HC Deb 18 November 1958 vol 595 cc1014-22
The Prime Minister (Mr. Harold Macmillan)

With permission, Mr. Speaker, I will now make a statement on new steel capacity.

The Government have accepted the conclusion of the Iron and Steel Board that additional capacity for the production of strip mill products is required to meet the future needs of the national economy.

It has been decided, in principle, that this additional capacity should include two major strip mill projects each with appropriate steel-making and finishing capacity.

The Government have decided to issue an Industrial Development Certificate for a project to be undertaken by Richard Thomas & Baldwin, Limited, at Newport, Monmouthshire. This will represent the first stage of a major expansion of strip mill production in South Wales. Its precise nature, timing and financing are under discussion between the interested parties, including the company and the Iron and Steel Board, but it is envisaged that the initial production capacity will be of the order of 500,000 tons for sheet and tinplate. It is not yet possible to give an estimate of the cost.

The board of Colvilles, Limited, has agreed, in principle, to undertake the other project in association with its new Ravenscraig works at Motherwell, and its existing works at Gartcosh, both in Lanarkshire. The Government are prepared to grant an Industrial Development Certificate for this purpose.

It is intended that this project, which includes modernisation of existing plant, should have an initial productive capacity of approximately 500,000 tons for sheet and light plate. It will make use of facilities already being provided by the company, and the additional cost is estimated at about £50 million. The initial capacity for sheet will represent a surplus above present Scottish consumption and will, I hope, attract to Scotland new industries using sheet.

Both projects will be capable of substantial extensions, particularly that of South Wales. To the extent that their construction will require funds additional to the resources of the two companies the necessary amounts will be advanced to them by Her Majesty's Government.

Details of the final arrangements will be made available in due course.

Mr. Gaitskell

While welcoming the decision of the Government to go ahead with the construction of additional steel capacity at present, may I ask whether the Prime Minister is aware that there is very grave concern at the failure to use existing capacity? Secondly, would the Prime Minister say what exactly this decision means in terms of total steel capacity in the years ahead? Does it correspond to the proposals of the Iron and Steel Board, which, as I understand, were larger than those put forward by the Federation, by the companies themselves? Perhaps we could have an answer to those questions.

The Prime Minister

This is a steel mill for a particular kind of steel of which the capacity of the present plants and the extensions already planned is about 4½ million tons. This is a proposal, as I understand it, to set up, instead of one gigantic plant for fully continuous production, two plants for what I think is called semi-continuous production, both of which are capable of being expanded and turned into the fully continuous process. It is expected that the production of each plant in the initial stages will be about 500,000 tons. The one in South Wales can be expanded to at least 3 million ingot tons, and the one in Scotland probably to about I million ingot tons.

Mr. Gaitskell

The Prime Minister did not quite understand my question. I was asking whether this programme, as now laid out by the Government, corresponds to the advice of the Steel Board or of the Federation? According to Press information there was a difference between the two.

The Prime Minister

I do not think that there is any difference, but I will inquire into that point more particularly. From my point of view, the chief problem which had to be discussed and solved was location rather than the size of the plant. I will do my best to answer supplementary questions on the more technical aspect of the matter, but no doubt Questions will be put to the Ministers primarily concerned. I think that the main concern of the layman is where these plants are to be located. The decision of the Iron and Steel Board and the acceptance by the companies—one of which is nationalised and one of which is not—was that it would be a good plan to have these two installations, both capable of considerable expansion. That has made it possible to make a solution which, while no doubt not acceptable to everybody, seems a fair and reasonable solution of the rather difficult location problem.

Mr. Gaitskell

No doubt other hon. Members will raise points about location. Mine was a different one. There is a further question that I should like to ask. In view of the very large amount of Government money involved in this operation, both in the case of the nationalised company and in the case of the other which is to receive Government aid, may I ask what steps the Government propose to take to exercise effective control over the companies and to secure for the benefit of the State a share in the dividends and the capital gains?

The Prime Minister

The terms on which money is being provided for Messrs. Colvilles, which is the denationalised or non-nationalised company, have been agreed in principle, but I am not in a position to disclose them at the moment. [HON. MEMBERS: "Oh."] As soon as they are finally settled—they are settled in general terms—then, of course, a statement will be made. They will fully safeguard the interests of the taxpayer. I am sure that the right hon. Gentleman will realise that so long as the threat, however distant, of nationalisation hangs over it the industry is precluded from obtaining money in the ordinary market and in the ordinary way.

Mr. Gower

Is my right hon. Friend aware that his assurance that there is to be a very considerable development of this industry in South Wales will be most acceptable to South Wales? Can he, at this stage, give any idea of the probable timetable for these developments?

The Prime Minister

No, Sir, I cannot tell how long they will take to complete, but I am informed that it should be possible to start site clearance in the later half of next year. The construction period will probably be something like four or five years. In the case of the Scottish scheme, since it is being built around an existing plant, or near to it. a great deal of work will already have been done and many services will be already available.

Mr. J. Griffiths

Is the Prime Minister aware that most of the old works of Richard Thomas & Baldwin, Limited, were located in West South Wales and that most of those buildings have been closed and more buildings will be closed when the new works come into operation? Since the closure of the works which have already ceased to produce has resulted in unemployment in that area amounting to three times the national average, and in some places as much as 10 per cent., what plans have the Government to deal with redundancy and unemployment as a consequence of these new developments?

The Prime Minister

We discussed the general question the other day in relation to the location of industry and other matters affecting employment. I agree that where the South Wales factory should be sited was a difficult decision to make. A great many factors had to be taken into account, economic and others. The decision does not please everyone, but I think that, on the whole, it is the right decision because the economic factors are of very great importance and the advantages of the site chosen, I understand, are very considerable.

Mr. Griffiths

Will the Government accept full responsibility for providing alternative employment for the people who have been employed in this industry for many years and who are now redundant?

The Prime Minister

The effect of the closing of certain works referred to by the right hon. Member is, of course, dealt with by the normal procedures we have been trying to use for alternative work, and so forth. We are quite prepared to he judged on the general results of our policies, both general and special, upon employment.

Mr. Hamilton

The Government will be.

Mr. T. Fraser

Is the Prime Minister aware that there will be widespread disappointment in Scotland that a new steel mill is not to be built there, but that there is to be some sheet production at Colvilles? Can he say whether the original plans for plate production at Colvilles have been modified and that the sheet production will merely be in room of plate production, which we are not now to get, and whether, when the plans are carried through, Scotland will have a greater or smaller share of United Kingdom steel production?

The Prime Minister

I should like the technical questions to be put to the Ministers who are concerned. As the hon. Member will appreciate, I am not fully aware of all these details.

Perhaps I may put it this way. I am sure that it is very much better for Scotland to have this decision to build a 500,000-ton plant, capable of extension to 1 million tons, and providing perhaps twice the present need for sheet steel and the attractive power which that might mean for other industries. That was the point put to me by Scottish hon. Members and others who came to see me. All that is very much better than if we had located the whole plant in Wales.

Mr. Fraser

Surely the Prime Minister will know whether this sheet production in Colvilles is to be in the room of the plate production which was earlier planned.

The Prime Minister

It is not in the room of, but additional to.

Sir W. Robson Brown

Can my right hon. Friend confirm, in connection with unemployment in South Wales, that the same general policy as applied in the erection of the Ebbw Vale strip mill before the war will apply, when considerable numbers of men were transferred from West Wales to Ebbw Vale.

The Prime Minister

I am sure that every possible measure will be taken, when this mill passes from the construction period to the employing period, to give all possible consideration to humane factors and to make the same kind of arrangements as were made previously.

Mr. Woodburn

While appreciating that the Prime Minister cannot answer these technical details, may I ask whether the Secretary of State for Scotland could tell us whether the relative position of Scotland is to become steadily worse, that is, whether we are always to be behind—[HON. MEMBERS: "Oh."] This is a very important question for Scotland—in the development of steel production?

The Prime Minister

What I meant was that I could not answer these questions without notice, but I shall try to make a mathematical calculation if the right hon. Member puts down a Question on the subject. I cannot see how Scotland can do anything other than benefit by the decision to put this important works in Scotland. From the point of view of employment, almost more important than the actual capacity of the works will be the attractive capacity of having this type of material available for users in manufacturing businesses which use this material. If this is an injury to Scotland, let there be more injuries done.

Mr. Malcolm MacPherson

Does the Prime Minister recall that although the Iron and Steel Board advised the establishment of further capacity—and he says he has accepted that advice— the Board also put its advice in the form of having a single integrated unit, and so far public discussion has been on that basis? Does he realise the difference to Scotland between having the sort of unit which will give Scotland the benefit which he has outlined—it certainly is a benefit—and having a complete, integrated unit, which would have offered Scotland the first hope it has had for many years of halting the continuous above-average unemployment and the southward drift of population? Does the Prime Minister realise, as my hon. Friends have said, that there will, therefore, be disappointment in Scotland?

The Prime Minister

I quite understand the view of the hon. Member and his anxiety. I must be careful not to go beyond what it would be right to say, but I am bound to say quite frankly that, had the technical arguments proved insuperable and it was absolutely necessary to have one giant plant, I honestly do not think that that would have proved to the benefit of Scotland. I remind the hon. Member that this is a matter of judgment, perhaps a little like that of King Solomon. If he denies the decision, he might lose interest in the child altogether.

Mr. Bowles

As Government money is going into these private steel companies, may I ask the right hon. Gentleman whether a condition of advancing that money will be a cessation of anti-nationalisation propaganda by those companies?

The Prime Minister

Perhaps the hon. Member will await the terms of the agreement, but I should remind him that there is nothing very novel about this. If I remember aright, I think it was with general approval of the party opposite that money was lent for the completion of the "Queens "—the Cunarders.

Mr. Bence

Is the Prime Minister aware that during the last three years the decision has been taken to reduce the old sheet, light plate and bar works in Scotland because they are uneconomic and out of date? Is he aware that the decision was taken three years ago by the Steel Board to augment Ravenscraig and to replace the old bar, sheet and light plate mills by this capacity? Is he aware that this is a replacement of out-of-date capacity and not an addition to Scottish output?

Mr. Rankin

On a point of order. In view of the statement from the Prime Minister, may I be assured—

Hon. Members

No.

Mr. Speaker

Order. The hon. Member for Govan (Mr. Rankin) should not hold up his hand to put me down when I rise to speak. We are waiting for his point of order.

Mr. Rankin

It is a point of order, Sir. In view of the statement which the Prime Minister has just made, will he say—

Hon. Members

No.

Mr. Speaker

Order. The hon. Member is trying to say something else under the guise of a point of order. We have had a very good run of questions on this matter and no doubt the whole matter will later have to be discussed in a general way. This is not the time for it. The Prime Minister.

Mr. Short

On a point of order. There are other steel-producing areas in the country where the capacity is being used to the extent of only 75 per cent. Would you permit—[HON. MEMBERS: "Order."] In view of the importance of the Prime Minister's statement to other steel-producing areas, would you not allow a question from another part of the country in which steel is produced, Mr. Speaker?

Mr. Speaker

No doubt there are any number of places where these works could have been put, but I hope that the House will not think it reasonable, after a statement has been made, for hon. Members from every district where the works could have been put to be allowed to ask a question about it. I hope that the House will enable us to go on with the business and to discuss this matter at greater leisure at another time.