, has touched upon one or two wider matters. I am not referring to the last part of his speech, which, as he says, does not concern my Department, but to one or two wider matters, with which I will deal very shortly, arising out of the present organisation of the steel industry compared with the organisation before the passing of the Act.

I should like to begin by dealing as far as I can with one or two of the specific points which he raised. I do not think one need attach too much importance to this, but I should mention, to avoid misunderstanding, that the hon. Member made the point that the ore in Cleveland is low in iron content but that most of the other home ores were also low in iron content. He asked, therefore, why that should be a cause of complaint about this field. While it is true that, broadly speaking, our home ores are of lower iron content than the imported ores, it is by no means true that they are all dear. I am advised that for a given metal content the Cleveland iron ore is far and away the most expensive of any ore used in British industry, either from home sources or from abroad. The hon. Gentleman did not rest on that point, but I think that that does dispose of it.

The hon. Gentleman asked me who took the decision and the initiative in this matter. I think he will agree that it would not be desirable to disclose the exact process within the industry, but it is a fact that the Board—I shall have something to say about it in a moment—felt that this situation involving a continuing, subsidy called for reconsideration. The Federation, the organisation of the producers, which manages the fund provided by the industry out of which the subsidy was paid, did reconsider it, and came to the conclusion that the thing was becoming quite uneconomic. The Board agreed that the situation was such that the subsidy should be discontinued. I think that that makes the procedure plain.

For the record, I ought to make it clear that this is not Government money. It is the industry's own money which it pays in to the fund for all sorts of purposes. Very large sums are involved, running into many millions a year. Out of the fund, among other much larger expenses, this substantial subsidy was paid. It is the industry's own money. Nevertheless, as the Government appoint the Board, they must, under the Act, take full responsibility for the view that the public interest, through the Board, is preserved in considerations of this kind. I repeat that both the Board and the Federation which administers the fund on behalf of the contributing companies were of the opinion that the subsidy was no longer appropriate and should be discontinued.

Paraphrasing the hon. Gentleman's words, he then put the question that, even if all this were true, why should it be done now? He was good enough to refer, in a quite friendly way, to views which I quite admit I hold about the desirability of subsidies generally. As he referred to me, I think that it is fair to talk to him, in a friendly way, and say that, of course, this is one of the reasons that I consider that subsidies are, prima facie, a dangerous and doubtful expedient which we sometimes have to put up with. When is the right time to remove a subsidy? When do constituency Members come along and say, "A subsidy is paid in my constituency and I think it ought to be discontinued"? It is not in human nature. It never is the right time to take away a subsidy from one's constituency. Nobody in my constituency, unfortunately, receives a subsidy, but I am quite sure that, if we had one, I should be as bad as the hon. Gentleman if it came to proposing that it should be removed.

There is another answer to the question "Why now"? These fields are not only uneconomic, but they are becoming progressively more so. The hon. Gentleman, very fairly, did not press strongly for details about the extent of the subsidy. He fully appreciates that these are commercial matters in a highly competitive industry, and it would not be in the interests of the industry or the public to go into £ s. d. I can, however, tell him that it is a substantial sum, not a matter of 1 per cent. or 2 per cent. difference in the cost of the ore and the cost of alternative supplies, either from abroad or from home sources. It is a very substantial difference, and, in the opinion of all concerned, it has become no longer appropriate, when cheaper and better—the main point is cheaper—supplies of home ore, quite apart from imported ore, are available in ample quantity. In effect, it would mean going out of our way, at a time when steel is in a very competitive position, to dig up iron ore where it is dear at the expense of other British people digging up exactly the same quantity of ore in other British mines where it is cheaper. That is the short answer.

Mr. Palmer

I hope the hon. Gentleman will not overlook the real point which I made there—that if this subsidy had to come off, surely it should not come off at a time when unemployment is generally advancing in the area.

Sir I. Horobin

We have to consider the position of the industry as a whole. We have to consider the national interest in this. We have to consider whether the steel industry, which is fighting a very fierce competitive battle at the present moment, should at this time go out of its way to get expensive raw materials, when it can get cheap raw materials That may not appeal to the hon. Member as conclusive, but that is the argument which both the Iron and Steel Board and the Iron and Steel Federation accepted.

Mr. George Lawson (Motherwell)

Is it not the case that, while this may be a small matter to the industry, it is a very large matter to my hon. Friend's constituency?

Sir I. Horobin

It is not a small matter. It is not a matter of 1 or 2 per cent. in the cost of this raw material. This ore is very much more expensive than alternative available supplies.

Mr. Lawson

Is it not the case that the costs are pooled, so that the cost of this ore is spread over the whole industry, and, in that sense, the matter is a small one?

Sir I. Horobin

I do not think that position arises. We must consider that, whoever pays this, it is money wasted as far as the industry is concerned, because the industry could get exactly the same raw material a lot cheaper. Somebody, somewhere, would be able to quote a cheaper price and perhaps get an order which otherwise we would get. I must leave it there. It is always tempting to say: "It is a little matter; let us have a rather more expensive this or that; put these factories in the wrong place." We are having that kind of argument pushed at us all the time, but, in the long run, if we pile up all this additional economic waste, we end up with an uneconomic industry, instead of an economic one, and that is not in the national interest. It is not in the national interest that we should saddle the steel industry with this avoidable expense at this time. Though that argument may not appeal to the hon. Member, I can only say that it is the argument which convinced both the Federation and the Iron and Steel Board.

I want to make it quite clear, in reference to what the hon. Gentleman said, that there is no truth at all in any suggestion—which I do not think he made, but rather asked whether there had been—that there had been some sort of tussle between the producing firms which wanted to do this and the Iron and Steel Board, which had to accept defeat. This has been wholly agreed by both sides of the industry.

In conclusion, I want to deal with the slightly more general point, which the hon. Member suggested arises out of this question of a possible tussle, whether the national interest has been properly considered under the present organisation of the industry. Obviously, we cannot go into a general discussion of the iron and steel industry, or nationalisation and denationalisation, but it was a perfectly valid point which the hon. Member made, and I should like to say something about it.

Let us suppose that this situation had arisen before the last Act was passed, when we had the Iron and Steel Corporation for the industry. That Corporation was under a statutory obligation—a quite definite obligation—as regards ore to promote an efficient, economic and adequate supply under competitive conditions. Who would have had to decide on that? The Minister would have had no powers. There are powers of general direction which, as we all know, are quite inappropriate and could not possibly be applied, and, could never have been applied, in industries still nationalised, to this kind of consideration.

Therefore, the thing would have been decided in an honest attempt to settle the national interest by the Corporation as it has now been by the Board. It is an interesting point that on the Corporation there was only one trade union member, and on the Board there are three. I am sure that the hon. Member would not suggest that it is only trade union members who would consider the effect of all: his on the livelihood of employees, because relations in the steel industry are a model, we all agree, to British industry.

But it would still be trade union representatives who would perhaps feel special responsibility. I put it no higher. And as against one, there are three on the Board, including the former General Secretary of the National Union of Blast Furnacernen, Ore Miners, Coke Workers and Kindred Trades. I do not think, therefore, that this decision would have been any different. The Minister could not have intervened. It would have been decided by the Corporation carrying out its statutory duties to promote efficient and economic supply.

I see no reason at all to suppose that the Corporation would have taken any other decision than did the Board in its honest judgment. Of the two, if anything, the new Board has a stronger trade union representation, but each applied its mind to the problem and, rightly or wrongly, having been set by Parliament to safeguard the national interest, have come to this conclusion.

Mr. Palmer

The hon. Gentleman would not wish now to enter into a broad discussion or general debate about the merits of nationalisation of industry as against this more recent arrangement, but does he suggest that this matter was really discussed by the Iron and Steel Board meeting as a board? Does he suggest that the trade union representatives—and I know that they must take the responsibility—have had a full opportunity of looking at all the implications of the board meeting?

Sir I. Horobin

It would be improper for me to interfere, let alone disclose, exactly what the Board did, but it is responsible and it approved and, as far as initiative came from anybody, it took the initiative. It was the Board which said that the thing should be looked at, and it is the Board that has agreed and approved. Therefore, without discussing which is the better organisation, the only point that I am making to reassure the hon. Member and his constituents, who naturally must take a keen interest in this, is that this is not a case of a few firms feeling the draught, if I may put it that way, and looking round for something on which they could save a little money and, being entirely oblivious to the wider issues involved, doing what they liked without consulting or obtaining the approval of anybody.

This, rightly or wrongly, was a considered opinion of what is in the best interests of the country and of the steel industry generally. The Board may be wrong and the Federation may be wrong, but they are responsible people. The hon. Member knows the position of the Iron and Steel Board and the people in the Federation. They have come to the conclusion that there must be a time when one can no longer reasonably go on carrying the "dregs", if I may so describe it, of a very large and expensive field. The only thing I would add to that is that, without encouraging any illusions, for this field is coming to an end, it is fair to remind the hon. Member that for the moment at any rate over five-sixths of the production is going on, and the Skinningrove production was only a small proportion of the total.

Mr. Palmer

Short time.

Sir I. Horobin

I want to make it clear that I am holding out no promises of what will happen. On the question of time, at the moment the majority are going on, but this is a field which has little future. I am advised that great efforts have been made in recent years to see if they could cheapen or improve the use of this ore to make it more economic. However, all the best advice available in the industry is that it is coming to the end of its life. It is an extractive industry which is becoming increasingly, and will become completely, uneconomic, and we must face that fact.

Question put and agreed to.

Adjourned accordingly at nineteen minutes past Nine o'clock.