HC Deb 01 December 1975 vol 901 cc1228-30
2. Mr. Crouch

asked the Secretary of State for Industry if he will make a statement regarding the financial position of the British Steel Corporation.

The Secretary of State for Industry (Mr. Eric G. Varley)

The British Steel Corporation has announced a loss of £125 million in its half-year to September 1975, with the prospect of a higher loss in the second half-year. This is primarily the result of extremely adverse trading conditions. The Corporation is making every effort to limit its losses through cost savings.

Mr. Crouch

I am grateful to the Secretary of State for that grave statement. Does he agree that the industry is now in a desperate situation, with borrowings this year amounting to no less than £1,500 million and with a prospect, as he has already intimated, of heavy losses this year, of—I am told—up to £200 million? What steps can he take with Sir Monty Finniston to improve the situation in this industry, which faces such a difficult time?

Mr. Varley

It is a grave situation, but I know that the hon. Gentleman realises that the British Steel Corporation faces the worst recession for 40 years. It is having discussions with the trade unions about cost savings. I hope that those discussions are successful. It would be inappropriate for me to comment further.

Mr. Stonehouse

Is not another cause of this loss the low productivity in the British steel industry, compared, for instance, to that in Japan? Is not one way to correct this state of affairs for the BSC to introduce more productive machinery? What is the Minister doing to impress upon the Corporation the wisdom of that course? In particular, what is he doing about the improvement proposed at Llanwern?

Mr. Varley

On the point raised by the right hon. Gentleman, the Llanwern inquiry has not yet reported to the Government. It would not be appropriate for me to comment until we have received that report. One of the factors, of course, is low productivity in relation to comparable industries overseas. However, the BSC is pressing ahead with its development plan, which is aimed at improving productivity.

Mr. Tom King

Has the Secretary of State made it clear to the Chairman of the BSC that he will give him his full backing in any measure that he believes necessary to reduce these serious losses—or does the Secretary of State intend to interfere, as his predecessor did?

Mr. Varley

I intend to give the British steel industry the support that is required. It has suffered quite a lot from Government interference—not necessarily by this Government. The hon. Gentleman will know that during 1970 it was prevented from going ahead with its development plan because the then Conservative Government set up what was called the Joint Steering Group, which is a constitutional monstrosity. I am convinced that had the industry been allowed to go ahead then, many of the problems of low productivity could have been overcome much earlier.

Mr. Cryer

Will my right hon. Friend comment on the report in today's Guardian that the British Steel Corporation cannot raise the finance to support steel stockholding for 12 months from private enterprises in the City, and that the Corporation will be asking the Government for more money for an exercise that will save jobs? Will he comment on this signal failure of private enterprise to support public ownership, which could easily be described as a "strike of capital"? Will he explain to the House what he proposes to do?

Mr. Varley

I know something about the proposals of the BSC for countercyclical stockpiling. We are anxious that there should be counter-cyclical stock piling for the very reason that my hon. Friend has given, namely, that it would help to preserve jobs.

Mr. Hugh Fraser

Will the right hon. Gentleman compare the results of the Bethlehem Steel Corporation, in America, with the results of the BSC, because both corporations are similar in size? The British Steel Corporation has lost about £200 million this year, but the Bethlehem Steel Corporation will again make a high profit in spite of the American recession.

Mr. Varley

I do not know the exact circumstances of the Bethlehem Steel Corporation, to which the right hon. Gentleman referred, but I know that we are just as anxious as he and the whole House are to ensure that productivity and the financial out-turn of the British Steel Corporation improve.