HC Deb 30 June 1971 vol 820 cc396-526

Motion made and Question proposed,

That this House do now adjourn.—[Mr. Pym.]

3.32 p.m.

The Secretary of State for Trade and Industry (Mr. John Davies)

I am very glad to have an opportunity this afternoon to elaborate somewhat on the rather bald statement that I had to make on Monday. It was bald, but rather lengthy, and clearly I could not put into it all that I would have liked to say. The debate today provides me with an opportunity to fill it out somewhat.

I am very conscious of the anxieties on both sides of the House about the future of the steel industry and of the impatience that some hon. Members feel about what they consider to be delay in coming to conclusions about its future. I stress that I am as keen as anyone in this House to avoid uncertainty and delay.

The industry in question is one which is not only beset with a certain number of problems, but one which worldwide has some of the biggest single decisions to make. It is an industry which permeates the whole range of industrial activity in every industrialised country. For that reason, it constitutes a situation of an exceptional kind which requires special treatment in many ways.

When one adds to the worldwide problems facing the industry the special ones confronting our own, the situation becomes even more complex. We have an industry which looks back on a very perturbed and troubled last generation of change and uncertainty, and one which today, as a result perhaps of those circumstances, consistently fails to achieve the level of investment which it needs to maintain its position and competitive standing in the world at large.

These factors undoubtedly cause one to take a very careful and deliberate look at the future of the industry and at the way in which, from our point of view, we can best ensure that that future will be compatible with what we need from it in terms not only of itself but of the generality of industry.

The background of the industry, with its shortfall of investment, has given rise in recent years to one which is not performing in profit terms as we should like and which is giving a great deal of disquiet in terms of the generation of the resources that it needs to ensure its own future. It is necessary, therefore, that the review which has been going on for some time and which will continue for some time to come should be thorough and able to enlist the confidence not only of those involved in the industry but of people in Parliament and outside it who have to make major decisions about its future.

Throughout this arduous period of study, the consistent objective has been to try to define the kind of form and pattern that the industry needs, not from the point of view of political, doctrinaire views, but from that of a healthy industry. This has been the substance of our discussions with the British Steel Corporation and with outside private industry. When we come to conclusions, as we have recently, they are conclusions which are necessary to ensure a sound and healthy industry for the future, and ones to which all concerned with its health can subscribe.

The position that we have just reached is that the second stage of our studies has been completed. I dealt with the first stage in my statement to the House on 27th April about bulk steel making activities. The second stage has concerned itself with two factors: on the one side, the short-term financial performance of the British Steel Corporation in the current financial year 1971–72; and, on the other, the longer-term structure of the industry, having taken the major decision related to bulk steel making activities, which I remind hon. Members are by far the biggest part of the industry, representing between 80 and 90 per cent. of the total activities of the Corporation.

The third stage, which will take much more time to complete, is concerned with the longer-term future of the industry, beyond the present decade. In saying that, I do not just mean the outturn of the industry only in this decade. The decisions that we shall take will affect the health of the industry to a large degree through to the end of the century.

A group comprised of people from Government Departments and the British Steel Corporation has been looking at the performance characteristics of the industry in the medium term. I announced before the Whitsun Recess that I had just received the first phase report on that subject. That report revealed some major problems which needed very careful consideration before I could declare to the House the conclusions which were reached therefrom, since they gave rise to some new situations.

First and foremost, we have to recognise that, after nearly breaking even in the financial year 1970–71–though it is difficult to be precise about this because of the exceptional depreciation provisions in that year—the present year 1971–72 will involve the Corporation in a loss of as much as £100 million after depreciation.

The causes of that big change in the fortunes of the Corporation in its annual performance are occasioned by two factors primarily. On the one side there has undoubtedly been a slackening of the market which is giving rise to forecasts for this year's operations which are not as satisfactory in market terms as had been hoped. On the other side it takes account of the fact that costs have risen steeply in the Corporation. Those costs derive not only from material and labour costs which have risen steeply, but also from the continuing high costs of keeping in operation plant which is not modern and which is not likely to give the best performance for the industry.

This level of loss is unlikely, in the light of the review, to be materially offset during the course of this financial year, either by substantial cost reductions, or by price increases at a level which would be compatible both with competitive price levels abroad, and with the fortunes of British industry generally. Hon. Members do not need reminding just how penetrating an effect steel price increases have on the whole export performance of British industry.

Looking to the future, the cost reductions will be most effectively dealt with through the progressive bringing into play of more modern plant. That implies a high level of investment, in contrast with a generation which, on the whole, has under-invested in the steel industry.

The inevitable consequence of the improvement of cost performance by the route of improved investment—and neither party has been able to doubt the impact of this—must inevitably fall upon redundancies and upon a lessening of the work force, with all that that implies, and these matters therefore have to be given the most careful thought. The industry must have investment if it is to stay in the hunt competitively and internationally, and the short-term review to which I have referred, and about which I made some comments on Monday, clearly points the way to that.

Despite the loss, we must proceed with a high level of investment in the industry. That high level of investment is concerned not only with the improvement of plant generally, but also with the introduction of major new plant of a modern character. I have therefore agreed to the investment for this year, 1971–72, being at the unprecedentedly high level of £225 million in 1970–71 values, and that is worth about £258 million in present-day values, a figure which exceeds by about £40 million, in 1970–71 values, the programme agreed last time.

The new programme which has been accepted and agreed allows the British Steel Corporation to proceed with all the existing projects that it had in its plan, including those at Llanwern and Ravenscraig. As I know that hon. Gentlemen opposite have been keenly concerned about this, may I tell the House that, as a result of the decisions taken, the control of the operation of that programme of investment is wholly in the hands of the Corporation. It will go through with that investment programme as it considers best, subject always to the normal communications that it has with the Department of Trade and Industry, whereby it lets the Department have foreknowledge of the major initiatives that it takes in major projects.

The combination of the loss to which I have referred, and the higher investment programme about which I have been speaking, obviously implies a very heavy commitment in additional borrowings, and I have had to agree to the Corporation's being able to extend its borrowing capacity during the current financial year by no less than £300 million. The result of that is that the ceiling allowed within the Iron and Steel Act, 1969 of £650 million in terms of borrowing capacity of the Corporation is needed, and an Order giving effect to that has been placed before the House for its consideration.

The combined effect of those factors also has clear implications for pricing problems and policy. The Corporation and the Government are anxious to see a return to profitability as early as possible, and in pursuit of that the Corporation has put before the Government proposals whereby, as against the past, where, broadly speaking, steel prices moved on an across-the-board basis, and from time to time there were great changes in the whole level of steel prices, the Corporation now wishes to move to a system under which it can change prices individually, having regard to the individual circumstances in the market of the product concerned. It seems that that is a sensible change, and it is one to which I am very much disposed to agree.

It will, in any case, still be subject to the provisions for consultation which exist informally with the Department, and also the provisions, provided by statute, relating to the position of the Iron and Steel Consumers Council and the references which that Council can make to me. I know that there has been a good deal of speculation in the Press about the position of pricing in the event of Britain's becoming a member of the Common Market. It is correct that under the Community's provisions the activities of the Consumers' Council will have to stop, and that the practice which is followed now, which is that as a result of any recommendation it may make to me I may have to intervene in matters of pricing by the Corporation, will equally cease. Those factors are correct. They are, however, the limits of the changes that are liable to take place as a result of membership.

Mr. John Morris (Aberavon)

Will the right hon. Gentleman confirm that had we joined the Common Market he would not have been able to take the step that he took a few months ago in turning down the application by the B.S.C. to increase prices?

Mr. Davies

I should not have been in that position, although the B.S.C.'s position in relation to its own assessment of the pricing system would have been somewhat different, too, so it is not necessarily right to assume that one would have been dealing with a 14 per cent. proposal.

Mr. James Callaghan (Cardiff, South-East)

The right hon. Gentleman has made a most important statement that will need to be examined very closely. When he said that that was the limit of the changes that would be necessary, was he referring only to pricing, or was he saying that no changes would be necessary in relation to investment policy and other important issues such as the location of the industry?

Mr. Davies

I was referring specifically to pricing then, and would limit my reference in that context to that matter only.

I think that this is not an appropriate moment to try to deal with the whole impact of Community regulations in relation to investment in this and other industries, which obviously have a profound effect. I think that, even on a Motion for the Adjournment, the House would like me to stick to what I was dealing with, and that was the pricing issue.

Mr. Brian O'Malley (Rotherham)

We are told in The Guardian this morning that the Government have received a detailed memorandum from the E.E.C. about both steel and coal. Does not the right hon. Gentleman think that it would be helpful to the House if the Government were to make that memorandum available to hon. Member so that they could consider these matters in detail?

Mr. Davies

Of course, an enormous number of matters of detail concerning the relationship of this industry and other industries and many other elements of life in relation to the regulation requirements of the Community are being studied and are the subject of memoranda. It is not relevant to refer to this specifically in this debate.

The great difficulty that I have in the light of the short-term review of the industry is to do the thing that I was most anxious to do—to agree with the Chairman of the Board of the Corporation specific targets for the Corporation over the immediate future, particularly in the current year. Clearly, with a prospective loss at the level of which I have been speaking and with the prospective needs of the Corporation, that does not seem practicable.

However, I have agreed with the Corporation that these figures to which I have referred—£100 million of loss after depreciation and £300 million extra borrowing capacity in this financial year—will be regarded by the Corporation as the limits within which it is bound to operate, short of some major and absolutely unpredictable event. These will therefore be the targets which it has readily agreed, and which I will expect it, to operate within.

In conformity with what I told the House on 24th May, I have asked the Corporation to institute a system of quarterly reports on its performance in relation to these limits. This is not to try to add to the interventionary capacity of Government in the Corporation's affairs. On the contrary, it is a simplification of the reporting system which I hope will prove as useful to us as it will prove simplified to the Corporation.

I should like to turn now to the structural side of my statement on Monday and the structural problems with which we have been faced.

Mr. John Mendelson (Penistone)

Whether or not the right hon. Gentleman intends to refer to any probings which may have been received from the E.E.C, will he not say more about the report on the long-term investment and the requirements of the Corporation, which was submitted to him months ago?

Mr. Davies

The hon. Member may be reassured. I shall have something to say about that in due course.

On the structural position of the industry, the work which has been going on should be seen in the context of the statement which I made to the House on 27th April about the bulk steel-making activities of the Corporation. It is worth repeating that these activities constitute by far the greatest part of the Corporation's activities. I have quoted the figures of 80 to 90 per cent., which give a fair idea of the preponderant effect which they have.

At the time of that statement, I was pressed very strongly to define more closely what I meant by bulk steel-making activities. I refrained from doing so, largely because the Corporation's plants are not easily assessable within theoretical definitions. They are composite plants of various kinds and therefore require consideration virtually plant by plant to assess on which side of a particular line they lie. But the activity which has been going on has confirmed the broad allocation of this vast preponderance of the activities of the Corporation on the bulk steel-making side.

It is on that point that the Minister for Industry has, since then and before, been engaged in the most intensive discussions with the Corporation and private steel-making interests to try to define the remainder of the activity and how, in terms of the structure of the industry, it should best be seen in future.

Mr. Eddie Griffiths (Sheffield, Brightside)

So that the right hon. Gentleman should not be thought to be misleading the House, would he confirm that his statement refers to the capacity and not the profitability—that the 80 to 90 per cent. is capacity and not profitability?

Mr. Davies

I think that my statement would refer correctly both to capacity and to the investment involved. But the hon. Member is right: the proportions in regard to profitability are not the same.

I have referred to the very heavy work in which the Minister for Industry has been involved in trying, first of all, to determine with what other area he was dealing in the steel industry at large and what was the structure most likely to give a healthy future to the industry in discussions with the various interests concerned.

I sympathise with the anxieties of hon. Members to have precise knowledge of individual plants which concern them in their constituencies, but it is very difficult to meet their requirements at this stage. The work which has been going on has not been an attempt to identify a whole series of individual small plants or to decide on their future. It has been to study the guide lines from which the Corporation, the party primarily concerned, and then the private steel interests, can work in order to rationalise and improve the structure of the industry. Therefore, my hon. Friend has not been concerned with specific individual plants, one by one. He has been concerned with stating broad rules which will be observed in trying to bring about this improvement in structure.

Moreover, it is right to say that the work concerned in putting into effect the conclusions which have been reached is for the Corporation and not the Government. The Corporation is the party which will now discuss with a variety of private interests how to bring about this improvement.

Equally, I am sure that hon. Members will understand that I am in great difficulty in talking about certain projects when there are at this stage only the beginnings of discussions. Very delicate issues are involved. All I can say is that, as soon as it proves possible to deal with it on an individual plant basis, the Chairman of the Corporation is fully seized of the need to do so.

What are the conclusions reached by this study? The first, a very important one, is that the Corporation has recognised that there is a valid point in the view of private interests which are concerned with re-rolling of steel products in not being tied to their principal competitor for the supply of their principal raw material. That is obviously an uncomfortable position.

The B.S.C. therefore understands this point and is prepared to try to find means of accommodating the private interests concerned. It plans to do so in three ways. The first is with regard to a specific case, to negotiate about the future of Guest Keen and Nettlefolds, and the Brymbo Steel Works. The second is to examine with private interests in the steel industry how to set up one or two joint ventures in billet-making with private industry which will give the kind of assurances which are sought. The third, very important, way is to consult with private industry to ascertain what other steps can be taken to make certain that there is fair competition, particularly in high grade billets.

Sir Gerald Nabarro (Worcestershire, South)

My right hon. Friend is aware of what has happened in the coal industry, when important private producers of smokeles fuel, like Coalite or Rexco, have to get their raw materials from the Coal Board. In the event of there being no agreement between the private sector and the Corporation on very contentious issues, are there provisions for arbitration by the Minister, and would he then come to the House with an appropriate instrument for approval of Parliament?

Mr. Davies

At this stage I am seeking to proceed by consent, which I believe is the appropriate way to proceed. There is consent, broadly speaking, on all sides to achieve these purposes. If there should prove to be great difficulty, then I would, of course, have to reserve any action I might have to take at that time.

Mr. O'Malley rose——

Mr. Davies

Time is advancing and many hon. Members are anxious to speak in this debate. I hope the hon. Gentleman will forgive me for not giving way.

In connection with special steels, it has been well known for a long time that anomalies were left by nationalisation. It is now the firm determination of the British Steel Corporation and the private interests concerned to try to resolve those anomalies. A joint statement has been made on this subject by the Corporation and Firth Brown, and this, with further actions which may be contemplated in the sphere of special steels, will help to resolve these anomalies.

A not dissimilar situation exists in connection with wire-making, in which field the industry is fragmented between the public and private sectors. It does not feel itself of a stature and ability to compete internationally as it would wish. Here again, it is the Corporation's intention to seek a rationalisation of the private sector, and this may well give rise to joint operations.

In constructional engineering, in which the Corporation has an important stake—in derivative chemicals; essentially those associated other than directly and physically with iron and steel plants—it is proposed that the Corporation should set up Companies Act companies with a view to attracting private capital into them, that private capital going in by way of direct participation or by mergers which the Corporation would negotiate. Thus, for billets or special steels and constructional engineering chemicals, there will be individual companies set up into which private capital can flow by one means or another.

It is also the intention of the Corporation to set up a holding company, incorporated under the Companies Act, to group together all these joint interests of the Corporation, which itself will be prepared to entertain the introduction of private capital.

By all these means it is hoped—it is a firm purpose which is well understood by the Corporation and the private sector concerned—that there will be a determined effort to reduce as far as possible the very great call of the Corporation on public funds for its finance.

There are certain peripherals about which the Corporation is prepared to entertain proposals for sale at a fair price. These include bright bar, stamping, tool and tool-steel making, small engineering works, industrialised housing and some brick-making.

I take this opportunity to say that everything I have been saying about the restructuring of the industry has the full support of both the Corporation and the private interests involved. I return to what I said earlier; that the intention has been, and I believe is being realised, to achieve a structure in the industry which will stand the test of time, which is an industrially sensible structure and which will give the Corporation and the industry at large an opportunity of progressing without feeling that it is constrained from doing so in an effective way.

Mr. Peter Hardy (Rother Valley)

Is the right hon. Gentleman aware that when any part of the Corporation's undertaking is transferred, either to a joint company or entirely to private enterprise, immediately or soon after the transfer there may be rationalisation and redundancy? The men who are at present working for the Corporation have considerable benefits if they are declared redundant. Will they lose those benefits upon transfer, or will the Secretary of State ensure that they receive firm guarantees that their position will be secured?

Mr. Davies

The Chairman of the Corporation is absolutely aware of the problem which the hon. Gentleman raises and will be anxious to ensure that those interests are looked after. I would find it difficult to give an absolute guarantee on his account. [Interruption.] It is his problem, but he is well advised about it and will certainly be concerned with it.

I will refer only briefly to the additional nominations I have made to the Board of the Corporation. I was concerned to see in one Press report these gentlemen referred to as "watchdogs". I regard them as very valuable proponents of good advice to the steel industry. Sir Matthew Stevenson has a remarkable background in this whole field and has deep knowledge of the relationship between the industry and the Government. Sir David Barran and Mr. Ralph Bateman have profound experience in large-scale organisations which are dependent on external sources for their raw material supplies. They are not only very much welcomed by me but by the Chairman of the Corporation.

Mr. Eric S. Heffer (Liverpool, Walton)

The right hon. Gentleman will be aware that Sir Matthew Stevenson is also Deputy Chairman of the newly constituted Mersey Docks and Harbour Board. How much time will he be able to give to the Mersey Docks and the interests of the Mersey people as well as to the Steel Board?

Mr. Davies

I am sure that Sir Matthew and the other gentlemen to whom I have referred will find it quite possible to be of great positive value to the Corporation in any circumstances—[Interruption.]—and the precise amount of time they devote to these duties is clearly a matter for them and the Corporation.

Having dealt with these rather shorter-term issues, the time has come for us to lift our eyes from the immediate foreground and look at the broader horizon beyond. We must look at the shape of worldwide industry in steel in the years to come, in the next decade or two, and see what part the British industry has to play in it.

That part must be assessed in regard to three big criteria. The first is the requirements of a great industrial country like ours. The second is the amount of resources which a country like ours can put in to the sustaining of an industry of this kind. The third is the need to have due regard to the fortunate access that we have to a highly experienced and competent body of men and women who are equated with the industry.

Several Hon. Members rose

Mr. Speaker

Order. This might be an opportune moment for me to comment on the length of speeches. There is talk of placing compulsory limits on hon. Members speeches, but I am at present against that idea. I believe that the purpose can be achieved by voluntary self-discipline. Over 20 hon. Members, in addition to Front Bench speakers, have indicated to me their desire to speak. I may be able to call all of them if hon. Members impose reasonable self-discipline.

Mr. Ted Leadbitter (The Hartlepools)

On a point of order, Mr. Speaker. May I seek your guidance for the benefit of the House. The Secretary of State gave a firm undertaking that he would comment on the long-term investment policy that will apply to the steel industry. Are we to understand that his final few words were meant to fulfil that undertaking? If not, may I ask you, Mr. Speaker, to ask him to carry out his undertaking?

Mr. Speaker

That is not a point of order for me.

Sir G. Nabarro

On a point of order, Mr. Speaker. Further to your appeal for short speeches, may I ask you to confirm that your strictures apply to the three forthcoming Front Bench speeches and to Privy Councillors? In other words, may we be assured that we shall be treated on terms of parity following your appeal for brevity?

Mr. Speaker

I am not sure that the principle of strict parity would assist the hon. Member. Mr. Michael Foot.

4.9 p.m.

Mr. Michael Foot (Ebbw Vale)

It seems——

Sir G. Nabarro

Only 15 minutes from you, Michael!

Mr. Foot

It seems, Mr. Speaker, that your words may have the effect of curtailing my remarks without my even opening my mouth. Perhaps I might be permitted to say, however, that in my judgment, which may be a very peculiar one, longer speeches from back benchers are sometimes the only way in which back benchers can answer what is said from the Front Benches, and that is one of the reasons why I as a past back bencher, and possibly as a future back bencher——

Sir G. Nabarro

Hear, hear.

Mr. Foot

—think it might well be that we should be very careful about curtailing the opportunity of back benchers to exercise their rights as those on the Front Benches do also.

When I commented on the Secretary of State's statement on Monday he may have thought I was a little churlish in my response to some of his proposals, and I should like to assure him at the very start that I am certainly not actuated by any personal animosity against him. It is hardly necessary for me to say it, but I do say it. I think he is just about the best of the bunch. I see I have almost brought a blush to his cheek. If he is to stick with that crowd he will have to cultivate a brass face like the rest of them. I will assist him, if I may, in the course of my remarks in the promotion of his political carer. Again I assure him that my remarks on Monday were not actuated in any way by a sense of animosity.

If I was churlish, and I should like to rectify that impression, it was in not referring at any length at all—and I am glad to have the opportunity of doing so now—to those parts of the right hon. Gentleman's statement which referred to the Corporation's immediate investment programme. We from the steel constituencies are extremely glad to hear that the Government have agreed that the industry's present investment programmes shall go forward in every particular, as I understand the right hon. Gentleman's statement, along the lines which the Corporation put forward some months ago.

I congratulate the Government on having reached that situation. In other words, the Government now seek to congratulate themselves, and to ask for our approval, because they have reprieved the steel industry and the firms concerned from the threat which the Government themselves made some months ago. That threat is now withdrawn, and I am glad that it is. If I may say so to the right hon. Gentleman, the threat in this respect reminds me of what Talleyrand said of Madame de Stael—although I admit that the likeness is not immediately apparent. Talleyrand said: She greatly enjoys rescuing people she has tried to drown the night before. This is like the right hon. Gentleman: he pats himself on the back because he has agreed to investment programmes which he had previously held up.

None the less we are extremely glad that the whole immediate investment programme in general and in particular has been approved by the Government after the deep studies they have made of the whole subject. I hope the right hon. Gentleman will be the first to agree that that is creditable to the Corporation, in the sense that the deep study the Government had conducted has proved the original case which the Corporation had put forward and which many of us had supported many months ago.

But I am sure the right hon. Gentleman, with his expert business knowledge which I cannot share at all, will agree that the delay is costly. In Ebbw Vale we have been waiting for the go-ahead for a new pickle line. We were ready to go ahead with it six months ago, perhaps nine months ago. Now, we shall get the go-ahead within a few hours as a result of the Government statement. But the extra cost of that proposition having been held up for a considerable number of months is something which the Government should have taken into account when they embarked on the whole exercise, and, of course, the amounts that have been involved in Ebbw Vale can be multiplied greatly in different parts of the country.

So when right hon. Gentlemen tot up the figures and come in a year's time, or six months' time, and instruct us how the Corporation has conducted its financial affairs, they should take into account the fact that some millions of pounds should be debited to the action of the Government themselves in holding up for this period a considerable number of these investment programmes.

I was glad to hear the right hon. Gentleman's statement—which was something I asked for in our last debate, when he said that he would try to give it to me: he has given it quite clearly today, and I am glad to hear it—that the operations of the Joint Steering Group, this constitutional abortion of civil servants and people from the Steel Board being compelled to meet under the aegis of the Government in some vague way to find out what is happening to the industry, is to come to an end in respect of the immediate programme.

The group was a proposition which, as I said earlier, is in my opinion of dubious constitutional propriety, but certainly from a Government which have advocated the advantages of disengagement of Government from industry—and if there are advantages from disengagement they are that responsibilities should not be blurred—everyone should know the responsibility of the Corporation, the Government and the Civil Service. But the joint steering group process is one in which those responsibilities are so blurred that no one can fix them exactly. At any rate, we are glad to hear that it is entirely out of the way now—dead and buried: Joint Steering Group No. 1, dead and buried.

But what about Joint Steering Group No. 2? That is still in operation, or so I understand, and is to continue in operation until the Government have completed the study of the long-term programme. The right hon. Gentleman said in his peroration that he would tell us about the long-term programme, and if the study is as brief as was his peroration Joint Steering Group No. 2 ought to come to an end pretty soon. [Interruption.] Someone says that it finished yesterday.

I say quite seriously that in the interests of the steel industry as a whole I trust that the Secretary of State will use all his powers to bring this method of conducting the industry, or Government intervention in the steel industry, to an end as swiftly as possible. I believe that, whatever may be our political views on the steel industry on one side or the other, this half-and-half affair, with a civil servant presiding over a committee composed partly of people from a nationalised industry, is a method of conducting day-to-day operations which the right hon. Gentleman must surely condemn. I hope that it will be brought to an end as swiftly as possible.

I come to another part of the right hon. Gentleman's statement, over which he skated very skilfully. Again, I do not blame him—I am today looking after his interests, as he knows. He spoke of prices policy. I am very glad that the right hon. Gentleman has made his statement about the desirability of the Corporation having restored to it the right to decide its prices. That is not because I am against, in certain circumstances, Governments intervening in the fixing of prices. If done on a fair basis over a wide range of industry it is a very good idea, in certain circumstances.

What I am thoroughly opposed to is the erratic, arbitrary intervention of price controls by a Government against particular industries, and particular industries in the public sector when all private sector industries are left out of account. So I was glad to hear the Secretary of State say that price choice by the Corporation is to be restored. My simple question is: when? Is it today? Does it start now? Will the Corporation be empowered to make its own decisions on prices, subject to the provisions that prevail under the Iron and Steel Act? I hope that when the Minister comes to reply he will give us an absolutely clear assurance on that subject.

I do not want to trespass into matters which I know are of extreme delicacy. I do not want to cause difficulty in this respect, because it was in this area of price control over steel that the Prime Minister scored his great victory. Whenever we have asked the Prime Minister about price control and what he promised on 16th June, this was the one example he could give. All the rest have been defeats. This was the Prime Minister's single victory in price control. This is the sole Austerlitz on the Arc de Triomphe of our new Napoleon. The rest are all Trafalgars and Waterloos.

So, of course, it is a delicate matter for the Minister to come along and say that the Prime Minister's policy has gone down the drain; that it has ended. He will never be able to use his terrible swift sword of 16th June with all that flourish, because it has gone.

I would give this advice to the right hon. Gentleman—I said that I would help him. I have never been a member of a Government—no doubt that moment of national salvation is still to come. But I would say to him that it is a good rule when a Prime Minister is making a fool of himself not to be the first to point it out, or the last. Try to get lost somewhere in the raucous middle. We all know that he tried his best to stop the Prime Minister doing it but was defeated. We know that he does not want to refer to the matter too awkwardly again. I promise that I will never refer to it again as long as the Government give to the Steel Corporation the same freedom in fixing its prices as is exercised, for example, by Shell. Sir David Barran might be able to bring some interesting information on this to the Corporation. He may be able to explain to them how Shell managed to push up oil prices without Government intervention. I hope that we can dispose of that question, but it depends on the assurance we get from the Government in the interests of the steel industry.

I now come to the hiving-off, or structuring of the industry as the right hon. Gentleman prefers to call it. First I should like to deal with the matter from the point of view of the trade unions. The right hon. Gentleman spoke as if all the responsibility rested with the Steel Corporation. It is easy for him to say that, but it is not fair. The right hon. Gentleman gave me an undertaking about structure on 9th November, 1970. I put it to him that people in the steel industry were concerned about stories which were going about to the effect that the industry would be carved up. I asked him for this undertaking: Will he give a clear guarantee that before bringing to the House any proposals for changing the structure of the industry he will have consultations with the workers in the industry? … His reply was: I will, of course, have discussions with the trade unions involved before any attempt is made to finalise arrangements to the point of bringing them to the House or elsewhere."—[OFFICIAL REPORT, 9th November, 1970: Vol. 806, c. 27.] On Monday of this week, prior to the hon. Gentleman's statement, a meeting took place with the Minister. That meeting, I understand, might have taken place two or three days before, but whether or not it did would not have done much good because the Minister said to the representatives of the trade union that he could not tell them what would be in the statement. The pledge has not been carried out. I do not merely say that. I took the precaution this morning of asking the representatives of the Steel Committee of the T.U.C. whether they thought that the pledge had been carried out. They said the opposite, that they felt that the promise had been broken. That is seri- ous, because the trade unions have an important part to play if any of these structural changes are to be carried through.

These changes in structure ought to be acceptable to the people who work in the industry as well as to those who hope to own them in the future. As far as I can see, very little effort has been made. Today we have crowds of workers in the House from Sheffield. They have come to lobby Members of Parliament, as is their right, because of the statement the right hon. Gentleman made on Monday. If the pledge had been carried out their representatives would have had a chance of discussing some of these matters before. Discussions could have taken place with the unions. It is no good the Minister saying, "Ah, we had to make the announcement here". The point of having consultations was to take some account of their views and not to face them with a fait accompli and to say, "This is what we are determined to do and it has to be pushed through".

The right hon. Gentleman is in danger of damaging the most precious asset which the Corporation can have, particularly when trying to carry out a major development programme, and that is the readiness of the unions to co-operate and to combine in the reduction of manpower in the industry which will be required to make that development programme successful. That is extremely difficult to secure, and these discussions could have helped. They should have taken place in Sheffield and all the other places long before the right hon. Gentleman's announcement.

I come to the question of the attitude of the Steel Corporation towards the structural proposals made by the right hon. Gentleman. I thought he was awkward on this. Very naturally, he says that these are not only the Government's proposals, and we know that no one will accept them on those grounds, these are the proposals of the Steel Corporation. The right hon. Gentleman usually goes into battle behind Lord Melchett's shield, and he is wise to do so. Let us have a look at this. None of us on this side of the House who are interested in the steel industry or come from steel constituencies have ever said that the demarcation line drawn in the nationalisation Act was perfect and that it should never be looked at again, should never be revised or rationalised, whatever may be the phrase of industrial logic used by the right hon. Gentleman.

The right hon. Gentleman is aware that in the days of the Labour Government the Corporation was drawing up certain plans to put to the Government. It had only just come forward with them a week or two before the election, so there had not been any question of whether the Labour Government would accept them in that form. Discussions, including discussions with the trade unions, had been initiated. The Labour Government never said to the Corporation, "You must leave the frontiers exactly as they are, we are not in favour of alterations".

There is all the difference in the world between saying to the Corporation or to the private steel firms, "Here, you can put forward proposals for altering the arrangements and the divisions between us, you can put forward whatever course you wish," and the kind of duress which has been exerted against the Corporation over these past months. In case the right hon. Gentleman should say that there has not been duress, I say in advance that he knows full well that there were discussions first about whether the Corporation should be split in two or split in three. There were discussions then about hiving off the whole of the chemical division or the whole of the constructional engineering division.

Sir G. Nabarro

Hear, hear.

Mr. Foot

I know that some hon. Gentlemen advocated these measures.

Then there were discussions about dividing up the industry on a much bigger basis altogether. So the Corporation is somewhat relieved that the right hon. Gentleman's proposals have shrunk to this extent. Of course the Corporation is relieved. If a doctor says to a patient, "You have malignant cancer and it will have to be cut out" and then tells the patient three or four months later, "It is all right. It is only a severe attack of inflamation of the bowels ", of course the patient is relieved. The Corporation is relieved in this situation. The Corporation co-operates with the doctor in this situation until perhaps it can get a new doctor. That is the best solution to the problem. The right hon. Gentleman knows that that is the position.

Up to a fortnight or so ago the Government were trying to twist the Corporation's arm to such a degree that it should hive off the Rotherham works group. That was under discussion. So there have been discussions of a much wider character. I am very glad that the Government have been forced by the facts of the situation and by pressures from other quarters, also by the way in which Lord Melchett has stated his case against the major measures which the right hon. Gentleman and his friends were suggesting, proposing or advocating, to reduce the extent of their proposals.

I am glad that the big carve-up has been stopped, but it does not mean that we have to approve the small carve-up, particularly as we are not prepared to accept the right hon. Gentleman's statement that the Government have been actuated solely by the attitude of industrial logic and with a desire to make an industrial solution and have not been influenced by political considerations.

I have here the Report of the Steel Industry Management Association, whose representatives saw the Minister for Industry on 4th May. The association is not a Left-wing organisation, as all my hon. Friends know. Representatives of the association asked the Minister for Industry what he was up to. They made very severe protests about everything they had heard about the Government's policy for the steel industry. These are people who have worked in the industry all their lives. Incidentally, they paid some tribute to the way in which the Corporation has reorganised the industry in the past two or three years.

In the discussions the representatives of the Steel Industry Management Association tried to extract from the Minister for Industry a statement about why he was doing it. The hon. Gentleman did not say, "I am concerned solely about industrial logic" —whatever that may be —"and about how we draw the lines." The hon. Gentleman said that the Government was concerned about the growing proportion of the total economy, not simply of the steel industry, within the public sector, and considered that a reduction in the size of the public sector was required in order to redress the balance. That is not just demarcation lines in the steel industry. That is the political gospel of the Minister for Industry. If the Secretary of State would like to know about the others in his Department, I can enlighten him, particularly in view of his manner of dealing with the question of the long-term programme. I shall come to that in a few moments, even if the right hon. Gentleman failed to come to the question of the long-term programme, because I think that it is much the most important part of the whole question.

What we are concerned about is: who is to decide the question of the long-term programme? The Steel Corporation has put forward a good development plan. I do not say that the plan is perfect in every particular. I do not say that it does not have to be looked at. I think it will have to be expanded, if anything. But it is a good programme, and it holds the field.

There are some hon. Members opposite who are not so much interested in that. They may be interested in reducing the size of the public sector, as is the Minister for Industry and as is the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). We remember what has happened in some of our previous steel debates. On 12th June, 1969, the hon. Member for Cirencester and Tewkesbury denounced the whole steel industry because of its size—like these people in the Common Market, and I will come to that question in a moment. The hon. Gentleman said: It is much more sensible to make an investment in a bowling alley than in a steel mill if the investment in the bowling alley will yield the highest return."—[Official Report,Standing Committee A. 12th June, 1969; c. 157.] I am concerned about whether these bowling alley boys will have anything to do with us in the steel programme, because they are not to be trusted. I once called them "popinjays in office". I think that "bowling alley boys" is an even better name. So far from leaving them in charge of the steel industry, I would not leave them in charge of a bowling alley if I had my way.

However, this is a serious matter. The two Ministers in the Department are fervent believers in the idea that there should not be a greatly expanded steel industry, or at any rate that the steel industry must be subjected to even more severe tests than most other industries, or at any rate that the expansion of the industry must not be allowed to go ahead without the same kind of consideration for the return on capital that is given to bowling alleys, bingo halls and all the rest.

That is one of the reasons why we are not content that the right hon. Gentleman and his friends should settle this matter. We want to ensure that the expansion of the industry is undertaken in the interests of a greatly expanded industry. We believe that the plan of raising the programme for the production of steel in Britain to 40 million tons and more is a good one and that it should have Government backing. The sooner the Government make up their mind to give that backing to the Corporation the better.

I know that there are other difficulties that the right hon. Gentleman has to face, difficulties that arise from the prospect of entry into the Common Market. The right hon. Gentleman, almost for the first time in this Parliament—indeed, it was the first time from any Minister—has admitted today that entry by Britain into the European Economic Community would have—I have his exact words—profound effects—enormous effects—on the steel industry and our other nationalised industries.

That is quite true, and I think that we are entitled to try to discover what those effects are. We do not get much assistance from the Government. I quote from the Financial Times of 22nd June, following the last negotiations on steel and coal with the representatives of the Community: Speedy agreement was reached between Mr. Rippon and the Six yesterday on two' easy' issues of the entry negotiations—U.K. membership of the European Coal and Steel Community and British participation in the Common Market institutions. The agreement on the E.C.S.C. was regarded as extremely satisfactory by British officials in Luxembourg. Only minor details now remain to be settled by the Ministers' deputies. The agreement means that the U.K. will be allowed to maintain its existing controls on scrap metal exports for two years after community membership if necessary (Britain had originally asked for five years). I can understand that the negotiations are eased if having asked for five years one agrees to only two years: of course it speeds up the negotiations.

All these matters should have been explained to us. I suppose the abolition of the controls on scrap metal exports will cost the Corporation about £25 million a year, but what is that when the Government have taken about £300 million from the Corporation in investment grants and have done other injury to the abolition of controls on the export of Corporation? I do not suppose the Corporation worries too much about the scrap, although such export has been of great benefit to the industry.

There are many other factors to be taken into account.

I know that the right hon. Gentleman again may try to go into battle bravely behind Lord Melchett's shield and say, "It is no good quarrelling with me about whether we should go into the European Economic Community or what the effects will be on the steel industry, because several people at the Corporation are in favour of this".

That may be. They are free men and are entitled to make up their minds like anybody else. Perhaps they feel— "For the Corporation better the fire of the Brussels bureaucrats than the frying pan of Whitehall", particularly when they have got this lot of Ministers in charge. I can understand their feelings, although I think it is a great mistake.

The matter must be examined much more carefully than that. As we have seen from The Guardian today, the document has been published which was submitted, if this document is accurate, at the nineteenth meeting of the conference at deputy level with the United Kingdom on 5th May.

Coincidentally, on almost exactly the same day as the Minister for Industry was telling representatives of the managers of the industry that he thought that it should be cut in size because he wanted to see the public sector reduced, this document was being presented to the British negotiators in Brussels outlining a whole series of changes which would have to come in the way we conduct our affairs in the steel industry if we went into the Common Market.

I am opposed to Britain's entry into the Common Market, but, whether one is opposed or not, all these documents should have been presented to the House. The right hon. Gentleman may say that it will all go in the White Paper. Very well. If that is his answer, let us have this document printed in the White Paper, and let us have in the White Paper the Government's answers on all the questions about prices, investment and location. These are matters of great concern to people in the steel areas.

One of the major decisions of Governments in the past, Tory as well as Labour, has been to influence or exercise power eventually over investment in such a major industry as steel. They have been right to do that. I do not say that their decisions have always been right, but it is right that they should have the power to do so, because the location of steel plants affects the life of the whole community. This is certainly true in Wales.

How will our entry into the European Community affect, for example, the building a a new steel works in Scotland, in Wales, in the North-East or the Northwest—some of the areas most afflicted by the savage unemployment of today? If our entry into the Community would mean either that we did not build it at all, which might be enforceable under the rules, or that we had to build it at a place convenient to the Community's ideas, that would be a very serious matter.

The right hon. Gentleman must answer all these questions in the White Paper. Of course, if the Government care to answer them tonight, we shall not mind, but let them tell us either now or in the White Paper. Did they ask the Coal and Steel Community to give an absolute guarantee that there would be no interference with the development plan of the Steel Corporation to build up steel production in this country over the next decade to 40 million tons or more? Did the Government ask the question, and, if they did, what was the answer? We want that in the White Paper.

To take a specific example, under the rules of the Community not merely can control of some sort be exercised over the general expansion of the industry but there is power to influence the position of individual products if it is considered that those products have a dominant position in certain parts of the Common Market. We have a good example of that in British tinplate production. The British Steel Corporation produces 100 per cent. of our tinplate requirements. If we want to produce more tinplate in this country, can the Coal and Steel Community interfere if it wishes?

Sir G. Nabarro

Of course it can.

Mr. Foot

Very well. Let that be put in the White Paper. This is of great interest to Ebbw Vale, because the Steel Corporation has given an undertaking under its development plan that we shall have a new tinplate complex in Ebbw Vale. The hon. Gentleman tells us that, if we go into the Community, we may not have it. So people in Ebbw Vale are closely interested in these issues—and not merely people in Ebbw Vale; I instance them only as an example. Everybody in all steel constituencies will in these circumstances have to consider the situation, and, if they are to consider it properly, they must have all the facts in the White Paper, not just a few selected facts.

After this debate, therefore, the right hon. Gentleman should, as one of his major responsibilities, approach whoever is preparing the White Paper and demand that a full account of the negotiations which have taken place with the Community be disclosed and discussed. What requests did the Government make to the Coal and Steel Community? What have been the answers? What are their estimates, and what do they think will be the effect on the Steel Corporation's development plan, which some of the Secretary of State's hon. Friends have been trying to reduce?

What requests have been made to us, and what has been the response? What have been the demands of the Community upon us? What have we agreed? We know that we have already agreed to abolish our own control over the export of scrap, but what about all the other concessions which have been made? They must be listed.

All these matters should have been published before the champagne was drunk—perhaps while they were still on on the cognac. There are some people in this country who say—I do not—that the British people have no right to pronounce upon these matters. In my view, the British people have every right to do so, and they have every right to have all the facts at their disposal. In this debate, we are dealing with a Government who have hobbled and restrained the Steel Corporation during all these months, and we have the right to full publication of all the facts.

Sir G. Nabarro

Get on with it.

Mr. Foot

I was about to finish, but the hon. Member for Worcestershire, South (Sir G. Nabarro) has reminded me of another point to which I should direct attention. It was with the hon. Gentleman's assistance that, during the Committee stage of the Coal Industry Bill we extracted from the Government an undertaking that they would submit to the House of Commons any individual proposal for hiving off a part of that industry. If that is proper for the coal industry, it is proper for steel, and I am grateful to the hon. Member for Worcestershire, South for having ensured that I did not overlook the point.

We are glad that the investment programmes are to go ahead in precisely the manner we urged they should many months ago. We are glad that the Government have abandoned the Prime Minister's erratic and arbitrary method of interfering with steel prices, when he is not interfering with any other prices. We are shocked—if anything done by this Government can shock us now—by the Government's scandalous attempt to proceed with their plans for changes in the structure without carrying out their pledge to the unions. They should have the nerve to come out from behind the shield provided for them by the British Steel Corporation and try to defend themselves. They should, above all, put in their place the bowling-alley boys who would prefer to see Britain escape from its responsibilities towards a major industry.

In short, when the time comes tonight, in voting against the Government we shall be voting for a greatly enlarged and expanded steel production, which we believe is an essential pillar of a healthy British economy.

4.49 p.m.

Mr. Patrick McNair-Wilson (New Forest)

The hon. Member for Ebbw Vale (Mr. Michael Foot) should realise that the mere production of steel, unless one can sell it at the right price, will be of little use to people in the industry.

This debate has been generated by the statement of my right hon. Friend the Secretary of State, that statement being, in essence, part of a trilogy of statements on the industry. Those hon. and right hon. Members opposite who have criticised my right hon. Friend for not dealing with the industry's long-term investment plans should have read more carefully his statement on 28th June, in which he said: In due course, I look forward to completing this series of announcements when the longer-term plans for the industry have been appraised and agreed."—[Official Report,28th June, 1971; Vol. 820, c. 33.] I am happy to wait for that third episode in this important saga when my right hon. Friend and his colleagues have had an opportunity of examining those long-term plans in more detail.

One very satisfactory aspect of the statement, in addition to its being well received by hon. Members on this side, was that it is clear that those Labour critics who suggested that it was a doctrinaire statement, made against the wishes of the Corporation, will, having heard the remarks of the Corporation's Chairman, realise that it is very much in line with the Corporation's thinking and is supported by it. It is not a doctrinaire document at all. I regard it as an important piece of common sense.

I should like first to address myself to that part of the statement which deals with the restructuring of the industry. My right hon. Friend has made it clear that the industry may well look at those areas which are not directly concerned with steel making and examine their future in a critical light. This thrusts into sharp relief the problem of nationalised industries and of the mix between private and public concerns.

There used to be a fashionable philosophy in business circles in favour of the conglomerate business. I believe that it is essential for the nationalised industries to be agglomerate businesses, dealing with those matters directly related to the purpose for which they were statutorily set up. The steel industry was not set up to make cement, bricks or chemicals but should devote its attention to those matters related to steel production and steel sales.

Those who make the most money out of steel are those who sell pins and needles, because more money is paid for a ton of pins and needles than for a ton of billet. The more air a producer can get around his product, the more money he is likely to make. Therefore, I am more than happy to see a nationalised concern getting down into the market, but the market for which it has been given a responsibility. Since there are about £60 million-worth of businesses owned by the Corporation but in no way related to steel, it was high time that a statement such as my right hon. Friend's was made.

I am delighted that the statement refers to flexibility in pricing. It has always seemed to me to be wrong that we should expect a nationalised industry to compete effectively with private industry if we are arbitrarily to fix the prices at which it may sell. It is wise that those prices should be the market prices applying at the time. I hope that the flexibility now being introduced will make certain that we do not again fall into the situation we had last year, when there was a shortage of structural steel and yet we could do nothing about changing our prices to take advantage of the market. I hope that with flexibility there will be an opportunity for the Corporation to reap its reward when that commercial opportunity occurs.

The statement refers to the problems of the billet-makers and the re-rollers, which are major problems. I have here the figures for 1969–70. The 1969–70 sales of semi-finished products which are essentially the sort of products we are talking about, represented 3.8 million tons out of a total of home sales by the B.S.C. of 16.29 million tons. That means that 22 per cent. of all the Corporation's home sales were of semi-finished products. Of these, about 40 per cent. went to one customer, which I understand was also a large potential importer. Such a customer must clearly be in a very strong position to affect the prices of billets. For that reason I am delighted that the statement tells us that it has been agreed that two new jointly-owned companies should be set up.

The investment figures my right hon. Friend has announced are encouraging but, as I said in an earlier debate, they are very small compared with the size of the problem that the Corporation must ultimately face. First, some of the money must go to the replacement of plant. There are 15 works in the country with out-of-date, open-hearth plant. I do not wish to pray in aid the problems of those at the Irlam Steelworks, but within the past two days I was circulated with a document supplied by them, and it sets out in sharp relief the very point I am making. It states: The Irlam blast furnaces were originally operating in Germany and were re-erected at Irlam in the mid-1950s as post-war reparations. They are small and old and cannot produce iron economically. … The No. 1 steel plant with its small 90-ton furnaces was built in the 1920s and, though modernised where possible in recent years, cannot compete against large modern furnaces and particularly against basic oxygen processes. That is common knowledge to all of us who know the industry reasonably well. Those are the problems faced by those who wish to close the works. With that background of small, old plant, much of which came from Germany as war reparations, we cannot hope to compete against the modern plants of the world.

I am advised that there are now about 10 new works overseas with a capacity of over 7 million tons a year. By 1980 there will be another 15. The world is moving towards the bigger plant, but in this country we have nothing bigger than a 3-million ton plant. Much of the money that my right hon. Friend mentioned in his statement will be taken up merely in refurbishing existing equipment, making certain that new converters and the like are put in to replace outdated equipment. But that does not deal with the bigger, long-term problem. Overseas producers are already talking about plant of 16 million tons to 20 million tons a year capacity, with great deep-water terminals to which they can bring their ore cheaply and conveniently, and where the process can be carried out with an economy of scale unlike anything we have ever dreamt of. In that situation, very great costs are involved. A 10-million tons a year plant will cost about £1,000 million, so we can see how, with respect to my right hon. Friend, the figures he has given will go only a very small way. We must face the fact that in the future we shall need a great deal of money.

Therefore, I congratulate my right hon. Friend on his belief that by divesting the Corporation of some of its peripheral activities, which are not directly related to its main purpose—and the Corporation has already sold off bits and pieces which it did not want—we are at least helping to provide money for that essential investment. We must make sure that the whole weight of the new investment does not fall on the back of the taxpayer. From whatever source it can be found, we must welcome that investment money.

My right hon. Friend told us something about the profitability or otherwise of the Corporation. He used the word "depreciation" when referring to the £1,000 million. I was encouraged by the fact that he said that the industry was now showing signs of breaking even. I believe that the Corporation has a great future. I do not think that there is anything in the future which need cause concern to it. Like so many of the great traditional industries—mining and shipbuilding, for example—the steel industry has been under-capitalised in the past. Great changes have come about—for example, the blowing of oxygen converters at Linz in the 1940s and a new way of winning coal at the face without a man with a pick. All these things cost money. I think that we have now begun to take the right steps to ensuring that the steel industry has the money it requires. I believe that, if the industry requires anything at the moment from Parliament, it is that we should leave it at peace and not constantly use it as a political football. Leave it free of political pressure and it will provide the performance we need.

5.0 p.m.

Mr. Frederick Lee (Newton)

I am grateful to the hon. Member for New Forest (Mr. Patrick McNair-Wilson) for his reference to the document produced by the Irlam Action Committee. As he said, it outlines the kind of conditions in which the men at Irlam have to work. It is disgraceful to expect any body of men to be able to compete with modern plant in conditions of that sort. I agree with a great deal of what he said about the need for new capital and about the way in which the industry was starved for so many years in the past and the need to catch up.

I congratulate the Secretary of State on his decision on the capital programme of the British Steel Corporation. As Minister of Power, I made a deep study of the steel industry with the aid of my right hon. Friend the Member for Aberavon (Mr. John Morris), who was then Parliamentary Secretary. We came up with the White Paper of 1965 and, indeed, with legislation. We were ready to embark upon it but other—I will not say wiser—counsels in the. Cabinet prevailed. My colleagues thought that a majority of two was not enough. I did not agree, but the legislation was deferred until after the 1966 election.

My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) asked about capacity. I hope that the Secretary of State will tell us what the Government are aiming at. We still think in terms of 40 million tons. The possibility of achieving such a target, of using a big greenfield site, of building a 10 million tonner, and so forth, all ultimately depend upon what we are aiming at in capacity. While we are happy to know the investment programme for next year, we need to know what the Government are aiming at.

There is great irony in the present policy of introducing private capital. In my day, the problem of obsolete plant was brought about mainly because the private owners either would not or could not invest enough in modern equipment. I recall the argument about the plant in South Wales—the Spencer works, as it is now—which was deferred for a long time by the private steel owners. Consequently, our balance of payments was put in great difficulties because of the amount of sheet we had to import. It is strange that we are now expecting private capital to redress the balance. I asked the right hon. Gentleman on Monday how the Corporation would become profitable from its losses of £100 million by selling off the profitable sections of its enterprise. We cannot expect private enterprise to want to invest in loss makers.

I turn now to the question of the Irlam works. Since 21st April, a black cloud has hung over Irlam. I was hoping that, either in his statement on Monday or in his speech today, the right hon. Gentleman would say something to eliminate some of that gloom. He told us that as yet the Corporation is not in a position to itemise the situation of various individual works. In correspondence on the subject with Lord Melchett recently, I have an assurance that the alternative proposals to shut down—proposals which the trade unions or the Action Committee may be able to make—will be considered very seriously by the Corporation and that the offer made by a private consortium to purchase Irlam and other parts of the wire group is receiving serious consideration.

Following the right hon. Gentleman's statement on Monday, I assume that discussions on conditions of sale are now taking place. That being so, I cannot understand why the announcement of the closure, under which thousands of people are being rendered redundant, is not now immediately withdrawn. How can one discuss with private employers or any other interested parties the future of a great works when they do not know what the condition of the labour force will be within a few weeks from now? Even after all the discussions we have had in this House about the vital importance of labour relations, many employers still do not realise that the greatest asset they can have is a highly-skilled, interested labour force kept together over the years. If the proposals by the trade unions will be seriously considered, and if the offer by the private consortium is under serious consideration, surely the concomitant is to assure the labour force that the announcement of closure, which involves 4,350 jobs being lost, is now at least in abeyance so that discussions can begin from that position.

I have said that the labour force at Irlam is highly skilled and very experienced. I remind the House that it is the Government who decide what is to happen to Irlam and to all the plants. It is time that the people of Irlam were given a public assurance about their position instead of being expected to go on enduring the misery which they have suffered for months now. Strangely enough, until a few days ago, we had never actually been told the real reasons for the threatened closure of the Irlam works. We had been vaguely informed that there were different reasons. For example, the geographical position was cited. Despite the fact that we have been successfully manufacturing steel there for 60 years, it suddenly became the wrong position.

We answered that by saying that we were in the middle of one of the greatest steel-consuming conurbations in Britain, and that over 60 per cent. of our products were sold within a 10-mile radius of the works, and practically all within a 60-mile radius. So the argument about geography was played down. There has been a suggestion of obsolete machinery, and we know all about that. Then there were arguments about loss making, but we have proved that the wire division is profitable, and Irlam is the biggest component of it. Private consortia do not ask for it unless they are sure that they can make pretty good profits from it. Therefore, we answered the arguments adduced by the B.S.C.

In Steel News of 17th June, Mr. Morley, the managing director of the General Steel Division, told us the sole reason for the closure. I ask the House and the country to judge between our case, part of which has been put so well by my friends on the Action Committee at Irlam, and what the B.S.C. has done. I have the feeling that the decision to close Irlam was snatched at, and not at the highest levels. Under the headline: The Reasons Behind Proposed Plant Closures Mr. Morley told us, speaking of Irlam, under the heading "Old Plant": The Irlam blastfurnaces were initially operated in Germany and were re-erected at Irlam in the mid-1950s as post-war reparations. They are old, small and cannot produce iron economically. The open hearth steel plant dates from the 1920s and, although added to in the 1950s, it cannot compete with the newer steel making methods, with the result that the primary end at Irlam is comparatively uneconomic. The existence of low cost capacity at Rotherham and the commissioning of BOS steel making at Scunthorpe in 1973 has led inevitably to our proposals to close both iron and steel making at Irlam. That is the case of the corporation. With great respect to Mr. Morley, he need not have told us about obsolete plant. We knew all about what came in in the 1920s and 1950s. I raised this issue with Sir John James time after time, but nothing happened except for the rod mill being brought along.

I have had a long association with industry, and this is the first time that I have heard advanced the theory that when plant in a great works becomes obsolete the works should be closed down. This is an expensive theory to work on. I may be a little old-fashioned, but I think there is something to be said for ripping out the old plant and getting in new plant. The right hon. Gentleman has made an announcement about the capital which is now at the disposal of the B.S.C, and some of that could be spent on modernising the plant at the old works. The Irlam Action Committee has produced a highly constructive alternative to closure. It would enable a goodly labour force to be employed at Irlam and it would enable the Irlam works to become a highly profitable venture for the B.S.C.

In my speech on 29th April I said that the second phase should not take place but that instead we should begin to build. We should implement the report—which has never seen the light of day—which recommended the installation of two new electric arc furnaces, and probably a third, and we should build on that after the first phase has gone through. On the other hand, a closure would produce the position where, within a short time, the Government would be paying out more in unemployment and other benefits than the B.S.C. would need to expend on new plant. What an utterly ridiculous situation to get ourselves into!

Hon. Members who have read the document to which I have referred will know that the Secretary of the Steel Corporation in a letter of 14th May, 1971, said that the decision was made: … only after the most serious consideration of the social consequences. That almost leaves one speechless.

Reference is made in the document to the Greater Manchester "travel to work" area. Within the last 12 months, unemployment in that area has increased by 50 per cent. If this closure takes place, there will be in Irlam 21.2 per cent. unemployment; between one in four and one in five breadwinners will be out of work. The same will happen in other parts of my division from which steel workers travel to Irlam to work. A general depression and malaise will hit the whole area and, by God, we do not want the 1930s again in Irlam or in South Lancashire——

Mr. Eddie Griffiths (Sheffield, Brightside)

Or anywhere.

Mr. Lee

Or, as my hon. Friend says, anywhere. I do not undstand how any responsible person can say that this decison was made "only after the most serious consideration of the social consequences".

The Government just cannot contract out of their responsibilities. We are not asking the Steel Corporation to take over social responsibilities. I assert, and challenge contradiction, that Irlam is profitable, and can be far and away more profitable given modern plant. When the offer to purchase was made by Schwarz the company said in a letter to the Corporation that the vast majority of the product the company would turn out would go to the export market. If, as the right hon. Gentleman says, he is looking for international competitiveness, the Schwarz organisation believes that it can achieve this in the Irlam works.

I am hoping that the Corporation will have second thoughts. My preference is that the Corporation should stay and that the plant should be modernised. The letter from Schwarz suggested that the Corporation might care to keep a minority shareholding, and that offer should be accepted. In any event, I should like the Corporation to maintain a financial holding in Irlam, and I hope that that will be seriously considered.

This afternoon 300 of my constituents from the Irlam works have been here, and the feeling they expressed to me was that the B.S.C. is not interested in selling to a private consortium. This feeling comes from discussions my constituents have had with the Chairman of the Corporation and trade union organisers. I was very worried about the situation and wrote to Lord Melchett. He assured me that this was not the case and I accept his word without reservation. I assure him and the right hon. Gentleman that my 300 constituents who have been lobbying the House today believe that there is grave apprehension on this matter among the people who work at the Irlam works. It would be unforgivable for an employer to say to men who have worked for a company for a very long time "We do not want to employ you and we will refuse point blank to let anybody else employ you." I hope this issue can be speedily cleared up.

My constituents have followed their fathers into the Irlam works. We have been making steel in Irlam for 60 years. It is a splendid labour force and the works is regarded as almost a family concern. The hon. Member for Manchester, Withington (Sir R. Cary) knows as well as I do that the people of Irlam look on the works as their own. Irlam without steel is almost inconceivable. The people have been bred on it, and it is the work that people want to do. It would be an enormous loss to the B.S.C. to dissipate such a labour force.

The right hon. Gentleman referred to the important matter of finance. I do not decry the rôle of finance since I have had to deal with these matters myself, but this is not only a matter of money. These men have sunk the whole of their beings into steel and it is their whole life. If we are to get a constructive discussion at national level and at Irlam itself, the first thing the Corporation should now do is to withdraw its statement of 21st April and to tell the men that the 4,300 redundancies are now off and that we should now begin again. They will find that there is no dog-in-the-manger attitude at Irlam. We know all about the need to get rid of old plant but, instead of annihilating the labour force and destroying a great works, let us begin again. Let the trade unions and the B.S.C. discuss the matter constructively. Let us examine how, in combination, they can go in for a modernised plant that is capable of giving great and profitable return to the British Steel Corporation.

5.35 p.m.

Sir Robert Cary (Manchester, Withington)

I intervene briefly in the debate to reinforce the eloquent speech by the right hon. Member for Newton (Mr. Frederick Lee. I should like to apologise to my right hon. Friend the Secretary of State for Trade and Industry for not being in the Chamber during his speech because I had to preside over an important Committee of the House and could not be here.

I made a speech on this matter in the House on 29th April on an occasion when the House discussed unemployment and was allowed by the Chair to discuss the question of Irlam. I agree with the right hon. Member for Newton that, if these works are closed, the area of Irlam as a whole will suffer a most serious disability. The total of unemployment in the Manchester area is high enough, and the closure of the Irlam steel works will add another 5,000 to the figure. I said in my earlier speech that a point may be reached when the level of unemployment was unacceptable. It is unacceptable in Irlam. I had the privilege of representing that area before the war. I regarded the township of Irlam as almost a sovereign body with its fine steel works, which was well-employed even though the rest of the area suffered all the disabilities of mass unemployment.

The information contained in the excellent document produced by the Irlam Action Committee should be read by every M.P. who wishes to inform himself about the critical situation which may arise in the area. The document is a superb piece of work. It is cogent, clear, to the point and instructive. Many hon. Members will be familiar with its conclusions, but the simple point to be considered is whether we can afford to see an important area like Irlam, which lies along the Lancashire—Cheshire border, almost to sink through the earth because of the degree of disability that will be conferred on it, which will be tantamount to mass unemployment.

The right hon. Gentleman said that one in five of the 20,000 to 25,000 people in that buoyant, happy town will become unemployed if this closure comes about. The possibilities of the older working population ever obtaining other employment will be almost minimal. I ask my right hon. Friend to consider whether the situation could be partly saved by the installation of two electrical furnaces at Irlam, but to be run at a lower level of profit than would be involved in the installation of such furnaces elsewhere. In any scheme of rationalisation no doubt such electrical furnaces could be installed in some other parts of the country at a higher level of profitability, but a reorganisation of that sort can be a little too concentrated. I would rather see the situation a little more fragmented to enable two of these furnaces to be installed at Irlam, to give employment to up to 2,000 persons. It is important for the Government and for the House of Commons to admit that the social responsibility of maintaining employment is as great as the economic need to make higher profits elsewhere.

Mr. Eddie Griffiths

I appreciate the hon. Gentleman's concern about Irlam, but does he put forward that theory as a new Conservative policy which will apply across the board in other places as well as at Irlam, which I know he loves so dearly?

Sir R. Cary

I am grateful for what the hon. Members says, but I would not be so presumptuous as to pronounce on Conservative policy. I am intervening on the special and single point of the future of Irlam, which was an area with which I was so concerned before the war. To apply what I am now saying across the board would raise other matters involving other Ministries and individuals, and I should not like to trespass on the time of the House.

If my right hon. Friend will look at the matter in that way and will consider again the question of withdrawing the notice to the 5,000 men involved, we could begin again at a new point. There is the question of the morale of the area to be considered. After all, the area is not a thriving one and there is no great upsurge of production on that part of the Lancashire-Cheshire border. This will surely come, but it has not yet happened. I want to save Irlam, which is a town I have known for many years.

I hope that we shall be able to find some solution or even a part solution on the lines which have been proposed by the right hon. Member for Newton and in line with the suggestions made in the document which I have mentioned. If towards the end of the debate my hon. Friend can give some indication that he will invite the Britsh Steel Corporation to look at this matter again he will render a great service to the area concerned.

5.30 p.m.

Mr. E. L. Mallalieu (Brigg)

I think that many of us on this side of the House will have been extremely interested in the very general proposition put forward by the hon. Gentleman the Member for Manchester, Withington (Sir R. Cary), that the social cost of making steel in a particular area is more important than the making of profits by making steel elsewhere.

Sir R. Cary

As important. Not more important; as important.

Mr. Mallalieu

As the hon. Gentleman pleases. That is good enough. I think it will be very interesting to most people on this side of the House, and we shall be looking forward to hearing him propound this proposition on future occasions in other connections.

I shall follow the hon. Gentleman in one respect, and that is in being short. I think five minutes will be enough to say what I have to say on this subject, because I want to deal with only one aspect of the relationship between the Government and the British Steel Corporation. That aspect is the creation of conditions in which it is possible for the B.S.C. to earn enough for adequate reinvestment. By adequate reinvestment I mean enough to produce the steel which is demanded of it and to keep its head financially above water.

I have always thought that it was extremely unfair to bandy accusations about loss in a particular area against the Steel Corporation when at the same time the Government had taken steps to prevent the Corporation from fixing prices which it regarded as economic. I know it is useful, of course, for the Government to have at least one price of which it has been able to stop a rise, especially when it is the price of a commodity so completely basic to all our lives as steel. That is certainly not the way to hold the ring between public and private enterprise, but I must say that the right hon. Gentleman, in his explanation today of the statement he made the other day in the House, did not adopt that, and I personally am very grateful to him for that. He even went so far as to draw attention to many of the difficulties which the Corporation had laboured under in its first months and years of existence—the under-investment which has taken place and which now must be made good, the fact that it was struggling with a new structure, the fact that costs were going up against it, that the engineers whom it employed were allowed to put up their costs against the Corporation but the Corporation could not put up its costs against them. I think myself that it would have been a miracle had it been profitable in the initial stages. As I say, the right hon. Gentleman has tried to put things as fairly as he could, as far as I can see.

The B.S.C. surely needs encouragement. By that I mean that it must be allowed to generate as much funds for reinvestment as it feels it needs at least to maintain its present position, and be allowed to fix its prices accordingly. I welcome the statement about prices which has been made by the Minister and what he had to say about that this afternoon.

This is the point I want to make. Surely, rather than to drive the Corporation further into the hands of the moneylenders, is it not better that it should be allowed, by fixing its prices, as I hope it will be independently in the future—that is one thing I am not quite sure about and upon which I should like reassurance—to generate a very much higher proportion of the money necessary and needed for investment in its own industry than to make the Corporation obtain it elsewhere?

I am certainly not one of those who want to believe that the Government are depriving the Steel Corporation of its means of succeeding merely because the Government do not like the sight of a public corporation which is succeeding. I do not want to have to say that, or believe it, and I do not want to have to believe that, for doctrinaire reasons on prices, the Government do not wish to see the Corporation maintain success. If the Minister does not want these things said I hope he will stick to his guns with his colleagues if necessary.

So, while I very much welcome much of the statement which has been made by the Minister, I still want assurance on one matter, and that is, is the present investment, all of it, going to be intact? Will it be allowed to go ahead? Are the remaining companies of the Anchor project in Scunthorpe to be interfered with, or are they to be allowed to go ahead? If the hon. Gentleman who will reply to the debate can reassure me on this I shall be most grateful.

5.37 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

We have had a long debate on investment and on return on capital in the steel industry. I intervene because I consider Monday's statement as well as the clarification we have had today an important milestone for the future of the British steel industry and a strong steel industry. I therefore intervene to support the action and the second statement by my right hon. Friend. I also intervene because of the consequences which the statement will have, with the large changes in Sheffield possibly affecting 4,500 jobs—or more, so it has been said—and also, because the unemployment level in Sheffield which has risen and is some 3.1 per cent.

Some five years ago my right hon. Friend the Chancellor of the Exchequer, when we were debating steel, said that if steel were to be nationalised the Conservative Government would denationalise it so far as would be possible. My right hon. and hon. Friends on the Front Bench should realise that there are many who expect a Conservative Government to go further as regards denationalising steel and find the setting up of Companies Act companies a poor second best. They want as alternatives, if there is not outright denationalisation, hiving off and outright sale to take place much more dramatically.

To those people who have expressed this view to me, I make a number of comments. First, it is a matter of regret to me that in Sheffield, for instance, as a result of the actions of the last six years the proudest steel company in Sheffield, the United Steel Companies, including Steel Peech and Tozer, Ltd., which, 10 years ago, were among the most successful, the most progressive, the most forward-looking companies, are in the midst of the shambles which we have to retrieve.

Mr. George Darling (Sheffield, Hillsborough)


Mr. Osborn

The right hon. Gentleman the Member for Newton (Mr. Frederick Lee) and my hon. Friend the Member for Manchester, Withington (Sir R. Cary) have been talking about the problem in Irlam.

The right hon. Member for Newton made an impassioned plea about the important spirit affecting the steel workers of Irlam. I wish that his plea had been as assiduous some four or five years ago when many workers in the Sheffield industry were being churned upside down for different reasons. Whereas at one time there was certainty and security amongst management, and on the shop floor, in the Sheffield steel industry that feeling has now gone. The situation is not the result of the past 12 months but of the last three or four years. The events that we are debating today are a direct result of the policies of right hon. and hon. Gentlemen opposite and the very process of nationalising steel. That is why my right hon. Friend has been confronted with an appalling set of problems to resolve. They are problems for which the last Government must accept a share of responsibility.

To those critics who ask why my right hon. Friend has not gone further, I say that my right hon. Friend has taken steps to create a healthy and viable steel industry which are realistic and which can help put it on its own feet. To my critics, I also say that, because of doctrinaire policies and the fact that outright denationalisation brings back once again a threat of renationalisation, it would be suicide to contemplate doing this at the present time. Although I have pressed my right hon. Friend to go further, he was realistic to make the statement that he did earlier this week.

There are those critics who regret that my right hon. Friend did not go further in April and break up the sites of the bulk steel industry. This would have been difficult. Already my right hon. Friend has announced a £100 million loss in the British Steel Corporation. My critics will no doubt say that, because of that, the Chairman of the British Steel Corporation and his Board should not be allowed to remain. Lord Melchett may not be a steel manufacturer. However, in a previous debate I indicated that he had the support of many Conservative back benchers, as well as of many hon. Gentlemen opposite, and there is evidence of understanding and realistic co-operation with my right hon. Friend the Secretary of State.

Sir G. Nabarro

Not everyone.

Mr. Osborn

It may be that my hon. Friend does not share my view, and possibly I shall go some of the way with my hon. Friend later on. Lord Melchett has been criticised for accepting an impossible undertaking. But in my view he should remain in his position, since he and his board, now that it has been strengthened, are coming to understand the problems with which they are confronted. My right hon. Friend no doubt is aware of this growing criticism. However, those closely involved in the industry accept Monday's statement as an important milestone.

There has been criticism from the Opposition Front Bench accusing my right hon. Friend of unwarranted delay and prevarication. That has come especially in previous debates. But surely it displays a lack of appreciation by right hon. and hon. Gentlemen opposite of the changing conditions that have resulted from their own actions when they were in Government. The actions of four years ago have created the problems that we face now.

I shall discuss the restructuring of the industry and the likely changes in Sheffield in more detail presently. But my hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) asked for the steel industry to be left in peace. I am one of those Parliamentarians who deplore the need for a series of statements followed by emotional and, to many outsiders, irrelevant debates about an industry whose future should be so much better decided outside Parliament by businessmen and management.

Sir G. Nabarro

These statements of pious intention may be of academic value. They are of no value to hon. Members on both sides of the House who want proper accountability for publicly-owned industry where vast sums of money are invested. Like many other Conservative hon. Members, I do not accept that the steel industry is inviolate and must not be debated in Parliament or criticised when the occasion arises.

Mr. Osborn

My hon. Friend is entitled to his opinion, but I agree we have to accept that the steel industry is nationalised and is now and has been in the cockpit of politics.

The hon. Member for Ebbw Vale (Mr. Michael Foot) spoke about Steering Committee No. 1 and Steering Committee No. 2. Right hon. and hon. Gentlemen opposite should decide where they stand. The object of nationalisation is ownership by the public of the means of certain types of production, which, in the case of the steel industry, means steel. The very consequences of that lead to ministerial control. There will be machinations of Select Committees and convulsions in parliamentary debate. There will be, as I see it, more steering committees. But they are no substitute for proper management, outside Parliament, where the disciplines of the market apply and where the supply of private capital provide those disciplines.

My right hon. Friend has been criticised for not permitting full price increases. In the circumstances, he had no option but to allow an increase of only 7 per cent. as against 14 per cent. So long as the industry is making an annual loss of £100 million, I have to agree with my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) that my right hon. Friend has no option but to act as banker and to balance the interests of shareholders, in this case the taxpayers, against those of the consumer.

Disengagement has been pressed by hon. Members on both sides of the House. I should welcome a trend towards disengagement. But that means a diminution of public investment in the steel industry. A number of hon. Members have referred to the need for capital expansion on a vast scale. We have been assured that £225 million is to be spent this year on a continuing and rising programme, which represents an increase of £40 million on the figure of £185 million that we discussed previously. This will involve the House in increased borrowing powers which we shall be discussing after this debate.

My hon. Friend the Member for New Forest talked about markets for the steel produced and the need for a large green acre site for the 10-million ton plant. In that connection, I ask my right hon. Friend a number of questions. What are the forecasts of output of and demand for world steel? What are the forecasts of steel production and demand in Europe? How accurate and relevant is the forecast of 43 million tons in this country by the mid-1980s?

The House ought to have more knowledge of the plants which are competing against British plants. I have asked questions about this, and I have been referred to "Iron and Steel Works of the World", a book which it to be found in the Library. However, I want to draw my right hon. Friend's attention to an article in The Times by Mr. James Tayler, an economic consultant, headed, Is B.S.C. taking a £2,000 million gamble?", in which it is said: In such circumstances it would (unless B.S.C. can produce sound detailed reasons to the contrary) be imprudent to bet on any considerable increase in the rate of domestic steel accumulation. This is but one article among many which advise caution in the future capital investment programme for steel. A number of my hon. Friends have drawn attention to the importance of the capital investment programme. However, the markets for the steel industry, when that investment has been made must be certain and sure if there is to be return on capital.

Reference has been made to the negotiations to join the European Coal and Steel Community. The British Steel Corporation is the largest steel company in Europe. The second largest is Auguste Thyssen Hutte, whose production is between 4 and 4½ million tons. The British Steel Corporation enjoys a virtual monopoly position, especially in this country. Ultimately, I believe that the General Steels Division will be found to be too large. However, for the present, I accept the decision made this April that the bulk steel industry should remain in public hands.

The position of the re-rollers in Sheffield and elsewhere has been recognised, and that must be welcomed. The jointly owned Companies Act companies are to be welcomed, as is the fact that billets are to be made available from sources other than the British Steel Corporation. But fair competition will not be the case because, although the re-rollers will have alternative sources of supply, private enterprise billet producers will still be in competition with public enterprise billet producers, though there may be some joint shareholding. The issue of unfair competition will be with us for some time, and I very much hope that my right hon. Friend will consider further measures to deal with this situation.

I come next to the position in Sheffield where last night considerable concern was expressed by shop stewards about the announcement that had been made. The Sheffield Star, in its leader under the heading Steel: The price of efficiency said: Both the British Steel Corporation and Firth-Brown will gain from the sorting out of the areas in which their activities overlap. But unfortunately the casualty list is a large one for Sheffield to face. It has been implied that the unions have not been consulted. Can my hon. Friend clarify the position? The negotiations are starting. They are not complete. I appeared on a television programme last night, and I gained the impression that the go-ahead had been given for negotiations to take place to bring about a rationalisation between Firth-Brown and the B.S.C., but that nothing had been signed, sealed and delivered. I hope that my hon. Friend will clarify the position because, as I understand it, there is still time for consultations. As I see it, all that has happened is that the go-ahead has been given in principle.

Rationalisation between Firth-Brown and the old English Steel Corporation has been talked about for years, even before nationalisation. To have two forges of similar size competing with each other has proved to be illogical in the last decade, and in fact even since the war. Rationalisation between those two organisations is the logical—[Interruption.]—if the hon. Member for Bassetlaw (Mr. Ashton) will allow me to go ahead with my speech, no doubt he will get an opportunity to make his own later.

The Corporation has gained an importan asset in the Shepcote Lane Rolling Mills, and it will be an almost monopoly producer of stainless steel strip. On the other hand, the old English Steel Corporation, now the River Don works of the British Steel Corporation, will retain a large heavy forge, and this will in no way be competing with the lighter and medium activities at Firth-Brown. As I see it, the bargain is about 50–50, and Firth-Brown has not gained unduly from the public sector, but it will be interesting to note what the bargain is when the negotiations have been completed.

Mr. Eddie Griffiths

The hon. Member is very fond of talking about the monopoly enjoyed by the Corporation with regard to Shepcote Lane. Why does he not tell the House that the transfer of the River Don Works to Firth-Brown will give it a monopoly position in that sphere?

Mr. Osbora

Will it? But I am talking about rationalisation. In a European context, that will be far from the case.

Sir G. Nabarro

We are not in yet.

Mr. Osborn

I think that we would welcome——

Sir G. Nabarro

Having said it first from a sedentary position, I wish to repeat loud and clear from a standing position that we are not yet in Europe, and to presume that we are is a little more than imprudent in present circumstances.

Mr. Osborn

Perhaps I may continue with my speech after that intervention, because what I have stated is relevant whatever the outcome of the Common Market negotiations.

Sir G. Nabarro

A very good one.

Mr. Osborn

Various other announcements have been welcomed. The fact that construction, chemicals, including the wire group, are to be Companies Act companies is welcomed. But what has happened to the Corporation's intention to establish industrial estates? Surely that is an activity, which was promised for the Renishaw area, that could be hived off and exploited by someone else?

If I may conclude, my right hon. Friend has had to make difficult decisions. In some directions he has not gone far enough, and I regret the inheritance that he has had to face. In spite of the intervention of my hon. Friend the Member for Worcestershire, South, I suggest that we are debating an issue with which the House is ill-suited to deal. How much more fortunate are the large companies, such as I.C.I., Unilever, Shell, Imperial Tobacco, and so on, which can go ahead with their own business without interference from the State or elsewhere. I therefore welcome my right hon. Friend's statement and look forward, at the end of this year, or early next year, to a further statement provided providing for the complete restructuring of the industry, and outlining the long-term capital investment programme.

5.56 p.m.

Mr. George Darling (Sheffield, Hillsborough)

The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) has been talking about his critics. The critics to whom he referred are those who criticise the Government, and perhaps himself as a Conservative Member of the House, for not going further with the denationalisation of the steel industry. I assure the hon. Gentleman that after his speech his critics will come from the right, left and centre in Sheffield, because his disregard of the facts is typical of the economic essays which he tries to inflict on us both in the House and in Sheffield.

The idea that the steel industry has been until recently a free enterprise industry, free from public control, and that only Labour Governments have interfered with it is a lot of nonsense. The steel industry has been under a measure of public control since 1932, and it had to be because a competitive, free enterprise system could not go ahead with planning and developing a steel industry on the lines and of the shape that the country required.

The hon. Gentleman spoke about Steel Peech and Tozer having a better organisation and a more profitable future before it was nationalised, and said that it is now a shambles. What he did not say was that it was originally part of the ramshackle empire which Clarence Hatry built up. That is another indication of how he gets away from the true facts of the case.

Mr. J. H. Osborn

Do I take it that the right hon. Gentleman is implying that the United Steel Company was a ramshackle company before it was nationalised?

Mr. Darling

I said that originally it was part of Clarence Hatry's ramshackle empire. During the war it had to get on with the job in a better way, and in the period of nationalisation after the war it was put into better shape, and it has since been progressive and profitable.

I intended to be brief, but I can be briefer still because of the excellent speeches of my right hon. Friend the Member for Newton (Mr. Frederick Lee) and my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot).

I want to correct one observation made by the hon. Member for Hallam, and then to concentrate on one or two of the omissions from the Secretary of State's statement and his speech today.

The first issue that I propose to raise is that of profits and prices. I put down Questions to elicit information. The Minister for Industry replied, and as he produced the figures I am sure that they are correct. I want to get rid of the idea that after nationalisation the 14 major companies that were taken into public ownership were less profitable than they were before. The Minister provided me with the figures. I will not go into detail since they are recorded in HANSARD for 8th April this year. They show that in the year preceding nationalisation the 14 companies made a profit of £23 million after depreciation, and in the year after a profit of £26 million after depreciation.

Of course, what was going on was a general expansion of trade and business, and one would expect that the profit figures would be very much the same. They were certainly not sufficient either before or after nationalisation to provide the Corporation with the capital out of profits which was needed for expansion. Something had to be done, and, of course, public funds come in to provide for developments. I am very pleased that the short-term investment programme is now to go ahead and that the Government are providing the necessary finance.

I also asked for information on prices, which is provided in a Written Answer on the same day. The idea that the Corporation was making these losses because it was not competitive in European markets is, of course, untrue. If we compare the prices of the main items of steel production at home with those of the steel industries of the Common Market countries we get some interesting results.

On the figures up to March of this year the price in West Germany for billets is 17 per cent. higher than the price in this country, in France it is 9 per cent. higher and in Belgium it is 20 per cent. higher. For medium plates the West German price is 23 per cent. higher than ours, the French 26 per cent. higher and the Italian 14 per cent. higher. On heavy plates in West Germany the price is 35 per cent. higher than ours, in France 32 per cent. higher, in Italy 20 per cent. and in Belgium 29 per cent. higher.

For beams the prices were even higher than the ones I have given, going up to 43 per cent. higher in the case of the Luxembourg steel industry. Only for reinforcement steel and hot rolled strip are European prices at much the same level as, or marginally lower than, B.S.C. prices.

This is a measure of the efficiency and not the inefficiency of the British Steel Corporation. If prices are to be a guide, the Corporation is the most efficient steel producer in Europe. But these prices are artificial, because the Secretary of State prevented the Corporation from having the prices which its circumstances required. This is why the Corporation got into difficulties.

The Secretary of State knows all the facts. He knows very well that if there had been selective price increases which the Corporation wanted—I agree with him that it should not have been across the board—we would not now be talking about a £100 million loss; we should still be talking about the Corporation making a profit this year.

There are other omissions to consider, for instance, I hope that the Minister for Industry will tell us a little more about how these joint companies that have been mentioned will be set up. Who will exercise control over them, and deal with the peripheral areas which will be hived off? Who will be the shareholders, and what kind of control will the shareholders exercise if they are to be registered under the Companies Acts? We require answers to all these questions: we need a good deal more information.

I was glad to hear the Secretary of State say that he wanted to elaborate on the bald statement which he made on Monday. My goodness, it was bald. It was full of omissions—if I may use that phrase. There are many items on which we need more information.

One such is scrap. For years the steel industry, under both private and public ownership, has been operating a scrap arrangement which requires very serious examination. It is a system which the Corporation inherited, whereby three major scrap processing firms are given —what do they call it?—a commission. They are supposed to be the advisers, I think——

Mr. O'Malley


Mr. Darling

—yes, consultants on scrap supplies. On every ton of scrap which goes into steel works they draw, or used to draw, 9d. a ton for giving advice. I do not know what it is now. How does the advice work out? Again, one of the Minister's colleagues gave me the figures. I can quote them from memory. The amount of steel scrap, some of it low grade scrap, for which we paid high grade prices—[Interruption.] Yes, this can be proved. If the Secretary of State looks at some of the trade journals and sees photographs of some of the low grade scrap which is coming in from America and for which high prices have been paid, he will see that I am not exaggerating. We have been paying for American scrap twice the cost of home-produced scrap, when there has been plenty of scrap in this country available for the steel works. There may be reasons for it, but no one has ever explained them to me, and I consider that this needs to be inquired into.

I am glad that the Secretary of State is now considering having a free market for scrap. This may come as a shock to some of my hon. Friends, but, although I do not mind control of the scrap business provided that it is proper control honestly exercised for the benefit of the industry, I would rather have a free market than the arrangement which operates now.

Mr. O'Malley

I assume that my right hon. Friend would not want a situation in which the electric arcs in Rotherham, for instance, would be paying £3 a ton more for scrap than they are at the moment—as would happen if we were under the scrap arrangements which exist in the E.E.C.

Mr. Darling

I do not know what the price would be——

Mr. O'Malley

Three times as high.

Mr. Darling

I am not suggesting that we adopt the E.E.C.'s scrap price arrangement——

Mr. O'Malley

They are.

Mr. Darling

All I want to ensure is that we do not go on importing this very expensive American scrap when we have scrap in this country——

Sir G. Nabarro rose——

Mr. Darling

Now, Gerald, sit down: let me get on.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Gerald is not my name.

Mr. Darling

I am sorry, Mr. Deputy Speaker, but what I said had the desired effect.

Sir G. Nabarro

The right hon. Member is being very equivocal in what he is saying about scrap arrangements. It is evidently the policy of Her Majesty's Government to go into Europe. If we go in, the position will pertain in regard to scrap exactly as his hon. Friend the Member for Rotherham (Mr. O'Malley) said. Will he not confirm that?

Mr. Darling

I do not know whether we are going into Europe or not. I am not discussing that issue. I am discussing the price of scrap at the moment.

I should now like to turn to the situation in Sheffield. Some of the remarks of the hon. Member for Hallam will, I think, be contradicted in a few moments. I could hardly believe my ears when the Secretary of State said that it was unreasonable to suggest that his statement on Monday had created any uncertainty. I do not know what the Secretary of State thinks about the state of mind of the Sheffield steel workers just now. They received his vague, uncertain and ill-advised package of proposals with dismay, apprehension and, as the hon. Member for Hallam said—if he quoted the local newspapers correctly—with disgust. This is typical of the way in which the Government have been handling the issues involved in the reorganisation of the steel industry.

The right hon. Gentleman said in his statement—a statement which he has not since amplified to any degree—that steps were under negotiation to strengthen the Sheffield steel industry. He did not give even a rough indication, when that statement was made on Monday or today, of what is in store for Sheffield.

Mr. J. H. Osborn

Let us get this right. My right hon. Friend actually said: First, in the boundary area between B.S.C. and private industry, agreement in principle has been reached between the Corporation and Firth Brown Ltd. as to the initial steps necessary to rationalise their overlapping interests."—[Official Report,28th June, 1971; Vol. 820, c. 34.] That is not what the right hon. Gentleman just said my right hon. Friend said.

Mr. Darling

Of course it is. If I had been given the job of providing a vague, inconclusive and more or less meaningless statement, I could not have improved on what the Secretary of State produced. There was nothing concrete in what he said.

The right hon. Gentleman as good as agreed that his proposals were being received in Sheffield with great concern. The people there are anxious to know what will happen. We are told, for instance, that the B.S.C.'s River Don drop forge plant will be merged with the Firth Brown forge next door and that it will be the B.S.C. plant that will be closed. We are also told—no evidence has been provided on this score—that the River Don plant is the older one, that it is relatively inefficient compared with the Firth Brown plant, that it should therefore be closed down and that some ancillary activity will also be closed down. We do not understand what this means. How much plant is to be closed down?

The figure of 4,000 to 5,000 redundancies came not from the trade unions but from the officials of B.C.S. They are clearly contemplating closing down more than the forge at the River Don plant. We want to know the economic reasons for it. Neither the Secretary of State nor his colleagues in the Government have the right to place the steel workers of Sheffield in this state of uncertainty.

No evidence has been provided to hon. Members and the Press, let alone the workers of Sheffield, about what these proposals will mean and how the workers will be affected by them, and the trade unions have not been consulted over these proposals.

Mr. J. H. Osborn

They have known about them for years.

Mr. Darling

The hon. Gentleman's interruptions are only prolonging my speech. Perhaps he would care to ask the unions whether they have known for years about these proposals and the circumstances in which the changes are to be brought about. I assure him that the trade unions have not known about this package of proposals.

Mr. Joseph Ashton (Bassetlaw)

My father is among those who are likely to be made redundant as a result of these proposals. I assure the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) that he has not been aware for long, certainly not for years, of these proposals. I, too. worked in the steel works there for many years before coming to Parliament. There has been confusion for a long time, but to say that the situation has been known for many years is arrant nonsense.

Mr. Darling

It is true to say that the unions have appreciated for a considerable time—not in the terms used by the Secretary of State but in far more constructive terms—that some of the steel plants in Sheffield, and especially those concerned with re-rolling and special steels, required rationalisation. Indeed, the I.R.C. arrangement based on Brown Bayley's was designed to provide the nucleus for such a reorganisation or rationalisation of what we euphemistically refer to as the private steel concerns in Sheffield. I say "euphemistically" because most of them have some public money in them in one way or another.

The trade unions have been in favour of these rationalisation arrangements because they are not Luddites. However, they have adopted a different approach from the Secretary of State's. They have said that if reorganisation must come—they have agreed to it in terms of new technology and techniques—and if, as they expect, between 5,000 and 7,000 redundancies must occur, then that must happen over a proper time-scale. They insisted, and received assurances from the Corporation, that these technical changes should be phased and that as much as possible should be done to bring in new job opportunities so that serious redundancy and hardship should not occur.

However, all that has now gone by the board. If the Secretary of State expects the steelworkers of Sheffield to give the new set-up the sort of co-operation they have given in the past, he will have to change his policies and adopt an entirely new approach to the problem.

The Minister for Industry's cavalier treatment of what he called "consultation" will be known to the Secretary of State. The trade unions feel that they have been treated with undisguised contempt by the Government, who now have an opportunity to put things right. I trust that when the Minister replies to the debate he will say that proper consultation will now take place.

What do we mean by proper consultation? It is not a matter of informing the unions and their leaders of decisions already taken. The union representatives must be brought into meaningful discussions before decisions are reached. Their views must be sought. I do not share the view of the hon. Member for Hallam that all the managers in the steel works in Sheffield are such paragons of efficiency that they have nothing to learn.

One constant factor ever since the steel industry was first established in Sheffield has been the quality of the steel workers, who have a great deal to contribute in the future, just as they did in the past, to the making of decisions affecting this industry, and their views should be heeded. As against that constant factor, we have had the inconsistent behaviour of management, some of whom have been good, some bad and many indifferent.

I must issue a word of warning to the Secretary of State. Next Friday evening trade union officials from the steel and engineering industries in Sheffield will be meeting to discuss the situation that has been created by his proposals. They will have in mind the uncertainty that has been aroused and the fact that the future of many of the people they represent is in jeopardy. I am sure that they will make a demand for proper consultation, and this will mean providing them with the necessary information they want.

This information must include all the evidence about the need to make the changes that the Government propose. They will require proof that these changes should be made. They will want to see all the evidence, including the balance sheets, and financial statements, and they will want some idea of the state of the order books and future prospects.

They want a guarantee that their views will be listened to, and that any contribution they care to make will be taken into consideration before decisions are made. If they cannot get a guarantee that that sort of consultation will now go on, and that no other changes will take place in Sheffield until those consultations are undertaken, there will be trouble. I shall be present at the meeting, and I will support—and indeed actively encourage—any action that those trade union leaders there may care to take in order that their demand for full consultation is properly recognised and the guarantee for which I am asking is given to them.

As the Secretary of State knows, I am not given to making immoderate statements, and he will appreciate that I feel very deeply about this issue. I must therefore warn him that unless the workers of Sheffield are to be properly treated from now on, he is asking for trouble in putting forward these proposals and ignoring the undoubted rights of trade unionists, as has obviously been the case in the proposals for which he is pressing. I repeat: the right hon. Gentleman is asking for trouble unless we get the assurances for which I have asked.

6.20 p.m.

Sir Gerald Nabarro (Worcestershire, South)

It is now more than 20 years since the Labour Party nationalised the steel industry for the first time, and the narrow majority in this House in February, 1951, gave it a mandate to do so. But the General Election of 1951 overtook the intentions of the Labour Party and, effectively, the industry was never completely nationalised.

In the 'fifties such parts as were in public ownership, except for Richard Thomas & Baldwins, were denationalised through an instrument called I.S.H.R.A. In 1967 the Labour Government proceeded with complete nationalisation, save only a private sector of about 5 per cent. of the total industry.

I was one of the 11 Conservative Members who sat throughout the marathon Standing Committee on the steel nationalisation Bill in 1967, reported in 2,569 columns of HANSARD. Every Conservative Member on that Committee, save only two, are now members of the Government. My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) was for special reasons excluded, and, due to an aberration on the part of the Prime Minister, I have been excluded. I forgive my right hon. Friend that, especially when my hon. Friend the Minister for Industry comes to the House with intelligent proposals for dealing with a most unsatisfactory position in one of our most important industries. All of us gave as our unanimous view in 1967 that the structure for nationalisation created by the Labour Party was grossly impracticable. Events have proved that we were exactly right.

It is no good going back to the period immediately before nationalisation for an estimate of profits that the 14 now nationalised steel companies then made, because they were then under a threat of nationalisation which affected the whole of their judgment and the whole of their output. To make a proper comparison one has to go back about 10 years, when those 14 companies were operating fully as non-publicly owned major companies in the private enterprise sector. Those 14 companies in the year 1960–61 made a profit of approximately £100 million before tax: this year the same companies make a loss of £100 million after depreciation. That is a true and valid comparison—[HON. MEMBERS: "No."]—between private enterprise operation and the operation of nationalised undertakings.

It is always a feature of nationalised undertakings that they lose illimitable sums of the taxpayers' money: £450 million of Coal Board losses have been written off; £420 million of railway losses have been written off. No doubt 10 years hence there will be £1,000 million of steel losses written off, because steel, as a highly competitive productive industry in the international field, is singularly ill suited to public ownership.

But we have to take the Tory Government as we find them and we have to take the nationalised steel industry as we find it. The Tory Government in their statement of 28th June have announced two intelligent things which are exactly in consonance with their election promises. First, they seek to inject substantial sums of private capital into a major sphere of the present nationalised steel industry undertakings. I refer to constructional engineering and chemicals.

I am not sure how the Government will attract the private capital. It will be very difficult to attract the private capital and the private investors if the British Steel Corporation owns a majority of the shares in the new Companies Act companies, as they are now called, which are constructed. No private investor will put money into a company of this kind, a sort of hybrid, if he feels that the return on his capital will be overlooked by a character like Lord Melchett.

I do not approve of Lord Melchett. [Interruption.] I am glad that there are many hon. Members opposite who do not approve of Lord Melchett [HON. MEMBERS: "Where?"] Perhaps I may continue. The right hon. Member for Aberavon (Mr. John Morris) keeps bawling at me, but he can make his own speech in a few minutes. I have listened to his leader in this debate for 38 minutes and to my own leader in this debate for 38 minutes—76 minutes combined, in response to Mr. Speaker's invitation for brief speeches.

I do not approve of Lord Melchett as Chairman of the British Steel Corporation. I should have preferred the Chairman of the British Steel Corporation to be a person versed and experienced in the making of steel. [HON. MEMBERS: "Sir David Barran?"] No, I do not approve of Sir David Barran being appointed to the Corporation. I think that one of many things wrong with U.C.S. was the fact that we did not appoint to the top executive positions men who knew how to make ships, and the steel industry ought to be run by men who know how to make steel.

My point is that the private investors sought by my right hon. Friend for these new Companies Act companies—admirable and pious though the intention is—are not likely to be attracted unless he secures that the private investors are in the majority and that the steel Corporation is in a minority. I do not believe that he will be very successful otherwise. I do not want Lord Melchett overlooking the private investment, the return on capital, the distribution of dividends, and the rest. However, I congratulate my right hon. Friend on an intelligent venture in these new companies. It is one way of injecting commercial methods, new capital and an element of private enterprise into what has been a high monopoly, publicly owned industry.

The second matter on which I congratulate my right hon. Friend is his statement in regard to the so-called peripheral activities. I hope that they will be a good deal larger than he indicated on 28th June, when he stated: Fourthly, the B.S.C. sees industrial advantage in disposing of a certain number of peripheral interests at a fair price: these include its bright-bar, stamping, tool and tool-steel making, a small engineering works, some industrialised housing and certain of its brick-making operation."—[Official Report,28th June, 1971; Vol. 820, c. 35.] They are not very significant. Even the hon. Member for Ebbw Vale (Mr. Michael Foot) could not get very excited about them. Page 8 of the Corporation's Annual Report and Accounts for 1969–70 shows that the share of the market occupied by forgings, for example, is 15.6 per cent., by bright-bars 9.3 per cent., by tool and magnet and high speed steel 7.3 per cent., and by castings, 7.7 per cent.

These are relatively very minor activities compared with the general run of steel making, which is a heavy industry, and this is the light end of the industry. It will not command very much support because it is so small, and I do not think that members of the Opposition need get as steamed up about it as they did about the proposals to hive off certain of the National Coal Board's peripheral activities.

Here I join forces again with the hon. Member for Ebbw Vale. In a combined exercise in the Standing Committee on the recent Coal Industry Bill we defeated the Government to assure proper accountability for these hiving-off operations. In other words, I say to my right hon. Friend that when he wants to sell the small engineering works he should present a Statutory Instrument to the House so that it can be seen to be a respectable operation. I hope that he will not carry it out surreptitiously—sub rosa—from the bureaucratic fastnesses of the corridors in his Ministry. I want my right hon. Friend's nefarious activities to be seen to be above reproach, because my right hon. Friend is always above reproach and I want him to act in a manner which is above reproach in this matter.

Therefore, I support my right hon. Friend's ventures in the steel industry, but I do not regard them as highly significant or even very important. I propose to address myself to two points which are of fundamental importance.

First, I hope that in the next few months my right hon. Friend will tell the House something about the Government's plans for increasing the output of steel in Britain. I want to know whether it is really the intention of the Corporation, fully supported by Government policy, to raise our output of steel from its present turgid level of approximately 28 million ingot tons this year to a figure of 45 million ingot tons about 10 years from now, having regard to what is happening among our principal international competitors.

It is probable that the figures that I now quote will not be known to every hon. Member listening to me, but they are figures of the greatest importance to all men and women who have the future fortunes of British industry at heart. In 1961 Britain produced 22 million ingot tons of steel; Japan produced 28 million ingot tons of steel. Thus, Japan's output was about one-quarter larger than ours.

The recorded figures for 1970 are as follows: Britain turned out 28 million tons of steel, an increase of 6 million tons over the 1961 figure and a figure equal to Japan's output in 1961, but Japan turned out 93 million ingot tons in 1970. In other words, in a single decade Britain's steel output has increased by just over one-quarter—both parties have been in power for roughly equal periods during that decade—but Japan's steel output increased by 232 per cent.

Mr. T. H. H. Skeet (Bedford)

Will my hon. Friend compare the growth achieved by the two countries, because if there is growth in the economy there will be a vast expansion in the output of steel?

Sir G. Nabarro

The growth in Japan's economy in the last 10 years has been enormous. No doubt this great increase in the output of steel in Japan can be attributed in some measure to the great advances Japan has made in the launching of new ships, notably mammoth tankers, which take large quantities of steel. However, I am not talking about a general economic comparison. I am now talking about the steel industry. In the 10 years 1961–70 Britain increased her steel output by one-quarter and Japan increased hers by 232 per cent.

People sometimes say to me that Britain has to belong to a large group such as the European Economic Community to grow. My right hon. Friend uses over and over again—ad nauseum, with utter monotony—the word "dynamic"; he is always talking about dynamic growth if Britain enters Europe. I say to my right hon. Friend and others who talk in like vein that Japan is not part of a larger group. Yet Japan has achieved this phenomenal increase in economic growth in the last 10 years. There has been an increase of 232 per cent. in the output of steel in Japan compared with an increase of 25 per cent. in Britain. In other words, the growth of the Japanese steel industry is 10 times faster than that of the British steel industry measured 1961 to 1971. That is all that I have to say about it. I am sad to relate these grievous figures.

I turn to my second and last point. My right hon. Friend made a splendid, incisive and, in response to your request, Mr. Speaker, very brief speech lasting only 38 minutes in opening the debate. He was not very forthcoming on the question of the European Economic Community. Let me state beyond peradventure—this cannot be faulted—that if Britain joins the European Economic Community and becomes a member of the European Coal and Steel Community all prices for British steel are controlled from Europe—from Luxembourg, to be precise—all output of British steel is controlled from Luxembourg, the location of all new steel works is controlled from Luxembourg, and every other facet of the operation of our basic coal and steel industries is utterly in the hands of European bureaucrats, including scrap.

Mr. Leadbitter rose

Sir G. Nabarro

Mr. Speaker is watching closely. I will give way, but keep it short.

Mr. Leadbitter

I will keep it short. What I rose to say was "including the rate of expansion in the industry".

Sir G. Nabarro

I concede at once that among the matters that would be controlled from Luxembourg would be the rate of expansion of the steel industry. We are bound hand and foot by Luxembourger bureaucrats: we have no autonomy or independence whatever in the conduct of this basic industry once we sign the Treaty of Rome.

I wish to make this important point today. I just want my fellow countrymen to understand that we are handing over, utterly, the control of our most important industries, coal and steel, to distant and remote jurisdiction from Europe.

The Guardian has it quite right this morning— United Kingdom to lose control of coal to Six. I respect Mr. Mark Arnold-Forster as one of our best economic journalists. In the article he says this: The rules, and their application to Britain, were described in a memorandum which was given to British diplomats last month and is now available in London. The main requirement concerns the Government's power to direct or influence the British Steel Corporation and the National Coal Board. 'The Community delegation', the memorandum says, 'considers that the power held by the Secretary for Trade and Industry … to give general directives to these bodies under the terms of the Coal Industry Nationalisation Act, 1946, and of the Iron and Steel Act, 1967, is inconsistent with the European Coal and Steel Community Treaty.' … The memorandum says that Britain would not, as a member of the Community, be allowed to prevent the import of coal from Europe. 'The Community delegation emphasises that the provisions subjecting imports of coal into the United Kingdom to an import quota system are not compatible with the Treaty as far as trade between Member States is concerned.' But, the memorandum says, the present temporary arrangement whereby imports are free, subject to Customs control, is compatible with the Treaty. The Memorandum points out, however, that the arrangement ends in March, 1972. … Both the B.S.C. and private steel producers do not at present publish price lists as required by Article 60 of the Treaty. I refrain from reading any more of the statement. The fact remains that there is absolute proof that the present rules of the European Coal and Steel Community would remove totally any control of this House—and of Ministers responsible to this House—from Westminster to Luxembourg. I submit that that is a very grave consideration, and I want my right hon. Friend, if not today, on an early occasion to print clearly—whether in the forthcoming White Paper on the European Economic Community or in another similar document—for the edification of every section of British industry, trade and commerce, what will be the influences and effects of Britain's joining the European Coal and Steel Community.

I have endeavoured to deal with those effects today. I hope that before Christmas the Minister will give us a much more detailed statement of the medium and long-term plans for the expansion of the British steel industry and the restoration of profitability—because even he, with the best intentions in the world, cannot go on assenting to a loss at the rate of £100 million a year. When my right hon. Friend brings this more detailed statement to the House I hope that he will include in it a precise assessment of the effects of our going into Europe and joining the Coal and Steel Community.

Mr. Speaker

Order. That speech took 23 minutes. The speech before it took 24 minutes. A number of hon. Members were not able to catch my eye in either of our previous debates on the subject. I hope, therefore, that hon. Members will be rather more brief.

6.43 p.m.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

I shall try to obey your request, Mr. Speaker. Although I take a more hopeful view of Britain's possible entry into the E.E.C. than does the hon. Member for Worcestershire, South (Sir G. Nabarro), I echo his invitation to his right hon. Friend to make much more information available to the House on the possible consequences of our entry into Europe not merely for the steel industry but for all our other industries, and especially our more important enterprises. Without that kind of information the debate that we all look forward to from now, right through the autumn, until the early winter, cannot be a real one. It certainly cannot enable us to make—in all our individual ways—the best judgment that we can.

I want to touch briefly upon the more important aspects of the right hon. Gentleman's statement on Monday and then to dwell on the implications for Sheffield. Given the proposed level of investment, I could reasonably ask the Minister to speed up his next review. It seems that he has already gone some way to declaring his views about the future shape of the industry. Although the Department of Trade and Industry seems determined to transform the British Steel Corporation into a basic steel corporation, with all the demoralising effects that that is bound to have in certain parts of the steel industry, nevertheless it has come as a small consolation to some of us that the Secretary of State is seemingly prepared to preserve the bulk of the industry. I trust that he will let the House has his ideas on the matter as soon as possible.

In view of what the Minister said in his statement on price policy, will not the Government become even more involved than before, despite the impression that they have been concerned to give that they are withdrawing? They have already brought the Corporation into deficit by chopping B.S.C.'s proposed pricing policy in half. Are they to indulge in similar antics in detail? At the last General Election the Government boasted that they would reduce central Government control in detail. They reject a prices policy, but by "informal consultation with the Government"—as the right hon. Gentleman says—they intend to keep the B.S.C. subject to their views, not only on an across-the-board basis but by means of consultation about—to use the Secretary of State's words—"individual products". Is the Minister not planning—to paraphrase what was said by the hon. Member for the New Forest (Mr. Patrick McNair-Wilson)—"to price steel billets or safety pins"? The Minister seems to have forced the Corporation to do both, and much more.

I now turn to the question of restructuring. First, when will the Minister be in a position to report on his negotiations "to strengthen the Sheffield steel industry". I ask his hon. Friend: who is involved in these impending negotiations? What is to be the future position of Brown Bayley's Steel? Are any foreign interests involved? If so, who are they? Drawing on recent Press reports—notably a report in the Sunday Times a fortnight ago—I ask: is it true that in the heartland of high-grade British steel the Government now intend to introduce large-scale foreign capital?

I now want to deal with the question of restructuring as it may affect Sheffield. First, there is the question of the frontier between the public and the private sectors. Many people in Sheffield could understand and follow the argument of the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) about the adjustment between the public and private sectors, because it is well known that such a possibility was considered by the last Government. An adjustment in the mutual interests of both sides—yes: but what the people of Sheffield will not easily understand is an adjustment at the expense of the public sector.

I want to tell the House about the east end of Sheffield, where my constituency is located. Large areas of Attercliffe are owned by the Corporation. They have been earmarked for industrial development by the city council to fit in with the expansion plans of the Corporation. All the evidence that we have suggests that the future expansion of the Corporation in that area will be restricted, and perhaps even restrained. Indeed, other areas have been cleared of housing—not without some private regrets on my part—in anticipation of the future needs of the Corporation. Given the statement on Monday, it seems certain that gaps will now open in the planning map of the City of Sheffield. There seems to be no likelihood of private steel filling these gaps. I doubt that the city council would wish private steel to do so, and I can speak with confidence on behalf of the majority of the people of Attercliffe when I say that Attercliffe certainly does not wish private steel to do so.

I come now to the question of the consequences of the adjustment which is about to take place between Firth Brown and the British Steel Corporation, as a result of which Firth Brown will have the right to take over the River Don works, and Firth Vickers, which also is in my constituency, returning to the British Steel Corporation as part of the deal the Shepcote rolling mill.

There is a general expectation on all sides, apparently—I have here the minutes of the meeting of the works council at Firth Brown held only last Monday afternoon—that the firm will have the pickings of the River Don Works, and then the remainder, which is expected to amount to the bulk, will have no future; it will be terminated.

That is not a hiving-off. It is a hijack. Worse than that, there are 4,500 jobs in jeopardy. I am sorry that there was no mention of this by the hon. Member for Hallam. I want the Minister to tell us tonight what thought his Department has given to, and what consultation it has had with the Department of Employment about, the phased rundown of the labour force at the River Don Works, about the redeployment of men laid off through no fault of their own, about their retraining, and about future compensation.

When he has such consultations with the Department of Employment, will the Minister bear in mind that the employment position in Sheffield is deteriorating fast? From being an area of low unemployment, it has become increasingly an area of growing unemployment. During the past year alone, unemployment has doubled. At the time of last month's figures, when there seemed to be a fall in unemployment in many parts of our economy, there was no such let-up in the seemingly inexorable climb in Sheffield's unemployment figures.

I could say a good deal more, but I shall not because of the time. I know that some of my hon. Friends will wish to enlarge on this aspect of the matter. They know as well as I do that employment opportunities in Sheffield and South Yorkshire generally are narrow enough as things are and that the opportunities for alternative employment are, therefore, almost nil. It seems certain, in the light of Monday's announcement by the Secretary of State, that I shall soon have to take steps, in concert with Sheffield City Council, to apply to the Department of Employment for my constituency to have intermediate area status. Indeed, the position may be much worse. It is possible that, within a year, an emergency situation will be reached in Sheffield. This certainly seems to be the view of the Sheffield Trades and Labour Council which, in an emergency resolution passed only yesterday, expressed itself as follows: With an unemployment total in May of almost 8.000 in Sheffield—the highest figure since 1939–the additional redundancies mean that Sheffield will be back to the hungry 1930s. It goes on: This Council has no intention of being the leadership of the unemployed masses. We do not intend to allow unemployment in Sheffield to reach massive proportions. Our battle will be fought through the shop steward movement in unity with the political arm of our movement from within the factories, not outside. So I can go further than my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) and say that, at the further meeting of the Trades and Labour Council which is scheduled for Friday evening this week, there may well be a demand for workers' control. This has already been anticipated by the Sheffield Star in its headline last night— 'We will take control of works' say City steel men. I say that in order to convey to the Minister something of the bitterness of the steel workers of Sheffield, and especially those who are expecting to be affected by the consequences of the Secretary of State's statement. I wish to convey something, moreover, of their militancy. The time may be approaching when further Ministerial announcements about the restructuring of our industry, with seeming disregard of the consequences for the workers, for human beings, for wage earners, will be likely to strain the social compact to which all of us, basically, subscribe.

Now, a word about that part of the statement which refers to constructional engineering and chemicals, again an important constituency interest of mine. This part of the statement, despite its muted phraseology, suggests a degree of hiving off which, if less politically dramatic than, presumably, some of the Secretary of State's hon. Friends would wish, is nevertheless potentially more damaging to the structure of the British Steel Corporation. As Lord Robens has argued over the years—indeed, he took the lead in so doing—nationalised industries must be allowed the freedom of ordinary industry to move into fields in which their basic interests lead them. Good business managers learn to realise where not to let those interests lead them. Are the Government proposing that the B.S.C. should not have the same right?

Now, a word about the wire group proposals, which are equally important, in my view. This is a sector built up and dominated since its inception by private enterprise, lacking, save for a few honourable exceptions, any forward-looking attitudes, and riddled with small companies and small men. The need here, therefore, is for a strong wire group.

As for the disposition of peripheral interests at a fair price, given the cash flow position this may be a reasonable thing to do voluntarily. But it brings one down to the fundamental question of what goes to whom, and at what price, the price being measured in real terms of productive capacity, potential earnings, industrial significance, and so on. The economics of hiving off, therefore, deserve special study along those lines, and I hope that we shall have from the Minister tonight some comment and statement of criteria in this connection.

Now, the question of part-time members of the board. I have always taken the view that part-timers were a waste of time, except on charitable do-gooding committees and so on. I do not see the purpose of the right hon. Gentleman's appointments. The gentlemen concerned demonstrably do not need the money. The Minister has not yet explained their responsibilities or their purpose. Perhaps, in deference to the great interest in these matters on this side, his hon. Friend will do so when he winds up.

6.58 p.m.

Mr. John Morris (Aberavon)

The 18th of June last year was a black day for all of us who care about the steel industry. Many of us have played a small part in trying to ensure that the industry was organised in the national interest and not in the interest of the few. We knew, since 18th June, that all of that was at risk. Everyone in the steel industry knew it. The Secretary of State was not himself involved in those controversies, but his acolytes were. They want to turn the clock back as far as they possibly can.

What we had in Monday's statement was the best possible attempt to turn the clock back in the face of growing realisation it was not possible. What have we instead? What is the Government's stewardship regarding the steel industry? We have had months of uncertainty, and the real decisions for the steel industry have been taken out of the hands of the British Steel Corporation, charged by Statute with the managing of the industry, and have been put instead in the hands of the Joint Steering Group No. 1. That is a very strange animal. We do not find it in any Statute. It is odd that, while the B.S.C. is obliged by Statute to have vested in it the assets and manage them, that extraordinary body could do more than to study the affirs of the Corporation and could stop any development and take over some of the responsibilities of management. It is a constitutional outrage.

It is also odd that no Minister was allowed to preside over that body. When there was something remotely comparable, a study of the future problems of British Rail, I had the privilege of chairing the joint steering group of British Rail and the Ministry of Transport, together with various other Departments and some outsiders. We were by no stretch of the imagination taking over the management of the industry but were analysing and studying its problems and preparing for legislation. It may well be that the Minister was not allowed to preside over that body because he was not trusted by his right hon. Friend, since he would not know what he was up to.

But we know, since Monday's announcement and the previous announcement, that the bulk of steel-making is to remain in public hands, and that is a complete retraction of the Government's opposition to the Iron and Steel Act which we introduced.

We are also glad that the investment for 1971–72 is to be allowed to continue. The blanket is now lifted, and we see that it will be increased—all praise for the eleventh-hour conversion of right hon. and hon. Members opposite.

On Monday we heard the strange statement that the present plans for hiving off have been agreed by the Corporation. We have heard of shotgun marriages. That is a shotgun divorce or a shotgun judicial separation, agreed in the sense that the situation could have been much worse for the Corporation. It has agreed under duress to make the best of a bad job. When we read this morning's newspapers we do not know how different parties regard the agreement. I understand that the Department of Trade and Industry put out information that the hiving off of billeting would amount to 6 to 7 per cent. of the total crude capacity of the industry. But Lord Melchett said at his Press conference that there was no question of doing anything on that scale. What are the terms of the agreement? What are the refinements of the understanding between the two sides?

I have congratulated the Government, but what else could they have done in present circumstances? Is it realistic to expect them, in the present market conditions, with the lack of capital, to announce any major denationalisation measure? They are being realistic, and they did no more than they could. Our fear is that while there is to be this small measure of hiving off now, if conditions change they might well announce something much bigger.

The tragedy is that we have had uncertainty for months, ever since the Government have been in office, and now scarce managerial talent is to be preoccupied for the next few months with working out the private company arrangements with those organisations which will share responsibility for that portion of the industry which is hived off.

The Secretary of State said on Monday that the need to be more profitable was recognised by both the Government and the B.S.C. That borders on hypocrisy coming from a Government and Secretary of State who denied the Corporation the right to put up its prices. That was the sole stroke of the Prime Minister to deal with prices. Now it is recognised as a blunder, in the sense that what was done was contrary to what might have been done if we had had the misfortune already to have entered the Common Market at that time. We had a major concession from the Secretary of State today that that step would not have been permissible if we had been in the Common Market. That is one of the "profound effects" on entry that he indicated to us, and there are others.

The Secretary of State said on Monday: The targets set in this financial year are difficult to put in normal form, because they are negative."—[Official Report,28th June, 1971: Vol. 820, c. 34.] That is a patronising attitude to the House. The House is not completely illiterate, and it can understand a presentation of what the aim of an industry should be. If it was not possible for the right hon. Gentleman to explain in his long statement on Monday what he had in mind by that negative form of targeting, he might have extended his speech by a few minutes today to tell us what he meant.

In the stewardship of this Government since they have been in office—now for a year too long—they have made a mess of the steel industry. They have created uncertainty, and from now on the industry will have to do its best to repair the damage and meet the expense of the delays that have undoubtedly occurred.

We have fears of what might well happen to the industry if we enter the Common Market. It is incumbent upon the Government to expand and elaborate upon the words used by the Secretary of State today about the "profound effects", other than price. We know the figures. The Corporation is now producing 26 million tons a year, 50 per cent. for e than its largest European competitor, and it plans to invest up to £4,000 million to expand production to 35 millions tons in 1975 and 45 millions tons in 1980.

We were deeply shaken by the article by Professor Lindsay in The Guardian of 9th June, when he spoke about the plans to cut B.S.C. down to size, and splitting it, all of which were totally unacceptable to Whitehall at that time. Then we had the denials. He added: The E.C.S.C. next move was more realistic. The maximum annual production of 20 million tons envisaged under its overall plan for a single producer was only 6 million tons less than the current annual production of B.S.C. Such a discrepancy, it decided, might be tolerable provided that further expansion of B.S.C. was stopped. The Prime Minister and the Government were deeply moved by that heinous statement, and denied that there was any suggestion in the course of any negotiation to split the Corporation. They said that it had never been put officially to them. But certainly it had been considered by the E.C.S.C. It had tested the water on the matter. We were told in The Times of 18th December, 1970, how the E.E.C. Executive Commission was concerned about the size of the Corporation and the triggering effect of its policies, because of its sheer size compared with its European competitors.

On 5th May this year a Frenchman on behalf of the E.E.C. said that it had officially informed the British negotiators that neither the size nor the national ownership of the B.S.C. and the National Coal Board would be an obstacle to British membership of the Community. Why was it necessary to make that statement if the matter had never been raised?

All the documents in the matter should be laid before the House so that we can examine the to-ing and fro-ing, the proposals made on both sides. Otherwise, how can we judge the dangers, both present and, much more important, future, of the attack on the B.S.C?

It was strange that last Thursday the Chancellor of the Duchy of Lancaster, reporting to the House, said: In the first place, the Community delegation confirmed that they had no intention of calling in question the size or the legal position of the British Steel Corporation or the National Coal Board."—[Official Report,24th June; Vol. 819, c. 1605.] That is word for word the same as the statement of the French delegate on 5th May. If the matter had not been raised, why was it necessary to make that statement? Some hon. Members on both sides were pleased with it. I am not. The statement makes no reference to expansion. It deals only with the present size and legal position of the British Steel Corporation. There is no suggestion that there will be no shackles on the expansion of the Corporation—that is studiously ignored in both statements. That is our fear.

We are concerned with the plans of the Corporation to expand. I am convinced that any talk about a green field new site in Britain is moonshine if we enter the Common Market. The whole concept in the E.E.C. is to limit the size of individual components of the European steel industry. I hope that the Government will face my challenge—that the pricing policy of the Community will be a serious handicap to the development of our steel industry and particularly any new part of it in any development area. I am sure that, if the hon. Gentleman has studied this matter, he will realise that that must follow. Those of us who represent development areas will know that any hopes we may have for major expansion of the steel industry in any area far from the Foulness or Sheerness part of the country must diminish rapidly if we enter the E.E.C. I hope that the Government will answer this point. It is a problem which must concern all of us.

May we have an assurance that, if we enter the Community, not only will there be no question of the legal position or existing size of the British Steel Corporation, but that there will be no question, no inhibition, regarding its expansion? Many of us on this side have fought hard for many years to ensure that this great commanding height of the economy should be managed in the national interest. We fear that this great commanding height will no longer be at our hands but rather dominated by the plains of Waterloo and the bureaucrats of Luxembourg.

7.13 p.m.

Mr. Ronald Bray (Rossendale)

In deference to your wishes, Mr. Speaker, I will be brief, and I will, therefore, defer my eulogy on the many advantages which will accrue for this country should, when and if we join the E.E.C.

I welcome the Secretary of State's statement on the amount of investment which will be made in this coming year in the steel industry. A total of £280 million shows the confidence of the Government in the industry, and I am convinced that it is only a start. I also welcome the comments and statement on its restructuring and the disposal, by various legitimate means, of certain fringe activities, what I call second-tier activities.

Over the years I have developed a great mistrust for large undertakings—or what I call "mono-block constructions"—such as the steel industry, in so far as they do not give the sufficient attention to details of cost accountability that one would like. The suggestion of hiving off these units within the meaning of the Companies Act will enable them to have a definite financial target to which they shall work and also make them financially accountable. There is a great deal to be said for that because we all want to see which parts of the various nationalised industries are in the red and which parts are doing a good service to the community and showing a profit as well.

Irrespective of whether any unit of the British Steel Corporation is to be sold or disposed of by any means, it is only right that it should be shown to stand on its own feet. Why should it not? Why should these units be protected amongst themselves? If private enterprise, or a combination of private enterprise and State investment, can produce the goods better than 100 per cent. State investment, let it be shown to do so. Let us bring in people who are cost conscious and are prepared to look at expenditure as though it comes out of their own pockets rather than out of the national pocket. This is where many of our industries in the public sector have failed us over the years and will continue to do so unless they are made accountable for their accounts. The larger the undertaking, I think we can say without reservation, the more the law of diminishing returns applies—and where an undertaking is nationalised the law of increasing loss invariably applies. These are factors which have come home to us and which have been referred to in detail on this side in the debate.

There were squeals on Monday when my right hon. Friend mentioned the Brymbo Steel Works in Wales and its proposed association with G.K.N. I see no reason why any progressive, responsible firm should not wish to operate or control its major source of supply in some particular material. That is all that is being asked in this case, and it is logical. I see everything to be gained for the country in overall efficiency and for the company in so far as it has control of its own supplies.

Let us take the point about control of its supplies by a company further. I would like an assurance that materials sold by the British Steel Corporation outside its own immediate orbit—in other words, to firms which may be re-rollers or wish to process materials in other ways—will be sold on strictly equitable terms as they would be to firms or sections within the Steel Corporation itself. That is not an unreasonable request.

If we are to hive off or segregate these fringe companies, we shall see another advantage—that of flexibility. At the moment, with the major rolling programmes and the like—as those directly involved in steel know to their cost—the time cycle tends to be rather longer with a large organisation, whereas more flexible units can give better deliveries on the smaller tonnages. That is a great advantage when it comes to stock holding amongst the various firms. There is also the factor that when special steels are required—I am referring not to very high tensile steels but to medium tensile or high carbon steels—for certain construction projects the larger producers are unable to cope because of the limited quantities. I have had cases reported to me in the last month or so where firms which have been using such steel from British sources have been informed that, owing to the tonnages involved, it will no longer be available, with the result that it has to be imported. That difficulty can be overcome by virtue of the policy which has been laid down. There is everything to be said for ending that state of affairs.

I make my final point from my heart because it refers to the Irlam Steel Works and I represent a Lancashire constituency. The right hon. Member for Newton (Mr. Frederick Lee) has covered the points admirably, and his views were strongly supported by my colleague. We have to look at this from the social angle. Reference has already been made to the money which it was alleged should have been spent on providing opportunities for other jobs. I should like some of that money to be concentrated in the Irlam area.

Irlam is quite a large supplier of smokeless fuels. Will the Minister tell us what will happen to the supply of smokeless fuels when this closure takes place, and will he guarantee that smokeless fuels will be made available from other resources? Furthermore, how will he square his number with the Secretary of State for the Environment on the question of old cars? Irlam has a great capacity for suitably compacted old cars. The social and environmental factors should weigh heavily in getting results for the people who are out on a limb.

The B.S.C.'s policy in respect of Irlam was disgusting, to say the least. It took no account of the opportunity for the further use of the plant. It was "close down and get out", no more. Whatever efforts are made to salvage that plant the people will remember this for years to come. I sincerely hope that alternative means will be found—and they have been expounded today—to keep Irlam to a large extent in use, and we on this side of the House will be happy to make every effort on this behalf.

I have greatly appreciated entering the debate in support of the Secretary of State, and I wish the programme for denationalisation speedy success.

Several Hon. Members rose——

Mr. Speaker

Order. I am grateful for the rather shorter speeches, but there are still nine or 10 hon. Members who wish to speak.

7.22 p.m.

Mr. John Mendelson (Penistone)

When discussing some of the changes he is proposing, the Secretary of State must have been aware of the human and social consequences of his policies. I want to begin with what I consider to be the most important aspect of the Sheffield situation that has developed as a result of his decisions. I attended a meeting in Sheffield last night where I spoke to a considerable number of people who were directly affected. In my many years of association with the city and the trade unions in the city, I have never seen the people so concerned. Today, a group of those people came to London, and I will quote one sentence from what a still youngish man said to me at lunch-time: It means the end of a career. He was referring to the announced intention to close down the River Don Works. He does not believe that he and many of his colleagues with special skills will be required in the immediate future in a similar position.

The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) always on these occasions refers to the attitude of individual people in the industry, but I noticed a marked absence from his speech of any expression of real concern for the 4,500 people who are so seriously and immediately affected by this announcement.

It is not good enough for the right hon. Gentleman to stand at the Box and say, three times over, "Of course, all this is agreed with the B.S.C." If these policies which have been imposed by the Government upon the B.S.C. are pursued, not only will the right hon. Gentleman be discredited, as he already is, in the steel industry and amongst steel workers, but the Chairman of the B.S.C. will also become discredited. The right hon. Gentleman owes it to the House and to the people who work in the steel industry to come clean on this matter. It is more than evident that the Government have used their power of delaying the investment intentions of the B.S.C. and the difficulty over financial liquidity to coerce the B.S.C. into a change of policy the consequences of which we are beginning to see. He will not get away with the kind of excuses that he tried to make today.

The B.S.C. had announced and had arranged with the previous Administration, and the Chairman of the Corporation had told union representatives of the steel workers and groups of Members of Parliament, that the modernisation and rationalisation needed—and that is common ground between all people in the industry—would be so phased and timed that new steel making capacity would come into existence at the time the old capacity went out of use. That is the answer to the still youngish man I quoted at the beginning of my speech. If new steel-making capacity came into existence just before closures took place, this young man would have hope and would not be in the mood in which I found him today. That is the human aspect of this change of policy.

The first requirement is to think of the interests of the 4,500, or perhaps 5,500 men involved and not to talk about the larger aspects of the general situation. That could come later. Anyone who speaks for any part of Sheffield has a duty to put that on record. The Government should call a halt. They should get together with the B.S.C. and respond to the demand of the steel workers at the River Don Works and their trade union and parliamentary representatives for full negotiations with the representatives of the men.

I have in front of me a statement drawn up as a set of minutes of an extraordinary meeting of the works council on 28th June, 1971, from which I will read an extract: Mr. Howarth asked what arrangements had been made to talk to full time union officials. Mr. Lewis replied that a meeting had been arranged at 11 a.m. on 29th June at River Don Works to which all full time trade union officials had been invited. The short notice of these invitations had arisen because the Minister was only disclosing this information in principle to the House of Commons this afternoon and earlier intimation would not have been possible. There is evidence that the people most directly concerned were not negotiated with and not consulted, and they could not even be informed a little earlier because the right hon. Gentleman had not yet made his statement. Because of this complete failure to live up to the undertaking that the Government and the right hon. Gentleman personally had given of advance consultations and discussions, I ask him to undo the damage that has been done by the absence of proper procedure. The right hon. Gentleman well knows that in trade union and working men's circles adherence to proper procedure is regarded as a bond.

Let the right hon. Gentleman reverse the process. Let him get together with Lord Melchett and call a halt in this situation. Let him say, "We realise that an error has been committed and we shall not proceed with any decisions or begin any detailed discussions about hiving off." Let the right hon. Gentleman get together with the proper representatives of the people so that he may have proper discussions with them. A meeting is to take place in Sheffield on Friday evening consisting of the trade union leaders in Sheffield, the leader of the city council and the Members of Parliament who represent the city. Cannot the right hon. Gentleman send a message to that meeting on the lines I have suggested? If he does so, he would be beginning to do his duty in this serious and tragic situation.

I put this forward as a practical proposal. This matter will take some time, even if the Corporation carries out its original intention. It is possible for the right hon. Gentleman to make a practical move on the lines I have outlined. It would have an effect in Sheffield among the people who are most directly concerned and would go towards undoing a situation which has been handled in the most irresponsible and extraordinary way.

Mr. J. H. Osborn

The hon. Gentleman referred to my remarks, and I referred to the situation in Sheffield. Is this not a problem which we must resolve? So far as I understand the situation, the decision has been made in principle, and is it not now time for a discussion to work out how it is to be implemented? I hope that my hon. Friend will clear up this matter when he replies to the debate.

Mr. Mendelson

The hon. Member for Hallam must not pretend that if the Government do not respond to the requests that I and my hon. Friends have made, there will be any possibility of changing the policy decision which has been announced, without consultation. What is required is to call a halt and to countermand the beginning of the implementation of the announcement. It would then be possible, in consultation with the workers' representatives, the city council and Members of Parliament responsible for the area—and I do not confine this to one particular party—to see that the decision is not implemented and that a better solution is found. That is my request, and the hon. Member for Hallam has not responded to it, as I still hope the Minister might respond. There is a lot at stake if this kind of irresponsible procedure is to be followed as a way in which both the Government and the Corporation will deal with these matters from now on.

I turn to consider a wider point of the policy of reorganisation and rationalisation. When my right hon. Friend the Member for Barnsley (Mr. Mason) was Minister of Power—and I do not believe in referring only to events which have happened in the last few weeks or months, because these problems are continuing problems—a proposal was put forward concerning the Sheffield rolling mills in which the majority interest was to be sold to a private firm. Along with many people in the city, I was opposed to the arrangement of a 51–49 per cent. private ownership that was then proposed.

Other hon. Members and I invited my right hon. Friend as the Minister concerned and the Chairman of the Corporation to come to Sheffield. My right hon. Friend came to the city and met senior trade union leaders and local M.P.s. I believe it was the first time that the procedure was carried out in this way. At the time, we were told that this was a way of rationalising some of the sections in the industry, and we were told that there might be certain minor adjustments in relation to the private sector. Those representing the unions were not unreasonable about this matter. We were told that in future some sections of the industry would be transferred from the private to the public sector.

I suggest that the Secretary of State for Trade and Industry should do what was done by my right hon. Friend the then Minister of Power at that time. He should come to Sheffield and meet the representatives of the trade unions and local M.P.s. He should have discussions with them and defend the policy which he has now instructed the B.S.C. to carry out. I want him to face the arguments put forward by the people in the area, and I want him to see the sort of human experience that is represented at such a meeting. I want him to meet men of the calibre of the young man whose words I quoted to the House a short time ago.

The Government have agreed with the British Steel Corporation to allow its borrowing powers to be increased and to allow projects for immediate development to go ahead, although we are not sure whether they have authorised all of them or whether there has been some change. We do not know whether the policy involves a gradual phasing-out of some of the works with at the same time the creation of new employment opportunities.

I turn to the long-term prospects for the industry. Considerations affecting the steel industry should not be made part of the White Paper on the Common Market. We wish to see it as part of another Government Paper. This concerns the working and the methods of the steel industry and those who work in it. The Minister would not be fulfilling his responsibilities if he merely went along to the Chancellor of the Duchy of Lancaster and asked him to introduce some reference to the future of the steel industry. This will have to be done in some way, but it should be undertaken separately. The Government are under obligation to disclose all the negotiations in which they have been engaged in regard to the future policy of the British steel industry.

The Government must now answer a question that they have never answered before, and I shall be glad if the Minister could answer this question tonight. The Foreign Office has said that no request has been received from the Commission or from the Six Ministers for the British Steel Corporation to change its present arrangement, and that there has been no demand to interfere with its operations. We know that a document has been received which supersedes this Foreign Office statement—a document from the Six laying down certain specific requirements from the British Government. We need an assurance that the United Kingdom Government intend to allow the B.S.C. to proceed with its expansion towards a target of steel production of 35 million tons in 1977–78 and towards 41 million tons in 1982. In no circumstances should the Government be diverted from that course because of any action among the Six, and I should like an assurance on this matter.

Finally, the long-term uncertainty that exists in the industry should be removed in respect of any decisions that are taken between now and the autumn. I do not expect the Minister to announce the details this evening, but I would ask him to remove the uncertainty in the industry so that he may be guided only by the practical considerations of providing a base for the future of steel production in this country, to make our industry competitive with countries such as Japan and the United States. Further, we should like to be assured that he will not allow any other considerations to interfere with his decision when he makes it.

I have deliberately confined myself to a series of practical points. All those who work in steel and all those who are interested in the future of British industry will expect a serious and considered reply from the Government tonight.

7.40 p.m.

Mr. Brian O'Malley (Rotherham)

The Secretary of State began the debate this afternoon by admitting that the statement which he made on Monday was a bald statement, and saying that he hoped to give the House further information arising from his statement. If that was his intention then I have to say to the right hon. Gentleman that he failed lamentably. All the confusions and the doubts and the need for information remain exactly or almost exactly as appeared in his statement on Monday. Indeed, as a result of the very brief comments of the right hon. Gentleman regarding the longer-term investment plans for the steel industry, I can only assume that either he left his notes behind or he deliberately decided before he came to the House that this was not a subject he wished to discuss, for he treated the House with less than the respect which he should have by not dealing in much greater detail with the longer term investment of the steel industry.

The Secretary of State is establishing an unenviable reputation in this House. Whenever he makes a statement in the House thousands of men can expect to lose their jobs. In March, arising from the Secretary of State's then statement, 1,300 men in my constituency, at Rotherham Steel Works, discovered they were to lose their jobs, most of the job loss arising from plant closures which would not have arisen till much later into the future, had it not been for the deliberate policies of the present Government. Now we are faced with another instalment of that pattern, and 4,500 men at the River Don works in Sheffield, including some of my constituents, are being sacrificed to Tory dogma. I shall attempt to demon-trate that a little later.

What makes these proposals even more objectionable is that it is quite clear that there has been no consultation whatsoever with the trade unions involved in the Sheffield area. My hon. Friend the Member for Penistone (Mr. John Mendelson) has just demonstrated that. We had a number of trade unionists, representing virtually all the trade unions involved, at the House of Commons this afternoon, and one of their first and major complaints was that they thought that the situation was absolutely disgraceful that there had not been proper consultation, that it had been entirely lacking in this case.

It is certainly the case that reorganisation in the private sector of the steel industry in Sheffield, particularly in the re-rolling section, is needed and has been needed for some years. That is precisely the reason why the I.R.C., set up by the last Government, put money into Brown Bayley, and that was why Mr. Kilpatrick moved from the British Steel Corporation to Brown Bayley so that Brown Bayley could provide the nucleus from which the reorganisation of the private sector in Sheffield could emerge. It is also perfectly clear, and has been for some time now, that there is need to tidy up the boundaries between the public and the private sectors, arising out of the 1966 nationalisation Act.

However, we should be aware of one thing in discussing the current situation as described by the Secretary of State during his statement on Monday, and that is, that the decisions announced by the Secretary of State, broad as they were, were certainly not those which the British steel Corporation was proposing to the previous Government.

Moreover, when hon. Members on the other side of the House, like the hon. Member for Worcestershire, South (Sir G. Nabarro) and the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) take the view they do that what is being reorganised or hived off from the Corporation is 'minimal"—which is the sort of phrase they use—all the information I have seen suggests that the total amount hived off, or the total amount opened up to private capital, will be between 10 per cent. and 15 per cent. of the total annual turnover of the Corporation.

The Secretary of State talked as though his proposals were to obtain sound industrial logic. This was not the attitude of the hon. Member for Hallam; it was not the attitude of the hon. Member for Worcestershire, South. It is certainly not the attitude, if all the reports around Whitehall are true, of the Minister for Industry and the Under-Secretary of State. I have seen those two hon. Gentlemen in Committee on the Steel Bill and other occasions. The Secretary of State should know that those two hon. Gentlemen are not concerned with industrial logic. Their sole, open, declared aim over the years has been to cut back the activities of the public sector, whether it be the steel industry or any other publicly owned industry.

The British Steel Corporation was certainly not talking about hiving off or coming to arrangements with private capital about the constructional engineering or chemical divisions. It was certainly not talking about selling off or entering into agreements with other people about the wire group. The Secretary of State must know that two or three years ago the Corporation set up a highly confidential working party within B.S.C. headquarters to examine the whole question of the wire group. This enquiry arose largely as a result of representations from the private sector that the Corporation should sell out the wire section of the old Lancashire Steel Corporation. The B.S.C. considered those proposals over a period of months in an experienced working party and came to the conclusion that it was not in the interests of B.S.C. or of the wire industry in this country that it should so do. Certainly B.S.C. was not proposing to the previous Government that billet production should be taken out of the hands of the Corporation and put into private sector or into some kind of joint arrangements.

It was the case that the Corporation was considering, and had been discussing for a very long time, with other interests in Sheffield the whole question of what the proper boundaries should be and whether tidying up was needed, but at no time was it proposing to do this kind of deal with Firth Brown affecting the River Don Works. As late as two or three weeks ago the management of the River Don Works were still living in high hopes of getting capital investment of £4 million or £5 million for one section of the works. So these proposals which have now emerged have come from a great deal of arm twisting either by the Secretary of State or by the two Ministers who work under him.

The Secretary of State says in defence of his case that Lord Melchett agrees with him. It is perfectly clear what has happened. Every industrial correspondent in London and every Member of Parliament knows that there has been a major battle between the Steel Corporation and the Department of Trade and Industry.

What is the history of this? First what is clear is that the Government by their policies have put B.S.C. into an impossible financial position. First of all, the change-over from investment grants to investment allowances was a very serious blow. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) mentioned the figure of £300 million. Secondly, the Government cut the proposed price increases by half, when the Corporation's prices were clearly competitive with those in Europe. Thirdly, as a result of Tory economic policy, the level of capacity working in the steel industry was cut back so that, in the first five months of 1971, the production of the industry was 8.7 per cent. down on what it had been in the first five months of the previous year. Lastly, the Government must be costing the steel industry a lot of money and causing it a lot of inconvenience by holding up development programmes.

It is the present Government who have created this situation in the industry and forced it into increased borrowing. It is clear what has been said to Lord Melchett. He has been told that he can have the investment that he wants only if he is prepared to take a number of steps. The first is to sell off profitable divisions. I have described this in the House as loot for the big business friends of the Tory Party. I see no reason to change that view.

The hon. Member for New Forest (Mr. Patrick McNair-Wilson) spoke about this situation. What is clear, whether we have joint companies or hiving off, is that the seed corn of the Corporation is being taken. Private industry does not want to go into some sections of the Corporation. It wants its share of the most profitable parts. The right hon. Gentleman intends to leave the Corporation with the less profitable parts, for example, certain sections of bulk steel production, and to hand over a great deal of valuable assets in one form or another to private interests.

I come from the Rotherham-Sheffield area. The right hon. Gentleman is allowing Firth Brown virtually to cannibalise the River Don Works and put more than 4,000 men out of work. I ask the right hon. Gentleman one question which affects my constituency vitally. Nearly a fortnight ago, it was believed all over Rotherham that the Government wanted to sell off or take out of the Corporation's 100 per cent. control the Rotherham works. The Guardian this morning confirms that. Is the right hon. Gentleman prepared to settle the unease and worry in my constituency? He said the other day: B.S.C. is prepared to open discussion with interested parties with a view to the creation of one or two new jointly-owned steel and billet-making companies."—[Official Report,28th June, 1971; Vol. 820, c. 34.] Will the right hon. Gentleman say whether the Rotherham Works of Steel Peech and Tozer or Parkgate, or both, are possible candidates for a sell-off of this kind? If the right hon. Gentleman can say that it has been decided that they shall remain with the Corporation in their entirety, many people in my constituency will heave a sigh of relief. There is great uncertainty. Morale has been damaged seriously in the last 12 months. I hope that the Secretary of State can help in this respect.

As for the possibility of this country entering the European Economic Community, there is already enough evidence to make it clear that it is not in the interests of the British steel industry, especially the northern areas of the industry, to be hamstrung by a pricing structure which fell to bits in the early 1960s and would fall to bits again if a similar crisis arose in the E.E.C. It is not in the interests of the industry to join a Community where scrap prices will be considerably higher than we pay at the moment, and where investment policy would clearly be controlled not by a British Government but, to quote the hon. Member for Worcestershire, South by "the bureaucrats of Brussels".

Will the right hon. Gentleman consider publishing the memorandum which is referred to in The Guardian? When I asked him earlier, I got the impression that he did not give a definite "yes" or "no". I shall be grateful if he will consider this, and perhaps the Minister for Industry will tell us whether the Government can let us have the information. It is not only the Government's assessment that we want. We want the documents that the E.E.C. have been passing over, and we want to see in their language what they have been demanding of us.

The proposals for hiving off and the joint arrangements which the right hon. Gentleman has been discussing do not make financial sense, especially when we consider the long-term interests of the Corporation. Secondly, the proposals show a blatant disregard for the interests of the workpeople, especially those in the River Don Works in Sheffield. Thirdly, throughout the steel industry there is the fear that this is only the beginning and that we shall get more of this kind of nonsense in the future as a result of the pressures of people like the Minister for Industry, the Under-Secretary and the hon. Member for Hallam. We on these benches intend to do all in our power to prevent the right hon. Gentleman implementing that kind of policy.

The Secretary of State has said that he hopes that these proposals will take steel out of politics. I can assure the right hon. Gentleman that they will not. They will bring steel right back into politics. To the steel areas, they are merely another indication that they have to get rid of this Tory Government as quickly as possible.

7.55 p.m.

Mr. T. H. H. Skeet (Bedford)

The hon. Member for Rotherham (Mr. O'Malley) has made an interesting speech. However, he cannot sustain the argument that the arm of Lord Melchett has been twisted, especially when he has been reported in the Financial Times as saying that he … welcomed the Government's measures as a good, sane, logical industrial solution to the problems that the steel industry has to face'. I think that that is a sincere observation.

Mr. W. T. Williams (Warrington)

What else could he say?

Mr. Skeet

He could have indicated clearly that he disapproved thoroughly of the proposition, or he could have used words which did not come through quite as clearly.

It has been said that bulk steel making is to remain with the Corporation and that bulk steel production represents between 80 and 90 per cent. of total production. If one considers the Government's proposals on a turnover basis, with an annual turnover of £1,400 million, it means that a turnover of something like £200 million is to be exposed to private capital. I am disappointed at that. It is so small. However, it means that a start has been made.

My right hon. Friend must face the fact that he has one steel structure in the United Kingdom which may become ossified in the future and which has little opportunity to adapt itself. However, my right hon. Friend sees prospects in his proposals.

I should prefer to see a number of enterprises working in competition than a single structure in the United Kingdom economy. I fear that the Corporation could become the Montecatini Edison of the United Kingdom, with disastrous consequences. With United States steel, while net sales increased from 3,649 million dollars in 1960 to 4,883 million dollars in 1970, earnings per share fell from 5.16 dollars to 2.75 dollars over the same period.

It is interesting that the 1967 production of United States steel is comparable with that of the British Steel Corporation. One finds in the United States and elsewhere, especially in Europe, that steel companies have not been doing well. The return on capital investment of the British Steel Corporation in 1969 was under 1 per cent. It was only seven years ago, in 1967, that, whereas the largest American company produced 31 million tons, the largest Japanese company produced only 12.8 million tons. A similar example is Thyssens in West Germany, which is a comparatively small producer. But the trend in Germany has been towards a diminution of the number of larger companies and the expansion of smaller companies. They tend to be more thrusting and easier to manage, and greater steps should be taken here to achieve that kind of set-up. To give some words of encouragement about the rate of return on capital investment in the steel industry, may I inform the House that one company in Luxembourg has reported the highest return in Europe—that is, 6.6 per cent.—and the interesting thing is that it is a small producer of 5 million tons.

I think that I have proved one point. I must be economical in time, because we are enjoined to be short. I think I have proved that the large structure is not necessarily successful. I do not think that my right hon. Friend has made any vast alterations. He has only looked at the periphery of the Corporation, and perhaps I could make some recommendations.

I am very concerned about unemployment in this industry. Where the Corporation has decided on plans which were brought to fruition before the Government took office, and which are being deployed, resulting in plants being closed, those sites should be offered to private enterprise, be it in the form of consortia or in some other form. If the consortia feel that they can hold the labour and guarantee employment, in the Irlam works near Manchester, for example, that might be a suitable answer. Grass roots plants, be they in the South of England, Wales, or Scotland should also be offered to private consortia to provide effective competition within the British economy. Nothing could be sounder than that.

So far as existing works are concerned, a franchise should be granted to private consortia. A step has been made by introducing private capital, but I do not feel that it has gone far enough. One other advantage of that is that while in the United States, and elsewhere, it is possible to have vertical integration in raw material supplies, that is not possible here.

Some people have suggested workers' control. That has not commended itself to me. Might we not make an equally radical suggestion? In Western Germany the supervisory and management board systems have worked well. Might they not be tried in the United Kingdom?

I realise that the Corporation has had certain difficulties in connection with pricing. My right hon. Friend, for reasons best known to himself, cut back the suggested increase of 14 per cent. to 7 per cent., and the Corporation says that it has been deprived of earning capacity. What one has to remember, though, is the increased costs derived from other nationalised industries. If one considers the total increased costs of about £113 million, one should realise how these are apportioned.

An additional £40 million went straight on due to the National Coal Board, a State industry, and £8 million went on due to electricity, another State industry. Fuel oil went up by £10 million, but a large part of that was tax, laid down by previous Governments, including this one. On the transport side, which is also State, there was an additional item of £30 million. On ore, which comes from abroad—very little of it is produced here—there was imposed an additional £30 million. The problem is that prices have been forced up against the Corporation. Wages have been going up continuously. The Corporation is loaded with debt. I enjoin my right hon. Friend to do something about flexibility of pricing, and I support his idea that one has to see that there are selective price increases.

I was impressed with the words of the right hon. Member for Sheffield, Hillsborough (Mr. Darling) when he said that we could be extremely competitive with Western Germany and France on certain items of steel making, that in those cases where we were competitive we could afford to put up prices, and that in others we may have to hold the line. If we are to look years ahead for the British steel industry, for goodness sake let us not specify a total figure for steel production when we do not have the markets in which to sell. But if we are determined to sell, let us be efficient. We shall not make the industry efficient if we keep the same structure as we have now. Size is no recommendation of efficiency at any time. It is the ability to work and the economy in which an industry lives that are the two main features necessary for a steel industry to operate successfully.

8.5 p.m.

Mr. Ted Leadbitter (The Hartlepools)

There are two main features of the debate which must stand out in the minds of all hon. Members today, and which will, I imagine, stand out in the minds of people outside tomorrow. The first is the welcome change of attitude by the Secretary of State. The change is belated, but it is indeed welcome, because, after many months of uncertainty, at least we are left with a British Steel Corporation. I shall say something later about the peripheral parts of it, which raise certain question marks.

I welcome the change of attitude, but I doubt very much whether it would have come about without pressure from this side of the House and from the industry itself. The right hon. Gentleman has learned the lessons late, but I hope that he has done so in time to repair some of the grave damage that has been done.

As the right hon. Gentleman has shown a susceptibility to learn, perhaps I might raise the issue of Irlam. I do not doubt that his objectives must be for the good, even if his methods are wrong. I do not doubt his integrity, but may I suggest that he considers what happened when there was a determination to close another kind of industry in my part of the world?

At one time some people wanted to close a shipbuilding yard near my constituency, which would have meant about 3,000 men being declared redundant. The professionals in the industry said that the yard had to close. Some politicians took the same view because, they said, the yard was not viable. But those who had faith in the men and the equipment there persisted in their efforts, and we had in the Labour Government a Minister who was prepared to listen to us. It was not in our language a lame duck, and we were able to save that yard. The House may be interested to know that that yard, Haverton Hill, expects to need a further 1,000 men to meet its orders.

The judgment about Irlam cannot be final. In a year the right hon. Gentleman has learned a lot about the House, and I say to him that he must have regard to the families in that part of our country. He must also take into account the fact that there is something about the British character which cannot be denied. It has an intrinsic attachment to certain of our economic activities. One of these is shipbuilding, another is coal mining, and the third is the steel industry.

I am sure that if the right hon. Gentleman is willing to look at the situation again and say to the Corporation that there is a case to be heard, my right hon. Friend the Member for Newton (Mr. Frederick Lee) will be able to say that his preparation of the submission that he has made with the support of his colleagues in the House and the admirable report from the local authority, has been worthwhile. I hope that the right hon. Gentleman's conversion to the idea that we must have a Corporation, coupled with the need to consider the position of Irlam in particular, will lead to his accepting our suggestion.

Lord Melchett, the Chairman of the British Steel Corporation, when speaking to the American Chamber of Commerce in December, 1970, said that during the past three years there had been some achievements, and he pinpointed the fact that, from being a loss-making operation, in the first year of the life of the Corporation, and bearing in mind the fact that in the last year of existence of the 14 companies which formed the Corporation there was a total loss of about £56 million, there was a loss of £22 million, and therefore there was an improvement. He said that there had been a considerable turnround in the half year ended last September: … we made a profit of over £13 million. When we look back over the previous 12 months, the profit was £23 million. On a capital of some £700 million, it is not a startling result, but it represents a ' turn round ' of about £45 million … If we had not introduced a much more stringent depreciation policy than had been the practice in the industry in the past, the profit for those 12 months would have been over £20 million better. In other words, it was a modest success story, from loss-making to reasonable profit-making.

But only two months later, on 16th February, 1970, the present Minister for Industry said in a debate on the steel industry: But, as he"— the then Minister— knows, steel prices have been too low for too long, which is one reason why the Corporation has been in difficulties."—[Official Report,16th February, 1970; Vol. 796, c. 154.] So we have two different postures—the Chairman of the Corporation expressing confidence and the present Minister for Industry saying that prices were too low because of difficulties in the industry. But who fiddled about with the prices? The present Government.

Lord Melchett also told the American Chamber of Commerce of two major concerns about the industry. His first was the increasing protectionism of America, and secondly, and I quote, The new Government has singled out our industry for further political attention. He went on to express the hope that, in future, … like most advanced countries, we will manage to keep politics out of the normal conduct of the industry's commercial affairs. He was saying that he had been singled out for political attention and that he hoped there would not be political interference in commercial considerations in future.

So whatever the Secretary of State says, the past 12 months have been unfortunate. The finances of the Corporation have been clear. They have not been as happy as we would have liked; some of the hesitancy caused by the Government's political intentions has caused some considerable damage. Perhaps we might find out later how much some of the investment programmes have been held up, causing acceleration of redundancies. The Government cannot blame the industry for their own decision to withdraw investment grants. This was a fatal blow, coming on top of the prices decision, for a Corporation which was hardly four years old.

In my constituency, in three or four months, we have had an announcement of 609 redundancies, and about 280 at the steel pipe plants. I move now from criticism of the Secretary of State to criticism of the industry itself. It seems odd that, while the Gas Council can place orders for the production of pipes for the distribution of gas over a number of years, the industry has not been able to plan how to produce them in our own steelworks. A large number of these pipes come from Italy, and are made by Italian labour.

On 23rd December last year, the Corporation told me that the reason was that pipes of this quality could not be produced in this country, and on the same day, the Gas Council said that, if it had given the full order to the Corporation, it would not have been able to meet the timetable. There are British pipes, produced from British steel, now in the ground carrying gas, so I do not understand this argument about quality.

The closure of a light plate mill in my constituency has been announced. Officials have been causing great confusion in the last few weeks by saying that it might close and then that it might not. All the evidence is that it will close. If only the plant manager would keep quiet for a while and let Lord Melchett handle it, we might get some sense into this matter.

There must be more consultation on general closures. Some of us are very sad that another problem of the Corporation, on top of Government interference, is too much bad plant management, with all their fringe benefits like trips abroad and practices from days gone by. We have some exciting management, but there are still too many bad managers.

On the question of foreign investment in the industry, the Sunday Times in May said that one group which had approached steel makers in Germany for financial support had been told: We see no point in investing in British steel, for once you are in the Common Market, we shall put your steel industry out of business anyway. One of the E.C.S.C. rules is that it should determine the levels of steel production here or anywhere else in the Common Market where a unit is producing 13 per cent. of the total capacity. On one side of the balance sheet we must put the investment of about £4,000 million by the middle of the 1980s to boost the industry's capacity from 20 million tons to 40 million tons, and on the other we must put the controlling elements of the E.C.S.C.

That is enough to worry about but we in this House will have no say anyway. The Commission and the E.C.S.C. will have the say and the hon. Member for The Hartlepools—or any other steel constituency Member—will not be able to ask a question here or would be wasting his time if he did. The Commission has so much power that many of us are convinced that even the Council of Europe cannot look after the whole host of regulations and decisions coming from it.

The Secretary of State has made a considerable improvement, but I am very much in doubt about future policy. This might be a peace-making approach from him and not a real intention to expand the industry. He should answer our precise questions about the future. On hiving off, perhaps he might undertake that Statutory Instruments will be laid so that the House will be able to consider them before they take effect.

8.20 p.m.

Mr. Alex Eadie (Midlothian)

The Secretary of Slate rather took our breath away when he said that the proposals contained in his statement were not motivated by political dogma. I wish that he could have seen the looks on the faces of some of his hon. Friends behind him. They found his remark almost as breathtaking as we did.

The most significant point to come out of this debate is the fact that overshadowing his proposals are the possible results of the long-term study which he told us is being carried out by his Department into the future of the steel industry. I have in the past found that the vast Department over which he presides is liable to be accident prone, mainly because of the magnitude of its field of administration. We do not want any accidents to occur this time.

Many hon. Members have referred to the possible effects on the steel industry of our entry into the Common Market. It is well known that fears on this score have been expressed by hon. Members on both sides of the House. I have tabled many Questions to the Minister responsible for negotiating our entry, and I am still waiting to be told why we abandoned the concept of a one-year transitional period.

As I have pointed out in the past, the Government have a responsibility to include in the White Paper the facts about the future relationship of the British steel industry to the steel industries of the E.E.C. member States. What will be the future rôle of the British steel industry if the Government take us into Europe, even with the consent of the people and Parliament? Will our industry be allowed to expand? How will we be able to determine our future rôle and expansion programme?

I appreciate that when he replies to the debate tonight the Minister may not be able to give precise answers to these questions. However, they should be spelled out in the White Paper so that we may be clear about our obligations. We do not want to take any more steps in the dark.

It would be churlish if, as a Scottish hon. Member, I did not express relief at the decision to go ahead with the Ravenscraig project, particularly as we in Scotland are now more job hungry than usual. We have the highest unemployment level in living memory. With more than 121,000 people unemployed, there is much talk about the hungry' thirties.

Although we welcome the decison to go ahead with the Ravenscraig project, That does not absolve the Government from responsibility for causing the difficulty in the first place. It was disgraceful that the Scottish people should have been left hanging on the hook of indecision for so long, wondering whether or not the project would go ahead. An element of callousness crept in——

Mr. Hector Monro (Dumfries)


Mr. Eadie

The hon. Gentleman does not represent a mainly industrial constituency. In any event, if he has something to say, let him get to his feet and say it.

The delay which occurred because of the Government's attitude to the Ravenscraig project will cause additional cost, and responsibility for this must be placed on the Government because of their interference with the proposals of the B.S.C.

In this connection Government policy has been, at least in part, responsible for the £100 million loss to which the Secretary of State referred. After all, the Government's change of policy from investment allowances to tax incentives has cost the B.S.C. not far off the loss to which the right hon. Gentleman referred. In addition, the Government's refusal to allow the Corporation to charge a proper price for its finished products undermined its profitability, particularly in relation to prices charged in Europe.

Much has been made of Lord Melchett's agreement to the policy announced by the Secretary of State, but the right hon. Gentleman cannot disguise the strong pressures which the Government placed on the Corporation and Lord Melchett in recent months. In any event, how much have the Government interfered in the plans of the Corporation? By how much have they amended the various propositions that the B.S.C. has put forward? If the Minister intends to be as foolish as to say that these matters are privy between the B.S.C. and the Government, then the workers in the industry will press to know how much interference there has been in the affairs of the Corporation.

The right hon. Gentleman is responsible for trade and industry. He must be aware, therefore, of the debates that have been going on in Committee on the Bill which is concerned with the so-called peripheral activities of the B.S.C. Even hon. Gentlemen opposite have not been prepared in discussing that Bill to allow the Government to hive off parts of the National Coal Board without adequate consultation. His hon. Friends invoked the principle of parliamentary accountability if such a situation should arise.

These industries belong to the nation. Some of the National Coal Board's peripheral activities were such that even private enterprise turned its back on them, but the Board made them profitable. Who is to say that the same thing will not happen about the Corporation's peripheral activities? We are talking of the taxpayers' money and of industries that belong to the nation, and we should be told tonight that there will be accountability to the nation and to Parliament if there is to be any selling of peripheral activities. If that is to happen, the Secretary of State should first ask the permission of the House.

Some may feel that, as a result of pressure applied by this side, the right hon. Government's proposals are not as bad as were originally suggested, but we in Scotland are still dissatisfied. Our priority is not to get a statement of policy on steel from the Government, but to get rid of the Government so that in their place we may have a Government which will be concerned with our living conditions.

8.30 p.m.

Mr. Peter Rost (Derbyshire, South-East)

I shall not take up the argument advanced by the hon. Member for Midlothian (Mr. Eadie). I know that he feels very strongly on the subject, and is probably anxious to catch the local Scottish newspapers——

Mr. Eadie

Too late.

Mr. Rost

The hon. Gentleman's personal and vicious attack upon my right hon. Friend was entirely unjustified, unwarranted and completely unfair.

I should like to welcome the statement on the future of the steel industry, but I have serious doubts whether it goes far enough, and I want to refer to one or two points that I hope may be given some consideration.

Can we have some clarification, because this seems to be one of the areas of indecision, of when the B.S.C. is likely to make profits again? Until that stage is reached, it seems quite unrealistic to talk in terms of raising outside, private, free enterprise finance for the industry. The profitability of the industry must be seen to exist The industry must generate its own cash flow in addition to raising extra finance. We ought to be told for how much longer the taxpayer is to be expected to subsidise and prop up a nationalised industry as it now exists.

The House ought to have debated at slightly greater length today the reason for the industry's productivity being so poor. This is not just a question of capital investment. Productivity is affected by the amount of capital investment, it is true, but that is only one factor. We ought to be seeking an answer to the question why productivity over the past five years in Japan, for example, has improved by 80 per cent., while that of our European competitor companies has increased by twice our rate of 12 per cent.

My right hon. Friend is grappling with the problem fairly thoroughly by strengthening top management, but on my excursions to, and discussions with, the management of one unit in my constituency—Stanton and Staveley—I found it very critical of the still top-heavy structure of the B.S.C. central management. Those at the centre might be described as the academics and bureaucrats of Grosvenor Place. I am curious to know whether the Minister is now satisfied that the management's strengthening moves will be adequate to ensure that the industry will be led in the right direction for the general benefit of its employees and of the nation as a whole.

That leads me to the capital investment programme which is related to management because it is management which makes the decisions. Is my right hon. Friend quite sure that the British Steel Corporation is getting its sums right? I know that the longer term capital investment programme is still under review but this is a most crucial question which must be answered. We must have the right solution too. Will we be assured of an adequate capital return on the vast investment programme which the industry has projected and are we quite sure that the more efficient units within the industry will not be used to subsidise the less efficient, because I am convinced that this is what has happened in one of the more profitable offshoots of the industry, the Stanton and Staveley units in my constituency?

This was part of the plum Stewarts and Lloyds group before nationalisation. There is not much doubt that the Stanton and Staveley group profits have been siphoned off and used in other areas of the Corporation through the centralised, bureaucratic system. There is not much doubt, at least not within the Stanton area, that that group could have expanded more rapidly, created more jobs and improved its own prosperity through natural growth if it had not become part of the nationalised Corporation. The whole question of how effective the capital investment programme will be and whether the management will be strong enough to take care of it is a crucial issue for the future of the industry.

I want to say a word now about the restructuring in the form of holding companies. Why are we being so timid? Admittedly it is a move in the right direction that part of the Corporation should be given the opportunity of a B.P. solution with private capital being reintroduced. What about the bulk of it, the other 90 per cent.? Are we really sure that competition will be restored in the present structure and, if it is not, what future can there possibly be for the steel industry against the increasingly severe competition, particularly from Germany, Japan and the United States?

Competition there is from the free enterprise steel industry primarily, which is more competitive, more efficient and which is expanding more rapidly. Unless we are prepared to adopt a structure which will allow us to become competitive once more, doubts raised by hon. Members opposite with regard to the Common Market are justified. The industry here would be under severe pressure and this is exactly why it is so imperative that the industry gets restructuring right.

In my view, this can be done only through a far more radical restructuring into three or four units with a longer term "B.P. solution ". I genuinely feel that the basic troubles of the steel industry in this country are due almost entirely to the 1967 nationalisation. It was the doctrinaire, fanatical obsession with nationalising the industry which is now the root cause of the industry's difficulties. Until we are prepared to tackle that in a more vigorous way the industry will continue to struggle against foreign competition with increasing risk of reduced employment opportunities, reduced efficiency and profitability.

This side of the House argued along exactly those lines at length and convincingly in 1967 against nationalisation. Yet we are now perhaps a little too timid to spell out the real solution.

I conclude by congratulating my right hon. Friend on having taken at least the first step. It is a brave move in the right direction.

8.40 p.m.

Mr. Eddie Griffiths (Sheffield, Brightside)

One of the worst features of a debate on steel is to witness the difficulties the Government had in providing sufficient speakers to match us. In these debates we have to sit here and listen to sanctimonious, nauseating political hypocrisy such as that just shown by the hon. Member for Derbyshire, South-East (Mr. Rost), who some weeks ago practically crawled and whined in his seat and asked the Secretary of State to save Rolls-Royce. At that stage the hon. Gentleman regarded nationalisation as a saviour for Rolls-Royce. Other hon. Members have jumped on the Irlam bandwagon. The "lame duck" philosophy of the Department of Trade and Industry that everyone must stand on their own two feet goes by the board because these hon. Members think that there might be a few votes in it for them, although they have no deep interest in the steel industry.

For nine months we have waited with bated breath for the short-term review which the Secretary of State promised us. Then we heard of the steering committee of civil servants and consultants who were vetting much of the Corporation's activity, going through the books and ensuring that the accounts, plans and development schemes were in order. Things were built up to a great crescendo such that we were expecting a startling exposé by the Secretary of State.

However, in the statement he made on Monday the right hon. Gentleman had to accept what the Corporation and what we on this side had been saying to him for months. The right hon. Gentleman in his wisdom—here I congratulate him—has allowed the Corporation its capital investment of £225 million for the current year. Had it not been for the delay, that would probably have been £170 million to £180 million; in other words, because of the inflation which has occurred in the intervening period some schemes will cost the Corporation more money.

Mr. John Davies

The hon. Gentleman would not wish to perpetrate that inexactitude. The £185 million had a clean addition of £40 million to make it £225 million in the same values because additional investment was involved.

Mr. Griffiths

I am grateful to the Secretary of State, and I accept his correction. Will he or his hon. Friend the Minister for Industry indicate where the £225 million is going? I assume that a large proportion of it will go on the Anchor scheme. The right hon. Gentleman mentioned in his statement Llanwern and Ravenscraig. They are substantial schemes. What other schemes to the value of more than £10 million are in the pipeline to be instigated during the coming year?

The general secretary of my union—the Iron, Steel and Kindred Trades Association—was Chairman of the Steel Steering Committee. He has complained bitterly about the shoddy treatment the Ministry has accorded the union over the announcement. Will the Secretary of State ensure in future that trade unions involved in the industry, at national level and, when there are local problems, at local level are consulted meaningfully at an early stage when announcements are to be made?

I welcome the right hon. Gentleman's assurances that during the coming year and for the future far greater flexibility will be allowed to the Corporation in its pricing policy. I hope that the Prime Minister will not find it necessary to interfere with the pricing policy of the Corporation. The Secretary of State ought not to allow him to do so.

On the question of hiving off, the right hon. Gentleman and I disagree about the philosophy of selling back some parts of the steel industry to private investors, or operating them on a joint basis with the Corporation. He is entitled to his opinion, and I am entitled to mine. I suggest that if he sells off certain assets to private investors, or merges them with private investors, the operation must be seen by the steel workers to be fair and equitable. In other words, whatever new company is formed must be formed for the purpose of expanding production and maintaining job security for the future.

In passing, I want to refer to the case brought to the right hon. Gentleman's notice about the proposed merger of the Shepcote Lane rolling mill and the Firth Brown organisation of Sheffield. For some time the Corporation has been keen for the rolling facilities to be entirely in its hands. As part of the deal the River Don Works is to be given to Firth Brown. The argument is that there is some overlapping of interests, and that the two plants are near enough adjoining as to lend themselves to rationalisation.

The men on the shop floor are saying what we have been saying: namely, that this is not rationalisation, or a merger between Firth Brown and the River Don Works for a future expansion of activities; the idea is that Firth Brown—a private company—should act as a sort of commercial vulture and pick those bones from the River Don Works that it wants and that will fit into its set-up.

The rest will go to the wall—the rest being the 4,500 or 5,000 workers. They are not labourers, or semi-skilled workers; they are craftsmen of the highest calibre. If that kind of workmanship and craftsmanship cannot be retained in the industry it will be a great loss to this country. We may have our political differences and dogmas, but I ask the right hon. Gentleman to heed the warning that the hiving-off operation in the case of Shepcote Lane and Firth Brown will bring his philosophy into disrepute within the industry. In that instance people will see it for what it is—a take-over of the River Don Works for one purpose only; namely, to take its order books and then to close it. I ask the right hon. Gentleman to consider the matter in that setting.

As for the general policy of hiving off, I hope that the Minister can assure us that the price to be charged to a potential buyer will be at the sole discretion of the Corporation; in other words, that there will be no artificial deflating of the price asked in a buyer's market. Will he also undertake that before an asset is sold off there are two potential buyers for it and not just one?

It is being said that the Brymbo Steel Works will go to Guest Keen and Nettlefolds, one buyer, at a give-away price. I hope that the Minister will consider that side of the question and ensure not only that the price is entirely in the hands of the Corporation but that there will be two potential buyers waiting and bidding for those assets which he may wish the Corporation to sell off.

Now, a word about the future growth of the industry. I have always tended to be pro-Common Market. I have never been fanatical about it, but I have always sincerely believed that it would be in the best interests of the British steel industry, the industry which I love particularly, that it should go into the wider market of Europe. But I have great misgivings at the moment. According to the information and reports coming out of Europe, the Community is saying, "We have no objection to the present size of the Corporation, and we have no objection to the present ownership of the British steel industry", but I suspect that an undertaking has been given, or may be given unofficially, that the expansion programme will go by the board and that the British steel industry will be retained at a level acceptable to the Community.

I suspect that words have gone out to the Community in the context of what the right hon. Gentleman proposed in his initial statement—I am sure that he will confirm that this is only a forerunner of things to come—indicating an understanding on the part of the Government, not the right hon. Gentleman personally, that by the time we are through with the British Steel Corporation, by the time we have picked a little bit off here and knocked a litle bit off there, it will be of a size acceptable to the Community.

I now offer an invitation to the Secretary of State. He has great experience of business, but I suspect that his experience is basically that of the boardroom, and I am sure that many of the voices which he hears as he goes about the country come from chambers of commerce and people at high company level. I ask him to come to Sheffield in the near future to meet not the chamber of commerce, not the Cutlers, not the people one meets in places where formal dress is worn, but the steel workers of Sheffield. If he can sell them his ideas for hiving off and forming companies between the public sector and the private sector, he will truly be a master of his trade and genuinely deserve to be in charge of the Department of Trade and Industry.

Now, a brief word about Irlam. I do not want to go into the arguments for and against Irlam, but I say this to my right hon. and hon. Friends as much as to the House as a whole. We on this side often say that we want a huge capital investment for the British Steel Corporation, that we want the £4,000 million, that we want large integrated steel plants and that we want to compete in world markets, but we are sometimes guilty of for-geting that the cost of rationalising and going into steel in a big way is often the closure of seemingly unprofitable and antiquated plants in various parts of the country. When that happens, we take a parochial attitude, and we try to destroy the system in which we believe because it does not suit our particular book at the time.

In the case of Irlam, it is all right to make speeches such as the one we heard from my right hon. Friend the Member for Newton (Mr. Frederick Lee). Any Member from a steel constituency could make a similar speech. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) could say the same about the steel workers of Ebbw Vale. I suspect that the workers of Sheffield were making steel before Irlam had ever heard the word "steel". The clouds go over all of us in turn. What we have to do, I suggest, is to set our sights on a flourishing steel industry for Britain.

8.54 p.m.

Mr. Joseph Ashton (Bassetlaw)

I shall be as brief as I can so as to give others of my hon. Friends a chance to take part in the debate. I do not intervene from a constituency standpoint, but I worked at the River Don Works for 10 years, and my father works there now. He works in the Grimesthorpe foundry, but he senses the cloud hanging over him now, and he wonders whether his job will last until he is 65. If I thought that its plans for the River Don Works in Sheffield were to be the final plans, even though they involved hiving off, I would be prepared to accept them. Unfortunately, the River Don Works has a long history, since the 1914–18 war, of not being a complete works but a sort of ten-legged camel, created for war purposes.

Its history goes back to the days of Cammell Laird, which was taken over by Vickers, and then this was tied in with Firth Vickers, and later became part of Firth Brown. This was part of John Browns in wartime and became a profitable and highly efficient war machine. It has been not a steel producer but on the dividing line between steel production and engineering, with the result that it has always suffered from the kind of proposals that are now made for it.

When the Labour Government went in for nationalisation in 1966 they made a fatal mistake. They thought that they had a large amount on their plate, so they decided that they would nationalise only bulk production of steel. The River Don Works was on the fringe; partly producing steel in bulk—rods, wine and so on—and partly producing heavy forgings, and part was engaged in heavy engineering.

The English Steel Corporation was very profitable, with a monopoly in work such as the making of the propellers for the Queen Mary, drills for oil wells, and so on, work of a specialist, one-off, nature. The Labour Government should have gone further and nationalised the Firth Brown part of the works, where steel production turns into engineering. There would then have been none of the present trouble. We would have had rationalisation, but it would have been rationalisation for the benefit of the industry from a technical and engineering point of view and not from a profit point of view, which unfortunately is what has happened today.

I should like to say a little about what is happening in Sheffield and the atmosphere there. There are understandable, emotional headlines in the local newspapers about the workers saying they should take over the factory. People whom I worked with came to see us in the House this morning and asked, "What are you going to do for us?" They think that M.Ps have lost respect for them. They think that we have forgotten the days when we worked side by side with them on the shop floor. We have not, but too often we are faced with economists and other experts in Whitehall who believe that what counts is the profit margin and not what happens to people.

The English Steel Corporation or the River Don Works—whichever of its numerous names of the past 50 years we care to use—will, like Krupps in Germany, continue to produce. It has the engineering skills to pull it through. But we need to settle the uncertainty affecting 4,500 people. How is that number made up—how many people, how many departments, how many shops? What sort of jobs are affected—fitters, turners, engineers, steel melters, rollers? What is to happen to them over the next two years? When will phasing-out occur? What will happen in the interim period?

Someone, somewhere, knows the answer. The people who work there are entitled to know that answer, and they are not getting it. There is no consultation; the only thing we have is communication. Too often the ordinary working man is told, as in the case of Rolls-Royce, Upper Clyde, the coal mines and now the steel industry, that his job is going, that rationalisation is taking place. The working man is treated as a unit, a cipher and no longer as a skilled individual who has something to add to an industry and who should be consulted when its future is decided. It is not good enough for politicians and Governments to act like that. It is essential for the Minister to tell the people concerned within the next few days what their future is, what the picture will be in two or three years' time, and why the redundancies are necessary.

We on this side do not accept it as necessary. We think that a lot of it is being done for doctrinaire reasons. We are fed up with the continuing confusion over the industry. We are fed up with the chopping and changing and decisionmaking, often by people who do not know what is involved, who are miles away and who do not visit or consult or talk. The average working man is totally fed up with the way they dominate his affairs. That is why he is afraid to go into the E.E.C. He is afraid of decisions being taken in Brussels. The workers are entitled to some answers, and if those answers are not forthcoming no one can blame them for taking any action which is not democratic.

9.0 p.m.

Mr. W. T. Williams (Warrington)

During my lifetime, I have lived with many changes in the steel industry and I had hoped in 1967 that I had lived through the worst of them. Now we appear once more to be back to square one. No one can have listened to this debate without having sensed the anxiety that is spreading throughout the steel industry about many things. There is anxiety about the position of the steel industry within the E.E.C, about which far too little has been said by those who should know what the long-term consequences to the steel industry will be should we join.

There is anxiety about the consultations within the industry, of which my hon. Friend the Member for Bassetlaw (Mr. Ashton) and others have spoken. There is anxiety above all about the nature of the restructuring within the industry that is being carried out by the Government and by the Corporation. I had hoped that it might have been possible to have developed my thoughts on these matters. I shall restrict myself, however, to this: through all the experience of this industry from poverty and despair to prosperity and hope and now back to times of anxiety the concern that is now felt within the industry can perhaps be best seen when one looks at the isolated spots where one can see in a small compass the way in which the Government's policy for steel is being reflected in its social and human consequences.

My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) said that those of us concerned about places like Irlam had to consider the total picture. Yet these small communities and the way in which they are being treated are perhaps the best illustration of the attitude of the Government generally, and justify the concern which many of us feel about the social and human consequences of their policy. When I speak for Irlam, therefore, I speak also for all the human beings who work within the steel industry who are now being treated like cogs in its machine.

In Irlam, for instance, the Government's decision to close the works will bring increased unemployment to an area where there are far too few places of alternative employment. The price in human terms of the changes which will follow closure is too high to justify even real economic advantage. The increase in the number of unemployed in Irlam alone is from 105 in April to 2,226 after the closure—from 1½ per cent. of the population to 21.2 per cent. And these figures, tragic in themselves, have an effect that is going to be widespread throughout the whole of South Lancashire. In Warrington alone the increase in the number of unemployed will be 354. This makes a mockery of the British Steel Corporation's comment that it was giving serious consideration to the social consequences of these acts. The chances of re-employment for the people who lose their jobs in the Northwest are pathetically slight. Since the beginning of the year the consequences of the Government's policies in the Northwest have led to over 16,000 redundancies in this small area of Britain. In April of this year there were available in the region about 18,500 vacant jobs of all kinds for nearly 110,000 unemployed, most of those wholly unsuitable jobs for the new people whom the Government have made unemployed, for of the 4,500 people who will be thrown out of work in Irlam, over a quarter are skilled steel workers unused to other work, and nearly half are men over 45 years of age.

The picture, therefore, is of a large number of unemployed in South Lancashire left on the scrap heap, without hope of re-employment and with all the consequences of misery and despair that follow from that dreadful situation that we thought had been left behind as before the war. All this for what? The cost of making Irlam viable is miniscule in comparison with the overall capital expenditure of the B.S.C. When one considers the cost to the Exchequer of unemployment and social security benefits of about £2 million a year, surely it would make greater economic sense and be more humane to provide capital for maintaining Irlam than to keep the people unemployed. The demands of social justice are clamant here.

Even so, I should have little confidence in presenting this case, because I know the Secretary of State for Trade and Industry has little sympathy with the argument that the Government should provide investment for industry to save the souls of the unemployed, but for one thing. The way in which this industry could be made viable at little cost has been excellently set out in the report of the Joint Action Committee in Irlam. I urge the Government, even now, not to destroy a possibly viable community for so little advantage. Let the Secretary of State belie at least one part of the unenviable reputation he is earning for himself, even among those of us who know him and like him personally, that, although he is personally so pleasant, he is showing himself socially so pitiless.

9.8 p.m.

Mr. Eric G. Varley (Chesterfield)

I agree with my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) that when we debate solid industrial matters such as the coal industry and the steel industry there is never much interest on the benches opposite. They have been empty for most of the day. This is understandable, because coal miners and steel workers are far too sensible to send Conservative representatives to the House of Commons. I make no complaint. I congratulate my hon. Friends on taking advantage of this situation. According to my calculations, we have heard seven speeches from the Government side of the House and 13 from this side.

The Secretary of State in opening the debate began by telling the House that he wished to avoid uncertainty in the steel industry. He also promised to say something about the long-term future, and my hon. Friends were surprised when he came to such an abrupt end. The right hon. Gentleman has done nothing to clear up the uncertainty that exists or to allay our fears. There is uncertainty about the long-term review, when it will be completed, how it will be presenetd to the House and what it will say. Following the Secretary of State's statement to the House the other day, there is now uncertainty about the Corporation's pricing policy, and again the Secretary of State did not clear up this matter. I hope that the Minister for Industry will attempt to do so in his reply.

There is uncertainty about the employment prospects. We have heard from my hon. Friends from steel constituencies, particularly those from Sheffield, how uncertain and tense is the atmosphere there where there is the likelihood of 4,500 redundancies. We should like the Minister to say what he knows about this situation and whether this will go through. We hope that he will be able to give us more information than we have had up to now.

Then there is uncertainty about hiving off and what form it will take. One recent informed report in the Daily Telegraph suggested that this process could go on for two years—two years of uncertainty, two years of doubt. We do not know at this stage what section of industry will own what, and at what particular date—and, if Press reports are anything to go by, Lord Melchett and the Secretary of State admit that they have no idea either. There is even speculation in the Daily Telegraph that the name of Krupps may be posted over the entrance of the B.S.C. enterprise. I hope that is not true, but it was in yesterday's papers.

No wonder The Times Business News in a leading article has made what I consider to be an indictment of the Government. It said: … a great deal of B.S.C. management energy is going in the coming months to be devoted to sorting out who buys what or who surrenders their assets, and complex constitutional questions. Another section of the same issue said: A number of major question marks still hung over the future of Britain's steel industry. This is the situation after a year of Tory Government, after a year of power by a party which pledged in its election manifesto "progressively to reduce involvement of the State in nationalised industries, for example the steel industry". This is a party whose spokesman attacked the Labour Government only 16 months ago in a censure debate on steel in the devastating terms which I am about to quote. The Minister for Industry knows what I am going to say, since he took part in that debate. The Conservative spokesman then said: The Government have denied the Corporation the ordinary commercial freedom to cope with prices. They have delayed and distorted the price movements… the Government's political juggling with prices and delays in dealing with them have led to even higher increases than would have been necessary."—[Official Report,16th February, 1970; Vol. 796, c. 107–8.] That was the present Secretary of State for Social Services, then the Opposition spokesman on steel. Another passage in that debate in columns 153–4 is even more relevant when one hon. Gentleman said: One of the ways in which the Steel Corporation will be able to show a better return on the capital invested in it is by more realistic pricing policies … steel prices have been too low for too long, which is one of the reasons why the Corporation has been in difficulties. That was said by the present Minister for Industry, who wound up that debate speaking from this Dispatch Box 16 months ago. When we contrast what has happened in the last few months to the B.S.C. with the way the situation has been handled those words to some extent border on hypocrisy.

It should come as no surprise to the Government, to the Secretary of State, that this debate has hinged upon the future of the steel industry. As my hon. Friend the Member for Ebbw Vale (Mr. Michale Foot) said, the statement by the Secretary of State on Monday told us very little about the long-term future of the industry. All it did was to make vague references to hiving off, the details of which are still no clearer. The Secretary of State is frowning, as though in dissent, but so far as we are concerned it was vague. If the Minister for Industry has anything further to tell us tonight we shall be pleased to hear it, but the Secretary of State vaguely told us about setting up new private companies for construction and chemicals and that kind of thing.

I should like to remind the House of what the Secretary of State said when we last debated these matters on 24th May. Referring to his first review he said this: We will take all relevant factors into account, including price factors and including not only home price factors but competitive prices abroad."—[Official Report,24th May, 1971; Vol. 818, c. 73.] We thought on Monday that all this would be revealed and that we would know precisely how the pricing arrangements stood, but still this is not clear. It is certainly not clear from the right hon. Gentleman's statement on Monday, because he said: As regards prices for the B.S.C.'s products, the Corporation wishes, in future, to be more selective in its price changes, dealing with its products individually rather than upon an across-the-board basis. I am in favour of such a change in practice. …"—[Official Report,28th June, 1971; Vol. 820, c. 34.] Can the Minister for Industry tell us what that means? Does it mean precisely that the Corporation is now free to charge prices for its individual products? Can it do that? I know that there is the normal consultation and the consultative procedure, but if, for instance, the Corporation comes to the Secretary of State saying, "We want to put up the price of this particular product" can the Secretary of State say to the Corporation in future "Yes, go ahead and do it"? This is absolutely crucial. We all know what happened on that Friday morning when a hurried Cabinet meeting took place and the Prime Minister decided he was going to intervene and the Secretary of State issued a direction to Lord Melchett, a direction which was, I believe, against the better judgment of the Secretary of State. Can we now take it that the Government are giving the Corporation marketing and price freedom? Everybody is concerned about this. It is bound to have been discussed and settled in detail; these discussions have been going on. I think the House is entitled to this information.

The Secretary of State this afternoon had some gloomy things to say about the Corporation's financial position. As many of my hon. Friends have said, this cannot be looked at in isolation. First of all, the Corporation is operating in an atmosphere of chronic economic recession. Nobody denies that. We on this side of the House believe that it is a recession stimulated by the Government, and it is a recession, if Monday's debate is anything to go by, which the Chancellor of the Exchequer and the Secretary of State for Employment gloried in, because certainly they announced in that debate nothing which will mean that there will be an improvement in the situation.

Steel users are in difficulty and curtailing their activities. For example, how much damage will be done by what I consider to be the stupid handling of the Upper Clyde Shipbuilders situation? Thirdly, in his statement on Monday the Secretary of State talked optimistically of the Corporation's need to move into profitability, and he referred to the expansion programme at Ravenscraig and Llanwern. How will the Corporation's financial position be damaged? In an intervention earlier, the Secretary of State said that it had not been damaged by holding up these expansion plans. I believe that it has, and again the Minister for Industry should tell us. Certainly those at Ravenscraig and Llanwern have been damaged because of the withdrawal of investment grants. It is probable that this has been estimated. I cannot believe that the joint steering group has not presented to the Secretary of State the precise estimated losses on those two projects as a result of the withdrawal of investment grants.

There are other crucial questions which the Minister for Industry ought to answer tonight. Can he tell us, for instance, what form the possible sale of the Brymbo Steel Works will take? In his statement on Monday, the Secretary of State gave the impression that the only discussion about the sale of the works will be with Guest, Keen and Nettlefolds. Is that really the case? If it is, irrespective of the merits or demerits of hiving-off, it is a poor capitalist concept to tell the British Steel Corporation to get rid of the Brymbo Steel Works and to open discussions with only one firm. If that really is the case, I am amazed, and I bet that G.K.N.s opening bid will be a paltry affair. Unless the Government can say that the sale of the works will be open to all bidders, we cannot help but form the impression that the British Steel Corporation is a forced seller and that a valuable asset will go for a pittance. It is important that we are told about it.

I do not wholly share the views of some of my hon. Friends who say that Sir Raymond Brookes of G.K.N. is getting the works as a pay-off for services rendered to the Conservative Party. If that is the case, surely it would have been cheaper to have sent him as Ambassador to Washington or to some similar post.

It is that kind of circumstance that we on this side of the House have in mind when we give the solemn warning to those who are thinking of bidding. If we are right in our suspicions and only one firm is bidding, that firm will get its fingers burnt. That is what we mean by renationalisation without compensation. I have never been in favour of confiscation, but if there is to be only one bidder, my hon. Friends cannot be blamed for the line that they take.

I want to ask the Minister also about the Parliamentary control of the sale of those parts of the industry which are to be hived-off. My hon. Friend the Member for Ebbw Vale mentioned this, as did the hon. Member for Worcestershire, South (Sir G. Nabarro) and the hon. Member for Bedford (Mr. Skeet). Certainly I know the views of the hon. Member for Bedford, since he served on the Committee which considered the Coal Industry Bill and was as anxious as any hon. Member on this side that provision should be made for it. We want an assurance that, if the sale of an asset takes place, there will be legislative and Parliamentary control. We want to ensure that any disposal of a public asset shall be allowed only with the approval of this House in possession of all the facts. We want to know from the Minister for Industry whether, for example, the Brymbo Steel Works and others are likely to be sold off without parliamentary control. If it is, it is nothing short of a scandal.

I hope that the Minister will be in a position to explain in more detail the time scale and manner in which new companies are being formed to deal with the constructional engineering and chemicals divisions.

The headquarters of the chemicals division, and a substantial part of its production, is at Staveley, which is part of the Chesterfield constituency. Never at any time has any question been raised about its efficiency, its profitability or its long-term future, yet now unnecessary confusion has arisen because of the Government's determination to satisfy some of their Selsdon Park prejudices, if I can put it that way. Can the Minister give us an assurance that when these new companies are established all those employed at Staveley and elsewhere in the chemical and constructional engineering divisions will be assured of future employment?

Another matter arises out of that. If there is to be rationalisation in these new private companies, if there are to be mergers as suggested by the Secretary of State this afternoon, what part will the Corporation's social policy unit play? Quite properly a great deal of credit has been given to the Corporation, certainly up to a few months ago, for its humane approach to manpower rationalisation problems. Will the social policy unit have a rôle to play in these new companies when they are set up? Whn they are quoted companies, will the Corporation still be involved in that way? If the Government are not able to answer that simple question, it will show how ill thought out these matters are.

But what the House is really interested in is the future, in this second phase, in the Steering Group No. 2 Report. The steel industry over the last 12 months has been subjected to the most intolerable pressure, and the first outcome of that has been the hurried and often heartless way in which redundancies have been announced. The same sort of thing has happened in Sheffield. It is not just a question of relatively junior officials of the Corporation speculating about what will close and what will not and all the difficulty that has been created there. What concerns us is the hurried and heartless way in which these matters have been dealt with, involving, as they do, jobs and lives. What has happened belies the attitude that we expected from the Corporation in dealing with redundancies, an dwhat we thought was its determination to cushion the social impact of redundancies.

Now we have the next stage. There has been this rearguard action against the B.S.C., brought about primarily by the Minister for Industry. I think that he is the nigger in the woodpile, if I may so put it. I do not think that the Secretary of State is happy with the way things have gone. We have seen a display of ideological malice, and Lord Melchett has had to jeopardise about a potential 14 per cent. of his turnover as the price for being allowed to continue with his capital expenditure programme or this year, and for this year alone. He has a sword hanging over his head. All that he is being graciously allowed is the extra burden of interest charges in place of the price increase that he has been denied, and yesterday's Daily Telegraph said that in many respects that thas accentuated the Corporation's financial loss.

Added to all that, I think that Lord Melchett has been subjected to terrible pressure and great indignity, but hes has put an extremely brave face on things throughout the situation. The industrial corespondent of the Daily Mirror summed it up very well yesterday when he said: In exchange for putting a brave face on this sell-off proposal Lord Melchett, Steel Corporation Chairman, has got Government backing for a £225,000,000 investment programme … As my hon. Friend the Member for Rotherham (Mr. O'Malley said, Lord Melchett's arm has twisted so much that his grimace is being misconstrued as a smile. The hon. Member for Bedford quoted something from the Financial Times, saying that they were the actual words. As one of my hon. Friends said, if one is threatened with hanging and it turns out that one will only be tortured, at the end of the process one may say, "Thank you." That is precisely how I view this situation.

The future price which the industry has to pay is the serious unemployment situation. The Steel Corporation has always made regional location one of its chief priorities, yet this vital priority may well be the next sacrifice to dogma.

The question which most exercises my hon. Friends from the hardest-hit regions is where the new green fields site works will be located. Jobs for the jobless and a boost for the regions where hope is scarce is uppermost in our minds. What a terrible let down it would be if it turned out that the Government's favoured location was not a development area but somewhere in the South-East, as close as possible to the markets and combines of the E.E.C. There has already been shock and disappointment at the location of the V.A.T. office. I do not particularly want the office all that much anyway. but if it has to be, it should at least be in a development area.

We will not be satisfied unless the Minister gives us a categorical assurance that not only will there be a new green fields site but that it will definitely be located in a traditional steel area which is at the moment affected by high unemployment. I know that many of my hon. Friends have an open mind on the Common Market, but they would regard it as extremely serious if it seemed that, in preparation for entry of Europe, the Government were prepared to tilt even further the industrial centre of gravity towards the overcrowded and still relatively prosperous South-East.

So there is anxiety here. The anxiety about the E.E.C. and its impact on this industry has been mentioned time and time again. Can the hon. Gentleman assure us that, in the White Paper, all these aspects will be considered? What will the Community have to say about the future expansion of the steel industry? It is absolutely crucial that we know. This is not an anti-Market point. Many of my hon. Friends who have open minds about this issue want to know, because this will determine their attitude.

Over the last few months the Steel Corporation has been subjected to a ruthless and humiliating intervention, in direct contradiction of the Government's Election manifesto. The postponing of the 1971–72 investment programme has added millions of pounds of extra burdens to the industry.

The proposals for hiving-off do not make economic sense to us. We have not been assured that there will be parliamentary scrutiny. There has been no consultation with the trade unions, which we were told would take place. This is not economic sense; it is just partisan spite.

At the end of the day, every industry in this country depends upon the confidence of those who are employed in it. In view of the way that the situation has been handled over the last few months, I can tell the Government and some of those in the industry that they have lost the confidence of the steel workers and the confidence of the nation as well.

9.35 p.m.

The Minister for Industry (Sir John Eden)

The hon. Member for Chesterfield (Mr. Varley) considerably exaggerated things. I hope that in attempting to answer at least some of the questions which hon. Members have asked I shall lay some of the quite unnecessary fears which have been aroused.

The one main point raised by many hon. Members on both sides has been the situation in Irlam, and I wish at the outset to inform the House of the situation there now. Perhaps the best way for me to do this is to explain the view of the British Steel Corporation. As the right hon. Member for Newton (Mr. Frederick Lee) was speaking, I felt that he was addressing many of his remarks directly to the Corporation, about which, in this instance, he and a number of hon. Members had some critical things to say.

I am sure that the B.S.C. is willing to consider any alternatives which the trade unions may wish to put forward to its proposed course of action. The Corporation has already made it absolutely clear to the men concerned that it will approach any such alternative strategies with a completely open mind. It will be known to a number of hon. Members that the Corporation agreed to set up a small joint committee, consisting of the unions and management, for the express purpose of considering the unions' counter proposals.

I believe that this joint management committee had a meeting yesterday, though I apologise for not being in a position to give a report on precisely what took place. If the proposals which the B.S.C. has so far put forward in connection with Irlam should later be confirmed, there will still be time for alternative arrangements to be made by and for those affected.

As the House knows, the rod mill on that site will in any case continue. This mill may well be involved in some of the discussions which are taking place about the wire facilities which my right hon. Friend mentioned in his statement on Monday. Apart from that, the Corporation will certainly consider—indeed, it is already considering—approaches made to it to acquire properties at Irlam with or without the associated wire activity.

The Corporation stresses, however, that any such consideration will have to take careful account of the effect there would be on the demand for semis from its own production facilities which are in existence or planned to be under construction in the country as a whole, and here it has especially in mind the situation at Scunthorpe.

The observations made towards the end of the speech of the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) on this matter put the situation in its proper context. It is an extremely difficult one, but the fact that the Corporation is approaching the matter with a completely open mind and is ready to receive representations and enter into discussions with the unions should be of some help.

Another matter raised by a number of hon. Members was the possibility of redundancies arising out of the announcement that the B.S.C. and Firth Brown had been discussing the possibility of rationalising their joint and competing interests in the area. This appears to refer to the River Don situation, and in the joint statement which was issued on behalf of the Corporation and Firth Brown there appeared a reference to the fact that the B.S.C.'s other activities at the River Don would be reorganised or terminated.

The situation has got no further than that. The discussions with the trade unions concerned will now begin. All the proposals are subject to final negotiation and agreement between the two parties. The future of the River Don Works will obviously call for very detailed consideration and planning, and the closest consultation with the trade unions. This procedure is normal in the sense that the first thing that has to happen in cases of this kind is that approval in principle has to be given before the actual detailed negotiations and discussions can take place.

Mr. Darling


Sir J. Eden

It is the same sort of thing as took place when the Round Oak and Tube Investments agreement emerged with the creation of a joint venture company under the previous Administration, 50 per cent. owned by B.S.C. and 50 per cent. owned by Tube Investments. The right hon. Gentleman the then Minister of Power had to announce his approval in principle for the transfer of assets to the new company to take place, and once that had happened the detailed negotiations and discussions could proceed.

Mr. John Mendelson

Does not the Minister recall that in the case that he mentions there was also a period after the original intention had been announced before the Minister gave his final approval? Could not the Government say tonight that only a preliminary announcement has been made, that they have not given approval, and that over a period of several weeks or months they will consult the trade unions before giving final approval?

Sir J. Eden

We have given our approval in principle to the proposals as announced in the joint statement, and I think that it is in the general interests of our steel industry that rationalisation at the boundary between the two sectors should take place.

The hon. Gentleman the Member for Ebbw Vale (Mr. Michael Foot) took me to task for my failure to consult the unions—[Interruption.]—or I think it was he. At any rate, someone did—perhaps the whole of that side of the Chamber.

I saw the unions concerned on 18th December last, on 28th April, and finally on 28th June of this year—just before the statement was made. I accept fully that that last meeting took place only just before the statement was made, but I was able to assure the unions—and I meant this absolutely—that I had taken their views very much into account in the earlier discussions. I am sure that I was right to have seen them earlier on, and to have given full consideration to what they had to say to me. I am sure, equally, that it would have been wrong for me to have spelt out the details of the statement which my right hon. Friend was about to make, in the first place, to the House. But I went as far as I could in indicating the broad lines of the direction in which we propose to move.

Further than that, I made it quite clear at that meeting, and have since written to confirm the fact, that I am ready to meet them again whenever they feel ready to come forward and to discuss in greater detail whatever they may wish to raise in connection with the statement.

Mr. Michael Foot

I was quoting what was said to me today by representatives of the steel committee of the Trades Union Congress, who regard this as a breach of faith. That is what they authorised me to say, and if the Minister looks at the undertaking he will see that that is the case.

But would the Minister now, in an attempt to repair the situation—[HON. MEMBERS: "Oh."]—give an absolute undertaking that there will be a veto on any approval under any of these proposals if the Corporation is not satisfied that the new companies or new firms are able to carry out the obligations which the Corporation itself has under the Act of Parliament, and in accordance with the way in which it has carried out its procedures in the past?

Sir J. Eden

I will come to the new companies in a moment. The other point that was very much in my mind in these matters was the extent to which the Chairman of the Corporation had agreed the broad lines of the approach that we were making. One of the most important parts of my right hon. Friend's statement was that which referred to the fact that: … the Corporation fully recognises the need to find a solution to the problems of private sector re-rollers and others who are substantially dependent upon the Corporation for supplies of billets while at the same time competing with it in finished products. This is a very important affirmation and it will almost certainly lead to the creation of a number of new steel and billet-making companies. I cannot at this stage say what total proportion of assets or capacity is likely to be involved because this depends very much on the nature of the negotiations which will now be able to take place and also upon what proposals the Corporation will put forward to those from the private sector who will enter into discussion with it.

The hon. Member for Chesterfield asked me about Brymbo and was I really right that the discussions would take place only with G.K.N. The answer to that is, "Yes they will take place only with G.K.N.". This is a question of reopening negotiations with Guest, Keen and Nettlefolds about the future of the Brymbo Works. That form of words is no different from that used by the right hon. Gentleman the then Minister of Power in 1967 who stated by means of a Written Answer in this House that discussions were continuing with Guest, Keen and Nettlefold about the future of the Brmybo Works. Those discussions at that time were frustrated. They are now being reopened and it is considered by both parties to be in their best interests to do so.

The exact form of the outcome of these negotiations I obviously cannot spell out because they are now only just about to take place. The important thing to remember in all these matters is that the way is now clear for the Corporation to negotiate a series of transactions which will be in its best interests. It agrees very much with the industrial logic of our proposals, mentioned by my right hon. Friend on Monday.

I have been asked about accountability, which is an extremely important matter and I do not pass over it lightly. First we have to bear in mind that these will be transactions with which the Corporation agrees. The emphasis is entirely upon a joint venture, joint public /private ownership and it will now enter into the negotiations to achieve what is believed to be a sensible solution. I and my right hon. Friend are very ready to answer to this House for the general implementation of disposal policy as a whole and the Corporation has agreed to include in its annual reports a full account of progress with as much detail as it is commercially prudent to reveal. We must bear in mind that these are commercial transactions, in some cases, as with Firth Brown, involving Stock Exchange quoted companies and it is absolutely vital that the Corporation should proceed in the way that I have described.

Sir G. Nabarro

The operative words are "answer to this House" firstly and "as a whole" secondly. May we have my hon. Friend's assurance that some instrument such as an affirmative Resolution to implement each of these transactions will be laid before the House so that we may examine each of them individually?

Sir J. Eden

No, Sir, I do not think that that would be a right or a sensible way of proceeding. [HON. MEMBERS: "Why not?"] Because I am sure that the proper way to proceed is to leave the negotiations to the Corporation to ensure that it gets a fair price for the assets concerned and to keep the House, through the Corporation's annual reports, as fully informed as possible of the progress which is being made. This will give the House ample opportunity for debate on the accounts and on any subsequent occasions as they occur. I cannot agree to inform the House on individual negotiations, because so much of this must rest within the Corporation's commercial discretion.

The Joint Steering Group is not a constitutional anomaly, as it has been described by some hon. Members. There is no question here of Ministers or of the Steering Group trying to manage the industry. It is simply a fact-sifting operation. There are many precedents for this type of operation of which right hon. and hon. Members opposite do not need to be reminded. There is no question of the Corporation's responsibility or of Ministers' prerogative being in any way interfered with.

The Steering Group study which is about to get under way in the long-term review was the subject of a very detailed reference by my right hon. Friend in the debate on 24th May. A number of hon. Members have asked why my right hon. Friend was not giving greater detail. If they will refer to columns 73–75 of HANSARD for that day they will find in very considerable detail both the objectives and the scope of the discussion which will now get under way with the co-operation of the Corporation in this longer-term review.

This will enable us then to answer the questions about the green field site and about the major investment programmes for the future. It is easy now to ask for a decision across the Dispatch Box about a green field site. This is a vast complex. As my hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) said, the one operation involves £1,000 million in investment and this will set the pattern and the course of the industry for a decade and more ahead.

These decisions must not be taken lightly. We must go into them as carefully and as thoroughly as we can taking into account international developments, the technological developments, and the nature of competition with which the Corporation is likely to be faced. [Interruption.] I have already answered that question. It is impossible to give any information about the green field site. This is what the purpose of the review is. This is why these discussions are being embarked upon. I cannot make it any clearer than that. The hon. Gentleman should read the debate of 24th May and he will find spelt out in greater detail the details of the investment programme which we have just improved.

This has been described as a very costly delay. I stress that it has meant only a very small amount in addition to the programme.

This is not, as the hon. Member for Ebbw Vale tried to imply, a question of lifting a threat, so that the Corporation ought to be pleased. We have increased approval for investment expenditure by £40 million. This is not only a case of bringing forward and continuing the development of schemes such as Llanwern and Ravenscraig—two heritage schemes—and the Anchor project at Scunthorpe. I was asked to give an assurance that that will proceed. The answer is that it will. Those are three programmes for this industry. We are providing for £225 million worth of investment, which will substantially improve the facilities available to the British industry.

Mr. Michael Foot

Will the hon. Member confirm that what he has done after this two months' delay is to agree in every particular to the investment programmes that the Corporation put forward before?

Sir J. Eden

What the hon. Member fails to recognise is the situation that we found overtaking us towards the end of last year, when there was an inability on the part of the Corporation to fix its forecast with any degree of certainty, and there was clear evidence of steadily increasing demands being placed on borrowing from the National Loans Fund. In those circumstances we were right to get to grips with the situation.

The pricing policy element in my right hon. Friend's statement has been generally welcomed. I am sure that hon. Members are right to recognise the fact that we welcome the pricing policy of the Corporation being placed on a more selective basis in the future. That will provide much greater flexibility, which means that the Corporation is free to put forward proposals for price increases on a selective basis whenever it feels that it would be appropriate to do so. My right hon. Friend has said that the Steel Consumers' Council and the normal machinery provided by the Iron and consultative arrangements with the Government will continue.

A number of hon. Members asked me about Europe. I know that many hon. Members who are here now were not here during the debate. This question raised a degree of interest in the debate. Any matters about the conduct of the negotiations are properly questions for my right hon. Friend the Chancellor of the Duchy of Lancaster, but if we become members of the wider European community of nations the existing functions of the Iron and Steel Consumers' Council will cease to exist. As hon. Members know, however, under the Treaty of Paris there is a consultative committee, on which all interests are fully represented, including those of the trade unions. We should be members of that committee.

The pricing system will have to change in those circumstances. Instead of the present system of delivered prices there will be a basing point. The important thing to recognise is that nothing will in any way give power to the Commission to intervene in the normal commercial autonomy of the Corporation. We are well aware that the Commission's chief concern is to guard against any form of subsidy, assistance or discrimination which gives an unfair advantage. Size and structure are in no way called into question.

The whole purpose of the Community is to expand industry—to expand economy and growth. We shall in any case be members of the Community in those circumstances and I can assure the House that there will be no discrimination against us. Rather should we concentrate on the positive benefits of membership. This will help us to get a much stronger steel industry.

Mr. Walter Harrison (Wakefield)

rose in his place, and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That this House do now adjourn:—

The House divided: Ayes 270, Noes 304.

Division No. 402.] AVES [10.0 p.m.
Abse, Leo Forrester, John Mackintosh, John P.
Albu, Austen Fraser, John (Norwood) Maclennan, Robert
Allaun, Frank (Salford, E.) Freeson, Reginald McMillan, Tom (Glasgow, C.)
Archer, Peter (Rowley Regis) Galpern, Sir Myer McNamara, J. Kevin
Armstrong, Ernest Garrett, W. E. Marion, Simon (Bootle)
Ashley, Jack Gilbert, Dr. John Mallalieu, E. L. (Brigg)
Ashton, Joe Ginsburg, David Mallalieu, J. P. W. (Huddersfield, E.)
Atkinson, Norman Golding, John Marks, Kenneth
Bagier, Gordon A. T. Gordon Walker, Rt. Hn. P. C. Marquand, David
Barnes, Michael Gourlay, Harry Marsden, F.
Barnett, Joel Grant, George (Morpeth) Marshall, Dr. Edmund
Beaney, Alan Grant, John D. (Islington, E.) Mason, Rt. Hn. Roy
Benn, Rt. Hn. Anthony Wedgwood Griffiths, Eddie (Brightside) Meacher, Michael
Bennett, James (Glasgow, Bridgeton) Griffiths, Will (Exchange) Mellish, Rt. Hn. Robert
Bidwell, Sydney Grimond, Rt. Hn. J. Mendelson, John
Bishop, E. S. Gunter, Rt. Hn. R. J. Mikardo, lan
Bradley, Tom Hamilton, James (Bothwell) Millan, Bruce
Brown, Bob (N'c'tle-upon-Tyne, W.) Hamilton, William (Fife, W.) Miller, Dr. M. S.
Brown, Hugh D. (G'gow, Provan) Hannan, William (G'gow, Maryhill) Milne, Edward (Blyth)
Brown, Ronald (Shoreditch & F'bury) Hardy, Peter Mitchell, R. C. (S'hampton, Itchen)
Buchan, Norman Harper, Joseph Molloy, William
Buchanan, Richard (G'gow, Sp'burn) Harrison, Walter (Wakefield) Morgan, Elystan (Cardiganshire)
Butler, Mrs. Joyce (Wood Green) Hart, Rt. Hn. Judith Morris, Alfred (Wyrhenshawe)
Callaghan, Rt. Hn. James Hattersley, Roy Morris, Charles R. (Openshaw)
Campbell, I. (Dunbartonshire W.) Healey, Rt. Hn. Denis Morris, Rt Hn. John (Aberavon)
Cant, R. B. Heffer, Eric S. Moyle, Roland
Carmichael, Neill Hilton, W. S. Mulley, Rt. Hn. Frederick
Carter, Ray (Birmingh'm, Northfield) Hooson, Emlyn Murray, Ronald King
Carter-Jones, Lewis (Eccles) Horam, John Ogden, Eric
Castle, Rt. Hn. Barbara Houghton, Rt. Hn. Douglas O' Halloran, Michael
Clark, David (Colne Valley) Howell, Denis (Small Heath) O'Malley, Brian
Cocks, Michael (Bristol, S.) Huckfield, Leslie Oram, Bert
Cohen, Stanley Hughes, Rt. Hn. Cledwyn (Anglesey) Orme, Stanley
Concannon, J. D. Hughes, Mark (Durham) Padley, Walter
Conlan, Bernard Hughes, Robert (Aberdeen, N.) Paget, R. T.
Corbet, Mrs. Freda Hughes, Roy (Newport) Palmar, Arthur
Cox, Thomas (Wandsworth, C.) Hunter, Adam Pannell, Rt. Hn. Charles
Crawshaw, Richard Irvine, Rt. Hn. SirArthur (Edge Hill) Parker, John (Dagenham)
Cronin, John Janner, Greville Parry, Robert (Liverpool, Exchange)
Crosland, Rt. Hn. Anthony Jay, Rt. Hn. Douglas Peart, Rt. Hn. Fred
Cunningham, G. (Islington, S. W.) Jenkins, Hugh (Putney) Pendry, Tom
Jenkins, Rt. Hn. Roy (Stechford) Pentland, Norman
Dalyell, Tam John, Brynmor Perry, Ernest G.
Darling, Rt. Hn. George Johnson, Carol (Lewisham, S.) Prescott, John
Davidson, Arthur Johnson, James (K'ston-on-Hull, W.) Price, J. T. (Westhoughton)
Davies, Denzil (Llanelly) Johnson, Walter (Derby, S.) Price, William (Rugby)
Davies, G. Elfed (Rhondda, E.) Jones, Barry (Flint, E.) Probert, Arthur
Davies, Ifor (Gower) Jones, Dan (Burnley) Rankin, John
Davies, S. O. (Merthyr Tydvil) Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Reed, D. (Sedgefield)
Davis, Clinton (Hackney, C.) Jones, Gwynoro (Carmarthen) Rees, Merlyn (Leeds, S.)
Davis, Terry (Bromsgrove) Jones, T. Alec (Rhondda, W.) Rhodes, Geoffrey
Deakins, Eric Kaufman, Gerald Richard, Ivor
de Freitas, Rt. Hn. Sir Geoffrey Kelley, Richard Roberts, Albert (Normanton)
Delargy, H. J. Kerr, Russell Roberts, Rt. Hn. Goronwy (Caernarvon)
Dell, Rt. Hn. Edmund Kinnock, Neil Robertson, John (Paisley)
Dempsey, James Lambie, David Roderick, Caerwyn E.(Br'c'n & Radnor)
Doig, Peter Lamond, James Rodgers, William (Stockton-on-Tees)
Dormand, J. D. Latham, Arthur Roper, John
Douglas, Dick (Stirlingshire, E.) Lawson, George Rose, Paul B.
Douglas-Mann, Bruce Leadbitter, Ted Ross, Rt. Hn. William (Kilmarnock)
Driberg, Tom Lee, Rt. Hn. Frederick Sandelson, Neville
Duffy, A. E. P. Leonard, Dick Sheldon, Robert (Ashton-under-Lyne)
Dunn, James A. Lestor, Miss Joan Shore, Rt. Hn. Peter (Stepney)
Dunnett, Jack Lever, Rt. Hn. Harold Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Eadie, Alex Lewis, Arthur (W. Ham, N.) Short, Mrs. Renée (W'hampton, N. E.)
Edelman, Maurice Lewis, Ron (Carlisle) Silkin, Rt. Hn. John (Deptford)
Edwards, Robert (Bilston) Lipton, Marcus Silkin, Hn. S. C. (Dulwich)
Edwards, William (Merioneth) Lomas, Kenneth Sillars, James
Ellis, Tom Loughlin, Charles Silverman, Julius
English, Michael Lyon, Alexander W. (York) Skinner, Dennis
Evans, Fred Lyons, Edward (Bradford, E.) Small, William
Faulds, Andrew Mabon, Dr. J. Dickson Smith, John (Lanarkshire, N.)
Fernyhough, Rt. Hn. E. McBride, Neil Spearing, Nigel
Fisher, Mrs. Doris (B'ham, Ladywood) McCann, John Spriggs, Leslie
Fitch, Alan (Wigan) McCartney, Hugh Stallard, A. W.
Fletcher, Ted (Darlington) McElhone, Frank Steel, David
Foley, Maurice McGuire, Michael Stewart, Rt. Hn. Michael (Fulham)
Foot, Michael Mackenzie, Gregor Stoddart, David (Swindon)
Ford, Ben Mackie, John Stonehouse, Rt. Hon. John
Strang, Gavin Varley, Eric G. Williams, Alan (Swansea, W.)
Strauss, Rt. Hn. G. R. Wainwright, Edwin Williams, Mrs. Shirley (Hitchin)
Summerskill, Hn. Dr. Shirley Walden, Brian (B'm'ham, All Saints) Williams, W. T. (Warrington)
Swain, Thomas Walker, Harold (Doncaster) Wilson, Alexander (Hamilton)
Taverne, Dick Wallace, George Wilson, Rt. Hn. Harold (Huyton)
Thomas, Rt. Hn. George (Cardiff, W.) Watkins, David Wilson, William (Coventry, S.)
Thomas, Jeffrey (Abertillery) Weitzman, David Woof, Robert
Thomson, Rt. Hn. G. (Dundee, E.) Wellbeloved, James
Tinn, James Wells, William (Walsall, N.) TELLERS FOR THE AYES:
Tomney, Frank White, James (Glasgow, Pollok) Mr. William Hamling and
Torney, Tom Whitehead, Phillip Mr. Donald Coleman.
Tuck, Raphael Whitlock, William
Urwin, T. W. Willey, Rt. Hn. Frederick
Adley, Robert Dodds-Parker, Douglas Hunt, John
Alison, Michael (Barkston Ash) Douglas-Home, Rt. Hn. Sir Alec Iremonger, T. L.
Allason, James (Hemel Hempstead) Drayson, G. B. Irvine, Bryant Godman (Rye)
Amery, Rt. Hn. Julian du Cann, Rt. Hn. Edward James, David
Archer, Jeffrey (Louth) Dykes, Hugh Jenkin, Patrick (Woodford)
Astor, John Eden, Sir John Johnson Smith, G. (E. Grinstead)
Atkins, Humphrey Edwards, Nicholas (Pembroke) Jones, Arthur (Northants, S.)
Awdry, Daniel Elliot, Capt. Walter (Carshalton) Jopling, Michael
Baker, Kenneth (St. Marylebone) Elliott, R. W. (Nc'tle-upon-Tyne, N.) Joseph, Rt. Hn. Sir Keith
Baker, W. H. K. (Banff) Emery, Peter Kaberry, Sir Donald
Balniel, Lord Farr, John Kellett, Mrs. Elaine
Barber, Rt. Hn. Anthony Fell, Anthony Kershaw, Anthony
Batsford, Brian Fenner, Mrs. Peggy Kilfedder, James
Beamish, Col. Sir Tufton Fidler, Michael Kimball, Marcus
Bell, Ronald Finsberg, Geoffrey (Hampstead) King, Evelyn (Dorset, S.)
Bennett, Dr. Reginald (Gosport) Fisher, Nigel (Surbiton) King, Tom (Bridgwater)
Benyon, W. Fletcher-Cooke, Charles Kinsey, J. R.
Berry, Hn. Anthony Fookes, Miss Janet Kirk, Peter
Biffen, John Fortescue, Tim Kitson, Timothy
Biggs-Davison, John Foster, Sir John Knight, Mrs. Jill
Blaker, Peter Fowler, Norman Knox, David
Boardman, Tom (Leicester, S. W.) Fox, Marcus Lambton, Antony
Body, Richard Fraser, Rt. Hn. Hugh (St'fford & Stone) Lane, David
Boscawen, Robert Fry, Peter Langford-Holt, Sir John
Bossom, Sir Clive Galbraith, Hn. T. G. Legge-Bourke, Sir Harry
Bowden, Andrew Gardner, Edward Le Marchant, Spencer
Boyd-Carpenter, Rt. Hn. John Gibson-Watt, David Lewis, Kenneth (Rutland)
Braine, Bernard Gilmour, Ian (Norfolk, C.) Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Bray, Ronald Gilmour, Sir John (Fife, E.) Lloyd, Ian (P'tsm'th, Langstone)
Brewis, John Glyn, Dr. Alan Longden, Gilbert
Brinton, Sir Tatton Godber, Rt. Hn. J. B. Loveridge, John
Brocklebank-Fowler, Christopher Goodhart, Philip Luce, R. N.
Brown, Sir Edward (Bath) Goodhew, Victor McAdden, Sir Stephen
Bruce-Gardyne, J. Gorst, John MacArthur, Ian
Bryan, Paul Gower, Raymond McCrindle, R. A.
Buck, Antony Grant, Anthony (Harrow, C.) McLaren, Martin
Bullus, Sir Eric Green, Alan Maclean, Sir Fitzroy
Burden, F. A. Grieve, Percy McMaster, Stanley
Butler, Adam (Bosworth) Griffiths, Eldon (Bury St. Edmunds) Macmillan, Maurice (Farnham)
Carlisle, Mark Grylls, Michael McNair-Wilson, Michael
Carr, Rt. Hn. Robert Gummer, Selwyn McNair-Wilson, Patrick (NewForest)
Gurden, Harold Maddan, Martin
Cary, Sir Robert Hall, Miss Joan (Keighley) Madel, David
Channon, Paul Hall, John (Wycombe) Maginnis, John E.
Chataway, Rt. Hn. Christopher Hall-Davis, A. G. F. Marples, Rt. Hn. Ernest
Chichester-Clark, R. Hamilton, Michael (Salisbury) Marten, Neil
Churchill, W. S. Hannam John (Exeter) Mather, Carol
Clark, William (Surrey, E.) Harrison, Brian (Maldon) Maude, Angus
Clarke, Kenneth (Rushcliffe) Harrison, Col. Sir Harwood (Eye) Maudling, Rt. Hn. Reginald
Clegg, Walter Haselhurst, Alan Mawby, Ray
Cockeram, Eric Hastings, Stephen Maxwell-Hyslop, R. J.
Cooke, Robert Havers, Michael Meyer, Sir Anthony
Coombs, Derek Hawkins, Paul Mills, Peter (Torrington)
Cooper, A. E. Hay, John Mills, Stratton (Belfast, N.)
Cordle, John Hayhoe, Barney Miscampbell, Norman
Corfield, Rt. Hn. Frederick Heath, Rt. Hn. Edward Mitchell, Lt.-Col. C. (Aberdeenshire, W)
Cormack, Patrick Heseltine, Michael Mitchell, David (Basingstoke)
Costain, A. P. Hicks, Robert Moate, Roger
Critchley, Julian Higgins, Terence L. Molyneaux, James
Crouch, David Hiley, Joseph Money, Ernle
Crowder, F. P. Hill, James (Southampton, Test) Monks, Mrs. Connie
Curran, Charles Holland, Philip Monro, Hector
Davies, Rt. Hn. John (Knutsford) Holt, Miss Mary Montgomery, Fergus
d'Avigdor-Goldsmid, Sir Henry Hordern, Peter Morgan, Geraint (Denbigh)
d'Avigdor-Coldsmid, Maj.-Gen. James Hornby, Richard Morgan-Giles, Rear-Adm.
Dean, Paul Hornsby-Smith, Rt. Hn. Dame Patricia Morrison, Charles (Devizes)
Deedes, Rt. Hn. W. F. Howe, Hn. Sir Geoffrey (Reigate) Mudd, David
Digby, Simon Wingfield Howell, David (Guildford) Murton, Oscar
Dixon, Piers Howell, Ralph (Norfolk, N.) Nabarro, Sir Gerald
Neave, Airey Roberts, Wyn (Conway) Temple, John M.
Nicholls, Sir Harmar Rodgers, Sir John (Sevenoaks) Thatcher, Rt. Hn. Mrs. Margaret
Noble, Rt. Hn. Michael Rossi, Hugh (Hornsey) Thomas, John Stradling (Monmouth)
Normanton, Tom Rost, Peter Thomas, Rt Hn. Peter (Hendon, S.)
Nott, John Russell, Sir Ronald Thompson, Sir Richard (Croydon, S.)
Onslow, Cranley St. John-Stevas, Norman Tilney, John
Oppenheim, Mrs. Sally Sandys, Rt. Hn. D. Trafford, Dr Anthony
Orr, Capt. L. P. S. Scott, Nicholas Trew, Peter
Osborn, John Scott-Hopkins, James Tugendhat, Christopher
Owen, Idris (Stockport, N.) Sharples, Richard Vaughan, Dr. Gerard
Page, Graham (Crosby) Shaw, Michael (Sc'b'gh & Whitby) Waddington, David
Page, John (Harrow, W.) Shelton, William (Clapham) Walder, David (Clitheroe)
Parkinson, Cecil (Enfield, W.) Simeons, Charles Walker, Rt. Hn. Peter (Worcester)
Peel, John Sinclair, Sir George Walker-Smith, Rt. Hn. Sir Derek
Percival, Ian Skeet, T. H. H. Wall, Patrick
Peyton, Rt. Hn. John Smith, Dudley (W'wick & L'mington) Walters, Dennis
Pink, R. Bonnier Soref, Harold Ward, Dame Irene
Pounder, Rafton Speed, Keith Warren, Kenneth
Powell, Rt. Hn. J. Enoch Spence, John Weatherill, Bernard
Price, David (Eastleigh) Sproat, lain Wells, John (Maidstone)
Proudfoot, Wilfred Stainton, Keith White, Roger (Gravesend)
Pym, Rt. Hn. Francis Stanbrook, Ivor Whitelaw, Rt. Hn. William
Quennell, Miss J. M. Stewart-Smith, D. G. (Belper) Wiggin, Jerry
Raison, Timothy Stodart, Anthony (Edinburgh, W.) Wilkinson, John
Rawlinson, Rt. Hn. Sir Peter Stoddart-Scott, Col. Sir M. Wolrige-Gordon, Patrick
Redmond, Robert Stokes, John Wood, Rt. Hn. Richard
Reed, Laurance (Bolton, E.) Stuttaford, Dr. Tom Woodnutt, Mark
Rees, Peter (Dover) Sutcliffe, John Worsley, Marcus
Rees-Davies, W. R. Tapsell, Peter Wylie, Rt. Hn. N. R.
Renton, Rt. Hn. Sir David Taylor, Sir Charles (Eastbourne) Younger, Hn. George
Rhys Williams, Sir Brandon Taylor, Edward M.(G'gow, Cathcart)
Ridsdale, Julian Taylor, Frank (Moss Side) TELLERS FOR THE NOES:
Rippon, Rt. Hn. Geoffrey Taylor, Robert (Croydon, N. W.) Mr. Reginald Eyre and
Roberts, Michael (Cardiff, N.) Tebbit, Norman Mr. Jasper More.