HC Deb 26 June 1972 vol 839 cc988-90
17. Mr. Varley

asked the Secretary of State for Trade and Industry what consultations he had with the British Steel Corporation concerning his decision to commission McKinsey's to undertake a study of the British steel industry; when the report was received by his Department; and on what date it was shown to the Chairman of the British Steel Corporation.

Mr. John Davies

The McKinsey study on the international steel environment was commissioned with the full knowledge of the British Steel Corporation. The Report was submitted shortly after that of the joint steering group, and a copy was passed to the BSC immediately.

Mr. Varley

Is it not extraordinary that the work of the joint steering group was completed without both sides having knowledge of what the McKinsey study contains? Is it not also true that the British Steel Corporation, now having belatedly seen the McKinsey study, absosultely rejects its findings about the future size of the British steel industry?

Mr. Davies

No, I do not think it was extraordinary at all. It was a highly sensible arrangement. The whole purpose of it was to have a study made within the framework of the steel industry and to have, as a counter check, a major study undertaken by a well-known firm of consultants with deep experience in this whole field. There is no question of anybody acting belatedly. As soon as the report was available, it was passed to the corporation.

Mr. Varley

The right hon. Gentleman still has not answered the question. Is it not true that the corporation, now having seen the report, rejects its findings about the future size of the British steel industry?

Mr. Davies

It may well be that the corporation will not agree with what McKinsey said. That only shows the value of getting two views on the same subject. This was the purpose of the exercise, and that one may not agree with the other is perhaps quite normal.

Mr. Edward Taylor

Did the study have regard only to production problems, outputs and potentials and not to the administration of the corporation? If not, does my right hon. Friend think that it would be advisable to have an inquiry into the appropriateness of having the Corporation's headquarters in London?

Mr. Davies

The study carried out by McKinsey dealt not with the British Steel Corporation as such but with the inter- national steel environment within which the framework of future investment was to be considered. There may be a case for a deep study into the administration of the corporation, but that will be a matter for the corporation and not for me

Mr. Barry Jones

Is the Secretary of State aware that in North Wales the steel industry employs 16,000 men? Could he say whether the study contains any grave implications for the Shotton works, which has 12 open-hearth furnaces?

Mr. Davies

The study has some reference to the future of all steel plants in this country because it gives a framework within which the corporation's strategic decisions are being worked out by the corporation. It would be wrong to pretend that it does not have a powerful influence on these matters. The number of people involved in each plant is a matter for serious concern, and I am sure that hon. Members on both sides of the House know how particularly I am concerned with these problems. However, it is right that the whole appreciation of the assessment of the future investment of the corporation should take place within the framework of an adequate knowledge of world circumstances, which is what the McKinsey study was all about. I hope the hon. Gentleman will realise that in many ways the future investment programme of the corporation is intimately caught up with the question of rationalisation of the corporation and the steel industry generally; they are matters which inevitably are intermingled.