HC Deb 24 July 1968 vol 769 cc582-6
The President of the Board of Trade (Mr. Anthony Crosland)

With permission, I wish to make a statement on aluminium smelters.

I informed the House on 10th July that Alcan Aluminium (U.K.) Ltd. was proceeding with a smelter in Northumberland. The Board of Trade and the generating boards have now reached agreement with the British Aluminium Company and the R.T.Z./B.I.C.C. consortium on the major outstanding questions relating to their smelter projects. The companies will announce today their decisions to proceed with their smelters at Invergordon and Holyhead respectively, for both of which outline planning permission has been granted by the appropriate authorities. The arrangements are inevitably complicated, but I thought it right to inform the House immediately of their broad outlines.

The smelters will draw power from the generating boards under special long-term contracts based on the principles announced by the Government last autumn. The companies will pay an operating charge and also a capital payment in return for which nuclear power generating capacity of the most advanced type will be earmarked to supply their requirements. My right hon. Friend, the Minister of Technology will arrange, subject to Parliamentary approval, to buy from the companies their rights in the relevant share of the plutonium arising in the nuclear reactors; the plutonium will thus remain under Government control.

The Board of Trade has agreed, subject to the approval of Parliament, to make loans to the companies at an interest rate of 7 per cent. under the Industrial Expansion Act. These loans, which will be of up to £29 million in the case of British Aluminium and £33 million in the case of R.T.Z., will be the subject of industrial investment schemes under that Act. They will be equal in amount to the capital contributions required by the generating boards. The necessary schemes, and a fuller statement, will be laid before Parliament in the autumn.

These two new smelters will each have an initial capacity of 100,000 tons per annum. This, together with the first 60,000 ton stage of the new Alcan smelter at Lynemouth, will provide a total new United Kingdom capacity of 260,000 tons per annum. All three companies have agreed to consult the Government before extending their capacity further.

I have informed the Norwegian and other E.F.T.A. Governments, and also the Canadian and U.S. Governments, with all of whom we have had a full exchange of views, of these decisions.

Sir K. Joseph

How long is it since Rio Tinto first proposed an aluminium smelter scheme to the Government? How many jobs, excluding construction, are expected to be created at Invergordon and Holyhead respectively? What is the cost of the power that the smelters will be using under the long-term contracts? Can other large continuous industrial users of energy make similar arrangements with the electricity industry?

Mr. Crosland

Of course, this has taken a long time to conclude—which is hardly surprising in view of the fact that what we are doing is, in effect, to establish an almost entirely new and very important industry—and to take decisions which involve most important regional considerations and international considerations for a new type of power contract. I make no apology for the delay which has occurred. [HON. MEMBERS: "How long?"] I would much rather delay and have a satisfactory scheme than do what Ministers in the previous Conservative Government did— constantly rush into hasty contracts which they then had to cancel.

There will be 600 and 700 jobs approximately at Invergordon and Holyhead respectively, although the numbers employed during the construction period will probably rise to over 2,000.

Details of power contracts are never made public, nor will they be in this case.

On the last point, as to other possible applicants for this type of power contract, if anyone suggests a similar type of power contract we shall consider the case on its merits in the light of the principles laid down last autumn.

Mr. William Hamilton

Can my right hon. Friend say whether his Department is satisfied that the social infrastructure —the roads, houses, schools and the rest —will be phased properly with the development of the smelter in Scotland? Can he say whether the time taken between the original decision of R.T.Z. and British Alcan and now is less than the 10 years which it took the previous Conservative Administration to get on with the pulp mill?

Mr. Crosland

On the first question, yes we are satisfied that there will be the phasing my hon. Friend has in mind. On the question of the time taken, certainly it is very much less than the 10 years my hon. Friend mentioned. Since the time when the Government invited these applications it has taken nine months for what, in effect, is an entirely new industry.

Mr. Alasdair Mackenzie

Is the President of the Board of Trade aware that his statement will give great satisfaction in Scotland, in Invergordon in particular? Is he further aware that the part played by the Scottish Office and the Highland and Islands Development Board in bringing these protracted negotiations to a successful conclusion is very much appreciated? Further, since the Government have come to a decision, will the right hon. Gentleman do his utmost to ensure that there is an early start of the work on the project?

Mr. Crosland

I am obliged to the hon. Member for his opening remarks. I gladly join with him in paying tribute to the Scottish Office and the Highlands and Islands Development Board. On his last question, work will be started as soon as the companies find this practicable.

Mr. James Griffiths

Is my right hon. Friend aware that this news will be received with great joy in Wales? May I congratulate him on the work which has been done? Now that we are beginning to establish these new and growing industries in the old industrial areas, will my right hon. Friend do his best to persuade industrialists to establish their industries, where possible, as near to the sites of the old industries, for the need for employment there is very great?

Mr. Crosland

I am obliged to my right hon. Friend for paying tribute to the Welsh Office and its endeavours in this matter. As to the latter part of his question, a large part of the object of the entire regional policy is to attract industries and firms to the areas he has in mind.

Mr. Noble

May I add my congratulations to the President of the Board of Trade for having, perhaps rather slowly, acceded to the demands which I know he was getting from the Secretary of State for Scotland and from the Highlands and Islands Development Board? May I wish the new companies great financial success in their areas in the Highlands and in Wales?

Mr. Maclennan

Will my right hon. Friend accept that this decision will be regarded through the Highlands as a triumph and a break-through for industry which will lay the foundations for great benefits to come over a wide area?

Mr. G. Campbell

Is the right hon. Gentleman aware that there will be relief in the North of Scotland that the Government have at last agreed to the site at Invergordon? Is he also aware that the reference by the hon. Member for Fife, West (Mr. William Hamilton) to 10 years in relation to the pulp mill is completely incorrect? Can the right hon. Gentleman tell the House what his estimate is of when the smelter at Invergordon will be completed?

Mr. Crosland

The smelter at Invergordon will be in production by 1971. I am obliged to the hon. Member for what he said in his opening remarks, but in the light of the extreme complication of this decision I would have thought that it would evoke, particularly from the hon. Member, a rather more generous reaction.

Mr. J. H. Osborn

Can the President of the Board of Trade state the price of electricity offered to the smelters, bearing in mind that the cost of electricity in other countries is very low? Can he give an assurance that there will be no need in due course for tariff protection of home smeltered aluminium, bearing in mind that competitors of aluminium—steel and other materials—will not have the advantages that aluminium has in this country?

Mr. Crosland

As the hon. Member must know, I cannot tell him the price. It is never revealed in contracts of this kind. I assure him, however, that it is completely unsubsidised. I can also assure him that there is no intention of imposing a tariff on aluminium imports.

Mr. Geoffrey Lloyd

Was the original application by R.T.Z. for a larger output than 100,000 tons at Holyhead? If so, will the reduction to an output of 100,000 tons have a bad effect in raising unit costs?

Mr. Crosland

The right hon. Gentleman is quite right in supposing that the applications from each of the three companies were for a larger capacity than we are now going ahead with in stage one. The reason why, in agreement with the companies, we reduced the capacity in stage one was to reassure our E.F.T.A. partners that we would examine any possible adverse effect on Norwegian exports to us after stage one was completed. The addition to unit costs as a result of the reduction in capacity will be very small indeed.