HC Deb 26 January 1970 vol 794 cc998-1001
29 and 30. Mr. Scott-Hopkins

asked the Minister of Technology (1) whether, in view of the financial position of the British Steel Corporation, he proposes to approve further price increases this year;

(2) whether he will make a statement on the British Steel Corporation's programme of cost reduction for the coming year as recommended by the National Board for Prices and Incomes in Report No. 111, May, 1969.

Mr. Harold Lever

The Government have decided that they will raise no objection to an increase in the British Steel Corporation's prices of 10 per cent. on average. This takes account of the Corporation's formal programme of cost-saving, which is designed to save £15 million in the year to September. I am circulating details on these closely-related matters in the OFFICIAL REPORT.

Mr. Scott-Hopkins

Can the right hon. Gentleman say by what criteria he has given permission for the rise being accepted by the Government? Does he recall how the Government were criticised in June of last year for refusing the appropriate rise asked for by the Steel Corporation? Can he say what effect this rise will have on many steel using industries, including our motor car industry? What does he propose to do about that?

Mr. Lever

The criteria mainly concerned are, first, the competitiveness of the steel industry at the new prices and, secondly, the commercial viability of the Corporation earning its living and making a contribution to the development of the steel industry. Prices will remain very competitive with those of other producing countries.

Sir J. Eden

Surely it is self-evident that the British Steel Corporation is here seeking to take advantage of buoyant market conditions. If this is acceptable to the Government in the case of a nationalised monopoly, why do the Government still seek to interfere with the rest of British industry when it attempts to do the same sort of thing?

Mr. Lever

There is a great deal of difference between one industry and another, quite irrespective of whether it is nationally owned or privately owned. The particular circumstance of the steel industry is that it has already held its prices very substantially below world market prices for a long time. It is now necessary, in order that this industry should make a moderate return on its capital, to bring its prices nearer into line with world prices.

Several Hon. Members

rose—

Mr. Speaker

Mr. Christopher Price—Sir Keith Joseph.

Mr. Christopher Price

rose—

Sir K. Joseph

But is it not the fact—

Mr. Lawson

On a point of order. Mr. Speaker. Did I not distinctly hear you call Question No. 31?

Mr. Speaker

It is not the first time that I change my mind in calling Members at Question Time. Sir Keith Joseph.

Sir K. Joseph

But is it not the fact that if a privately-owned industry—one in competition amongst itself—had raised prices far more than the cost increase, which is what has happened in the case of the British Steel Corporation, the Government would have made an almighty fuss, and would have referred that industry to one of their many tribunals?

Mr. Lever

We did, in fact, refer this industry to the Board and I will not have any difficulty in deciding to send the industry to the Board again when it might be useful to do so, but the last reference was only very recent. This price rise is fully justified, and that is the unanimous view of the Government, who have given very close consideration to it.

Following are the details:

Statement on Steel Prices The British Steel Corporation has proposed that it should increase its prices by an average of 12 per cent. The Iron and Steel Consumers' Council has considered the proposals and has told the Minister that it accepts the need for a price increase sufficient to enable the Corporation to achieve commercial viability on a long-term basis. 2. The Government has studied the proposals in the light of the Corporation's position, the requirements of the economy and of Prices Policy, and the situation of steel users, and has decided that it will raise no objection to an immediate increase of 10 per cent. on average. This will still leave United Kingdom prices fully competitive. The Corporation has agreed to implement its proposals within this average as from tomorrow, Tuesday, 27th January. 3. The Government has indicated its intention to refer price increases to the N.B.P.I. or its proposed successor where this would be helpful. However in view of the fact that the N.B.P.I. has recently reported on the British Steel Corporation (Report No. 111, May 1969), they have concluded that the imperative need was for the Corporation to be able to increase its revenue immediately. But the Government will consider the possibility of an early reference to the proposed Commission on Industry and Manpower on the Corporation's efficiency and cost saving measures. 4. The Corporation has already made progress with its formal programme of cost-saving which this year is expected to save a further £15 million and these measures to effect cost savings will be continued. In addition new investment and rationalisation will produce important savings later especially on the new Product Division basis. The Corporation is also improving manning standards in co-operation with the unions. 5. The private sector of the steel industry which following the recommendation of the N.B.P.I. last year is not required to give early warning, will be free within the commercial restraints to raise its prices. In the case of non-alloy bright bars, where early warning remains in effect, the Government will make no objection to producers raising their prices by an amount sufficient to cover the increased cost of their mix of black bar purchases based on the new B.S.C. list.