HC Deb 21 July 1960 vol 627 cc912-22

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

12.32 a.m.

Mr. Harold Davies (Leek)

After all the courtesies on the Charities Bill and all the very nice compliments paid across the House, I should like, in the time left to us, to discuss the hard facts of the iron and steel industry in relation to some of the problems which concern firms and people in my constituency.

It is one of the delightful fiexibilities of this House that an hon. Member can retain it when he has the Adjournment, and I intend to do it to the full extent of my 30 minutes. I am grateful to the Parliamentary Secretary to the Ministry of Power for being present. I hope I shall give him enough time—about 15 minutes—to reply to me, because I want a good answer. I ask him to indicate when he thinks I have spoken for my 15 minutes.

I am a little chagrined. I have been reading the Star newspaper in the Library and looking at my fortune under "What the stars foretell". I am informed, having been born under the sign of Leo, that I should finish my day's work as early as possible. I should probably have finished it about three hours earlier had it not been for the Bill which has been before the House. I hope that what the stars foretell for me in the Star this evening does not mean that I shall not be able to get a taxi to my abode tonight.

To get down to the brass—or steel—tacks, my main complaint and that of my constituents and a little firm of great importance in my constituency is simply that no matter how much the firm has tried, it has been unable to purchase any rod or bars from any of the rod or bar rolling firms in the country. Since the firm was established nearly three years ago, in spite of inquiries through Governments Departments and the Iron and Steel Federation,—I must have had more than 70 letters about this problem; I could give dates and quote advice that has been given had I time—the sad fact is that the firm—it is also true of many other small firms—has been unable to get the rod, bars and wire which it has needed for the business in which it is engaged—reinforced concrete, an industry which is of paramount importance in civil engineering, in railway extensions, in road building and in mining industry extensions.

In November of last year, the Iron and Steel Federation supplied the Reinforced Concrete Specialists and Engineering Company in my constituency with a list of rod producers, and each was approached for supplies but without success. With its usual courtesy and attention to duty, the Ministry has replied to the number of letters which I have written. In April, I was informed that the home production of reinforced bars and rod had increased and was running at record levels and that supplies were adequate to meet the requirements of consumers. I was also told in April that bars and rod, like all steel products, could be freely imported, subject to the payment of import duty, which was 10 per cent. ad valorem.

On 12th May, the Minister said in a letter to me that I could assure the corn-pans- that action for the suspension of the duty on wire rods was being examined. Since then that has happened. That is the First step in the right direction, and I see that the import duty on wire rod has been temporarily suspended until the end of the year. Undoubtedly, this is the results of the courageous efforts of a number of small firms in the country, including the B.G. Engineering Company at Kidsgrove, which brought pressure to bear. It may sound strange, but the fact is that there is a need for the suspension of the tariff because there is not a sufficient supply of wire rod and bars in the country.

Can the Minister assure me that he will contact firms throughout the country who are interested in this business before he reimposes this tariff? I do not feel in a very combatative mood at this time of night, and had the matter been raised at Question Time or during an ordinary debate I should have pressed the point more vigorously.

Nobody can hide the fact that there is a monopoly in the steel rod, bar and wire business. It is no good talking about the initiative of the little man, because he is not being allowed to use his initiative in the steel industry. Wire rod is drawn down into wire and used for the manufacture of reinforcing fabric, and that entire industry can be squeezed by a ring or restrictive practices. To be able to compete with that ring, a firm must have an assured access to wire rod and bars. That is the difficulty, and that is the restriction. Firms cannot obtain sufficient supplies of wire rod or bars from British producers, and there is a severe shortage of that class of material.

I now come to my evidence. I have with me the address of the chairman of the Lancashire Steel Corporation, Sir John James, to the corporation's annual general meeting on 11th February, 1960, when he said: The most notable feature of the year just concluded was the extraordinary difference in the demand for our products, particularly small sections, rods and wire. In the early months, that is to say, from October, 1958, to May, 1959, the demand was extremely meagre; in fact, it was a constant worry and preoccupation to obtain enough orders to make up reasonable rolling tonnages for the Mills each week—indeed, some were working on short time. About May, 1959, however, the demand, particularly for rods and wire, suddenly revived, and from then onwards has continued and increased to such a degree that in spite of working our Rod Mills to their utmost capacity we cannot meet the demand made upon us by our customers and our own Subsidiary Companies. Whilst this is a very welcome change, nevertheless we wish we were in a position to supply more of their requirements. In a debate on the subject in June, my hon. Friend the Member for Newton (Mr. Lee) pointed out that, despite all this gasconading and publicity about the steel industry, the solid facts—and we are not now on the rostrum fighting a general election trying to gain cheap votes, but facing the economic realities of the country's situation—were these: When we ask questions concerning sheet capacity, we are always told—I was told it again today—how rapidly the industry is increasing its supplies of sheet. Let us look at the real picture, taking 1955 as the base year—and 1955 was a crisis year in steel. In no quarter of 1956 did we again reach the 1955 figure. In the first two quarters of 1957. as also in 1958, we failed again to reach the 1955 figure."—[OFFICIAL REPORT, 27th June. 1960; Vol. 625, c. 974.] We have had to import steel, and we have had a total increase of 355 per cent. in imports of sheet steel. The British steel industry has not been meeting requirements.

The result of that failure is shown in a letter sent by my constituents to the British Iron and Steel Federation, in which they said: The result of the B.G. Engineering Company, Kidsgrove, being unable to obtain rod is that not only has their business been jeopardised and men laid off, but also we in turn have been forced to return to our customers approximately £12,000 worth of work and orders during the last eight weeks rather than break faith with our customers regarding delivery. It will be appreciated that this kind of thing and our inability to quote for fabric a definite delivery is having a serious undermining effect on our efforts to establish our firm. The firm wanted to establish a new industry in North Wales. It applied to the Treasury for grants and, despite the fact that cuts in prices to 17½ per cent. below market prices were allowed by the Treasury experts—in a few years' time it would have been able to meet all its commitments—the firm did not receive the grant from the Treasury to start the new industry in North Wales. That is not in my constituency, but it is linked with it. The reason for the failure to get the grant was that there was no assurance of supplies of rod and bars.

The Press representative of the Iron and Steel Board has sent all hon. Members some information. Let us first get rid of the propaganda. The purpose of the Board is shown in this phrase, Public supervision of the United Kingdom iron and steel industry can be interpreted both as the response to the needs of public policy and as the outcome of historic evolution. The industry is basic. In such an industry the forces of the market alone would not always ensure efficient, economic and adequate supplies at reasonable prices". That was one purpose of the Board, but one purpose not held by the Board is indicated on page 29 of the Board's Report: The duty derives directly from the Iron and Steel Act, and it is no part of the Board's function to examine trade practices in the terms of the Restrictive Trade Practices Act, 1956. I should like to name the firms if I could, but there is no doubt that restrictive practices have taken place. How can firms in both new and old areas of industry keep going unless they have adequate supplies? The steel industry is not meeting its commitments. One way in which the Minister can help is by taking the duty both off wire and off rod and bars. I hope that he will be able to give me some positive information on that this morning. If he cannot, then I assure him that I shall exercise every legitimate Parliamentary method of keeping this matter before the Government. I am sure that we shall have an instructive and, I hope, a pleasant answer from him.

12.47 a.m.

The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George)

I thank the hon. Member for Leek (Mr. Harold Davies) for the co-operation he gave me in preparing for the debate; I found it very helpful. I was surprised by his quiet attitude this morning. He is normally much more combative. I felt that his quiet attitude was due to the fact that he has not a very strong case to put forward. He confined himself mainly to his constituency troubles and to the supply of ferro-concrete rods and bars and of wire rod. It would be right for me to confine myself mainly to these two products. One is used, as produced, for reinforcing concrete, and the second is usually drawn into wire and used for a multitude of purposes, including the reinforcement of concrete.

Let us look at the production position of these two steel products. The United Kingdom production of ferroconcrete bars and rods is expected to reach 600,000 tons in 1960, which is 20 per cent. above the output last year, which was itself a record year.

With wire rod, production this year is expected to reach 1½ million tons, which is also 20 per cent. above the 1959 output, which itself was again a record. In fact, the production of these two products has increased over the last three years. Home produced wire rod deliveries in 1958 were 1,133,000 tons; in 1959, 1,242,000 tons; and in 1960 are expected to be 1½ million tons. Small quantities were exported and small quantities were imported.

With bars and rods, deliveries from home production in 1958 were 396,000 tons; in 1959, 500,000 tons; and are expected to be 600,000 tons in 1960. That is a steady progression of rising output in these two very important products. As the hon. Member said, the pressure from home demand has been strong, but it is true that with the help of only minor imports the industry has been able to meet total demand. That minor help of imports in the case of wire rods was 3 per cent., and in the case of bars and rod 4 per cent. Nevertheless, discussions took place between the Iron and Steel Board and the users in April. As a result, it was found that demand was outstripping production, even though production was rising so well, and that a significant increase in imports of wire rod would be needed in 1960.

'These discussions between the main users and the Board—not as the hon. Gentleman said, between a large number of small firms fighting their own battle against the Board—were arranged under the usual consultative arrangements in the industry, whereby the Board, the producers and the big consumers get together to consider the health of the industry and suggest what steps are needed, if any, to improve matters.

After the April meeting, they made suggestions to the Board of Trade regarding the suspension of the import duty, and the Board acted pretty swiftly. On 24th June an Order was made suspending the import duty from 1st July to 31st December. That is the result of the comprehensive arrangements that are always in being between the Iron and Steel Board, the producers, and main consumers.

Individual difficulties can be dealt with, and are certainly dealt with, by invoking the aid of the Iron and Steel Federation or the Iron and Steel Board. I hive a lot of experience in handling these complaints, and in almost every case I never hear about them again. I conclude, therefore, that the consumer gets satisfaction. So individual complaints can be and are dealt with satisfactorily.

What is not in existence is a system of allocating supplies to individual consumers. Our experience is that the informal arrangements, the normal commercial arrangements, work very well indeed, and the swift withdrawal of the tariff is an example of how consultation takes place for the health of the industry.

Mr. Harold Davies

Can the hon. Gentleman assure me that the Reinforcement Manufacturers Association Limited, or the I.I.S.W.M. are not themselves acting in a ring and keeping out these little people?

Mr. George

I am coming to that point later on. Please do not use any more of the time or I shall not be able to make a satisfactory reply. In spite of what the hon. Gentleman said, I was going to add that the Ministry of Works is unaware of any building project which has been or is being held up in this country through a shortage of reinforcing bars or wire rod. But, although the tariff has been withdrawn because it is expected that imports will be significant this year, the industry is not prepared to stand idle, and they are making plans for increasing production, and in the last Report of the Board three projects were detailed. These three projects, resulting in a fairly big expansion of output, will be completed at various dates, beginning this summer and ending in 1962.

The Lancashire Steel Rod and Bar Mill, at Irlam, which the hon. Gentleman mentioned, will be completed in the summer of 1961. Important projects are in train to increase the production of wire rod and bars and rods. That, we hope, will lead to the end of the suspension of the tariff because the supply from home sources will have met the home demand. The picture is this: In supplies of bars and rods and wire rod there has been an increase in production in the past three years. That has been matched by a steadily rising demand. The meetings in April forecast that demand would rise faster than production, and the Board of Trade acted by suspending the tariff in June.

There are three new projects for 1960, 1961 and 1962 which will provide additional output, and we expect will more than meet home demand. That is the general picture—rising production at the moment not meeting demand, but additional production in train to stop the imports and meet home demand from home sources.

The hon. Member has raised two points relating to his constituency. He referred to two firms—the B.G. Engineering Company and the Reinforced Concrete Specialists and Engineering Company. We can rule out the B.G. Engineering Company right away. It had discussions with the Iron and Steel Board some months ago and the Board has heard nothing from that company for the last few months; we can only conclude that as a result of the action taken, that company is now receiving satisfactory supplies.

That leaves us with the Reinforced Concrete Specialists and Engineering Co. situated in the hon. Member's constituency. This company wishes to produce reinforced mesh for concrete reinforcement. The company has complained of inability to obtain supplies and has alleged, as the hon. Gentleman has alleged, that there are restrictive practices between the rod makers and the Reinforcement Manufacturers' Association. He said, I think, that this was an important company in his constituency. In fact, as far as wire rod is concerned, it has no factory at all, so this cannot be an important firm.

Mr. Harold Davies

It is linked with B.G.

Mr. George

It has no factory for using rod. But I think it has tentative plans. The company wants wide guarantees before building a factory. The first guarantee that it wanted, and the first fight it made, was for the reduction of the tariff. As they said in their letter of 3rd May to the hon. Member, their object was the removal of the tariff. The tariff was removed, and they were satisfied. They said in their letter of 30th June to the Board of Trade: We are extremely grateful to receive information as contained in your letters … that Import Duty is to be temporarily suspended on wire rod in coil … They go on to say: This action on the part of the Board of Trade now means that we can obtain wire rod from foreign sources, at prices comparable to British prices. There we have an expression of satisfaction in connection with their main fight, which was the removal of the tariff.

Then they go on to say: We now wish to implement our plans to enter the field as producers of reinforcing fabric … our requirements … will be appreciable … It will however be approximately 12 months before we require these appreciable supplies. That is after we have erected a factory and installed the plant … They make another intriguing suggestion: In view of the fact that it will be 12 months before our factory is ready to go into production, when tariff may have been already reimposed, we hope that the Board of Trade will immediately support our request for removal of tariff, if we find ourselves unable to obtain the necessary assurances of supply from firms in this country. That is a curious suggestion to make to the Board of Trade. Indeed, it would appear that the company wishes the Board of Trade to take its instructions from the company and to have regard solely to the company's supply position, instead of using a comprehensive survey covering the whole field of supply.

The hon. Gentleman asked for assurances that the Board of Trade would consult the firms. Of course, it will consult the firms. The Board of Trade is continually consulting the firms, but it will not, as requested here, impose the tariff again only if this company can be assured of receiving full supplies.

Mr. Harold Davies rose—

Mr. George

No, I am sorry, but I cannot give way now.

The supply position for this firm has been cleared for six months by the suspension of the tariff. It says that it can get rod from abroad at reasonable prices. It is logical to say that if the President of the Board of Trade suspended the tariff because imports were necessary, he would hardly reimpose the tariff if imports were still necessary. That assurance can be given to the company.

The company claims that it cannot get supplies from home sources. The position is that deliveries have lengthened; home users are pressing for delivery, and it is unlikely that steel producers are willing to take on new customers, especially new customers who have no factory at all, only plans.

In the few moments remaining, I should like to quote from a letter which does give some hope to the company. This is the Iron and Steel Board speaking: It is recognised that when a new company wishes to come into the engineering field, there may be particular difficulties in getting their arrangements, such as factory space, machinery, finance, supply of materials … all organised reasonably at the same time. It would be understood that firm arrangements in any one of these fields might have to depend on the others. Nevertheless, if the company are able to show progress with the other parts of their organisation it would not be expected that any insuperable difficulty would remain in arranging supplies of steel, although some part of the initial needs might have to be imported. That is the position. The company can get supplies from abroad in the meantime, and, once the factory is a reality, then the company becomes a supplier needing the consideration a supplier should have.

The hon. Member spoke of monopoly and rings, as he put it. He produced no evidence. The company produced no evidence. I took care to have the matter investigated, and the Iron and Steel Board has consulted the file of the Registrar of Restrictive Trading Agreements. I am informed that no record can be found of any agreement between the rod makers and the Reinforcement Manufacturers' Association which ensures members of the Association preferential treatment in rod supplies. It does not exist. The Registrar has power to require agreements to be registered if he has reasonable cause to think that an agreement subject to registration exists. It is the function of the Registrar to look into evidence that a registrable agreement, not registered, is in being.

If the hon. Member can produce any evidence that there is any restrictive practice between the rod makers and the Reinforcement Manufacturers' Association, I will pass that evidence on to the Registrar. But I think the responsibility lies with the company or with the hon. Member. It seems to me, looking at the company's problem, that it cannot get supplies because it is not really a user; it is not really a manufacturer, and—

The Question having been proposed after Ten o'clock on Thursday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes past One o'clock.