STEEL INDUSTRY (Hansard, 27 April 1971)

§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)
With permission, Mr. Speaker, I will make a statement.
The House will wish to know of the stage reached in my review of the existing and future structure of the British Steel Corporation; this has been carried out in parallel with the review of nationalised industry activities more generally which is still continuing.
After a most careful examination with the Corporation, the private sector of the industry, and other interests, we have decided, in view of the economies of scale of modern integrated steel works, to maintain within the Corporation the present responsibilities for bulk iron and steel making activities.
The question of the future size of the industry is being considered within my current review of the Corporation's financial and development position. We shall continue to explore with the Corporation the scope for further progress towards greater efficiency and competitive discipline. This of course must be subject to the constraints of fair competition with the private sector and the need for a rapid improvement in the Corporation's financial position; it is also subject to the Government's overall policy for the economy.
The nationalisation of the industry created a number of anomalies on the boundary between the Corporation and the private sector and we intend to pursue with the Corporation the extent to which these can be remedied. The Corporation also has interests in a wide range of diversified and ancillary activities. Now that we have taken the main decision on bulk steel making we will have urgent consultations on the future status of these activities, and on the scope for introducing private capital. Furthermore, we would welcome any new private sector steelworks developments and in this connection—

Hon. Members
Oh!

Mr. Davies
Shall I repeat that—we would welcome any new private sector steelworks developments, and in this connection it would not normally be my intention to use my statutory powers of approval in any restrictive way.
The decision I have announced today will help to provide the industry with a greater sense of stability.

Hon. Members
Oh!

§ Mr. Davies
I shall of course report back to the House when the further consultations I have referred to have been completed.

§ Mr. Michael Foot
Does the right hon. Gentleman realise that after the ten months of uncertainty in which the steel industry has been plunged by the Government's attitude the equivocal nature of his statement is bound to lead to further uncertainty and difficulty for the steel industry?
Does the Secretary of State recognise that his exclusion from Government action, selling off or hiving off of the bulk iron and steel-making activities is a reprieve for a section of the industry which has never been proposed for selling off or hiving off by anybody except the most neolithic members of his Administration, and does he realise that if he is to remove the uncertainty he should give an undertaking to the House, the country and the steel industry today that he will exclude from the further consultations and proposals for hiving off the four other main divisions of the Corporation, namely, special steels, tubes, constructional engineering and chemicals, which include some of the most profitable parts of the industry? Will he give a clear undertaking that those sections of the industry are to be excluded from any proposal for hiving off?
Further, when he says that he will not treat any proposal for private capital in a restrictive way, will he say, also, that he will remove the restrictions which he is now imposing on the public sector of the industry and the Steel Corporation generally? Will he accept that he has an absolute obligation to the people working in the industry to remove these uncertainties and to enable the Corporation to get on with the job of carrying out its investment programme and 249 development programme, upon which the employment of steel workers depends, and will he realise that the best way he could do that would be to say that any further consultations of this character are to be called off altogether?

§ Mr. Davies
As regards the general tenor of the hon. Gentleman's remarks, I recall that throughout the decade of the 1960s, the whole future of the steel industry was held utterly in suspense by the party opposite. During their period in power, the Labour Government declared their intention to nationalise this industry—that was in November, 1964—and they brought that to fruition nearly three years later, at the end of July 1967. So I do not readily accept any easy charges of delay and dilatoriness.
The hon. Gentleman's reference to the equivocal nature of the decision is equally irrelevant. In fact, this decision covers a very large proportion of the activities of the British Steel Corporation, and to call it equivocal is, to my mind, just incorrect.
The hon. Gentleman asked me to confirm that this major part of the Steel Corporation's activities was never considered for any treatment other than that which my statement now accords to it. The Conservative Party in Government would certainly not have wished to start with a Corporation of the kind which we now have before us. But we have to deal with what we have, and the decision which we have reached has certainly not been reached on the basis of no alternative proposals in contemplation.
Finally, as regards the argument which the hon. Gentleman puts up about my attitude towards the introduction of private steel works as against what he calls my restrictive policy in relation to public capital, I have simply said that I should welcome private proposals coming forward. My attitude to public capital is that, with a steel industry in the condition in which we have it, that is, in deficit and facing serious problems in relation to its investment programme, any reasonable person responsible for the monetary welfare of this great industry and for the public interest would have to look carefully into the future of its finance.

§ Mr. Foot
Will the right hon. Gentleman now answer the most specific question which I put to him, about the four sections of the steel industry—special steels, tubes, constructional engineering and chemicals? Is he saying that those aspects of the industry are still to be subject to consultation, or is he saying that they are to be removed from the consultation? If he says that they are to be removed from the consultation and that they are to remain part of the Steel Corporation, we should certainly welcome the decision, but does he realise that, if he now says that consultations are to continue about those sections of the industry, he cannot acquit himself of the charge of continuing the uncertainty in the steel industry?

§ Mr. Davies
I apologise for not replying on that aspect of the matter before. In so far as the four activities to which the hon. Gentleman refers do not fall within the framework of the decision which I have announced, they will still be subject to the consultation which I propose.

§ Mr. Emery
Does my right hon. Friend realise that his decision, which will bring about greater rationalisation and greater economies of scale, with larger units of production, represents the only way that the steel industry will make the profits which both sides of the House want, but will he tell the House how he envisages that Section 15 of the Iron and Steel Act, 1967—I think it is—will be used and the way in which he will wish to encourage more private capital and more private steel work operations to be introduced?

§ Mr. Davies
I fully realise the vast importance of scale of plant considerations; obviously, they are paramount in the matter. As regards the latter part of what my hon. Friend asked, I think that my announcement today should serve as sufficient notice, bearing in mind that I would not use these powers in any restrictive way. That in itself would, I hope, constitute an encouragement.

Mr. Eddie Griffiths
Will the right hon. Gentleman explain what he means by bulk steel making? I understand it to mean the production of ordinary grades of steel, including up to the strip mills. Is he saying that the special steels division, the chemicals division, the constructional engineering division, and also plants 251 such as Ebbw Vale, which was to be reorganised to produce tin plate and galvanising plate, and plants such as Shotton, which was to specialise in Stelvetite, will be sold off to private buyers? Will the right hon. Gentleman say exactly where he draws the line between ordinary steel work activities and bulk steel making as he defines it?

§ Mr. Davies
The precise definition would take an exceedingly long statement. [HON. MEMBERS: "Try it."] I do not propose to do other than indicate the broad lines. Activities such as iron making and steel making, primary rolling, strip mills and like processes will fall within the definition of what I have said. But it would be dangerous, I think, to restrict it to that. Individual plants which, obviously, may comprise other parts of the industry may well fall within this definition; this is a matter which needs precise statement plant by plant, which is now being undertaken within my Department and will be discussed with the Corporation. As regards the two specific plants which the hon. Gentleman mentioned, Ebbw Vale and Shotton, both these would be regarded as falling within the framework of the bulk activity to which I have referred.

§ Mr. Lawson
Does not the right hon. Gentleman realise that one of the vital questions concerning us is the size which the Government have in mind for the steel industry? He has given no indication of that. Can the right hon. Gentleman tell us, for example, whether the Secretary of State for Scotland has been pressing upon him the vital importance of a much larger steel making and iron making industry than at present if the interests of Scotland are to be protected at all?

§ Mr. Davies
The hon. Gentleman can be very sure that the Secretary of State for Scotland presses these views strongly upon me. As regards the size of the steel industry, as has been said in the House on previous occasions, this is a subject of the deep review which is taking place into the whole development programme of the industry. The hon. Gentleman may well recall that I cited a figure for this development of about £4,000 million as being the kind of extent which we are discussing. It will be fully realised that a profound review will have to be under- 252 taken before a development programme of that size can be agreed.

§ Mr. Speaker
Order. I hope the House will realise the difficulty I am in. In accordance with the wish of the House, I allowed questions on the last statement to go rather longer than usual. We have very important business ahead of us in which many hon. Members are concerned. Therefore, I can allow only a few more supplementary questions.

§ Mr. Lane
Is my right hon. Friend aware that there will be wide welcome for his statement today? Will he confirm that the rest of his review will be pursued with the utmost urgency, so that as soon as possible the steel industry will have a secure financial and organisational basis for its future progress and prosperity?

§ Mr. Davies
Yes, I absolutely take that point and will expect to see the review carried out with the utmost urgency. As my hon. Friend knows. I hope to have reports very soon on the first section of the review. The more widespread section of the review will take some additional time, and I do not expect to have the report of the review body on the major development programme covering many years until much later in the year.

§ Mr. Palmer
Will the right hon. Gentleman say whether the principles of this alarming statement are to be taken as a precedent for other nationalised industries, including electricity supply?

§ Mr. Davies
I find it difficult to reply to that question, because the statement seems to me to be not at all alarming.

§ Sir G. de Freitas
Will the Minister assure my constituents that no part of the steel industry in Corby will be hived off or handed over to private speculators?

§ Mr. Davies
This will, I think, in all reason fall within the bulk category to which I have referred, but this is a matter for further discussion with the Corporation.

§ Mr. O'Malley
Is the Minister aware that if this is the best he can do after ten months in office it is just another acknowledgement of his complete inadequacy? The first part of his statement amounts to an open acknowledgement of 253 the justification for the nationalisation of the steel industry. Since there is need for tidying up the ragged edges in the private sector in Sheffield, now that the Industrial Reorganisation Corporation has been removed, would it not be sensible for the assets of Brown Bayley to be transferred to the British Steel Corporation? On the question of new steel works, will the right hon. Gentleman say, in view of the Press speculation and leaks, just what inquiries have been received by his Department for the takeover of British Steel Corporation assets that are to be closed immediately or in the future?

§ Mr. Davies
On the last point, proposals for taking over any assets of the Corporation are matters for the Corporation and not for the Department, and I am sure the hon. Gentleman realises that. He referred to the ragged edges of the industry, and the survey which we are undertaking with the British Steel Corporation looks naturally at both public and private sectors. I am surprised to hear him continue to emphasise the delay factor in view of what I have said. The penalties of delay which the industry has suffered are very much more the product of the Labour Party than of the Conservative Party.

§ Mr. Finsberg
My right hon. Friend spoke of Section 15 of the 1967 Act and said that he would not use his powers restrictively. Will he go slightly further and say whether he would encourage the injection of private enterprise in steel?

§ Mr. Davies
I have said that I would welcome proposals of this kind. The powers in question might be used restrictively, and I wish to indicate that I would not so use them.

§ Mr. Frederick Lee
Are we not now in the absurd position that, whilst the Government's deep-seated inquiry, as they call it, into the Corporation's finances and development policy is holding up development in the nationalised sector and bringing about the closure of steel firms such as Irlam, the right hon. Gentleman is now giving an invitation to private people who wish to invest in steel to do so? How under those conditions, can he possibly know what kind of steel industry we shall have in the future?

§ Mr. Davies
I refute absolutely the right hon. Gentleman's remarks on the subject of Irlam. The Chairman of the Corporation has made it abundantly clear that it has nothing whatever to do with the current review presently being undertaken.

§ Mr. J. H. Osborn
Is my right hon. Friend aware that his statement will be welcomed as a milestone in establishing a healthy steel industry, both public and private? When will he be in a position to publish an agreed plan—[Interruption]—I have a private interest in the private sector and I have also been associated with the steel industry, as I think the House is well aware. Will my right hon. Friend say when he hopes to publish an agreed plan outlining the scale of investment we can visualise towards meeting the £4,000 million programme to which he has referred? How much will be provided from Government sources and how much does he visalise will have to be found from rationalisation, hiving-off and other sources of finance? The European steel industry has the advantage of large-scale finance from sources outside Europe. Is there a chance of the British steel industry being financed from resources outside this country and the Treasury?

§ Mr. Davies
It is refreshing to hear someone who knows the industry and realises the significance of the statement I have made. As regards sources of finance—

Mr. Eddie Griffiths
On a point of order. It is invidious for the right hon. Gentleman to make such a statement before he has had an opportunity of knowing the background of hon. Members within the Chamber. I have spent 17 years on the shop floor.

§ Mr. Speaker
It is not a point of order for the Chair. I am not responsible for what the Minister says.

§ Mr. Davies
As regards the sources of finance, of course it will be—[HoN. MEMBERS: "Withdraw."]—Replying to the question—[HON. MEMBERS: "Withdraw."]—I am replying to the question on finance—[HON. MEMBERS: "Withdraw."]

§ Mr. Speaker
Order. I think some hon. Members on the Opposition side are under the impression that the right hon. 255 Gentleman made a personal allegation against some of them. Is that the case?

Mr. Eddie Griffiths
On a point of order—

§ Mr. Speaker
I call the right hon. Gentleman first.

§ Mr. Davies
I did in fact just say a word of commendation about my hon. Friend. I made no observation whatever about any hon. Member opposite.

Mr. Eddie Griffiths
On a point of order—

§ Mr. Speaker
The right hon. Gentleman has made it quite clear that he made no reflection on any hon. Member.

§ Mr. Michael Foot
On a point of order. It is quite clearly in the recollection of every hon. Member on this side of the House that the right hon. Gentleman referred in the most derogatory and scandalous manner to all my hon. Friends who come from steel constituencies and all my hon. Friends who have worked in the steel industry, some for many years. The right hon. Gentleman is in no position to insult hon. Members as he has done. I therefore submit to you as a point of order, Mr. Speaker, that the comment of the right hon. Gentleman was not a proper withdrawal of his remarks, and that you should call upon him to withdraw them.

§ Mr. Speaker
Order. The House must remain calm about this matter. The right hon. Gentleman made a remark which was taken as a personal reference. I do not think it would have been out of order even if it had been a personal reference. I gave the right hon. Gentleman a chance to say that he did not mean what he said as a personal reflection against any right hon. or hon. Member, and I think it would be wise to leave the matter there.

§ Mr. Tinn
What the right hon. Gentleman said might well be taken as a reflection not only on this side of the House but upon the Chair. If some of us who have had direct practical experience of the steel industry have not been able to put a question, the responsibility is not ours but lies with the Chair.

§ Mr. Michael Foot
May I ask the right hon. Gentleman first to note that 256 one of the difficulties in these question and answer sessions on steel matters is that practically all the representatives from steel constituencies come from this side of the House, and it is very difficult for all of them to have the opportunity in the time available to put their case. In view of the grave nature of the right hon. Gentleman's statement and what we consider to be grave uncertainties in the steel industry—uncertaintities which are bound to be intensified by his statement—will he arrange for the earliest possible debate in this House so that we may have a full discussion of the steel industry to try to repair the damage which the right hon. Gentleman has done to the industry today?

§ Mr. Davies
Any question of a debate is not a matter for me but for my right hon. Friend the Leader of the House. If I may reply to the question put by my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) on the subject of finance, the sources of finance are self-generating and those and other sources will come into consideration in the review which I am undertaking.

§ Mr. Speaker
If I may deal with this matter now, I am sure that the right hon. Gentleman did not intend any personal reflection. In fact according to my recollection it could only be suggested that the right hon. Gentleman was inferring that some hon. Members did not know what they were talking about. Many people have said such a thing on many occasions in this House and I do not think hon. Members should be too sensitive. The matter to which the hon. Member for Ebbw Vale (Mr. Michael Foot) has just referred is not a matter for the Chair. I have no doubt that it will be taken into consideration. I cannot allow the matter to be further debated now.

Mr. Eddie Griffiths
On a point of order, Mr. Speaker. I believe that the right hon. Gentleman's words, referring to his hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), were that it was refreshing to have somebody with a knowledge of the industry. This can only be interpreted as casting a reflection on those hon. Members with experience of the steel industry who spoke before the hon. Gentleman. I ask the right hon. Gentleman to withdraw that remark.

§ Mr. Speaker
Order. I will now rule on this matter. I did give the right hon. Gentleman an opportunity of saying—

§ Mr. Faulds
Lame duck. Have the guts to get up and apologise.

§ Mr. Speaker
The right hon. Gentleman said, and I heard him say it, that he meant no personal reference to any hon. Member on the Opposition benches. In any case, I would not have ruled what he said as unparliamentary. I have heard much worse things from other right hon. and hon. Members.

§ Mr. John Mendelson
On a point of order, Mr. Speaker. The other day when one of my hon. Friends tried to move the Adjournment of the House under Standing Order No. 9 you referred in your Ruling to the fact that there could not be an immediate debate on the Government's policy on the steel industry, as announced in three different statements, because there were other opportunities for debate. You will recall that arising out of your reply it was then suggested by the right hon. Gentleman the Leader of the House that there would be a debate which he would announce the next day and which would satisfy that particular demand.
You are involved, Mr. Speaker—which is why I am putting this matter to you—because as a result of your reply the further steps which I and other hon. Members might have taken to move the Adjournment of the House were not taken. We now find that in the general debate on Thursday that particular pledge by the right hon. Gentleman is not being fulfilled. The right hon. Gentleman, who today has made another serious statement, refuses to give an undertaking on behalf of the Government that there will be an immediate debate. I put it to you, Mr. Speaker, that those of us who represent many people who earn their livelihood in the steel industry at various levels are now entitled to press for an 258 assurance that there will be an immediate debate on the steel industry within the next three days.

§ Mr. Speaker
That is not a matter for me. I may have some sympathy with the idea that a debate on the steel industry should be arranged, but I am not quite clear about the extent of the debate on Thursday. The point is that the Chair does not arrange the agenda of the House. If the Standing Orders were to be altered so that it was the responsibility of the Chair to choose the subjects for debate, the Chair would do its best. However, it is a matter for the Leader of the House, and, since the usual channels are represented at present in the Chamber, no doubt the matter can be discussed.

§ Mr. Mendelson
On a point of order, Mr. Speaker. Since the Leader of the House is here, will he not now give an assurance in the light of the statement which we have heard today?

§ Mr. Speaker
As I have said, this is not a point of order.

§ Mr. O'Malley
Further to that point of order, Mr. Speaker.

§ Mr. Speaker
It is not a point of order. I must protect the business of the House. We must move on to the Motion in the name of the Prime Minister.