HC Deb 16 January 1978 vol 942 cc32-44
Mr. Russell Kerr

(by Private Notice) asked the Secretary of State for Industry if he will make a statement on the latest estimate of the projected financial loss by the British Steel Corporation for the current financial year.

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

The latest estimate is a loss of about £520 million. This includes a remaining contingency provision of £50 million. I would emphasise that even at this stage in the financial year the estimate is subject to considerable uncertainties as regards, for example, sales, realised prices and industrial relations in the steel industry and elsewhere.

Mr. Kerr

In view of the recent disclosures in the Press, does not my right hon. Friend think that it is more than ever important that the Select Committee, which is charged by this House with responsibility for examining these matters, should have access to all the information which is necessary for the proper fulfilment of its functions?

Mr. Varley

I have seen the Press reports, of course. I must tell the House that the procedures adopted by the British Steel Corporation and the Government have been observed fully on every occasion. What is more, they have been tightened over the past four years.

At no stage have I or my officials been discourteous to the Select Committee. In fact, the contrary is the case. We have adopted the normal procedure. On 27th April, I was summoned to appear before the Select Committee. After being left outside the door for about 25 minutes, I was informed that the Committee had failed to raise a quorum. Subsequently, I was asked to submit written answers to questions which it had been the Committee's intention to put to me. None of those questions referred to the financial position of the British Steel Corporation. However, my hon. Friend the Member for Feltham and Heston (Mr. Kerr) is a signatory to a report calling for closures and redundancies and a departure from the Beswick Review to which he and I and all other hon. Members on the Government Benches, whether or not they be members of the Select Committee, were committed at the last General Election.

If I had come to the House in July or August, on the basis of financial results and forecasts only three and a half months into this financial year, to make the sort of suggestions contained in the Select Committee's report, reported only a week ago, I would have been criticised, and my hon. Friend and many others would have been the first to criticise me.

Mr. Kerr

On a point of order, Mr. Speaker. Simply on a question of fact, may I point this out to the House? We have been informed by my right hon. Friend on a rather smeary basis that he came along to give evidence to the Committee only to find that there was no quorum. For this we apologised. May I say to the House that we have met on 208 occasions since the beginning of this Parliament and that there have been only three occasions on which there has not been a quorum for any sitting of a Sub-Committee or of the whole Committee?

Sir K. Joseph

Is the Secretary of State aware that it is a fact that the Select Committee is dissatisfied with the treatment it received and that that dissatisfaction is, as I said last week, a House of Commons matter? Is the Secretary of State not willing, in the light of all the material which has been released to the Press, now to conform to the request of the Select Committee and let it have the papers for which it asked? Surely this House can rely upon the prudence of the Select Committee to treat the papers with discretion, in the light of possible confidentiality.

Finally, are the Secretary of State and the Lord President aware of the request for a debate made by the Select Committee, and will they ensure that there is a debate before the Secretary of State makes a statement, so that the views of the Select Committee may be considered by the House?

Mr. Varley

The question of a debate is for the Leader of the House. He made the position clear at business questions last Thursday. As to my appearance before the Select Committee and the nondisclosure of papers, I must point out that when I appeared on 1st December I was not asked for the financial forecast of the British Steel Corporation, nor was I asked to deliver any papers to the Select Committee. I am perfectly willing to go back to the Committee if it requires any further evidence.

Mr. Kinnock

At least one hon. Member—myself—is grateful to the Secretary of State for his previously stated offer to go back to the Select Committee for further discussion. However, is my right hon. Friend aware that innumerable opportunities are found by Members of the Government to relate any information that they wish to give? They do not have to wait until they attend Select Committees, nor do they have to wait until Select Committees ask them for information. The fact is that had it been the practice of Government in this country openly to communicate matters of interest to specialist Select Committees, we would not have this situation. The information would have been conveyed to the Select Committee and its findings would have been much more accurate when they were published.

Mr. Varley

I must reject some of the charges that have just been made by my hon. Friend. On no occasion have I been asked to deliver papers to the Select Committee referring to the financial returns of the British Steel Corporation. These questions were not put to me, either in April in the written questions that I received from the Committee, or in December, when I appeared before it. In the four years that I have been a member of the Government I have appeared before many Select Committees, and I have always maintained maximum cooperation and observed the normal customs of the House.

Mr. Biffen

Is the right hon. Gentleman aware that the loss to which he referred in his answer indicates the imperative need for a reassessment of a more appropriate investment programme for the BSC? Will he tell the House when the Chairman of the BSC and himself were first told that losses of this magnitude were a likely probability?

Mr. Varley

There is a system of reporting between the Corporation and the Department. There are monthly reports that are tentative in some respects, and quarterly financial reports. The figure of £446 million, which appeared in the Press over the weekend, was reported in the normal course of events to the Department last August. But the conclusion that I must ask the House to consider is, what should the Government have done at that stage? We were then four months into the financial year. Had we jumped to the conclusion that was contained in the Select Committee report published a week ago that there should be closure of a number of older plants, particularly those maintained in production as a result of Lord Beswick's review—[HON. MEMBERS: "Read the rest of the report."] I am sorry, but the conclusion at that time was that if we had come to the House and acted upon the financial results of four months, we would have been criticised not just by hon. Members on this side of the House but by Conservatives as well.

Mr. William Ross

Will the Secretary of State tell us the reactions of the unions to his producing this kind of conclusion which the Select Committee has reported? Can he tell me the implications, in terms of unemployment, for Scotland of the Select Committee's findings?

Mr. Varley

I cannot give the precise implications for Scotland. There is no doubt there would be some. My right hon. Friend asks about the reactions of the trade unions. I do not expect Conservatives to take account of this, but in 1973 we actually said that immediately on taking office we would freeze and reconsider all the plans for closures and redundancies. We did that, and the Beswick review reported to the House. We are the custodians of the Beswick Report and we are fulfilling that duty.

Mr. Baker

Does the Secretary of State realise that his answers this afternoon have been most unconvincing? The British Steel Corporation has known very well since before August that there would be substantial losses this year. The only change that took place in August was that the gigantic size of the losses became apparent. Is it not time that the Secretary of State brought proposals to the House of the Government's intentions for the steel investment programme?

Mr. Varley

The British Steel Corporation is facing most adverse market conditions. In fact, all steel companies throughout the world are facing these conditions, not just the BSC. The Germans and the French are as well, and the steel companies of the United States are actuactually losing more per ton than are the British. In consultation with the Chairman of the BSC and the trade unions, we are looking at ways of arresting this situation and putting it right. However, we are not going to be panicked or forced into taking any arbitrary action.

Dr. Bray

Is my right hon. Friend aware that I discussed the report with the Chairman of the Scottish TUC and the Scottish division of the British Steel Corporation after they had a chance to read it? They do not consider that it is damaging to the interests of steel workers in Scotland.

The revelation in the minutes submitted by the chief executive of the Corporation at the Corporation's board meeting on 28th July brings out the fact that the biggest single cause of the losses is the fall in prices as a result of imports and dumping. Had that information been publicly available to this House, we would have been concerned to see far more urgent action taken promptly to stop this dumping in Europe.

Mr. Varley

I said to the Select Committee that action on dumping would be taken wherever it was justified. The Secretary of State for Trade has taken some action. However, as I said before, at a time when we were four months into this financial year, with all the uncertainties for the British industry and for every major steel industry throughout the world, what action were we supposed to take? Were we supposed to go back arbitrarily on the decisions taken by Lord Beswick?

My hon. Friend says that he does not regard this as damaging. I attended a private meeting which he attended a few months ago at which he pressed on me that the investment programme of the Corporation should go ahead. One of the recommendations of the Select Committee is that it is imperative that there should be a reduction in the planned capital expenditure.

Mr. Michael Marshall

The Secretary of State has just referred to the question of the level of investment. The Select Committee Report underlines and reinforces the case for continuing investment on a substantial scale. It is important that the whole of the report should be looked at in context. In view of this, will he consider the question of an early debate so that all hon. Members, not only those who sat on the Select Committee, but those representing steel constituencies as well, can play a part in the national steel debate?

Mr. Varley

I have already answered the question about a debate. My right hon. Friend the Leader of the House is sitting here and he will have heard the requests for a debate. The normal procedure is that when any Government of any political complexion receive a report from a Select Committee, they report to the House in the normal way. I take the hon. Member's point that, apart from hon. Members who served on the Select Committee—and many aspects of this report are valuable—there are other hon. Members who did not have an opportunity to serve on the Committee who have very strong views about the steel industry and the way in which it should develop.

Mr. John Ellis

Will the Secretary of State now address himself to the point that the Select Committee, having produced a report, then finds that a lot of it is immediately out of date because of lack of information at its disposal? When asked what he was going to do, the Chairman of the BSC made the memorable remark that short of going to the Tower he was not going to tell. What alternative does the Select Committee have but to report back to the House on this position? What else can it do in the face of a negative reaction like that? Will my right hon. Friend consider going back, with the Chairman of the BSC, to the Select Committee in order to get over these difficulties?

Mr. Varley

I have already made that offer. I am prepared to go back to the Select Committee and talk to its members about the problems of the industry, and I am prepared to do that with anybody whom my hon. Friend cares to produce on that basis. But the facts are that the Government have for months been considering with the Corporation and the trade unions how to bring about a more orderly and rational situation. That is the approach I took when I went before the Committee on 1st December. That is the course which I shall maintain.

Mr. Tim Renton

I for one will be pleased to welcome the Secretary of State back again before the Select Committee. But there is one point which the right hon. Gentleman misses. The last official financial forecast given by the Government for the BSC was contained in the FSBR published at the end of March showing a loss or deficiency of generated funds of £50 million, and yet, within four weeks of that figure being printed, the Government knew from the Corporation that it would be operating this year with an expected loss of £350 million. Surely the Secretary of State knew that the Select Committee was investigating the Corporation at that time and therefore he had a duty to make those figures of deficiency known to us, even if we did not put the specific question to him. Even if the right hon. Gentleman did not give that information to the Select Committee, was it not the duty of the Minister of State to make that known to Parliament when we debated the Iron and Steel (Borrowing Powers) Order on 22nd July? However, in that debate the Minister of State said nothing about the increased loss in financial terms—

Mr. Speaker

Order. It is not fair for hon. Members to make speeches now. There are many other hon. Members who hope to be called on the statement, but it will be impossible to call them all if we are to get on with our other business.

Mr. Varley

We have all known for a long time that steel is in a deteriorating position in market terms in a financial sense. This applies not only to our industry but to the world situation—[HON. MEMBERS: "No."] Yes, it has been a devastating situation world-wide.

On the subject of my co-operating with the Select Committee, I was prepared to co-operate, I turned up on 27th April, but the Select Committee was not there to ask me any questions. I submitted full answers to all the questions which it put to me at the time. If I am correct, after issuing its first report, Select Committee members criticised the Government at that stage for not letting some of the investment take place such as that at Port Ta[...]bot and all the rest of it.

Miss Maynard

Will my right hon. Friend confirm that, despite the serious financial position that faces the steel industry, matters of finance and balance sheets will not be the first consideration in trying to solve these problems? Will he confirm that redundancies will be kept to an absolute minimum, and will he also confirm that alternative jobs will be provided? Will he tell the House that the investment programme will not be slashed in panic action in an attempt to stem the present difficult situation, thereby making matters more difficult for the future? Does my right hon. Friend agree that we are unable to stop imports of steel into this country because of our membership of the EEC?

Mr. Varley

We have been taking action against some imports. My hon. Friend is right to say that the steel industry is in a serious position. We are addressing ourselves urgently to that situation and we want to deal with the matter rationally and humanely.

Mrs. Bain

Does the right hon. Gentleman agree that all the introspective arguments that are being indulged in by the House will not allay the fears end suspicions of those who are involved in the steel industry? Is he aware that on Radio Clyde yesterday, in a programme in which the hon. Member for Motherwell and Wishaw (Dr. Bray) participated, the Scottish BSC representative refused to give a categorical "Yes" or "No" answer on recent development plans for Hunterston? Will the right hon. Gentleman give an assurance today that Hunterston will be in no way affected by the £520 million deficit?

Mr. Varley

The whole of the BSCs financial requirements, development plans and future expenditure are under consideration by the Government, the Corporation and the TUC steel committee.

Mr. John Mendelson

In view of the point made by the hon. Member for Oswestry (Mr. Biffen) about investment and long-term plans, will my right hon. Friend accept that those whose livelihoods depend on the industry are most concerned that he should not take any panic measures as envisaged in certain circles? Will he maintain the steady nerve which he has shown so far and not let the procedural matters take precedence? Will he not allow the Government to be hounded, or treat this report in any way differently from the treatment accorded to other reports? Does he not agree that the Government should have proper time to consider the contents of the report and also take proper time to reply to it so that the procedural matters can be considered by those who are concerned with procedure rather than that we should be concerned with hostile propaganda about a publicly owned steel industry?

Mr. Varley

My hon. Friend shows an understanding of the situation which I regret other hon. Members in some parts of the House do not display. I agree entirely with my hon. Friend.

Mr. Tebbit

Is the right hon. Gentleman aware that he is not adding very much to his reputation as a moderate? Is he also aware that he is being a little petulant towards the Select Committee, which has produced an agreed bi-partisan policy document that should be welcome to the Secretary of State? Is he saying that nothing shall deviate from the Beswick recommendations, or is he petulantly taking the view that it will happen when he wants it to happen and not when the House through its Select Committee wants such a thing to take place?

Mr. Varley

I am not being petulant. I am pointing out the facts. I am prepared, if necessary, and if the Select Committee wishes me to do so, to appear before that Committee and to give as much information as I can—as I have always done in the past when I have appeared before other Select Committees. This is a matter not only for the House—although I appreciate that it is important for the House to consider—but for the Government to consider in consultation with the BSC and those who represent the workers in the industry. Those discussions are taking place.

Mr. Hardy

Although one welcomes any move to develop more harmonious relationships with Select Committees, does my right hon. Friend agree that, in view of recent developments, it is imperative that there should be a debate on this subject so that we may see an endorsement of the Government's view that a vigorous and successful steel industry should be sustained to meet need when world demand is a great deal higher than it is at present?

Mr. Varley

The matter of a debate is for my right hon. Friend the Leader of the House. I agree that there are other Members in this House who are not Members of the Select Committee and whose views should be expressed.

Mr. Hordern

Is it not clear that the real issue is whether the Select Committee received information for which it asked during the course of its proceedings, and is it not clear that it did not receive that information to which it was entitled, and therefore could not have drawn up a report based on such information? Is the Secretary of State saying that no action should be taken on the steel industry if it deviates in any way from the Beswick recommendations?

Mr. Varley

I do not agree with the hon. Gentleman if he is saying that I refused to give the Select Committee financial results or interim figures relating to the BSC. I did not refuse to give the Select Committee information on that basis, nor was it asked for.

Several Hon. Members

rose—

Mr. Speaker

I shall allow two more questions from each side of the House.

Mr. Mike Thomas

Is my right hon. Friend aware that, as a member of the Select Committee, I have no complaint against him as to the way in which he has behaved or the information which he has provided? However, the Select Committee has a major complaint against the Chairman of the BSC. He was asked to provide up-to-date statistics on a number of occasions, the last of which was 14th November, and signally failed to do so. Is my right hon. Friend aware when he refers to the Labour programme of 1973 and our manifesto that my colleagues and I were concerned that the reduction of £2 billion since October 1976 in the BSC's contribution to its investment programme for internally-generated funds would inhibit the fulfilment of that programme?

Mr. Varley

We can argue about the effect of the report, and the Government will study the implications of the remedies contained therein. I do not entirely accept what my hon. Friend says, but on the question of the Corporation I have full confidence in Sir Charles Villiers in the way he has reported to the Department and given us information. A great deal of damage is being done by some hon. Members getting hysterical about the behaviour of the Chairman of the BSC.

Mr. Neubert

Will the Secretary of State stop regarding the projected loss of £520 million as a private matter between himself and the Parliamentary Labour Party? Does he not recognise that the taxpayer, whose nerve may not be as steady as that of the hon. Member for Penistone (Mr. Mendelson), also has an interest—to the tune of £10 million every week that goes by?

Mr. Varley

Of course we are extremely concerned. That has been expressed by the Chairman of the BSC right through the summer, in July and August and in every public statement that he has made about the Corporation. We have also expressed our concern at every opportunity, including Question Time in the House, and I have not seen the hon. Gentleman here very often when we have discussed Department of Industry Questions and the steel industry. We have to take action to achieve a long-term, substantial and viable steel industry, but this will not be done on the basis of taking panic decisions as a result of reports by Select Committees or anyone else.

Mr. Anderson

Does my right hon. Friend agree that, however vital may be questions of courtesy to the Select Committee, disclosure of documents and so on, the key issue is jobs in our steel-making areas and the health of the industry? The other procedural matters can be dealt with in general. If we accept from him that it would have been unwise to make decisions in the autumn on the basis of incomplete forecasts, can be give us his view, since the figures are now available, about how we should proceed in the House and when he expects to be able to make a full statement to us on the decisions reached by the industry, the Government and the unions?

Mr. Varley

I shall make a statement as soon as the discussions have been concluded. They have been going on for some weeks and it will be some weeks more before they are completed. I shall make a statement as soon as possible, but it will not be for some time.

Mr. Eldon Griffiths

Leaving aside the procedural point, which I hope will be debated by the House, may I thank the Secretary of State for confirming to the House for the first time the quite appalling, fact that the BSC is losing £½ billion of the taxpayers' money? He has at least done that. As the responsible Minister, will he now say why he has allowed this to happen, what he is doing about it and how soon he will be coming clean with the House and telling us what his policies are to be?

Mr. Varley

The hon. Gentleman forgets the world situation in the steel industry, which has suffered the most adverse market conditions. This applies not only to our industry but to every other steel industry in Europe and throughout the world. We are trying to take action to deal with this through cooperation and consultation and also trying to deal in a humane way with the immense social problems which will arise.