HC Deb 13 March 1974 vol 870 cc345-54

10.0 p.m.

Mr. Roy Hughes (Newport)

I would say at the outset, Mr. Deputy Speaker, what a delight it is to me to see you in your elevated position, and as a fellow Welsh Member I ask you to accept my sincere congratulations.

I wrote to Mr. Speaker seeking this debate the day after I was elected back to the House, and following promises that I made to people in my constituency during the election campaign. The Spencer works employ nearly 9,000 people, and many hundreds more are employed by ancillary concerns attached to them. The works are literally the cornerstone of the economy of Newport.

Recent happenings at these works have been the subject of considerable public concern. They have been highly detrimental to the town of Newport in its quest for new industry. Secondly, they have been politically damaging to the Labour Party which profoundly believes in public ownership of the steel industry.

The immediate sequence of events was a small dispute, following which the British Steel Corporation decided to close the works and to lay off many thousands of workpeople. Following that, the payment of unemployment and other benefits to those workpeople was stopped. In addition, an offensive letter was sent to each workman at the plant, and this all at the height of the General Election campaign. The letter caused tremendous bitterness in the area. Housewives as well as workpeople at the works were highly indignant, and I can truthfully say that at times there was almost a riotous situation there.

There are a number of questions which I want to pose to the Minister. Who gave instructions to Mr. Stanley Brooks, the Llanwern group director, to close the works? Was the corporation responding to the dictates of the Government of the day in their law and order campaign? In other words, was it a politically motivated decision? Those are fundamental questions which I feel need answering.

These works have a tremendous potential, but their history to date has been nothing short of a disaster. They were opened in 1962 by Her Majesty the Queen, following a decision in 1958 by the then Macmillan Government. There was a controversy over the site. Consequently, half of the original plant came to Newport and half went to Scotland. The Newport side of the venture nevertheless cost about £200 million, but due to the split there was a production bottleneck right from the start. There was not enough steelmaking capacity to keep the massive and extremely expensive rolling mills working to capacity. What is more, the plant was opened at a time when the product produced was plentiful. Thus, in the early 'sixties it was selling its product at below market price. The works certainly got off to a bad start.

My former colleague, Mr. Donald Anderson, who was then Member for Monmouth, and I fought hard to remedy matters. Eventually, in January 1970, the last Labour Government authorised what became known as Scheme C to provide, among other things, a third blast furnace and to bring the steel-making capacity into line with the rolling mills. After the 1970 General Election, however, the new Conservative Government held up the scheme, although later they gave the go-ahead again. Such indecision, nevertheless, was hardly likely to inspire confidence among the workpeople.

What is more, over the years the cost of the scheme has escalated from the original £48 million to £90 million. Another damaging factor was three years ago at the works, when an investigation was held by the fraud squad into a possible £300,000 fraud involving the hire of plant and equipment. Although the Director of Public Prosecutions eventually decided to take no action in the matter, this, again, tended to undermine confidence.

These factors have been highly detrimental to the works, but they had nothing to do with the actions of the work force. Nevertheless, I agree that many of the current difficulties are about industrial relations—in other words, about people. When the works started, people flocked there from West Wales, from many of the villages and towns of the hinterland. New communities sprang up, and ever since there has been a certain lack of social cohesion. Likewise, there has been the lack of security at the works. This is partly due to the production bottlenecks to which I have referred.

I have received numerous deputations over the years from the trade unions calling for a fully integrated plant. There is the question of iron ore supplies. The works are at present supplied by small ships of less than 30,000 tons coming into Newport docks but there was an Uskmouth scheme passed by the House in 1967 which would have provided for much larger vessels. After public ownership, this scheme was, unfortunately, pigeon-holed. Now we have the ridiculous decision by the corporation to supply iron ore for the works through Port Talbot and bring it 50 miles over land. A new harbour would cost a fraction of the cost of new works, and the Spencer Works would derive tremendous benefit from a harbour at Uskmouth. Instead, the works are being treated merely as a subsidiary of Port Talbot, and this, again, is highly detrimental to morale.

Why cannot the corporation management see this? It has much to answer for and it is no good its trying to put all the fault on the workpeople, as it is doing through its public relations department. There was a major dispute there in early 1973 over the sacking of a boilermaker. A strike by 280 men ensued which lasted over seven weeks. Eventually, over 5,000 men were laid off and the dispute was estimated to cost £10 million. It was a completely unnecessary dispute.

I do not want to go into the pros and cons of the dispute, but an independent tribunal reinstated the man. I said at the time—and I was fully supported by my right hon. Friend the present Foreign Secretary—that this man should have been suspended with pay and then a tribunal could have been established to go into the whole matter. But what the BSC wanted was that the man should be laid off without pay and that then the tribunal should sit.

As I said at that time, it is like the judge in the Western film who said, "You are guilty, but you will have a fair trial". This behaviour is against all the concepts of British justice. Again, at the end of last year I was approached by one of the trade unionists at the plant who made allegations of telephone tapping. I took up the matter in a reasonable manner with the British Steel Corporation management.

After eight weeks I had received no satisfactory reply and I therefore indicated that I intended to raise the matter in the House. Subsequently, the British Steel Corporation issued a statement in The Times to the effect that it had reviewed its procedures for checking against the misuse of company telephones and that the previous practice at some works of monitoring certain calls had been discontinued.

Again, I pose the question: are actions of this kind likely to promote confidence and good will among workpeople? Another factor from which the works is suffering is in their choice of management personnel. There has been an invasion from the North of England from people previously associated with the United Steels Company. They have worsened the situation at the works. They do not understand the psychology of the workers. The Welsh temperament is different from theirs. There has been a long and great history of steel making in South Wales, but there is no vision among the new management staff. I believe that the corporation should bring to the works Mr. John Powell, the formerly highly successful manager at Ebbw Vale, now at Shotton. He has the verve and flair to make a success of this potentially great works.

I turn to the present scandal of the non-payment of benefits to the people who were laid off as a result of the recent dispute. I have been swamped with requests from workers about the injustice of this situation. My telephone at home has hardly stopped ringing. The dispute originally affected only a handful of people. Why should thousands of people be denied benefits as a result?

I call upon the Minister, as a matter of urgency, to contact the Secretaries of State for Employment and for Social Services to see that these benefits are paid without further delay. There is a feeling of righteous indignation in our area at the present time about the situation at these works. People are simply demanding that the situation be looked into. Tonight I wish officially to report this request. The inquiry must be national in character. Perhaps the steel committee of the TUC would be the appropriate body for it, together with representatives of top-level management of the British Steel Corporation and also of the Department of Employment.

There was a series of industrial disputes some years ago at the Port Talbot works, but eventually, after the major inquiry there, the air was cleared and it heralded a new era of industrial relations at the plant. Something similar is called for at the Spencer works. To my mind, it is not only management-worker relationships that should be discussed but also the future development of the works, to build it into a fully integrated plant, as I mentioned earlier. These are the moves that need to be urgently made to restore morale at these works. I hope that my hon. Friend will give some clear assurances tonight about these matters and authorise the establishment of an inquiry so that the position can be clarified for the people in my constituency.

10.15 p.m.

The Under-Secretary of State for Industry (Mr. Michael Meacher)

First, I join my hon. Friend in congratulating you, Mr. Deputy Speaker, on your elevation to your position. While I do not have the advantage of being a fellow Welshman, I am delighted that it is through you, Sir, that this privilege is being granted to the Welsh people. I am very pleased, too, that the first debate to which I am called upon to reply concerns the steel industry. My hon. Friend has raised an issue of considerable concern to his constituents and it is right that he should do so. I am reminded of the vigorous campaign that he waged to stop the closure of the BSC's tube works at Newport.

The reference in the Order Paper to the closure of the Spencer works—or, as I shall call them in accordance with the official BSC list, the Llanwern works—gave me a moment's doubt. My hon. Friend used the term in a particular context. But Lianwern are not a works living under the threat of permanent closure. These works were opened in 1962 on a greenfield site at a cost of £150 million and have since been developed to their present size. They employ, as my hon. Friend said, about 9,000 people. They have an output of about 2.2 million tonnes of steel per year and represent capital investment worth £200 million.

I emphasise that the works have an assured future. The BSC's 10 year development strategy refers to the extension of the plant from some 2.2 to 3.8 million tonnes per year. This expansion will provide new jobs at the works at a cost of about £80 million. In answer to my hon. Friend's point about the need for a fully integrated plant, Llanwern will produce a balanced works in which the iron and steel making capacity will, for the first time, match that of the hot strip mill. This is of great importance, and it goes all the way to meet the point which my hon. Friend made.

The works represent a massive investment of the country's resources of both capital and manpower, and concern over the health of the works is a matter which extends beyond constituency and national boundaries. Interest in the performance of the works is not confined to the steel industry but it concerns every aspect of British industry, notably the British motor vehicle industry, which relies on the works for their supplies of steel.

The labour troubles at Lianwern must be seen in context. Labour relations generally throughout the corporation are good, thanks to effective trade union leadership and to the corporation's concern for the welfare of their employees. The TUC Steel Industry Consultative Committee provides a single representative body with whom the corporation can negotiate and discuss issues of concern to the work force as a whole.

The introduction in 1973 of the manual grades pension scheme and of a sick pay scheme for manual workers illustrates the effectiveness of this machinery and the concern of the corporation to be a good employer. The House will know of the Government's concern to promote industrial democracy. The BSC's worker-director scheme was pioneered by the corporation, and this and other aspects of industrial democracy will be the subject of discussions between Government, the corporation and the unions.

Nevertheless, no one can be happy with the record of labour relations at Llanwern. During the 12 years since the works opened, there have been many disputes which have had a serious effect on both the profitability of the works and the morale of the work force and management.

The corporation would admit that the faults have not all been on one side, and it has been making great efforts to improve the atmosphere and to develop new methods of consultation and communication with its employees.

I understand that during its 12 years of operation, the plant has accumulated an operating loss of about £33 million. Since the beginning of 1973, I am told, there have been 30 disputes—nearly all unofficial—of which 10 were serious. The most recent was the disruption of production by a go-slow by 250 men in the slabbing mill. As a result the BSC closed the works, with great reluctance, and wrote to each of the 9,000 workers explaining that the works would remain closed until assurances were given by the unions that the agreed procedures would be followed in all disputes. The BSC felt obliged to point out that the long-term future of the plant must be in danger.

I am glad now to be able to tell the House that those assurances were forthcoming, and the management for its part has confirmed that it will adhere to the agreements and procedures that exist and will do everything possible to speed up the resolution of problems. The works reopened last Monday, after a shutdown of just under a fortnight which involved laying off about 4,700 men.

The corporation has never underestimated the seriousness of the action it took. It still has great problems to face at this works—the improvement of good consultation and communications, and the maintenance of all agreed procedures for dealing with the trade unions. In addition, it is currently making a further large investment in the plant to increase its capacity by balancing all the units. This, together with other developments during the past 10 years, will bring the total capital invested in this plant to £300 million.

The current developments will involve long and difficult negotiations during the coming months to arrive at new wage rates appropriate to the new capacity. We realise that problem. My hon. Friend drew attention to the need for a proper leaven of management with a local background. It is the responsibility of the BSC to select the most effective personnel it can. However I readily acknowledge the importance of local identity and I am sure that the corporation will take full account of my hon. Friend's views.

I know that there has been widespread concern about the situation at Llanwern and that there have been suggestions from various quarters, including my hon. Friend tonight, that an inquiry should be held into labour relations at the works. I, too, am concerned about the situation but we must remember that in the end it is for the BSC, the unions and the work force to settle their differences and to achieve that degree of mutual respect and trust which is essential if a proper working relationship at the works is to be obtained.

Mr. John Stradling Thomas (Monmouth)

Briefly I should like to congratulate the hon. Gentleman on his appointment as Under-Secretary. May I also congratulate you, Mr. Deputy Speaker. We are temporarily lending you from Wales to the United Kingdom. Many congratulations.

The Llanwern works are shared by the hon. Member for Newport and I, because it is in my constituency and many of the workpeople come from Newport which is his constituency. I put to the Minister this question. Of course the management problems are for the BSC and not for the Minister as such, but I should like him to consider carefully the possibility of an inquiry because I confirm a great deal of what the hon. Member for Newport said. Morale is poor. Right through the General Election I was constantly reminded by constituents—many of them good Labour voters who I am sure did not support me—that they were absolutely fed up with the situation. It has got very bad. If this effort now does not succeed, I wonder whether it will not be essential to have an inquiry to blow some fresh air through the whole situation and to re-establish contact, because the situation has sunk very low throughout Newport and Monmouthshire.

Mr. Meacher

I am grateful to the hon. Gentleman for that point, which he put sincerely and effectively. We are well aware of the problems of low morale and, of the successive labour disputes, many of them serious, that have occurred at this plant, but I think I can give the hon. Gentleman some assurances on the question of an inquiry.

I am convinced that we should allow BSC and the unions time to try to make these latest arrangements work, and I would not support at this stage any action which might prejudice the prospects of success. I am sure the hon. Gentleman would agree with me about that. But I do not believe that a formal inquiry would be helpful until all else has failed. I am told that the principal trade union leaders concerned do not want any kind of external inquiry.

It is, of course, always open to BSC and to the unions to discuss together problems of labour relations at Llanwern—indeed, at any other works—and to have their own internal inquiry. I am told that it has been agreed with representatives of the craft unions to set up a joint BSC/trade union committee to consider the relationship between management and craftsmen at Llanwern. It is the intention that this committee should address itself to the future rather than the past, but the Government—I say this strongly—are firmly of the view that reasonableness and conciliation can alone ultimately solve these problems.

I am most grateful to my hon. Friend for raising this subject and providing an opportunity for the public airing of this problem.

Mr. Roy Hughes

Will my hon. Friend give an assurance about the other matter I raised? There is considerable consternation in the area about the nonpayment of social security benefits, which, I appreciate, is a subject about which he knows a great deal. Will he accept my suggestion that he should make representations to the Secretary of State for Employment and the Secretary of State for Social Services to see whether these benefits may be paid without further delay?

Mr. Meacher

I am grateful to my hon. Friend for raising that matter. I can certainly give him an assurance that I shall make representations to my right hon. Friend the Secretary of State for Social Services and my right hon. Friend the Secretary of State for Employment to see whether payment of all benefits for which there is an entitlement are paid.

I am sure that my hon. Friend will join me in calling on all parties at Llanwern, whether they be workers or management, to work together in a spirit of greater good will for the prosperity of the works and for all those persons throughout who depend on it. I am satisfied that the plant is off to a new start and that all parties are glad to be able to bring that about.

Question put and agreed to

Adjourned accordingly at twenty-nine minutes past Ten o'clock.