HC Deb 29 November 1962 vol 668 cc799-810

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

10.11 p.m.

Mr. E. L. Mallalieu (Brigg)

In the heart of my constituency there lies the town of Scunthorpe, the boom town, the Eldorado, as the popular Press has said so many times in the last few years. But on Wednesday of the week before last, there was an announcement that a blast furnace at one of the three great steel works in Scunthorpe was to close down. It was the Redbourn Works of Richard Thomas and Baldwins, Limited, and I want to know the reason why.

It was accepted fairly generally at first that this was just part of the recession which has overcome the steel industry recently; but I wonder. It is true that during this recession the other two great steel works have been obliged to work short-time, and one of them is still on short-time, but so far Richard Thomas and Baldwins has not found such a course necessary. The House will remember that Richard Thomas and Baldwins is the only large steel combine now to be nationally owned, the rest of them having been sold back to private investors. It is a firm where relations between management and men have been right at the top and where profits have been probably the biggest of all in recent years. Its profits have gone to the State, of course, rather than into the pockets of private investors. The efficiency of the plant has been quite beyond dispute, because the Government themselves have patronised it to the extent of very many million's of £s of investment.

All these things have happened while it was still nationally owned; but it was not nationalised, in the sense that the other characteristics of nationalisation—in particular, the responsibility of the board of such a concern to the elected representatives of the nation—were not present.

However that may be, for a very long time the Redbourn works in Scunthorpe have had large orders from the firm of Whitehead in South Wales. This has gone on, some times larger, sometimes smaller, for many years. Being a go- ahead concern, Redbourn has been developing and has now put into operation a new rolling mill for billets, and, in anticipation of the working of this rolling mill, the management has been conducting a planned campaign for orders which has been remarkably successful. Orders were secured from far and wide and, among others, the order from Whiteheads in South Wales was stepped up to the extremely large figure of 4,000 tons of billets per week, a very considerable order.

This new rolling mill has been operation now for some time. Suddenly, from on high as it were, a ukase came to Redbourn Works that this order from Whiteheads was to have priority over all other orders. The result was that many of the customers, some of whom had been newly won in this drive, had to be disappointed. Their delivery dates were not adhered to, all because of the order from above that this order from Whiteheads was to have priority.

As soon as the other customers had gone away to other firms, Whiteheads order was cut down to 2,000 tons of billets a week, which naturally put the Redbourn works in something of a spot, and when they tried 'to go round to the customers who had recently been disappointed in their delivery dates, and so on, of course they were not successful in getting them back and the decision had to be made to close down this blast furnace.

I came across a repercussion of this in South America a fortnight ago when I was there for the Inter-Parliamentary Union Conference. A young importer there, I might almost call him a whipper-snapper, said to me, pulling my leg I suppose, "It is no use giving orders to your nationalised concern"—he called it a nationalised concern, incorrectly of course—"because they have been falling down on their delivery dates". Immense harm was done to the reputation of Richard Thomas and Baldwins.

The announcement that this blast furnace was to close down came on Wednesday of the week before last. The very next day, on the Thursday, came the announcement that the Whiteheads order, already reduced to 2,000 tons, was now going down to 100 tons a week, a mere trickle. If anybody had had the idea that it would be rather a good thing from certain political points of view to sabotage the only nationally-owned steel concern, could he have gone about it in a more effective way? It would be very much more easy—

The Parliamentary Secretary to the Ministry of Power (Mr. John Peyton)

Perhaps the hon. and learned Gentleman can give a little point to his allegation. Is he suggesting for a moment the direction from which the order came?

Mr. Mallalieu

Yes. The hon. Gentleman will hear about that immediately.

It so happens that the chairman of Whiteheads, the firm concerned with giving these orders and then taking them away at such an inconvenient moment, is none other than the vice-chairman of Richard Thomas & Baldwins. He may be—I hope he is—the most honest man imaginable, but I say this most emphatically to the hon. Gentleman. If one man holds those two positions at a time when things such as I have described are being done, he cannot be surprised if people think that right is not appearing to be done, even if it is actually done, and I want to hear from the Minister to what extent it is actually being done.

Mr. Peyton

If the hon. and learned Gentleman wants to hear anything from me, perhaps he will make his question clear. He has been talking very much from the political point of view. He has now mentioned one person who, as far as I know, is not a politician at all. I should be obliged if the hon. and learned Gentleman would give me the information on which I am supposed to base an answer.

Mr. Mallalieu

I hope that the hon. Gentleman will not try to ride away on some little affair of that sort. I am suggesting that somebody might have had some motive for doing this thing. Whether it was this man or not I have no evidence at all. I am not suggesting that the hon. Gentleman has. But the fact is that these things were done and that a General Election is in the offing, and it could be that there was some such motivation.

There another aspect of this. White-heads did not withdraw that order because they did not want billets any more. They did want them. Indeed, they switched over from British-made billets, which they had been getting from Red-bourn to dumped billets from South Africa and Canada for which they had to pay about £24 a ton, whereas the price of the British-made billets in Britain is in the region of £32 a ton. This is thanks to the rather peculiar policy of the Iron and Steel Board which, presumably, under pressure from Iron and Steel Federation, last summer raised its prices to the £32 figure that I have mentioned, while at the same time insisting that British manufacturers sell abroad at about £24 a ton.

We have this ridiculous Alice in Wonderland position that the very ship which brought dumped billets from Canada and South Africa to South Wales could go back with billets manufactured in this country to be dumped in those other countries—a quite fantastic situation. Is it Alice in Wonderland or is it merely Richard in Woodland? I do not know, but whichever it is, already 100 men and their families in Scunthorpe have been dismissed and there will be perhaps another 400 on very short time indeed as the result of this jiggerypokery, and I think that we ought to know what is behind it. It does not seem to make sense. Is this Conservative freedom and, if so, whom does it pay? There are many hundreds of constituents of mine whose livelihood is being played with for somebody's profit. I do not know what Whiteheads did with these billets. Did they sell them on the British market at the controlled price of £32 per ton having bought them in at £24 per ton? I am not particularly interested in what they did, but I am immensely interested that, as a result of all this, constituents of mine have been put out of work. I should be very glad if the hon. Gentleman would give some kind of explanation of what has happened.

10.23 p.m.

Mr. Ifor Davies (Gower)

I welcome this opportunity to intervene very briefly in this debate because of the complaint which has been put before the House by my hon. and learned Friend the Member for Brigg (Mr. E. L. Mallelieu) about the importation of steel billets, which has also had an effect upon the Elva steel works at Gowerton, in my constituency. The Minister is well aware of my interest in this matter, and I appreciate very much the courteous manner in which he has met me on previous occasions in connection with this point.

The Elva steel works has been a very good customer of Whiteheads, but my information is that because of the contributory effect of this importation of billets, together with the general position in the steel industry, the production department at the works ceases today and that next week the workers will go on to the guaranteed four-day week. Therefore, this is a very serious position, and I should like to put to the Minister certain facts which I have on good authority, namely, that 36,000 tons of these billets were imported in the first part of this year and that later 40,000 tons arrived, and on 5th December I understand that another cargo is expected from Australia. Indeed, 130,000 tons are expected from Canada during the next few months, purchased by this firm.

I appreciate that these imports come in under Commonwealth Preference, and so are duty-free. I also realise that imports from Commonwealth countries are not governed by quota restrictions, and that no tariff can be imposed unless dumping is proved. Nevertheless, the position is so serious in my constituency that an investigation is called for at the highest level. Since the effect is so injurious to our steel industry, it should be possible to impose a duty to balance the amount by which sales are being made at less than the domestic price.

There is evidence that some of our steel industrialists are making money at the expense of our steel workers, and I appeal to the Minister to look into the matter closely and to take some action.

10.26 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. John Peyton)

Both the hon. and learned Member for Brigg (Mr. E. L. Mallalieu) and the hon. Member for Gower (Mr. I. Davies) are protesting because of the effect that imports of steel, and especially billets, are having upon our domestic steel industry. I have always thought that it was very dangerous to base too many rapid judgments on other people's motives. I want to spend a little time in dealing with some of the more extravagant things said by the hon. and learned Member for Brigg. I suppose that every hon. Member is entitled, from time to time, to compare his constituency with E1 Dorado, but not even the prosperity and virility of Scunthorpe could ever lead me to picture that prosperous city as El Dorado.

It is right to remind the House of the facts of this matter. One blast furnace at Redbourn has been closed down, not for ever, but temporarily. The hon. and learned Member for Brigg has been well and long enough acquainted with the steel industry to know that this happens to the best blast furnaces from time to time. This furnace was blown in in 1959, and, all going well both with the furnace itself, technically, and with the market, it could have been expected that the furnace would continue in operation for another two years before relining.

But the management decided that both from the technical point of view and of the market this would not be a bad opportunity for carrying out an essential operation. It is, therefore, quite wrong to suggest that there is any permanent suspension or diminution of pig iron capacity.

Mr. E. L. Mallalieu

Nobody suggested that.

Mr. Peyton

The hon. and learned Member went on to say that all this was due to the fact that Richard Thomas and Baldwins was not properly nationalised, and that its management owed no responsibility to the elected representatives of the people, namely, the House of Commons. In my submission, the question with which we are concerned here is not affected by the other question, whether the firm is or is not nationalised, and whether it is publicly or privately owned. The considerations are exactly the same. The House of Commons, the Ministry of Power, or anybody else would be crazy to try to intervene in such affairs of technical management and marketing as these.

The hon. and learned Member referred to what he called a planned campaign for orders carried out by Richard Thomas and Baldwins. He said that orders from Whiteheads always had to have priority. I am informed that in May, 1961, 1,500 tons of billets for Whiteheads were given priority at Red-bourn, in order to enable Whiteheads to deliver reinforcing bars needed for the construction of the Spencer works, but that no other priority has ever been accorded them. He made a great deal of play about the harm that might be done to the reputation of Richard Thomas and Baldwins by what he described as this quite wrong way of giving priorities.

I think it not inappropriate that I should say that a great deal of harm may be done to this very well-known firm of world-wide repute by allegations of the kind that he has made; that this firm has in some way been chopping and changing the market for all sorts of personal and political reasons, without regard to the welfare of the company and its workers. I think that this sort of allegation about the motives of other people, without apparently checking, is not very helpful to the firm or the industry.

Let us face it. Perhaps we forget from time to time and get too remote from the facts. But in a market which is highly competitive all over the world nothing will count so much as margins, and if costs go up, our power to compete goes down. The power of the steel industry to compete is today of vital importance. I cannot believe that in those circumstances any of the remarks made by the hon. and learned Member can have helped at all.

The hon. and learned Member went on to say that somebody—the obvious man to mention was the man who was a member of the board of Richard Thomas and Baldwins and also connected with Whiteheads. There was no evidence to suggest anything against that gentleman at all—he was just dragged in. It was also said by the hon. and learned Member that somebody had some motive. He was then good enough to acquit me, and with me my hon. and learned Friend the Minister of Power.

The hon. and learned Member said that a General Election was in the offing. We are getting accustomed to this optimistic statement from hon. Members opposite. It is one for which, so far as I know, there is no justification. But he said that there was a General Election in the offing and this could have been a motive for the operation. What a childish allegation. If we are to depend for the way that we run our affairs in this House on discussions in such debates as the hon. Gentleman launched, and this kind of stuff, I should like to express my sincere and wholehearted rejection of it—

Mr. E. L. Mallalieu

Perhaps the hon. Gentleman will show that he is not childish by answering my question, which, in effect, was: does he think it right that one man should hold those two positions when such a conflict of loyalities was aroused as must have been in this case?

Mr. Peyton

I am not here to answer such a question—

Mr. Mallalieu

I am not surprised.

Mr. Peyton

I am not here to take part in the management of this industry and I am certainly not prepared to exchange with the hon and learned Gentleman those sort of barbed remarks about a conflict of interest that might exist. There is no basis whatever for it and the hon. and learned Gentleman knows that very well. It is fun to come to this House and make from a position of privilege charges against the morals and motives of other people without having to support the charges. But I am not prepared to play that sort of game at all.

The hon. and learned Gentleman went on to refer to dumped billets. He did not even bother to prove his case, or to refer to the fact that so far as I know no official allegation of dumping has been made to the Board of Trade on behalf of or by the steel industry. The machinery exists and I for one, from the back benches on this side of the House, have said that the machinery does not always work as quickly as we should like. But so far as I know, no complaint has been made by the steel industry on the point and we are entitled to say to the hon. and learned Gentleman before he makes allegations of—

Mr. E. L. Mallalieu

Has the hon. Gentleman denied it?

Mr. Peyton

As I have said, no complaint has been made—

Mr. Mallalieu

Does he deny it?

Mr. Peyton

I am not in a position to deny it or confirm it. The hon. and learned Gentleman has made an allegation. He has some knowledge of the law. He alleged that billets had been dumped. He has produced nothing at all, no agreement from any authoritative source to suggest that that is true. I feel obliged to leave the hon. and learned Gentleman where he is now and to depart from him repeating one last remark he made, that the flesh and blood of hundreds of his constituents was being played with. None of us wishes to deny for a moment the gravity of the situation of a man whose livelihood is being threatened by redundancy, or unemployment, call it what we will. This is a terrible thing, but does it really help to dress it up in these melodramatic terms? I believe that it does not.

The hon. Member for Gower, put his case in a very much more temperate way, if I may say so. I know that he has already had words with my right hon. Friend about the problem, and it is a very serious one. For either my right hon. Friend or his Department to take immediate action to control imports in the absence of proof of dumping is very difficult, and introduces quite novel considerations. I am sure that the hon. Gentleman is aware of that, but I want to make one or two points absolutely clear.

It would be wrong for the House of Commons, or for any Government Department to interfere with the minutiae of management. The burden of the complaint in this debate is that one blast furnace has been temporarily put out of commission. Of course, as is the usual custom, the company has not said when the relining will be completed, or when the furnace will be blown again, but it is quite obviously beyond the scope of the House of Commons or any Government Department to make such technical judgments or such decisions over the matters of marketing that would be involved here. One has to remember that there are in blast, eight furnaces fewer at the moment than there were a year ago, so there is probably nothing very exceptional in the action that Richard Thomas and Baldwins has taken at Scunthorpe.

The landed costs—and these are vital, because we cannot get away from the figures, and should not try to do so—of imported billets from the Commonwealth average £29 a ton. The United Kingdom home price is £33 per ton. The total domestic billet production over the first nine months of the year was 4.1 million tons. Our total imports amounted to 1.9 per cent. of that—a total of 80,000 tons, one-half of which came almost entirely from the Soviet Union purely for purposes of rolling and were re-exported immediately to the same owners. Therefore, in point of fact, the effective import was only 40,000 tons net. Exports over the same period amounted to 73,000 tons.

The country has not, therefore, tremendously strong grounds for making a great shout about how badly our own industry is doing, because we are not really justified in saying that our export position in billets is very much less favourable than the import position. But the fact remains, and it is very clear, that our own costs give grounds for considerable anxiety—

Mr. I. Davies

I mentioned that I had had it from very good authority that there are 130,000 tons also on the way, and that in Gower, although I accept the percentage quoted by the hon. Gentleman, that marginal amount is enough for an old industry that could be kept going for twelve months.

Mr. Peyton

Of course, I accept that the hon. Gentleman says; that a marginal amount is of great importance.

I am not in a position to confirm or deny whether the amount mentioned by the hon. Member for Gower is on the way or not. What I am concerned about, and what I think the House of Commons should be concerned about, and what everybody who has the interests of the industry at heart should be concerned about, is whether we can reduce our costs to a level to make our billets competitive with those which are being shipped to this country.

I think that hon. Members will be very conscious of the fact that it is normal for a country's exports, which are marginal production, without in any way being dumped—this happens with our exports as well as with those of our competitors—to be at a lower price than the home price in most cases. It is so with the United Kingdom and it is certainly so with Canada and South Africa, with which countries' products we have been particularly concerned tonight.

The Question having been proposed after Ten o'clock and the debate having

continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at nineteen minutes to Eleven o'clock.