BRITISH STEEL CORPORATION

HC Deb 09 March 1978 vol 945 cc1624-754

Mr. Speaker

I have selected the Government amendment to the motion on the Order Paper.

Before we begin the debate I should like to make a brief statement. I am in difficulty. There are 15 hon. Members who represent constituencies with major steel interests. There are other hon. Members who also have strong claims to be called. The debate raises major issues of concern which are wider than constituency interests. I shall do my utmost to ensure that a fair balance is maintained between the several interests, but I remind the House that those who succeed in being called should bear in mind the large number of other hon. Members equally anxious to contribute to the debate.

Mr. Douglas Crawford (Perth and East Perthshire)

On a point of order, Mr. Speaker. I am in no way questioning your selection of the amendment in the name of the Government but, in view of the great Scottish involvement in steel, would you consider also selecting the amendment in the names of my right hon. Friend the Member for Western Isles (Mr. Stewart) and my hon. Friends?

Mr. Speaker

I have announced my selection.

4.6 p.m.

Sir Keith Joseph (Leeds, North-East)

I beg to move, That this House approves the First, Second, and Fifth Reports from the Select Committee on Nationalised Industries in Session 1977–78 relating to the British Steel Corporation. We have three unanimous Select Committee reports on the steel industry and on the conduct of Ministers in relation to it. One of the main recommendations of the Select Committee was that before the Government announced their policy decisions to the House there should be a debate, in Government time, to allow the analysis and the unanimous recommendations of the Select Committee and the opinions of the House on them to be taken into account by Ministers. The Government were unwilling to allow such time, so the Opposition have made the time available for at least one day of the two days requested.

We believe that the Select Committee analysis of the condition of the steel industry and its recommendations are sensible. As the House knows, Conservatives are not in favour of nationalisation, especially of an industry producing internationally traded goods such as steel. We think that nationalisation of steel has been bad for the country, bad for the people working in the steel industry, bad for suppliers, bad for consumers and bad for taxpayers, but that is not the subject of today's debate.

Steel is nationalised, and in that context we think that the diagnosis and the prescription of the Select Committee in its three reports are sound. With reservations on only one or two secondary issues, we approve the reports on the industry, and in our motion we ask the House to do the same. As for the conduct of Ministers, we think that the Select Committee has presented a case which Ministers should welcome the chance to answer.

I should emphasise at the start that no one, certainly no one on the Opposition Benches, believes that we should set ourselves up in Parliament as managers of a nationalised industry. But we are the bankers, and we represent the owners, and in both these capacities we are entitled, both directly and through the Select Committee, to inform ourselves. The experiences of the Select Committee have raised issues in relation to its powers which the House may wish to discuss. I am glad to see that my hon. Friend the Member for Leeds, North. West (Sir D. Kaberry) is in the Chamber, and I hope that others of my hon. and right hon. Friends and, indeed hon. Members on both sides of the House will pay heed to the experiences of the Select Committee in relation to its powers.

Seldom can a debate on a controversial subject have had so authoritative a base as the set of documents before us. Most of what I say will be drawn from the work of the Select Committee. Wherever it is not, I shall say so. We who have studied the Select Committee's work wish to commend its objectivity and its efforts very highly. We regard the analysis and the recommendations as solid, cogent, powerful and, in parts, magisterial.

I would add that most important of all, all three of the Select Committee's Reports were unanimous. We on the Opposition side of the House cannot understand why the Government, for their part, do not agree with us in approving at least the analysis. Of course, we understand that Ministers would wish to give their colleagues the chance to answer the comments made upon them personally.

The Liberals evidently had a very active evening of negotiations and drafting yesterday. It is not quite clear from the change in the amendment now on the Order Paper what purpose they were seeking to serve, but perhaps if one of their number is lucky enough to catch your eye, Mr. Speaker, we shall understand what they have in mind.

But for all hon. Members, I should have thought that there was a very great deal of common ground represented by the Select Committee's reports. The theme of the Select Committee is the need for us to have an internationally competitive steel industry, with international manning levels. How can the Government possibly disagree with that? How can the Liberals not approve that as a purpose?

I am very glad to see from the Liberal Bench that the Liberals agree with that.

The Select Committee clearly perceives that an uncompetitive enterprise or industry—that is, an industry or enterprise that does not survive on what the customer at home and abroad is willing to pay for its products—is a precarious and an ill-rewarded one.

The Select Committee says that low productivity is the main obstacle to increases in the real wages of steelworkers. I am sure that we would all agree with that. But besides that, the Select Committee, in its unanimity, is not alone in identifying the importance of having an internationally competitive steel industry. After all, that was the theme of the agreement between the British Steel Corporation and the Trade Union Congress steel committee as long ago as January 1976. Indeed, the theme of international competitiveness was the essence of the Chequers meeting on industrial strategy.

Therefore, this theme of international competitiveness, to be achieved, among other things, by international manning levels, is common ground to all members of the Select Committee, to the TUC's steel committee, to the BSC and, indeed, to the Ministers concerned at Chequers, under the leadership of the Prime Minister, with the industrial strategy. Therefore, we have a very solid basis of common ground on which to work.

I shall very briefly go through the analysis of the recommendations of the Select Committee. I shall not give references every time, but everything that I shall say on this subject from now on comes straight out of the Select Committee's report.

First, the condition of the industry has obviously suffered a very great deal from the world market recession and from the arrival of new and very intensive competition from countries that used not to have a steel-producing industry. Both of these factors are outside the control of the BSC. But the rest of the factors identified by the report are within the control of the BSC—first, the size of the programme; and second, the share of the home market retained by BSC, which has fallen very sharply, reflecting, as the Select Committee says, the inability to supply either to time or to quality.

I gather—no doubt the Secretary of State will tell us—that there is a slight upturn in the domestic share of the market, reflecting the restrictions imposed upon third country steel under the Davignon plan, but the penetration of the home market from our European competitors is still as great as ever.

The third factor within the control of the industry which accounts for its present condition is persistent overmanning associated with a high break-even point—both phrases I quote from the Select Committee's report—industrial disputes leading to long delays in contracting, in commissioning and in manning, delays associated with design and engineering, and unbalanced projects.

As a result of all these, the Corporation is financing only a fraction of its investent and is failing to service its capital. The Select Committee says that there is little hope of the British Steel Corporation being able to service public dividend capital or being able to meet a proper share of its capital requirements internally on present policies.

Those are the factors mostly within the control of the BSC that account for the present condition of the industry.

Sir Charles Villiers, the chairman, has explained that 40 per cent. of the loss is, in his view, due to world market recession, 40 per cent. to overmanning and 20 per cent, to keeping plants open under the Beswick plan. Of course, the Opposition understand the pledge given by the Government, called now the Beswick pledge. Of course we understand that the Government feel an obligation to keep that pledge—unless, presumably, superior obligations force them to revise that pledge. Of course we understand that the Government's pay policy—with which, as the Secretary of State knows, we are not in agreement—presents obstacles to demanning.

In the light of all these factors, and of this diagnosis, the Select Committee recommends reconsideration of the size of the capital programme, recommends de-manning and improved working practices, and maintains that drastic action was needed, has been needed and was not taken. It sets aside the excuse by the Secretary of State that the social and political consequences of action by the Government or the Corporation were too grave for anything to be done when the loss was £350 million a year, and points out that the loss is now over £500 million a year and that the social and political consequences of the action that will now have to be taken will be graver than they would have been had action been taken earlier.

I want to point out, briefly, the implications of failure by the Government and the Corporation to act to stem the losses earlier. There is the impact on the taxpayer. These huge cumulative losses have to come straight out of the pocket of the taxpayer.

There is the impact on the Budget. The estimated loss in the current year will exceed total tax revenue from North Sea oil. The estimated loss for the current year must have entered most vexatiously into the Chancellor of the Exchequer's plans for his Budget. It will mean either a higher tax take or higher public sector borrowings, or less public spending on such things as kidney machines or subsidies, or whatever the party in power seeks to put as a priority. But consequences and implications for the taxpayer there certainly are from these losses.

Also, of course, there is an impact on suppliers, whose expectations have been shattered. There is also an impact on the people working in the industry and all connected with them, because the people working in the industry read the newspapers, and they are well able to judge the uncertainty in which their jobs stand. They well realise that they cannot make plans on any solid basis while the industry is propped up precariously on taxpayers' funds. The strain of working in the industry under conditions of uncertainty must be borne in mind.

The Secretary of State may well say, "What about the implications of acting? Suppose the Government had acted earlier, and suppose the Government had authorised the Corporation to act earlier—what about the Beswick pledge, and what about jobs?" The Select Committee recognises the los of jobs involved in reducing the losses, but recognises that it is a higher national need to have a competitive industry. The Select Committee recognises that some of the cash now used to keep plants open should be used to slim down the manning and to close down some plants.

After all, the Select Committee has discovered—indeed, the papers have told us—that not all steelworkers are unwilling to go. Some of them are voting with their palms when there is the opportunity to have redundancy pay. In fact, we can hope that demanning, belatedly, is starting now.

We on the Opposition Benches agree with the Select Committee—as I hope will hon. Members in all parts of the House in the light of the Select Committee's unanimous reports—that overmanning is bad for the country and bad for the workers. There is this solid piece of common ground on which we all stand.

I hope that from neither the Secretary of State nor the Minister of State will there be any argument whatsoever in terms of vilification of the Opposition, or allegations that we want there to be fewer jobs. After all, the Minister of State was said by a journalist, Geoffrey Goodman, writing in the Daily Mirror, to have produced a confidential report which spoke of cutting the industry down to a size at which it could, indeed, be, as the Government's amendment proposes, competitive and profitable. That, according to Mr. Geoffrey Goodman—not well known as an adherent of the Conservative Party—would have involved cutting down by a quarter the jobs in steel, and the Minister of State has not denied that such a report exists. Subjected to pressure by the Select Committee, he said, papers were constantly being prepared.

Mr. John Mendelson (Penistone)

Having brought in Mr. Geoffrey Goodman, would the right hon. Gentleman tell the House and the steelworkers whether at the time the Beswick plan was worked out in agreement with the trade unions, the Opposition would have disregarded that and would have produced large-scale redundancies against the opposition of the trade unions and industry?

Sir K. Joseph

We would not necessarily have sought the agreement to which the hon. Gentleman has referred. We regard the trade unions as very strongly entitled to put the case for their members, but we do not regard the hands of the Government as tied by the necessity for agreement.

Mr. Peter Hardy (Rother Valley)

The right hon. Gentleman has suggested that demanning should start now and has referred to Mr. Geoffrey Goodman's suggestion of a reduction by one quarter in the labour force. Is he aware that in the last decade the labour force of the British Steel Corporation will have declined from 267,000 to less than 200,000 by the end of this financial year?

Sir K. Joseph

But we have to look at that in terms of manpower and production. It was not Mr. Goodman's proposal. Mr. Goodman was maintaining that it was the proposal of the Minister of State. But more important than whether the Minister of State made such a proposal—and perhaps he will tell us—is that the loss paid by the taxpayer may save jobs in steel but only at the cost of jobs elsewhere, because subsidies from the taxpayer simply shift unemployment generally from the less to the more efficient enterprises in the economy. There is no costless way out. There is no cost-less way to rescue British Steel. The only way is by its own efforts, as indicated by the Select Committee. Only in that way will they achieve profitability and competitiveness.

Mr. Mendelson

What would the Conservative Party have done?

Sir K. Joseph

I am asked by an hon. Member, what would we do? I am able to say categorically that we would do as the Select Committee recommend, as we approve the analysis and recommendations of the Select Committee in the problems of the steel industry. There are, of course, important questions of management and of union consultation, but the Government ultimately have the last word. Will they continue or will they not continue to finance the present investment programme and excessive labour costs?

I turn now to the conduct of Ministers where the questions really are their vigour, or lack of vigour, in handling the problems of the industry.

Mr. Neil Kinnock (Bedwellty)

Can the right hon. Gentleman be specific about supporting the recommendations of the Select Committee's Report? Can he tell us in equally specific terms—because this is a vital matter—to what would he commit his party in the event of it being in government in terms of new investment, now and on a continuing basis, for the redevelopment of the industry? It is no good avoiding this because it is a crucial central factor.

Sir K. Joseph

We want the industry to generate enough internal funds to make a significant contribution to its own investment but in general we must await the review by the Government of the investment programme. Conditions have changed sharply since my right hon. Friend the Member for Worcester (Mr. Walker) when he was the Secretary of State concerned, in the Government of my right hon. Friend the Member for Sid-cup (Mr. Heath), approved the then investment plan. There is a world recession. The right hon. Gentleman the Secretary of State, then spokesman for the then Opposition, was going round the country claiming that the proposals of the Conservative Government were far too small and that there should be an investment programme to produce 40 million tonnes a year, not 32 million; so we are entitled to say to this Government now that when we come to office we shall have to take account of profitability, the level of investment and how much can be financed as a basis from internal funds, from the cash flow of the industry.

The Select Committee considered two particular features of ministerial conduct, vigour or lack of vigour in dealing with, or allowing the management of the British Steel Corporation to deal with, the problems, and their frankness in relation to this House.

I hope the Ministers will not lay any false trails before us. I hope they will not try to escape by explaining that the world market is in recession. We know that and we know the amount of loss due to it. I hope they will not try to escape by claiming that other steel industries are doing as badly, because I have a list of the losses of the main steel industries of the world and of the British Steel Corporation per tonne. That is the significant figure. Its loss per tonne in 1977 was the highest of all and it is accompanied at the top by other State-owned industries. [HON. MEMBERS: "Oh."] My note says that the British Steel Corporation does not dispute these figures. The loss for the year 1977 per tonne was £31 for British Steel, £31 for Italsider of Italy, £25 for Sacilor, France and £25 for Cockerill of Belgium. All the rest were far lower. The highest few are nationalised.

I hope the Minister will not try to escape on that. I hope Ministers will not try to escape on the slight upturn in the share of the home market which is the result of the Davignon plan. I hope they will not try to escape by claiming that they are pledged guardians of Beswick, because they are also pledged guardians of the taxpayers and they have to reconcile the two. I hope they will not try to escape by pleading the difficulty of forecasting, though that is difficult. If we have to borrow we have to do it on the best forecast, and when borrowing it is all the more important to grapple with identified problems.

As the Select Committee says in paragraph 15 of its Fifth Report, there was a massive turnround in the fortunes of the industry in the early part of last year, yet Ministers appear to have been unwilling either to let managers manage or to take the awkward decisions themselves. They have behaved in the last years like Micawbers and show every intention of wanting to continue to act like Micawbers, and yet they know very well the needs of the industry and the proper interests of the steelworkers. As they say in their amendment, they seek a profitable and competitive industry, and that will involve reviewing the investment programme and securing demanning in the industry.

What did they do when the new decline in the condition of the industry was brought forcibly home to them, and when the estimated loss for the current year was seen to rise dramatically? What did they do? The Secretary of State went on holiday. I do not imagine that the head of a private firm, faced with shocking conditions that would have bankrupted a giant enterprise, would have gone on holiday without asking probing questions. There seems to have been general assumptions by Ministers of access to the bottomless purse of the taxpayer. [Interruption.] I am quoting the point about a holiday from the Select Committee's report. When nobody owns or when everybody owns, nobody, at least in the Department, seems to care.

The hon. Member for Bedwellty (Mr. Kinnock) asked at a meeting of the Select Committee what efforts were made by Ministers to reduce the losses below the estimated level. It appears from the answer of the chairman of the Corporation that he was unaware of any such efforts. It appears from the Select Committee's reports that the Secretary of State and the Minister of State took Parliament and the taxpayers for granted.

The Select Committee says: senior Ministers of the Crown four days before a major debate in which the House of Commons was being asked to approve an increase in the borrowing powers of the Corporation of £1,000 million from £3,000 million to £4,000 million did not see fit to press the Corporation as to what their expected loss was on the basis of the latest possible figures. Instead they were content to work on forecasts submitted two months before, even though experience over the previous twelve months had shown that such forecasts were liable to become rapidly out of date and it was known that figures based on the quarter ending 30th June were about to become available. It adds: there was a failure by Ministers to press for proper information. If the City were seeking money as casually as the Minister of State sought it, he would be among the first to criticise—and he would be right to criticise.

The Select Committee comments on the marked contrast between the Minister of State's optimistic statement in the debate that it was hoped that the upturn that is taking place will assist the Corporation."—[Official Report, 22nd July 1977; Vol. 935, c. 2136.] with the more pessimistic statement made in private by the chairman of the Corporation four days previously when he said: I am bound to say I do not yet see a significant upturn in demand or price. I hope that the Minister of State will explain the extraordinary aberration in his speech. It was full of grave comments about the situation, yet suddenly there was the positive statement that an upturn was taking place. We should like him to explain that to us. If he made a mistake, let him say so. I agree that other parts of his speech were grave, but when my hon. Friend the Member for Mid-Sussex (Mr. Renton) spoke, in the debate on an increase in the borrowing powers, of the industry "drifting to disaster"—which was precisely what was happening, as Ministers knew, or should have known—the Minister of State took it upon himself sanctimoniously—there is no other word for it—to rebuke my hon. Friend.

Mr. John Mendelson

What is the right hon. Gentleman doing now?

Sir K. Joseph

I hope that I am representing, no doubt inadequately, the view of the Select Committee which pointed out these matters itself.

Whether the loss was £250 million, £350 million, £450 million or £520 million, the condition of the industry was desperate. Any loss of these dimensions should have been a stimulus to Ministers to allow the Corporation to take action to stop the rot, but it appears from the Committee's report that the Secretary of State was inert and the Minister of State made a statement that he must have known was false. The House will want to hear the answers of both Ministers to the charges made by the Select Commitee. If they made errors, I hope that they will tell us.

I hope that the Government will heed the view of the Committee and the views of hon. Members in the debate. The Committee expressed its fear that there would be fudging, followed by a renewed steel crisis in a yet more virulent form. We hope that there will be no such fudging. We believe that there should be no further capital without a specified rate of demanning as recommended by the Select Committee. We believe that there should be a revised capital programme as recommended by the Committee and that cash limits should be split, as recommended by the Committee, between revenue and capital.

We believe that the Select Committee unanimously recognises economic realities and the real interests of the country and the steel industry. We hope that Ministers will work along the lines recommended by the Committee and we certainly ask the House to approve the Committee's unanimous reports.

4.35 p.m.

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

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof, takes note of the First, Second and Fifth Reports from the Select Committee on Nationalised Industries, and accordingly calls upon Her Majesty's Government to bring forward proposals in consultation with the British Steel Corporation and the trade unions to secure a future for a modern competitive and profitable industry". The motion is not what the Select Committee wished the House to debate. Last week every Member of the Committee including those from the Tory side, tabled a motion to take note of the three reports, and that motion is incorporated in the Government's amendment. The Opposition's decision to move a motion to approve the reports is a deliberate decision to turn the three reports into a vehicle for party political attack.

My hon. Friend the Member for Bedwellty (Mr. Kinnock), who was a member of the Select Committee, said during business questions last week, with his customary understatement: this is the most incompetent and stupid abuse of the purpose of Select Committees tint that it is the most insensitive and contemptible disregard of the real needs of the steel industry to use it for stupid and superficial party political purposes?"—[Official Report, 2nd March 1977; Vol. 945, c. 670.] That was what a Member of the Select Committee said about the way the official Opposition have handled the debate.

Mr. Peter Rost (Derbyshire, South-East)

The right hon. Gentleman prefers a cover-up.

Mr. Varley

I consider that there is a great deal in the reports which merits serious consideration, and we are giving them that consideration.

Mr. Patrick Cormack (Staffordshire, South-West)

Will the right hon. Gentleman give way?

Mr. Varley

No. The Government will, of course, be responding to the reports by means of a White Paper, and we shall be doing this as soon as possible.

It is clear that the Opposition's motive in seeking a debate is not necessarily—in view of what the right hon. Member for Leeds, North-East (Sir K. Joseph) has said—to engage in a constructive discussion of the Committee's long-term recommendations. They have sought the debate in order to use the reports for party political advantage.

Mr. Cormack

Will the right hon. Gentleman give way?

Mr. Varley

No. I am not giving way.

Mr. Cormack

On a point of order, Mr. Deputy Speaker. Why is it partisan to endorse unanimity?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The hon. Gentleman knows perfectly well that that is not a point of order.

Mr. Varley

The right hon. Member for Leeds, North-East concentrated at least half his remarks on the Fifth Report of the Select Committee and very little on the First and Second Reports and their recommendations. It may be that many hon. Members in all parts of the House will not regard the debate as wholly successful if it concentrates merely on who said what to whom between 18th July and the middle of August last year. If we do that—I have no wish to avoid any of the charges directed against me, and my hon. Friend the Minister of State has no wish to fudge the charges against him; I shall be coming to them—many hon. Members will regard it as a wasted debate, especially if we do not look at the whole work of the Select Committee.

Although the Minister of State and I naturally have to refer to the charges levelled against us in the Fifth Report, the Committee's reports have been set against the most serious world steel recession in memory. I make no apology for mentioning that.

We can see the present situation of the British steel industry only against the background of world circumstances. The recession does not affect only the British industry. Steel industries throughout the developed world, including the United States and Japan, are facing a great crisis. In the United States, the Bethlehem Steel Corporation made a loss of £250 million in the first nine months of 1977. This included a large write-off of closure costs.

Sir K. Joseph

In the next quarter it was in profit because of the action that it took in the nine months to which the Secretary of State referred.

Mr. Varley

I do not deny that some of the steel companies made profits. I am saying that there are many steel industries throughout the world, publicly and privately owned, which are in exactly the same difficulties as the British Steel Corporation.

In Japan, the five largest steel manufacturers are reported by the Japan Commerce Daily on 21st November to have made losses in the six months to the end of September. One of those five, Kobe Steel, has just announced the closure of two plants from 1st April.

Most developed countries are having to take action to assist their steel industries. The French and Swedish Governments are advancing loans to their loss-making steel industries either at preferential interest rates or under arrangements for deferred repayment. Even in Germany, the Government of North Rhine-Westphalia subsidise the coking coal used by their steelmakers.

The problems of the British Steel Corporation are not unique but they are very serious. There is no doubt about the seriousness, but they are not necessarily the worst. Wherever one looks throughout the developed world, every steel industry entered 1977 expecting an upturn and was faced instead with a continually deteriorating situation. That the position of the British Steel Corporation deteriorated is not in doubt. But the nature of that deterioration was widely misunderstood because of the misunderstanding and misinterpretation of the information published last March.

The implications of the figure in the Financial Statement and Budget Report presented to Parliament last March were that the BSC would incur a loss of £250 million in the current year. But the figure of internally-generated funds was misunderstood, at least originally at the beginning, and this led the Select Committee to believe that the deterioration was much steeper and much more rapid. That was cleared up in the evidence which I gave on either the first or second occasion. This was a major source of misunderstanding that arose between the Select Committee on the one hand and the BSC and my Department on the other. As a result, statements have been made about the Corporation, its chairman and the adequacy of information which I must reject as quite unwarranted.

Mr. Tim Renton (Mid-Sussex)

Surely the point that the Secretary of State has just mentioned is a red herring. The the current year, debated in Parliament last year, showed a loss for the current fact is that the annual operating plan for year of £350 million. The Department was aware of that figure by the end of April.

Mr. Varley

It was around the period of the Financial Statement and Budget Report. That is correct. I thought that we had cleared that up with the Select Committee. I shall probably have to go back to the hon. Member and explain it to him. In my judgment, that was one of the major sources of the difficulties that existed between the Select Committee, the Government and the BSC. At all times the Corporation has kept my Department properly informed. We have made sure that Parliament, including the Select Committee, has been equally and properly informed.

The waters have been muddied by a page from an internal BSC working document which was never provided to the Department of Industry, which it would have been quite improper for the Corporation to have transmitted to my Department and which was mischievously and anonymously leaked to certain newspapers and hon. Members on 13th January this year. Six months after it was circulated within the Corporation.

That document showed a projected loss figure of £466 million. This was based on internal forecasts which we now know were being internally examined and processed within the British Steel Corporation from 14th July onwards but which were not communicated to the Department of Industry until almost a month later, after the Corporation had properly considered them. It is around that figure that much of the controversy has revolved.

Should the Corporation have informed me of that projected loss figure when my hon. Friend the Minister of State and I met the chairman and chief executive on 18th July to discuss the report and accounts of the previous financial year which were to be published the following day? Without knowledge of that figure—that is the £466 million figure, because neither my hon. Friend the Minister of State nor I had knowledge of such a figure—ought I to have challenged Sir Charles's forecast when the last figure available at the end of May was a projected loss of £350 million?

Was Parliament properly informed of the true situation in the debate on the borrowing powers order the following Friday, 22nd July? My hon. Friend the Minister of State will be dealing with this last point when he winds up the debate because the Select Committee's report specifically refers to that debate.

I now want to deal with the first two questions because they are crucial to the argument and to the discussions that we have been having. In the evidence that he gave to the Select Committee on 30th January, Sir Charles Villiers dealt with the question of whether he should have told me of the figure of £443 million which was contained in an internal BSC document produced on 14th July.

The hon. Member for Mid-Sussex (Mr. Renton) then questioned Sir Charles. He asked: The figure of £443 million loss was reported by Mr. Scholey to the Board in the week of 16–22 July and that was clearly a figure which he had taken a lot of trouble to arrive at? Sir Charles replied: I do not think that is exactly right because 14 July was when the figure came forward in that form and it was not until 28 July that this paper, having by then been refined and improved, came to the BSC Board. This was the supplementary report which you have, which was leaked to The Times on 13 January and it did not reach the Board until 28 July, by which time a lot of work had been done on it and I was prepared, on behalf of the Board and with the Board, to accept it, but in the verbal form in which I received it on the Sunday, two days before the press conference, I was not prepared to accept it at face value". So Sir Charles explained to the Select Committee very clearly that when he met me on 18th July the £443 million figure was one which he would not have used outside the business. It was only on 28th July—ten days after he met me—that a more considered estimate could be put to the board, forecasting a loss of £466 million. Even on 28th July the BSC board rejected this forecast as "quite unacceptable", and appropriate remedial action was being put in hand. It then went forward in the normal way and reached the Department in the quarterly report which was sent to officials in my Department on 12th August.

I should explain that the quarterly reporting procedure was initiated by a Labour Government and has been considerably tightened up over the past three years. Therefore, Sir Charles Villiers clearly explained to the Select Committee why he did not give me that figure.

Mr. F. A. Burden (Gillingham)

Surely that figure of £443 million must have been accounted by someone entirely responsible within the Corporation. If it was brought to the notice of the chairman surely, if it was arrived at by a responsible person in the Corporation, it should have been conveyed to the Minister.

Mr. Varley

I am coming to that point. I do not want to avoid it, because it is germane to this argument.

The Select Committee was also given a most authoritative explanation of why Sir Charles, in his Press statement on 19th July, did not go beyond the range of possible loss contained in that statement. This explanation—if you, like, Mr. Speaker, this vindication—was contained in a letter sent to Sir Charles on 10th February and forwarded by Sir Charles immediately to the Select Committee.

The letter was written by Mr. R. L. Emmitt, one of the senior partners of the highly reputable City accountants Coopers and Lybrand. He wrote as follows, and I shall quote this at length: I have considered the degree of disclosure made by the Corporation of its deteriorating financial position against this background. I particularly take into account the fact that on 14th July there was produced for submission to the Chief Executive's Committee —That is, Mr. Scholey's committee— a finance paper which gave a further indication of the financial deterioration as a prelude to urgent consideration by the Board and top management as to the action to be taken. The loss projected in that paper was about £450 million, but this took no account of any action by the Board or top management to reduce it. Mr. Emmitt went on: In my view, having regard to the status of this finance paper, it would have been misleading at that stage to have based any published announcement on the figures in that paper. Nevertheless, your circulated Press statement on 19th July reflected a somewhat more pessimistic outlook compared with the words in the annual report printed earlier and referred to remedial action being taken or planned. And Mr. Emmitt went on: I have discussed the situation with some of my partners and they support me in my view that, in the circumstances in which the Corporation found itself at the time of the publication of the annual report and its discussion at the press conference on 19th July, having regard to the extent of the reliable information then available to the Corporation, an adequate disclosure of the deteriorating trading prospects of the Corporation was given in the documents published on that day. It is easy, with hindsight, to argue that more might have been said, but I do not think it realistic in all the circumstances to have expected that you"— that is, Sir Charles Villiers— could have said more than you did at the time pending completion of the detailed assessment of prospects which was then in hand. That is a most important statement that the House should not disregard. It came from the Corporation's own auditors, a firm of accountants of high reputation and acknowledged integrity. I am astonished, quite frankly, that the Select Committee did not attach sufficient weight to that note from a firm of City accountants with a reputation that no one will dispute. The note should have been given more weight by my colleagues.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Does the Secretary of State not agree that the writing of that letter destroys the reputation of these auditors? Will he invite the BSC to change its auditors, since they have devalued their reputation by writing such a disgraceful note?

Mr. Varley

I thought that the hon. Gentleman was going to make a serious point, but as usual he makes a snide point against this highly reputable firm of City accountants. I do not think that any other Conservative Member would agree with him.

Mr. Mike Thomas (Newcastle upon Tyne, East)

We are on a narrow point and I hope my right hon. Friend will forgive me if I give him the chance to clear it up. The Select Committee report says that none of the members of the Select Committee believes that Sir Charles should have made the figure of £443 million or anything like it available at his Press conference on 19th July. We read carefully the letter from the accountants. Our sole point was that it was an error of judgment on the part of Sir Charles for him to have used these specific words might even be comparable with which implied that the £255 million figure was an outside estimate when he must have known at the time that it was not.

Mr. Varley

This is a matter of judgment, the judgment of my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) and the other members of the Select Committee, and the judgment of the auditors of the British Steel Corporation. That is what it boils down to.

The auditors have said It is easy, with hindsight, to argue that more might have been said, but I do not think it realistic in all the circumstances to have expected that you could have said more at the time That is what Sir Charles Villiers relies upon, and he was right to do so.

I have a further quote I should like to give the House. On 27th February the Financial Times further vindicated the Corporation in a leading article when it said: In point of fact these procedures appear to have signalled danger as quickly as could reasonably be expected in a fast moving situation which caught steel makers everywhere off their guard. So, Mr. Speaker, I think that the case can fairly be made that Sir Charles behaved with absolute propriety in providing information to the Government, to Parliament and to the country.

The second conclusion which the Select Committee said was to be drawn was that there was a failure by Ministers to press for information. I have already pointed out that under this Government, the procedures for providing information to Government by the Corporation had been greatly improved. What the Select Committee was therefore asking was whether I should have taken steps beyond the normal procedures to obtain information.

But the Select Committee's report itself shows that I did press for information. Paragraph 8 of the Fifth Report records that at my meeting with Sir Charles Villiers on 18th July I asked him Will it (the prospective loss) he £250 million or £350 million? It then goes on to say: The Chairman's diary note records that he replied 'I have every hope with the action we are now going to take we will be able to contain it at the lower figure, but I am bound to say I do not yet see a significant upturn in demand or price'. The Secretary of State"— that is me— apparently accepted this explanation without further question or comment. I find this conclusion by the Select Committee extraordinary, because two sentences later the report itself records that I went on to press Sir Charles on this very matter. This is what it says: The Secretary of State replied that ' the Corporation's approach would have my full support both in the House during the debate on the Order and when I talked to colleagues. My view was that people should know if things were going to be difficult'. And the report goes on to say: Sir Charles Villiers said that the situation was not as bad as had been painted, the Corporation were unlikely to lose as much as £250-£350 million in the current financial year. So the report itself, in the account of that meeting, shows that I asked Sir Charles Villiers what he expected the forecast loss to be. It shows, too, that Sir Charles Villiers replied. I then pressed him further and he amplified his reply in response to my pressure.

That does not bear out at all that we failed to press him. It shows the opposite—that we pressed him. Short of telling Sir Charles Villiers that I did not believe him when I did believe him and when I had every reason to believe him, my actions could only be regarded as entirely proper in the circumstances. The implication of what some people are say- ing is that I should have said to Sir Charles Villiers after that questioning, "I really do not believe you. I do not accept what you are saying. There must be something else." That is the implication, because he was pressed at that time.

In any case, while the Select Committee report concentrates a great deal of its attention on this period in late July, it states quite clearly that in its view action to deal with the Corporation's financial problems should have been taken much earlier.

Paragraph 16 of the Fifth Report says: It was therefore clear by April or May 1977 when the Annual Operating Plan had been agreed that, unless action was taken, there was likely to be a loss of up to £350 million in the year 1977–78. By this time also the Corporation themselves had begun to accept that in their own words the traditional steel cycle had gone' and that 'the landmarks had disappeared'. At least by then some action should have been taken; the evidence given suggests that nothing was done. But far from showing that nothing was done, the evidence given to the Select Committee showed that a great deal was done. On 18th May the Corporation announced that the Port Talbot development had been deferred due to the trading and financial situation. Again, in 1976 the Corporation proposed a 2 million tonne plate mill in the North-East. At my request that was re-examined in the light of market assessments and the Corporation came back with the conclusion that the capacity at this mill should be reduced from 2 million tonnes to under 1 million tonnes. My hon. Friend the Minister of State announced that in the debate on 22nd July.

There is no doubt that BSC has undertaken and is still undertaking a considerable and continual process of entrenchment to meet the trading situation. It has been taking out of operation—permanently or temporarily—coke ovens, blast furnaces, steel melting shops and mills. The latest estimates that I have show a progressive reduction of 3.7 million tonnes of blast furnace capacity and 2.4 million tonnes of melting shop capacity since April 1977. Also, there have been reductions in shifts, overtime and other costs.

The Government have also acted within the framework of the EEC to secure better trading conditions for steel. We have consistently sought the vigorous application of measures by the European Community both to maintain steel prices within the Common Market at more economic levels and to prevent their being undermined by dumped imports. As the steel situation deteriorated the Commission was persuaded to introduce more extensive measures last December. These include mandatory minimum prices for certain products and higher guidance prices. The Commission is also negotiating agreements covering prices and volume with major supplying industries. The Government will continue to seek improvements in these measures to meet the needs of the present situation.

The only action that I could have taken would have been to advance the closure of older plants, including plants on which the Beswick commitments were given. But I ask what the reaction of the House would have been if one month into this financial year, 1977–78, I had come to the House of Commons and said "The BSC has produced an estimate that in the financial year ending 11 months from now it is likely to have a loss of £350 million" and if I had gone on to say, "In order to deal with the loss which the British Steel Corporation believes it will be announcing in 11 months' time we have decided to abandon the Beswick commitments and close down immediately all the high cost plants". That would have been an arbitrary and precipitate action and not the action that was recommended by Members of the Select Committee. That is the sort of action that all the newspapers from The Daily Express to The Daily Telegraph were recommending. One only has to think of it for a microsecond to realise that that argument is totally false.

It is interesting to look at what was said to the Select Committee. In the summer of 1975, in consultation with the unions, the British Steel Corporation warned of a prospective loss for the forthcoming year of £375 million but the actual loss turned out to be £255 million. Mr. Scholey himself referred to this situation when he gave evidence to the Select Committee on 30th January. I quote from page 23 of the minutes of evidence: It was very interesting that, when the Chairman met The Times on that January 14th interview, I referred to the situation that obtained in 1975, when we had the £375 m. and finished up with £255 m The Times' correspondent's reaction to that was, 'Oh, that was the year you tried to frighten the unions with an over-heavy loss'. There is no doubt that one has to be careful about prematurely pushing forward big figures before you have really worked out how you can bring them under control. If we had proposed drastic action of that kind one month into the financial year, or even three months into the financial year, on the basis of a forecast loss or an internal British Steel Corporation financial paper which we did not even know about and which did not see the light of day until it was leaked to a newspaper and to certain MPs in January of this year, the unions would not have believed us and certainly would not have co-operated with us.

I remind the House that if it had been possible—I know that hon. Gentlemen do not believe that it is possible as a result of this information—and if I had been foolish enough to do that and to take arbitrary action, there could have been massive industrial action within the steel industry and the cost would have been £150 million a month. The cost to our balance of payments would have been at least £50 million a week. Just as serious would have been the set-back to the British Steel Corporation's effort to regain market share and the customer confidence that it wanted to maintain.

Over and over again I have made it clear that the only way in which we can deal with the problems of the BSC is in consultation with the BSC, with the trade unions, and taking fully into account the views of hon. Members, of the House of Commons. During the past three months, during the course of our consideration in depth of the Corporation's problems, we have had regular meetings with the BSC and with the unions, the latest being only this week.

I believe that the unions, led by Mr. Bill Sirs, are showing great statesmanship in their readiness to co-operate with us and find remedies for the impact on the British Steel Corporation of the world steel crisis. A good deal has been achieved. The recent pay agreement with the Iron and Steel Trades Confederation, the largest of the steel unions, reaffirms the joint commitment to productivity schemes.

As the House knows, I shall want to make a full statement to the House before the Easter Recess about the British Steel Corporation. Discussions are still taking place, not only between the BSC and ourselves, but within the Government.

The steel unions have issued a great number of messages and statements which broadly support our approach. A week or so ago the Scottish TUC said that the Tories…are angry because the British Steel Corporation has not gone along with their proposals for even more massive cuts in investment and massive redundancies". I do not know whether that is what the right hon. Gentleman and his hon. Friends want.

This week the TUC steel committee issued a statement declaring its support for our approach to the problems of the steel industry. I am afraid that the right hon. Gentleman's words will be interpreted—I am sure by those in the steel industry whose livelihoods depend on the steel industry—as a policy of despair to a very great extent. I know that the right hon. Gentleman does not like nationalisation. He says that. He was a member of the Government who did not denationalise the British Steel Corporation. I do not think that anybody in the House contemplates the destruction of the nationalised steel industry at present with all the problems that it faces.

As I have said, other Governments in Europe are making absolutely clear then insistence on rescuing their steel industries. The Belgian Government are making considerable loans to their private steel industry and are guaranteeing their industry's credit with the banks.

I hope that we shall not be ready to play politics with a vital national asset. The steel industry is absolutely essential to our economy. It is needed to play a major part in our industrial recovery.

The Government are determined to save the steel industry. They want to do that with the support of the House and not against the wishes of the House. We want to deal with the social consequences of modernisation and ensure that we reach a viable and profitable and competitive steel industry. That is why I want the House to support my amendment.

5.11 p.m.

Mr. Edward Heath (Sidcup)

I am grateful for this opportunity to make an intervention that I hope will be brief, because I see that many hon. Members wish to take part in the debate, including the Chairman of the Select Committee. I intervene because I wish to make two general points that I think are of importance beyond some of the specific subjects that we have been discussing so far.

First, I should like to refer to some immediate aspects of the Select Committee's report. I think that every hon. Member will agree that a Select Committee should be supported in all its activities. Where the Select Committee asks for that support, I have absolutely no doubt that it should be given. The House and the Committee should have confidence in that fact, because it is an instrument of the House which is given powers by the House.

I want to add one further aspect, that the whole House would wish that such investigations—if I may use that word—as we must make from time to time should be carried on in an amicable way between all the parties concerned. It is not for the benefit of the House that action should be taken such as the Select Committee thought it necessary to take in order to secure access to documents. Hitherto Committees have been able to act without such action, and I hope that that will continue to be the case in future.

Mr. Dennis Skinner (Bolsover) rose—

Mr. Heath

I am trying to be brief. Let me deal with these points.

Mr. Skinner rose—

Mr. Speaker

Order. If the right hon. Gentleman is not giving way, he must be allowed to proceed.

Mr. Heath

I said that I hoped that everybody in the House would agree—

Mr. Skinner

A lot of us do not—Mr. Consensusman.

Mr. Heath

The second question is on the position of Ministers. The Secretary of State's conduct has been questioned by the Select Committee. The Committee left it open to the House to take any decisions about the actions of Ministers, and it is up to the House.

The Secretary of State has given his explanation of what occurred. For me, the question is "Did the right hon. Gentleman or his colleague deliberately mislead the House by the information that they gave?" The Secretary of State's answer is that he did not deliberately mislead, that he gave what he believed to be the best information in his possession. I am prepared to accept what the right hon. Gentleman says in those circumstances. He owes it to his conscience to judge whether he is dealing fairly with the House. That is always the case with Ministers.

The other question is whether the Secretary of State was guilty of any negligence in August. In my view that is a matter for the Prime Minister. If he concludes that the Secretary of State was negligent and damaging to his Administration, it is his responsibility to remove the right hon. Gentleman. We recognise that he cannot give any undertaking to the House that the replacement will in any way be an improvement. This is entirely a matter for the Prime Minister.

We then come to the chairman of the British Steel Corporation. Here it is a matter whether the Secretary of State has confidence in the chairman of a nationalised industry. If he has not, he must remove him. If he has—and he has stated specifically on many occasions, including today, that he has—it is understandable that he keeps him there.

The one point that I should like to make in reference to this is that it seems to me to have been, let me say, an unusual position in which the chairman of BSC did not at least warn the Secretary of State when he saw him at that meeting that the possible loss brought forward by those working on this matter at BSC was so much greater than the previous figures.

This may very well be a question of the relationship between the chairman of a nationalised industry and the Secretary of State concerned. I realise full well how difficult these relations are. Many hon. Members and others outside the House say that chairmen must have complete independence, but that makes it more difficult to have a complete relationship of confidence between a chairman and a Secretary of State, because the chairman says "I am independent. I do not think I shall tell him anything until I do what I am required by statute or by arrangement."

But I think that it was unusual, when the figure was so much greater, that the chairman of the Corporation and the Secretary of State did not both realise it at the time it was brought forward, particularly as both have emphasised that if there was to be any possibility of avoiding that figure of loss, action had to be taken.

What could action mean other than that mills would be closed down? To bring that about, the chairman had to have the support of the Secretary of State and the whole Government. Therefore, I should have thought that if proper relations existed information should have been passed to the Secretary of State as long ahead as possible.

As for the auditors, may I simply say this: there is a great difference between the auditors and accountants for a private enterprise firm under the Companies Act and for a nationalised industry in relation to a Government Department. Under the Companies Act, if a private firm or its auditors have any indication that the firm is in that position, it is then trading beyond its means and that must be declared. Therefore, they would be bound to make public disclosure. It may well be that it is not necessary for a nationalised industry to make public disclosure, but at any rate the Minister concerned should be warned at the earliest possible opportunity.

Therefore, if I have criticism to make it is that the informal relations should be so close that that information is passed automatically between Ministers and chairmen concerned.

I should now like to make my first general point. The indications from Ministers and the chairman have been that they expected an upturn. I believe that that is because economic thinking both in industry and in Government world-wide has still not grasped the nature of the economic crisis that has hit the world. They are still expecting us to pull out of a trade cycle.

Mr. Skinner

What about the Common Market?

Mr. Heath

There is no need for the hon. Gentleman to interrupt just because I did not give way to him, but I shall give way to him now if he wishes.

Mr. Skinner

The right hon. Gentleman wants to remember a few points. First, he received the Charlemagne Prize supposedly when he dragged us into the Common Market, when he conned the British people in order to resolve the so-called unemployment and economic problem.

Secondly, on the question of accepting a Select Committee report, will the right hon. Gentleman explain why nearly the whole of the Tory Party, of which he is a member, refused to endorse the Select Committee report on the conduct of Members?

Mr. Heath

As the hon. Gentleman prides himself on his accuracy, I must remind him that he is wrong on both charges. First, I received the Charlemagne Prize when I failed to take Britain into Europe. Secondly, I did not say that the House should accept the Select Committee's report.

Mr. Skinner

The right hon. Gentleman did.

Mr. Heath

I said that the House should support the Committee in the exercise of its powers. That is quite different. I believe that when the Chairman of the Committee wants the documents, he should be supported in getting them.

I return to the nature of the economic crisis. It is very clearly discernible by looking at the graph of steel production. When the oil crisis hit the world in the autumn of 1973, the world was deprived of a massive amount of purchasing power. That is still the great economic danger facing the world.

The graph shows that in 1950 world steel consumption was 150 million tons. At the end of 1973 it was 450 million tons. It then immediately dropped—not over a period of recession, but immediately—by 80 million tons. That shows the impact of the oil crisis on the rest of the world. It has continued for these four years.

The point I wish to make—particularly in view of the fact that I understand that the Prime Minister is to meet the German Chancellor on Sunday evening—is that until the world leaders recognise this fact and agree, by force of necessity, to act together to deal with it, we shall remain in this situation of world-wide mass unemployment. It follows that if that is to remain the situation, steel production will be damaged permanently by at least this amount. If that is to remain so, our projections for our own steel production must take account of it.

If, on the other hand, the world leaders reach an economic solution to this problem, we can again hope for an expanding world economy and can look forward to a future for our own steel production which would be much brighter than it is at present. When we come to our own problems, what we decide today must depend on whether the world leaders will deal with the worldwide economic problems in order to give the world an expanding economy again from which this country can take advantage. We must put ourselves and our steel industry in a position to take advantage of that situation. That is the crux of the matter.

I wish to make another point with regard to the history of steel from 1950, and not from 1967 as the Select Committee did. The figures illustrate quite clearly that in 1950 the United Kingdom produced 16.6 million tonnes of steel. In 1977 we produced 20.4 million tonnes, an increase of 23 per cent. over 27 years. The only other country near that level of increase was the United States. In 1950 the United States produced 87.8 million tonnes and in 1977, 113.1 million tonnes, an increase of 29 per cent. over 27 years. The United Kingdom has a State-owned industry and the United States is the greatest free enterprise country in the world. Both are at the bottom of the league table for meeting world demand in steel consumption over the last 27 years.

But let us look at the other countries. In 1950 Italy was producing 2.4 million tonnes. In 1977 it produced 23.3 million tonnes, an increase of 870 per cent. That was under a plan organised and backed financially by the Government. France produced 10–6 million tonnes in 1950 and 22.1 million tonnes in 1977, an increase of 108 per cent. That was backed by a plan introduced by Jean Monet and financed, where necessary, by State banking. In 1950 West Germany produced 12.1 million tonnes rising to 39 million tonnes in 1977, an increase of 222 per cent. It did so with the help of the Marshall Plan. We then come to Japan. In 1950 Japan produced 4.8 million tonnes and in 1977 102.4 million tonnes an increase of 2,030 per cent. It did so under a system in which steel production is private enterprise but backed by an industrial bank and the central banking system. [HON. MEMBERS: "The Government."] It is not entirely the Government. It is backed by a central system.

The point I wish to make is two-fold. First, with an increase in world consumption in 27 years from 150 million tonnes to 450 million tonnes, the United Kingdom has been able to increase its production by less than 4 million tonnes as its share of that world increase of 300 million tonnes. The United States has not done very much better. Yet the other countries have all had massive increases in production.

What we ought to be asking ourselves is not whether we should continue the argument about private ownership and State ownership. Rather, we should ask how we are to ensure that we manage what we have got and how we can get a larger share of the world market that is available.

Mr. Norman Atkinson(Tottenham) rose—

Mr. Heath

I am sorry, but I want to be brief. I would have thought that what I have said was something with which the whole House could agree.

I again want to look at the steel industry's record over the last 27 years. Up to 1950 the industry was nationalised. Then the Conservative Party came to power and it was denationalised. The result of that period of nationalisationdenationalisation—was a reluctance to invest. We succeeded in denationalising the whole of the steel industry except Richard Thomas and Baldwin—for the reason that the money was not available in the City for it to be bought.

But under the Labour Government of 1964 to 1970 we had renationalisation and both finance and commerce said that this was immensely damaging. The Labour Government and their supporters must accept their lull share of the blame for that damage. We have seen that public ownership has solved absolutely nothing. From the figures it can be seen that during the 1964–70 period Britain managed to achieve only $5.6 investment per tonne whereas Japan achieved $16—three times more than that achieved under the Labour Government's plan. The Labour Government bear a very heavy responsibility for this to-and-fro battle and for the lack of investment which the industry has had.

The Government must now take responsibility for having repudiated the proposals which the Conservatives put forward in the early 1973 White Paper. The Conservatives faced the fact that some very difficult decisions would have to be taken. I myself met the workers from Shotton in the Cabinet Room. It was very impressive. I was deeply impressed. I had a lot of sympathy with them because they said "We have had perfect industrial relations the whole time. Why then does our plant have to be shut down? Why, when we have nothing else in the area, do 5,000 or 6,000 men have to be made unemployed?". That was the position we had to face and we had to take a decision, unpleasant though it was.

But at the General Election the Labour Party said that it would not accept that decision. It wanted to increase steel production beyond what we Conservatives had proposed. The Labour Government received the Beswick Report and accepted that these closures would not take place. I would not altogether differ from the Secretary of State when he said that he does not want Select Committee reports used for political reasons. But he must be a little careful about his argument. Why in the 1974 General Election did the Labour Party say that it would not go ahead with the closures that had already been announced? Was there not something of a political reason in that decision?

I suggest that the Secretary of State should be a little careful when deploring the introduction of political reasons into the question of steel production. We took the decisions. Had the present Government adhered to those decisions, the British Steel Corporation would be in an infinitely better position today than it is.

The Leader of the House shakes his head. I shall tell him why. We took those decisions at a time of expanding economy when people had some hope that there would be alternative jobs for them. What is more, action groups went out specifically to arrange that as far as possible with further industry. The Leader of the House could not do that today in Ebbw Vale, because there is a stagnant economy and he would find it most difficult to persuade any firm to replace the closures that now need to take place.

Mr. Norman Atkinson

I am grateful to the right hon. Gentleman—

Mr. Heath

There is no need to be grateful, because I have not given way.

Mr. Atkinson rose—

Mr. Speaker

Order. The right hon. Gentleman clearly wants to get on with his speech.

Mr. Atkinson

I ask the right hon. Member to be fair in his criticism, and to extend his analysis to the whole world of capitalist values when he refers to investment in British nationalised industries. He referred previously to production figures and not consumption figures. He should deal with consumption figures when relating his argument to British Steel. British Steel was unable to invest because its visible trade was in deficit. That is the idiocy of the system. Because of the public sector borrowing requirement, that investment was cut back. The right hon. Member should be honest.

Mr. Heath

With great respect to the hon. Member, exactly the reverse is the case. With a deficit on visible trade, home industry needs to expand in order to save imports. That is what has been happening.

Had the closures been made at the time proposed, the BSC would undoubtedly have been infinitely better off. As a result of this, over the last four years really vital investment has now been cut back. This is unavoidable because the money does not exist. All we want is an efficient steel industry, producing cheaply. That means new investment in major plants and the closing of older plants.

We are suffering a double loss. First, we are suffering the loss caused by the delay in closing those plants, and that four-year delay has meant a financial loss to the BSC. Secondly, we are suffering a loss on capital investment where it is required.

There are those hon. Members who wish to be tough about our nationalised industries and some private industries as well. They tend to say that if a company is making a loss it should go to the wall. But we have seen in the past decade a decline in British industrial power. I find this absolutely terrifying.

We have seen the decline in the steel industry in the world position—in the people it employs and its effectiveness. We have seen the decline in the coalmining industry where there has been a very large drop in manpower and total production. At the same time we see that there are export markets that we should have captured. We have seen a decline in the shipbuilding industry, to an appalling extent, and in the ship repairing industry as well, at a time when world production is expanding just as world steel production is expanding. We have seen a decline in the British indigenous car industry in exactly the same way. There has also been a decline in the tool industry. Just in those five cases we see a decline in the basic British industries which are vital to the future of this country.

To those who say, "Let them go to the wall", I ask what will happen to our balance of trade as a result. We should have to import the steel we use. We are seeing what is happening to the car industry. Because of the decline, large numbers of cars from abroad are taking over our markets. We have seen the problems of machine tools. We have to import machine tools because we are not able to produce them. It is not sufficient to say that these companies should go to the wall.

The same people claim that other companies will spring up in place of those that do go to the wall. Where has this happened? We have lost 500,000 people from agriculture in the past 15 years because of mechanisation. There is every justification for that, but we have still not found jobs for those people. The Scots and the Welsh can tell us that because it is more evident in those countries.

All those concerned with industry know that to build a firm of any size takes at least a decade or two. Anyone who has had anything to do with regional policy knows the appalling number of firms employing 250 or 300 people needed in a region to provide these jobs. We should not be arguing about public or private ownership of the steel industry—and I absolutely oppose any extension of public ownership because it has failed completely to answer any of our problems—but how to manage what we have got and have to live with.

I do not believe that the Select Committee has found the answers to the problems of the steel industry. Much more is required. I think that we should do some careful thinking about monitoring. Do we want the steel industry to monitor itself? Do we want the Department to do the monitoring and the Treasury? That is a triple monitoring system, plus the Select Committee. Surely we could get rid of at least one and possibly two of those. One has to control financing and this must come from the Government, unless the Government are prepared to tell the industry to get its money from the market. However, the market cannot always supply it, and if it can, it will cost more.

Where can we get adequate management for our nationalised industries? We have the utmost difficulty in persuading able young men to go into nationalised industries and to train to get to the top. All Governments have gone through this painful process. In future we must recognise the importance of making these industries efficient and of getting our share of world markets. This is what is really required from the machinery of government.

If our nationalised industries are to have the opportunity to run themselves we must forgo a lot of things that we have at this moment. We cannot have our industries independent from government if the Government are always to be held responsible in this House. As long as the Government are responsible, the industries will not have complete independence from Ministers, and Ministers must always be answerable to the House. All these things must be thought out. If we get more good management into the nationalised industries, we shall have better relations with the trade unions and a better chance of getting rid of overmanning and other problems that afflict us.

We should look beyond the immediate problems and irritations to the bigger issues and open up the real problems of maintaining an efficient industrial base in this country which can hold its own with the rest of the world.

5.37 p.m.

Mr. Russell Kerr (Feltham and Heston)

With the exception of the right hon. Member for Sidcup (Mr. Heath), this debate has not been characterised by the degree of frankness—I do not want to include the Minister in my stricture—that we have a right to expect of a major debate in the House of Commons.

Everybody knows that the Leader of the Opposition and her hon. Friends are a lot less fervent than they now claim in their support of the activities of the Select Committee on Nationalised Industries which I have chaired for the past four years. To be blunt about it their sole reason for wanting to approve the three most recent reports on the steel industry published by my Committee is not in order to give us a well-deserved pat on the head, nor to encourage us to further endeavours on behalf of the House of Commons and the taxpayers. It is simply to embarrass the Government and, if possible, to try to remove them from office. One should not blame them for this lofty, albeit unlikely ambition. After all, they are Her Majesty's official Opposition and their duty is to oppose more or less regardless, whether in fair weather or foul, whether it makes sense or nonsense, whether the country will be harmed or not and whether one's slip is showing—as in this case—or not.

Whether the Queen is happy with their being such an Opposition we do not know. As a result of events that took place more than 300 years ago, she is able to avoid—and indeed must avoid—the spectacle on the Opposition Benches up with which some of us have had to put every day of our working lives and which causes many of us to mutter with well-meant fervour, as well as loyalty, "God Save the Queen".

However, let me revert to the matter in hand. [HON. MEMBERS: "Hear, hear".] The theory behind this brilliant parliamentary manoeuvre is painfully obvious. Put simply, it is that the majority on the Select Committee, namely the eight Labour Members, will be so embarrassed by the terms of the motion before us which, on one reading, means that we would have to vote against approving our own reports, that they will be transfixed with fear at looking silly and will be forced either to vote with the Opposition tonight or abstain—or, just possibly, to go off and commit suicide as a consequence of failure to solve the dilemma!

I have news for Violet Elizabeth and her right hon. and hon. Friends: it ain't going to happen. My own hon. Friends will speak for themselves when they catch Mr. Speaker's eye, but it will come as no surprise to me if my fellow Labour Select Committee members decide to "fly the flag" tonight and vote with the Government—and to do that despite the pride we all feel in our three excellent reports which have been singled out for spurious commendation in this motion. But the point is that Labour Members on the Select Committee were not born yesterday—none of them. They recognise the siren calls of the right hon. Lady the Leader of the Opposition for what they are. Since we all come of clean, honest and God-fearing families, we are resolved to have nothing to do with such political low life. As we see it, the right hon. Lady has, politically speaking, to "get it honest". Her present somewhat disingenuous political ploy certainly is not that, nor anything like it.

This brings me—briefly, because no doubt the House has had a surfeit of steel politics in recent weeks—to what is actually said in the reports. The first thing we see—and we must keep this matter very much in mind as the argument develops—is that recent events in the British steel industry all took place against a backdrop of the most savage depression the world steel industry has known for many years.

Mr. Norman Tebbit (Chingford)

Get on with it.

Mr. Kerr

If the hon. Member for Chingford (Mr. Tebbit) wants to intervene, I shall allow him to do so. If he does not want to do so he should shut up. Recent events in the British Steel industry all took place—

Mr. Tebbit

Speed up.

Mr. Kerr

I shall speed up in my own good time. This is my speech, not somebody else's. I repeat that these events all took place against a backdrop of the most savage depression the world steel industry has known for many years. No part of the steel industry in the West managed to escape, as my right hon. Friend the Secretary of State reminded us—not the United States, France, Germany or even Japan, which has made such remarkable technological progress in recent years. Our steel industry in the West in the past couple of years has been in a depressed state from which there are few signs that it is beginning to emerge.

Mr. Tebbit

Get to the point.

Mr. Frank Allaun (Salford, East)

Be your age.

Mr. Kerr

Would the hon. polecat for Chingford shut up?

Mr. Speaker

Order. We have been having a serious debate. There is no need for anybody to take us away from the main subject. On both sides of the House below the Gangway there has been an exchange of complimentary remarks which would have been better left unsaid. I suggest that the House should now listen to the Chairman of the Select Committee, the hon. Member for Feltham and Heston (Mr. Kerr).

Mr. Kerr

Thank you, Mr. Speaker. I am capable of looking after myself, but I appreciate your help. Let me resume the story. The whole of the steel industry in the West over the past couple of years has been in a depressed state from which there are as yet few signs that it is beginning to emerge. The performance of the British steel industry in this period has been around the middle, when we think of the grisly league table of losses sustained. In other words, that performance has been not good but not bad. The figures in our report are there to support this view.

The second aspect of our report to which I should like to draw attention is the nature of the complaint we made in our report about Charles Villiers and the board of the British Steel Corporation, and to a much lesser extent the Industry Department and the Ministers concerned. We most certainly do not accuse any of them of villainy or anything remotely approaching it. Sir Charles, in several appearances before the Select Committee, impressed us all as a man of honour, ability and as a considerable fighter for what he believes are the rights of the Corporation. He is the sort of man I would prefer to have beside me when shooting tigers in the jungle or—and this is factual—when parachuting into occupied territory in Jugoslavia in the last World War. He is a gentleman no doubt, but a tough cookie to boot.

As we saw it on the Select Committee, the worst thing that could be said against Sir Charles and his colleagues was that they were neglectful of their duties to the extent that they displayed a certain understandable reluctance to be the harbingers of bad news—that is to say, the virtual collapse of the steel market in the West—and were therefore reluctant to pass on to the Select Committee information, albeit perhaps unconfirmed, which it was important that the Select Committee should have had before publishing its report. As the House will recall, this led to certain difficulties and culminated in a parliamentary order from the Select Committe to Sir Charles, delivered by Miss Mary Frampton, as the Serjeant's Warrant Officer, which happily obtained the information we were lacking.

Perhaps I should also add that my right hon. Friend, the Secretary of State for Industry, who had also been somewhat critical of the Select Committee following the efficacious intervention of Miss Frampton, was the soul of courtesy and co-operation when he attended a subsequent meeting of the Committee. We have no complaint in that regard. The answers given to our further questions were frank and forthright, as indeed one would expect of the Secretary of State, and as a result we were able to publish our final report, as the House knows, in near-record time.

What indeed this last meeting with the Secretary of State did achieve was a quite impressive meeting of minds—to the extent that we saw some of the difficulties he faced in dealing with a fast deteriorating situation and he, for his part, saw that, far from being the agents of the devil, bent upon the destruction of the British steel industry, we were no less anxious than he to preserve and protect this great industry, then as now facing a critical situation, which could have resulted in the loss of hundreds of jobs and widspread distress of a kind that certainly no Socialist, such as myself, could contemplate for a moment.

But so far as the future of the steel industry itself is concerned, the Select Committee has set out its views clearly in the First and Second Reports and I am content to let my colleagues on our Sub-Committee B explain our case.

There are just three things I should like to say briefly. First, I should like to pay an unreserved tribute to all of my colleagues on the Committee. Even if some of us vote in different Lobbies tonight, we have throughout our inquiries worked and thought as a team and this has been our strength. Secondly, while it is too early to make a judgment on the Government's policy, since final decisions have still to be made, we stand by our views, as summarised in paragraphs 21 to 34 of the Second Report, and we shall have to judge the Government's policy in the light of this—always remembering, of course, that the world steel industry has been, and still is, passing through a major depression, the like of which has not be seen for many years.

Thirdly, there have been suggestions made, some of which have been swallowed even by good friends, that our reports are somehow anti-steelworker. This really is a total travesty of the truth, as anyone who reads the reports without preconceived prejudice can see. I would never be a party to a report which was hostile to the steel industry or the steelworker and anyone who suggests that Labour Members have been gullible and "sold a pup" by Opposition Members of the Committee simply does not understand how our Committee works-or what sort of person I am.

Much publicity, has been given to the supplying by BSC of information on the financial forecasts of the Corporation, which concerned our Fifth Report. Again, I am happy for the report to speak for us. The report has been generally welcomed by all sections of the Press. The Guardian, for example, said that its conclusions are sharp, succinct and entirely to the point. The Sun—no, not on page 3—said that the report is based on evidence which the Government and the Steel Corporation fought desperately to avoid giving. The Scotsman pays tribute to the splendid investigating job done by the Committee. The only people who appear to criticise our reports are several unnamed Ministers who are quoted as saying that the report is full of "inconsistency, inaccuracy and invention". However, they do not substantiate those charges. For what its worth, I vigorously refute that smear campaign, though I am sure that neither the Secretary of State nor the Minister of State played any part in it.

The only inaccuracy of which I am aware is the suggestion made in the Fifth Report in paragraph 17 that there was a meeting on 11th September between the Secretary of State and Sir Charles. Apparently, that was not the case. The conclusion was based on the reading of the answers to Questions 147 and 170, and on the natural assumption that as Sir Charles had decided that the Beswick plant closures should be brought forward, he would discuss that at once with the Secretary of State. If the meeting did not take place until later, the Committee's general line of argument is strengthened, not weakened.

My right hon. Friend the Prime Minister seemed to imply last week that we on the Select Committee were somehow exceeding our terms of reference in our findings. He said last Thursday that those who are on the sidelines always think that they know better than the players in the middle. I can speak only for myself but I am sure that my colleagues on both sides of the Committee will support me when I say, with great respect to my right hon. Friend, that we shall not be intimidated and prevented from doing our duty by remarks of that sort.

The proper relationship of Government, the nationalised industries and Parliament is of fundamental importance to Britain's future. After all, it is not only the Select Committee that has drawn attention to the bad relationships between Departments and industries. It was the NEDO report, itself commissioned by the Government, which made that one of its principal findings.

The Government's response has been delayed for too long, and my colleagues and I on the Committee will be examining the White Paper closely when it appears. Indeed, it is our duty to do so, whatever Ministers may say. Moreover. I believe that our investigation will be welcomed by most of the nationalised industries.

Whether or not Sir Charles understands the proper role of Parliament and the Committee, other nationalised industry chairmen most certainly do. Sir Frank Price, chairman of the British Waterways Board, said of our inquiry into the Board: We have welcomed the investigation by the Committee of the role of the Board and its work. We have found it refreshing to be able to explain our work, and the problems, to an independent body of Members of the House of Commons who are not bound by Departmental loyalties. I also quote from Sir Daniel Pettit, chairman of the National Freight Corporation, who, incidentally, has had Freightliners taken from his corporation partly as a result of our recommendation. He said: during the whole of these eight years I have been coming to meet the Select Committee, this is an experience of which we have been very proud, and something we have valued very much. Your treatment of us has always been extremely courteous, and my colleagues have always been very agreeably surprised at the welcome you have given us. That has not meant you have not been very pertinent and relevant in the questions you have asked. He continued: Your questions have been very shrewd, very demanding, very challenging. We have appreciated this very much indeed. Thanks to the Select Committee, the relationship between Parliament and the nationalised industries is, on the whole, good. It will be the task of the Committee to try to ensure that relationships between Departments and the nationalised industries and, indeed, between Departments and the Committee, are equally good. Whatever by right hon. Friend the Prime Minister may think, we on the Committee are not mere spectators of some esoteric game. We have a vital part to play and we are determined to play it.

All the issues mentioned so far are important. Yet behind and above all the turmoil and heat engendered today lies a greater issue yet, the very future and credibility of the House of Commons itself as the watchdog of the people.

What is important is that the House is debating a great issue today with a proper knowledge of the facts. This is because a Committee of the House has stuck to its guns in using its powers to get at the truth, and to lay the facts before the House.

This is a victory, and a notable one at that, but unless the House is careful it may turn out to be a Pyrrhic victory. There are those in high places, including some of my right hon. Friends, who are hostile to the concept of Select Committees and to any extension of their powers. I believe that I speak for the vast majority of Back Benchers when I say that it is our task to ensure that Ministers seeking to deny necessary powers to a Select Committee like ours are overwhelmed by the strength of Back-Bench opinion, speaking on behalf of the people.

Ministerial accountability and responsibility must come to mean something at last. I believe that our Select Committee's work is welcomed by most thinking people. It will, I believe, be resisted only by the arrogant few who are convinced that Whitehall knows best.

I appeal to all Back Benchers, and especially my hon. Friends, to exert the proper rights of the House of Commons to scrutinise, to probe and to curb the powers of the Executive. In the days to come this struggle will be renewed and valiant men and true—women as well—will be needed more than ever. As a Select Committee of the House, we hope to play our full part in making sure that that is so.

5.58 p.m.

Sir Donald Kaberry (Leeds, North-West)

I shall be brief, but I must make it clear, lest there be any misapprehension in view of the speech of the hon. Member for Feltham and Heston (Mr. Kerr), that we are dealing with unanimous reports of 15 Members, some of whom, on the Government Benches, could never be described as being exactly in the Centre or to the Right of their party while some of those on the Opposition Benches likewise could never be described as being in the Centre or to the Left of their party. It was a broad-ranging and wide discussion upon a variety of matters brought before the Committee by the British Steel Corporation.

It is fair to say that it was about the longest investigation ever held by any Committee of the Select Committee on Nationalised Industries. The dates are worth mentioning. The Committee started taking evidence in April 1976 and finished in May 1977. It resumed in November 1977 and sat in January and February 1978. It produced the three unanimous reports that are now before the House.

It was not only the longest investigation; I should think that it was about the most expensive. The Committee had three technical advisers and a computerised system of recording evidence and documents. It spent a long time touring the countryside and elsewhere, if that is a kind way of putting it to conceal a number of matters.

In the ordinary way I suppose that the Committee would have reported early in 1977. It did not do so, for a variety of reasons. It was overtaken by events that showed that it required to have a vast amount of additional financial information that it felt had been denied to it.

There had been some 22 sessions of taking evidence. Evidence was taken from the former chairman of the Corporation, the present chairman, the independent steel manufacturers, the trade unions and a variety of others, including the Secretary of State and the Minister of State. No one can complain about the depth of the inquiry; persons can complain about its length and the quantity of paper consumed if they wish. There were 18 lengthy memoranda and 34 appendices to the minutes of evidence.

Lest it be forgotten I should put on record the fact that the House as well as the Committee owes a debt to the chairman of the Sub-Committee who presided over the whole of these inquiries. I pay tribute to the hon. Member for Dearne Valley (Mr. Wainwright), not because we are fellow-Yorkshiremen and stand foursquare before everything, but because of his courtesy and patience and the manner in which he permitted all witnesses who appeared before us to feel at their ease and to say that which they wished to say.

The reasons why the inquiry was started are set out clearly in the first paragraph of the First Report. There were all the indications of a downturn in the British Steel Corporation. There was all the evidence of losses being made. Therefore, the Committee decided to go into the whole matter and have a full, detailed report.

As we were concluding the report in the autumn of last year, it became abundantly clear that the Committee had been denied a vast amount of factual evidence which it should have had. Therefore, the Committee was reconvened in November and the Second Report was prepared. That was followed by another reconvening of the Committee, with the taking of further evidence in January and February of this year, giving rise to what is now known as the Fifth Report.

I was delighted to hear the Secretary of State this afternoon say that he would give great consideration to the 35 separate recommendations set out by the Select Committee in the First Report. It would be terrible if, in a cross-party battle, those matters, which are all-party and for the benefit of the country as a whole, were to be lost sight of, because those 35 recommendations contain valuable suggestions about the manner in which the industry should proceed.

I turn to the Fifth Report, because that gives us the inquest upon the matters which had been denied us. It is abundantly clear, from the questions set out on pages 2, 3 and 4 with Sir Charles Villiers giving evidence, that there were 10 explicit occasions between 5th October 1976 and 14th November 1977 when figures that had been requested were not supplied, were delayed, or were put off. The answer to the question why that happened is simple. It may be that it is to the credit of Sir Charles himself. His answer was that he did not accept the figures; he did not believe them.

In answer to a question that I put to him, Sir Charles said: The first evidence I can give to this Committee is when on the 8th December we met here and I was asked for these figures and I said that I did not really have great confidence in them. He went on, in the midst of a long answer, to say: I had cause on several occasions to say to the Secretary of State who will confirm this when you see him shortly that I found the past was littered with tombstones of numbers that were overtaken by events and I had very little belief that the figures then in front of me would not suffer the same fate. There we have the strange position of a responsible chairman of a nationalised undertaking wishing to improve and to develop it but not accepting the figures supplied to him by his own staff, which he had reorganised.

Subsequently, I asked him the simple question that would affect us all in our daily lives: Are you still relying upon the same team of advisers within the BSC who gave you figures which were extremely crude, and which you would not accept? The answer was "Yes, I have the same advisers." That gave me, at any rate, great cause for concern.

I pass now to the Ministers, because the British Steel Corporation, through its officials, by correspondence or via Sir Charles Villiers, the chairman, on several occasions—specifically between August 1976 and 26th April 1977—gave figures which started with a projected profit which, a quarter or so later, turned to an anticipated loss of £55 million, increasing to £250 million, £350 million and, finally, £450 million. At the same time, Sir Charles was saying "I am not going to accept them. I am going to do battle to try to defeat those figures if I can."

None the less, on the evidence which is clearly set out, Sir Charles warned the Secretary of State about those losses, and the Secretary of State knew of those losses and, as it were, of Sir Charles's struggle to overcome them.

Perhaps the matter is best summed up in the answer to Question 193, on page 35 of the Fifth Report, when both Ministers said that they hoped that something would turn up. That is fair enough. But what should turn up? A price increase? A general restoration of trade in the world, in Europe, in this country?

I am sure that the whole House feels indebted to my right hon. Friend the Member for Sidcup (Mr. Heath) for illustrating so well this afternoon the difficulties prevailing in world trading conditions last year at the time when Ministers were discussing whether something would turn up. Of course, the Ministers were confronted by a variety of other problems.

The members of the Select Committee are as fully convinced as are the two Ministers of the human element involved in this matter—the jobs and the creation of work and a viable industry. One can understand hesitation in wanting to rush into some kind of decision. None the less, the BSC warned the Ministers on seven occasions of the losses, and the losses were increasing.

Surely, seeing the whole position, the Ministers ought to have been more responsive to the feel of the situation. The longer they delayed taking any action, the worse the position must get, having been warned time after time that losses were mounting in that way.

What was wanted at that time, as now, was firm action to preserve whatever was possible of our great steel industry. Their best course would have been to have ensured the security of real jobs in the industry plus the continuance, with success, of all the steelworks which were viable propositions.

I think that the Ministers should not have waited and calmly accepted the figures given to them by BSC representatives without taking further advice upon them. There is an equal duty not only on the chairman of the British Steel Corporation to give, but on the Minister to demand information and to seek some solution to the problem.

I should explain what happened in the process of accumulating the matter which forms the body of these three unanimous reports. By carefully looking behind the curtain to see what was hidden, or lifting up the carpet to see what had been swept underneath, and demanding that we be given the figures and the information, we arrived at a ludicrous situation which called for serious and immediate action by the Government.

The Committee did not receive the information and the figures for which it had been asking until its meetings in January this year. Apparently, the Minister did not get or accept the full story of the accumulated losses. But I suppose that the whole situation is in some way rather academic, because we come back to the fact that the chairman of the BSC did not accept the figures. He did not believe what was put in front of him. That is, perhaps, the worst aspect of the whole matter.

The two Ministers sat there, somewhat complacently, hoping, as they said in their evidence, that something would turn up—

Mr. Varley

Will the hon. Gentleman tell me where I said that I hoped something would turn up? He is not quoting accurately from the report.

Sir D. Kaberry

It was an answer to Question 193. The Secretary of State said: We certainly hoped that things would get better and there was a good deal of evidence at that time to suggest that they might get better. In answer to the same question the Minister of State said: Of course, when Sir Donald puts it as it is fair in one way to put it, that we were waiting for something to turn up, what we were waiting for, of course, like steel industries all over the world was for prices to turn up. That may well be, but they were waiting for something to turn up and taking no positive action of any kind.

I want to deal with an aspect that raises the whole question referred to by my right hon. Friend the Member for Sidcup, which is extremely important for everyone in the House of Commons and in the country. I refer to the nature of the control that we wish to have over our nationalised industries. Do we want them to be commanded by a nominated president, a czar who will be rude to any Minister who does not answer a question, who will act as an independent fortress, removed from all political pressures and refuse to take any political subsidies? Or do we want the reverse—not a commanding height but an abysmal depth, where the nationalised industry chairman is under the thumb and the control of the Minister concerned? That is a question that has to be decided and answered.

It is to the credit of the Select Committee on Nationalised Industries that it took the initiative in this matter. In a report in December 1973, after we had had an across-the-board examination of capital investment in nationalised undertakings, we specifically recommended that the Government should institute a wide-ranging inquiry into the role of the nationalised industries in the economy and the way in which they should be controlled in future. We intended that to be, as it was, a challenge to the Government to say how they wanted the nationalised undertakings to be controlled. That was in December 1973 and, as the dawn came through in 1974—the murky, dim dawn—nothing happened, save for two General Elections.

Finally, in June 1975 the previous Government appointed NEDO to examine the whole problem. NEDO, to its credit, started work in July 1975 and in September 1976, I think, put out its report.

That report, based on a great deal of information which NEDO had considered, was rejected almost unanimously by the chairman of every nationalised industry. NEDO recommended a policy council, an intervention between the Minister and the board of the nationalised undertaking—but I need not go into that, because it is set out in the NEDO report. The Select Committee last year published all the replies from the nationalised industries' chairmen setting out why such a proposition would not be workable.

Now it is with the Government, and it is for the Government to decide. It is for the Government to issue their long-awaited White Paper saying how they want nationalised industries to be managed and controlled; whether they want them to be responsible to a Select Committee or to the Minister and, if so, how. Those are extremely important matters which have to be decided.

It was in that vacuum that the Select Committee went ahead and produced these three unanimous reports, which contain a great many extremely valuable suggestions. My colleagues on the Select Committee and I want to see a strong, viable British steel industry. The jobs, the wage earners, the product and the country demand it. I hope that the outcome of this debate, although it may be a little political at times, will produce that result.

6.16 p.m.

Mr. Geoffrey Robinson (Coventry, North-West)

I have read the reports of the Select Committee and the minutes of evidence, and I am gravely disturbed by them. I could not dissent more from the views which have been expressed by the right hon. Member for Leeds, North-East (Sir K. Joseph), who called the reports magisterial and the analysis profound. In my view the 35 recommendations could have been cobbled together quickly by any modestly competent group of management consultants. As for the analysis, in many key areas it is fundamentally wrong, as I shall demonstrate in the course of my few remarks.

In the Second and Fifth Reports the Select Committee makes specific charges. They are serious charges, which must be taken seriously. The Select Committee says that it is "very disturbed" and "extremely concerned", and it refers to the "appalling situation" and "still more serious implications". Yes, the implications are very serious.

In essence, these are charges of incompetence against the BSC and its chairman, and against the Secretary of State for Industry, and charges of incompetence against his Department and lack of adequate relations between his Department and the BSC. The Secretary of State has already adequately dismissed the charges against his Department and against the relations between his Department and the BSC. I propose, therefore, to deal with the far more serious imputation made by the Select Committee on which judgment by the House is invited and on which the House is obliged to form a judgment. They are of such gravity, and posed in such stark terms, that we cannot avoid it. I quote from paragraph 6, on page viii of the Fifth Report: Your Committee are content to leave it to the judgment of the House to decide, in the light of all the evidence whether the failure to supply information was a deliberate attempt to conceal the situation or a genuine misunderstanding of what was wanted. This repeats the same imputation made in the Second Report.

My hon. Friend the Member for Feltham and Heston (Mr. Kerr) said that there was no deliberate attempt to conceal the situation and no deliberate attempt to mislead the Committee. For that question to be posed in that way and for an invitation to be given the House to express a view on it, some members of the Committee must presumably still be in some doubt. That charge, made outside the Chamber by persons who are not covered by the privileges accorded to the Chamber, if unsubstantiated, would prove actionable.

Sir Charles Villiers stands in no need of any attestations to his integrity from his personal or professional friends, although, having worked for him for three years on the Industrial Reorganisation Corporation, from 1968 to 1970, I feel obliged to state that I consider him to be a man of total integrity, a dedicated and devoted public servant. He is in no need of that testimony; I put it on record because I am pleased to do so. If members of the Committee agree, why is that question still in the report, and why is it repeated in the Fifth Report, having already appeared in the Second Report? As I have said, Sir Charles does not need that.

The Committee was terribly misled, but the members of the Committee misled themselves. They misled themselves because they did not understand certain basic principles and practices of financial accounting. That is how they misled themselves, and I shall demonstrate that.

Let us turn to the first piece of evidence. This is the crucial document that they did not understand. They misunderstood it. It is the "Financial Statement and Budget Report 1977–78". Table 13 shows a net deficit on total internal resources of minus £50 million There is a footnote to that table which gives a precise and comprehensive definition of the elements that made up that estimate. In no one's mind, therefore, should there be any confusion.

Alas, that was not the case with the Select Committee. From their discussions with the BSC and the Chief Secretary to the Treasury last November, and again with the Secretary of State for Industry in December last year, the members of the Committee continually confused the deficit on internal resources—that is, the minus £50 million figure—with profit and loss.

Mr. Mike Thomasrose—

Mr. Robinson

If my hon. Friend will wait, I shall quote him. I shall willingly give way, although I would much rather give way to Members on the Opposition Benches than to my hon. Friends. I advise my hon. Friend to wait until I have read his words before he jumps to his feet.

To substantiate the point about this confusion, I have, regrettably, to quote my hon. Friend's words, for it was he who, in his relentless interrogation for precision paradoxically, so clearly brought out the total confusion in which he and other members of the Committee found themselves. I shall give him the exact reference. I quote my hon. Friend: In the FSBR it —this refers back, and it is quite clear from the context that it is the internally generated funds deficit— is down to minus £50 million, and now it —if the English language means anything, that "it" is also the deficit of the internally generated funds— is down to a probable minus £500 million, which is a pretty massive turn-round in just 12 months. Yet the cash limits —and this shows that my hon. Friend does not understand the position— that the Chief Secretary in his wisdom allocated appear to be going to be adequate. My hon. Friend continues: I am trying to be complimentary. That seems to me to be a remarkable achievement on his and his colleagues' part. Although the irony is rather heavy-handed, my hon. Friend had a point. The fact, much overlooked, is that the BSC has stayed within its cash limits. The achievement is not as remarkable as my hon. Friend seems to imply, though it shows quite a tight degree of financial control.

The point is that my hon. Friend has totally confused a figure of minus £50 million with another figure of minus £250 million. Therefore, instead of the turn around being, as my hon. Friend would suggest, one from minus £50 million to £500 million, a turn round of £450 million, there is a turn round of only £200 million. My hon. Friend's calculations are £200 million out.

My hon. Friend is not alone in this. It is on the record, and every Opposition Member who tried his hand at the same financial analysis made the same elementary accounting mistake of £200 million because he confused internally generated funds with profit and loss forecasts.

Mr. Mike Thomas

My hon. Friend makes a point that is true but irrelevant. I shall explain why that is so. The reason why it is true but irrelevant is that there are two occasions in the proceedings where I make the confusion in long sessions of verbal evidence and questioning, to which my hon. Friend has referred. There is no other point in the report—and there must be at least four or five dozen other points at which I refer to this sort of evidence and get it right, except for a small misunderstanding that was cleared up by the Chief Secretary to the Treasury about the way in which regional development grants are accounted—where this mistake is referred to or repeated where it is in any way critical. My hon. Friend totally fails to answer the main charge. I put it to him that if he had been provided on 5th October 1976 with figures that were by then already approaching £300 million or £400 million out of the true figures and were six months out of date, and the people who provided him with those figures had not told him that they were six months out of date and had changed in the interim, would he not feel misled?

Mr. Robinson

Of course, the point is irrelevant when my hon. Friend is out by £200 million but, of course, it is a cause for massive concern when the BSC is out by that amount. That is the first point. Point No. 2—[Interruption.] I am being very fair. I want a debate across the Floor of the House. I am itching to give way to hon. Members on the Opposition Benches. But here we have the real professionals. They have more sense. They know they were wrong and that it was a massive elementary mistake. But until it was exposed, they could go on using a forecasting error much more easily made by the BSC in the teribly difficult circumstances in which it was operating, for the precisely party-political purposes that they intended. That is what this is about. I shall show that. [Interruption.] I am not nitpicking over £200 million. BSC was then only £200 million out. When my hon. Friend has checked again what he has just said, he will see that he is in the same confusion as he was before.

Mr. Norman Lamont(Kingston upon Thames) rose—

Mr. Robinson

I am itching to give way, but I must get on.

Not only was this error made several times by all members of the Select Committee in the verbal evidence—the cut and thrust of discussion; but what is more, there is a similar error, although this time not across the table in the to-and-fro of debate, but written into the Second Report. It is another elementary error that is easily demonstrable. It shows again the total financial incompetence of those who wish to accuse the BSC and a public industry of incompetence. That is the irony, and this is what destroys them. I refer now to the Second Report, paragraph 10 on page 10. My hon. Friend may not like it, but he must take it.

Mr. Norman Lamont rose—

Mr. Robinson

No, I shall not give way. Let me finish. Paragraph 10 says: The most recent Government forecast —[Interruption.] I want Opposition Members. They know who I want. Paragraph 10 says: The most recent Government forecast (in the Financial Statement and Budget Report … of March 1977) implied a loss of £150 million. Those are the words of the Second Report. Of course, it did nothing of the kind. The FSBR implied a loss—indeed it was derived from the basic assumption of a loss—of £250 million, as the Chief Secretary informed the Select Committee in December, before the report was produced. The letter is in the report as an appendix. I disagree with many of the Chief Secretary's economic policies but I understand that he is a qualified chartered accountant and I tend to believe his figures when put there. In its report, the Select Committee says that the FSBR implied a loss of £150 million. Then it goes on to say—I think I quote verbatim, but it is from memory—that the situation is even more confused because the Chief Secretary, in his letter, says that there was going to be a loss of £250 million. The Chief Secretary was right. That was the figure. How was it, therefore, that the Committee was again out, confused and wrong by another £100 million in the written report? In fact, it is not hard to see why.

Mr. Tim Renton rose—

Mr. Robinson

The Committee's recommendations included an estimate in the £150 million for depreciation. The members of the Committee got that far, but they had forgotten the very clear footnote to Table 13 in the FSBR, which gave the elements that made up the deficit of £50 million also including regional development grant. But in July 1976, the same precise point was made to them when Mr. Monty Finniston was chairman and Mr. Driscoll was finance director. There was no excuse for overlooking that. The situation was made dramatically worse because they misunderstood it by £200 million to start with, in the investigations, and by a further £100 million later. I shall explain the relevance that I believe I can attach to these fundamental and persistent misunderstandings which take up so large a part of the minutes of evidence.

Mr. Tim Renton

I have listened with astonishment to the hon. Member. I thought that he was more intelligent. It is much more fun for him to be answered by his own hon. Friends, and I can well understand why the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) is looking so thoroughly irritated with him. Perhaps I may suggest to the hon. Member that he actually reads the letter from the Chief Secretary. If he does that, he will see that the Chief Secretary says: By way of illustration, outline financing tables compatible with a cash limit of £950 million and showing the kind of savings which could be made to offset a worsening in deficit from £250 million to £500 million might be: He then goes on to draw two analogies—two examples of how the British Steel Corporation, by cutting down on capital investment could still stay within the cash limits of £950 million even if its losses had deteriorated from £250 million to £500 million.

Mr. Robinson rose—

Mr. Deputy Speaker

The hon. Gentleman said that he was seeking interventions. He has now got one.

Mr. Renton

The hon. Member for Coventry, North-West (Mr. Robinson) is like an animated jack-in-the-box, popping up and down.

Mr. Robinson rose—

Mr. Deputy Speaker

Order. There can be only one hon. Gentleman on his feet at one time. The hon. Gentleman had given way, and I understand there was an intervention from the hon. Member for Mid-Sussex (Mr. Renton).

Mr. Renton

There is nothing in the letter from the Chief Secretary that refers to the actual loss being forecast by British Steel at the time of the questions to which his hon. Friend is referring. Furthermore, there is nothing—[Interruption.]

Mr. Deputy Speaker

Order. The hon. Gentleman may have an opportunity of catching the eye of the Chair in due course.

Mr. Robinson

I am grateful to you. Mr. Deputy Speaker. I was seeking interventions, not speeches—trying to get away from the fundamental weaknesses of the two reports which produce an analysis which would have failed the hon. Gentleman even in an intermediate examination of the Institute of Chartered Accountants. I understand that he was a director of a certain company which also got into difficulty and had to be restructured in 1974; possibly there was difficulty in distinguishing between cash flow and profit. He left that board. I understand, and at the self same time joined a Select Committee. I would not mind his joining a Select Committee if he had learnt something from his previous experience at Vavasseur, which got into a confusion over cash flow and profit and loss. He is still confusing the two. All that was by way of illustration.

I come back to my point that I do not think that what the report went on to say was correct and I base my statement that the Select Committee should have known this on the evidence given to the Sub-Committee by the Chief Secretary, which related to evidence that he gave which appeared to indicate, apart from the publication of the financial statement and budget report, that the Government expected the Corporation to make a loss of £250 million. That is the derivation that the Select Committee should have made, had it not committed the fundamental error of forgetting in its calculations the cash contributed from regional development grants. I hope I have demonstrated to the House the fundamental financial incompetence to make analyses on the part of those who took part in the debate. I draw three conclusions. First, the errors which the Committee made, though elementary, were of such magnitude and so central to its charges of incompetence against British Steel and the Department of Industry that they render those irresponsible accusations totally invalid. All they demonstrate is the Committee's own incompetence and it was this very reason which led the Committee to think it was being misled, and made it send for information when that was already at its disposal.

Mr. Kinnock

We did not have the information.

Mr. Robinson

Such incompetence casts general doubt on the validity of the work of the Committee as a whole.

Thirdly, and possibly most important, the Committee profoundly misunderstood figures to such an extent on such key issues as to create a hostile atmosphere which gave way to the paranoia and suspicion which at times prevailed. Anybody who reads the minutes will come to that conclusion. It seems to me that the Select Committee thought it was on to a Watergate-type cover-up between the British Steel Corporation and the Department of Industry. Sadly, for it, the missing tapes are not missing tapes at all, but are misunderstood figures which have blown up in the faces of members of the Select Committee. It is like putting in a third-rate chartered accountant to sort out the quandary of a secondary bank's collapse. These statements are irreparably damaging to the reputation of those Opposition Members who sat on the Committee.

It is not really surprising that mistakes were made when one considers the pre-sure of time under which the Committee continued to sit. The first time it met, Sir Charles, in his presentation of the policies of the Corporation, was stopped in his tracks because it had lasted for 17 minutes. In an 18 months' inquiry was that too much? In total, up to last summer's First Report, the chairman of the Steel Corporation had given evidence at three meetings and, apart from one meeting covering non-executive directors, had had three hours to respond to questions on every aspect of the affairs of BSC.

Specifically, on the quality of the minutes of evidence leading to the Fifth Report, no hon. Member comes out well. It reads like a confused jumble of patently hostile questions grasshopping over time scales and subjects, with no attempt to deal with the real issue. It is quite clear that because of time pressures throughout the sitting anything like a full debate was impossible. On no fewer than five occasions the Chairman of the Select Committee attempted to call the discussion to a halt. It is really not surprising that mistakes were made. I do not believe that any Committee can possibly or effectively operate under those circumstances. This matter cannot be left by exposing the Committe's financial incompetence or by casting upon the report the contempt and derision that I believe much of it deserves, because the real damage that was done by those members was seen in the newspaper headlines "The Guilty Men"—including the chairman of the British Steel Corporation, the Secretary of State and the Minister of State. They are not the guilty men. The guilty men were those Opposition Members who stirred up grossly exaggerated and factually incorrect charges just because they did not understand the figures—those Members who committed themselves to paranoid suspicion about figures which they were given, which led to Press statements inspired by the party opposite.

We have to consider whether it was correct that the whole of the Select Committee's proceedings went as they did. Under common law, under which we normally live, every party has a full opportunity to present his case and to be cross-examined. But the important point here is that the Select Committee acted as judge, jury and prosecuting counsel, with no rules of evidence. These procedures remind us of nothing less than the Court of Star Chamber which was abolished in 1641.

Dr. Jeremy Bray(Motherwell and Wishaw) rose—

Mr. Robinson

No, I shall not give way. I have given way more than enough.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. If the hon. Gentleman does not wish to give way he cannot be pressed to do so.

Dr. Bray

I understand my hon. Friend's motivation and the validity of some of his comments, but in order to avoid misunderstanding, he should make clear that he is making his speech on his own initiative and not at the request of Sir Charles Villiers.

Mr. Robinson

I am grateful for that intervention. Unlike Tory Members, I understand the figures and am able to interpret them and demonstrate the total incompetence of the Select Committee.

I am making my speech entirely on my own behalf. I believe that the Select Committee has brought great discredit on itself and on the British Steel Corporation, and has done nothing to further the real interests of parliamentary government.

To the Select Committee on Procedure I say "Look very carefully at the status and operating procedures of Select Committees in general and abolish the Select Committee on Nationalised Industries, in particular, very quickly."

6.41 p.m.

Mr. Richard Wainwright (Colne Valley)

Liberal Members consider that these three robust and serious reports—whatever view one takes of their 40 or so recommendations—should be fully debated by the House in their proper context and, in our view, the context for debating Select Committee reports, especially on such a weighty subject, is when the Government have tabled a full reply by way of a White Paper.

Regardless of the fact that we are having today's debate, we believe that it would be wrong to face the House with new legislation concerning the BSC until a White Paper has been published. If, as the hon. Member for Coventry, North-West (Mr. Robinson) has attempted to demonstrate in the light of his successful industrial experience, there are serious flaws in the accountancy reasoning in one of the reports, that is all the more reason for a White Paper to analyse all that has been said.

Mr. John Mendelson

I apologise for interrupting the hon. Gentleman's arguments so early. He knows that I would not normally do so, but it is precisely for the reasons that he has reasonably stated that I have urged the House that the Government should be allowed an opportunity, as with any other Select Committee report, to prepare their answer and publish a White Paper that we could debate rather than allowing this misuse of procedure by the Leader of the Opposition for shoddy political purposes.

Mr. Wainwright

I am glad to have that endorsement which shows that, not for the first time, Colne Valley and Penistone are at one on a parliamentary matter.

There seems to have been some confusion between the House approving the Committee's recommendations and paying serious attention to the evidence and the analysis produced by the Committee. Even if none of the recommendations turned out to deserve implementation, the analysis—even with its faults—and the massive amount of evidence, which is of enormous importance to such a vital industry, must soon have the proper attention of the House in the light of a Government reply published at the earliest possible opportunity. My right hon. and hon. Friends and I regard the debate today as premature in that respect.

Select Committees are of immense, and, I hope, rapidly growing importance to Parliament, and the steel industry presents unique dilemmas for Parliament and the country. It is a manufacturing industry dependent upon being competitive in world markets and, in the next few years, probably dependent on managing to export at least one-third of its total output in difficult world circumstances. Yet it is under attempted parliamentary control which raises appalling problems of procedure. Most hon. Members regard the industry as vital—certainly my party thinks it is vital—and, in many respects, as a promising industry in the European context, but it will be desperately hard put to break even, let alone make a profit, in the next decade.

As one of the three advisers to the Select Committee wrote in the New Statesman on 3rd March: there is no ground for foreseeing the BSC as anything other than a drain on public expenditure for a generation to come. No one disputes that, regardless of profit or loss, the capital requirement of a modern competitive steel industry, over and above any profit which might be generated, will be enormous in its demands on this country's strictly limited resources.

Perhaps the admirably low key in which the greater part of this debate has been conducted, with interruptions, is due to the fact that the House is faced with its own vomit. It is, as the right hon. Member for Sidcup (Mr. Heath) pointed out so clearly, the vomit of having to deal with a fundamental manufacturing industry which has been treated as a political shuttlecock and has been taken in and out of public ownership over the years.

There is also the appalling dilemma, which no one has yet solved, of having a manufacturing industry in world-wide competition, yet in public ownership which is dependent upon funds voted by Parliament and therefore liable to parliamentary control and investigation.

I applaud the energy and diligence of the Select Committee, or at least some of its members, in trying to square the circle and get information on behalf of the House about the state of the industry and its future prospects, but it is clear that it has not been able to square the circle. The dilemma is that the information that would be required for a searching examination of the industry could be given only at the peril of undermining the Corporation's commercial success.

I know that there are arrangements for concealing in reports certain figures and details, but while that device may be all right for the Public Accounts Committee and some others, it does not meet the case of trying to investigate a competitive manufacturing industry in world markets. If one respected commercial confidentiality one would have to asterisk enormous chunks of a Committee's recommendations.

Mr. Mike Thomas

The amount of asterisking in the report is extremely small and relates only to forward financial forecasts for 1979 onwards and to some specific things said in evidence—amounting to no more than a few sentences.

These matters were agreed between the Secretary of State, in the case of his evidence, and the Committee and Sir Charles Villiers, in the case of his evidence, and the Committee. The Committee acceded at every point to requests for confidentiality to be preserved for commercial purposes.

We were not faced with the problem that the hon. Gentleman mentions. We were able to do the job properly and to respect commercial confidentiality.

Mr. Wainwright

I am sure that the Committee tried hard, but this is a circle which cannot be squared under the present arrangements. While the Committee was robust in demanding certain information and sticking up for the rights of Parliament, its reports fudged some of the issues and the House has still not been frankly presented with the pertinent difficulty of operating a modern steel industry, which we must have, in a manner that will not be an intolerable drain upon public resources.

The Committee must have been overawed—I know I would have been—by the appalling task of delving into the affairs of a strictly commercial organisation that is trying to face up to American anti-dumping regulations and competition from up and coming steel countries such as Brazil, Korea and Taiwan, in the glare of publicity for its operating accounts Britain's competitors, especially in the developing countries which have no elaborate press or television, must be chuckling that so much trading information is at risk of public exposure in Britain. That is a dilemma for which I can find no solution but it should be ventilated.

Mr. Ted Leadbitter (Hartlepool)

I agree that the objectives which the hon. Member for Colne Valley is beginning to develop would have been enhanced if we had not had this debate at all because it is interfering with commercial considerations. It would have been wiser to wait for the Government's response to the reports and for the statement which we know that the Government intend to make before Easter.

Mr. Wainwright

I am grateful for all the support from hon. Members but it is prolonging my speech. We believe that this debate is premature.

I turn to the reasons why we shall oppose the amendment tabled by the Conservative sector of the Opposition. We cannot approve these three reports when we have not had the Government's published reply. Perhaps the Government's reply will be unconvincing, unless they take over the accounting skills of the hon. Member for Coventry, North-West. Perhaps they will do that. Whether or not the Government's reply is convincing, I cannot believe that the Select Committee regards as a compliment some hon. Members rushing in to agree with it before hearing the other side of the dialogue. No one respects a friend who, during an argument with a third person, rushes in and falls over himself to say that his friend has won the argument before the other person has begun to reply. The proper response which the House owes to the important functions of Select Committees is to demand from the Government not a perfunctory, point scoring, sharp, Civil Service reply but a thorough reply in detail to the recommendation and the analysis.

Mr. Michael Marshall (Arundel)

I deliberately tried not to intervene because I hope to contribute to the debate but the hon. Member for Colne Valley (Mr. Wainwright) is presenting a strong argument. Does he recognise that the Select Committee reported unanimously three times on the importance of having this debate before the statement. The Government made it clear that they were not willing to have such a debate. This is the only chance that we have to play our part.

Mr. Wainwright

Statements must come when things actually happen. We do not say that statements to the House should be held up because documents are not provided but we say that legislation should not be laid before the House until the House has had a full reply.

We should have found ourselves unable to do anything but vote against a Government amendment which sought to pre-empt the full reply which they owe to the House by attempting a defence against these three reports today. We support the Select Committee system and the interrogatory system of democratic control. We do not believe that the Order Paper is the proper place for the Government to defend themselves against Select Committee reports. If the Government had attempted in an amendment to import any kind of attack on the Committee or any implied defence of the Government we should have voted against that as well as against the Tory motion.

The Select Committee has dug out the evidence industriously and it is on the whole useful. There is an appalling slump in the world of which there seems to be no end. The whole BSC strategy, therefore, has to be reviewed, and as little regard as possible paid to political or electoral interest. It is no good saying that the large numbers of people employed in steel plants do not present electoral temptations. This is something which can be brought up only in a proper debate.

If the steel industry is well managed and not subjected to undue political interference it has a future, particularly in the European context. We see no reason why it should not supply much of the Common Market's needs for many forms of manufactured steel. We start with a lead over some other member States. In order that this can take place the industry is entitled to demand at least a stable political environment in which these matters are discussed more in the spirit of today's debate than in the spirit of past debates involved with nationalisation statutes. I hope that when we have the Government's reply the House will rise to the occasion and deal with the dialogue between the Select Committee and the Government in an appropriate way.

6.56 p.m.

Mr. Roy Hughes (Newport)

We all agree that our publicly owned steel industry is going through a difficult period. Its losses of over £500 million are bound to cause grave concern to the House, the Government and, of course, the BSC. They also seriously concern the workers in the industry who obtain their livelihoods from steel.

We know that there are mitigating factors. Over many years the industry has been subjected to appalling fluctuations. The present slump has also affected other places such as Germany, Scandinavia, Belgium, Italy and France. The BSC is not unique in its present difficulty, but I agree that there is no room for complacency.

I have always been a wholehearted supporter of the principle of a publicly owned steel industry. But I confess that over the years I have been disappointed with its performance. I was disappointed before the present slump and before the divine revelations of the Select Committee. In structure and performance the steel industry can be summed up as being too bureaucratic. It shows a lack of initiative and its labour relations have not been good.

I have always found the poor industrial relations in the industry difficult to understand. That is one of the reasons why I often took Sir Monty Finniston to task. The poor industrial relations seemed to reflect not so much on the workers or trade unions as on the management.

I welcome the tribute paid this afternoon by my hon. Friend the Member for Feltham and Heston (Mr. Kerr), the Chairman of the Select Committee, to Sir Charles Villiers. My impression is that he is an honourable man. A year or two ago he was handed the poisoned chalice. It is easy to see the defects in the industry.

I have spoken in a number of debates on this subject. I have persistently pointed to defects. I have proposed more industrial democracy. A massive expansion of that is now necessary, and the major trade unions in the industry go along with that principle. For too long we have had to endure this sham arrangement of so-called worker directors.

There should be greater accountability to this House by all our publicly owned industries. I regret having to say this against my own Government, but they have been most remiss in the number of steel debates that they have arranged in the last four years. Our questioning procedures should be sharpened so that we can ask questions more directly about the performance and defects of our public industries. Why should all that be left to the civil servants when there is so much talk about more open government?

It is against this background that we should see the Select Committee's recommendations. It has had a difficult job to do, but in one form or another those recommendations contain proposals for massive redundancies, plant closures, the contraction of capacity and cut-backs in investment. Again I regret having to say this but to me that is the traditional reaction of the old iron masters: when the industry is in difficulty, contract and sack the workers. Such recommendations are not in the best interests of the industry or the country.

Mr. Mike Thomas

That is not very fair, is it?

Mr. Hughes

For example, it is quite illogical to plan production on the assumption that the present slump period is the norm—

Mr. Mike Thomas

We did not do that.

Mr. Hughes

The right hon. Member for Leeds, North-East (Sir K. Joseph) referred to Sir Charles Villiers' explanation of the situation. He said that the losses were due 40 per cent. to the slump and 40 per cent. to over-manning. But at present we are producing only 17 million tonnes of steel a year when we could be turning out 24 million tonnes. Logically, therefore, productivity would be very much higher if the industry were working to capacity and turning out 24 million tonnes a year. That is why I say that the Select Committee is basing its recommendations on the present situation, and on the basis of that situation is calling for the sacking of so many people.

Mr. Mike Thomas

The Select Committee did not base its recommendations on that presupposition, nor did it call for the sacking of large numbers of people.

Mr. Hughes

I am sure that my hon. Friend will, if he can, make his own speech about these matters. The Select Committee has spoken of phasing redundancies over five years, and one would therefore expect the redundancies to be massive. Is the number to be 40,000, 20,000 or what? This is the sort of airy-fairy nonsense peddled by the right hon. Member for Leeds, North-East.

The Select Committee says that the unions should be allowed to negotiate, but that if there is no agreement there will be cuts in investment. That is rather like the judge in the Western film who tells the prisoner "You are guilty but you will have a fair trial."

Another remarkable recommendation is that higher productivity should not be encouraged by the introduction of new facilities. Surely the whole lesson of British manufacturing industry in the past 30 years is that it has been essentially under-capitalised, and that is why we have been losing out in world markets such as Japan and West Germany—

Mr. Kinnock

That is exactly what we said.

Mr. Hughes

Wales is particularly involved with steel. It is very much a part of the livelihood of the Principality Take the Shotton works in North Wales. As the right hon. Member for Sidcup (Mr. Heath) pointed out, it has had a remarkable industrial relations record over the years, and that is worth a great deal. The plant was reprieved until the early 1980s, but paragraph 146 of the Select Committee's recommendations brings the works once more back into the centre of the stage. When the report talks of introducing new industry to the area it seems to ignore the fact that 1.5 million people are unemployed in Britain.

The general-secretary of the Iron and Steel Trades Confederation, Mr. Bill Sirs, wrote to me on 26th January about the Shotton works. He said: I was saddened to read within the committee report that whereas there is no government or B.S.C. intention to close down Shot-ton works, the Select Committee have made special mention and brought it back into the area of consideration for closure. This is a very unsatisfactory state of affairs in my view. Then there was the news item which hit the headlines a few weeks ago which referred to the possibility of Sir Charles Villiers being put in the Tower. That item came at a very difficult time in the history of the industry and it can have done little good either to the workers or to the whole principle of public ownership.

Mr. Russell Kerr

On a point of order. Will my hon. Friend please correct the impression that we were trying to put Sir Charles in the Tower? We employed an accepted means by which Parliament tries to exercise necessary authority to get information or documents. It has nothing to do with trying to lock up poor old Charlie.

Mr. Deputy Speaker

That is hardly a point of order, but it is a point of interest.

Mr. Hughes

The Select Committee was certainly responsible for what happened and the Press reports certainly gave that impression.

Mr. Russell Kerr

Whose fault is that but the Press?

Mr. Hughes

My hon. Friend the Member for Coventry, North-West (Mr. Robinson) gave us a financial analysis. He has great experience in these matters. The Government and the Corporation expected an upturn in the industry, not the slump that eventually prevailed.

Let me quote here from another gentleman who knows the steel industry. This is from Mr. John Boyd, general secretary of the engineering section of the AUEW. For many years he was chairman of the TUC steel committee and he spent a long time as workman and a trade union representative in the steel industry. Referring to the affair concerning Sir Charles Villiers, he says: All this nonsense that facts and figures have been withheld is all so much silly superficiality against the serious economic facts, which even a blind man can see; hence, the best service the Government could give the Steel Industry is to declare redundant, if they can, the present Select Committee, and encourage the BSC and the Unions to plan together how best our British Steel Industry can weather the present economic recession, and emerge a more efficient cost-conscious industry.

Mr. Kinnock

Will my hon. Friend give way?

Mr. Hughes

No, I shall not give way. I have read the extract from the February journal of the AUEW.

Besides the recommendations in the Select Committee about chopping the industry, I feel, as someone with some trade union experience, that the report can only strengthen the hand of the British Steel Corporation in its dealings with the trade unions in the industry. We know that if ever the Conservative Party got into power again, it would like to chop off what it would imagine to be the more lucrative sections of the industry and leave behind the basic sectors either to be subsidised by the State or to rely on imports from overseas. I know how damaging this could be to our economy in Wales. We certainly need at the present time of depression—I feel that the Keynesian analysis is still valid—to re-equip our industries and be ready for the upturn, however long delayed it may be.

Mr. Kinnock

That is exactly what we said.

Mr. Hughes

I am sure that my hon. Friend will be able to catch the eye of the Chair. My hon. Friends have already made out a case in the Select Committee report as well.

There are imports into this country of between 4 million and 5 million tonnes at present. The Government should do something about import controls, not only in this sector but in others.

What does the Select Committee say about these matters? It says that imports are a protection against the abuses of market power by our publicly owned steel industry. What nonsense this is! It has been peddled repeatedly by the right hon. Member for Leeds, North-East, but it can lead only to putting more of our people on the dole.

Some of us resent the influence of the EEC over our publicly owned steel industry and the EEC's activities in regard to competition. But the Committee is satisfied with the measure of EEC control. It also wants strengthening legislation to be introduced in this Parliament so that there is no abuse of monopoly power by the publicly owned BSC.

We nationalised steel in this country, but, according to the report, we should be kind to private enterprise. The fact is that BSC has never had a monopoly.

Mr. Kinnock

Of course it has not.

Mr. Hughes

I wish that my hon. Friend the Member for Bedwellty would shut up. He has had plenty of time to make his speeches on television.

The BSC has never had a monopoly. We are witnessing the private sector gaining an increasing foothold. One would have thought that the Select Committee, with a Labour majority, would have considered at least the principle of total public ownership of the industry besides a massive expansion of industrial democracy. However, there has hardly been a squeak on issues of this sort.

Mr. Edwin Wainwright (Dearne Valley)

My hon. Friend must realise that the Sub-Committees are a combination of Members from both sides of the House. Therefore, it is difficult for a Sub-Committee to take one side on nationalisation. Many of us believe in it, but on an issue of this kind surely my hon. Friend does not expect a Sub-Committee to have power to introduce nationalisation.

Mr. Hughes

According to the advocates of the recommendations in the report, the report was a great analysis in depth of the whole problem and of what the solutions for the future of the steel industry in this country should be.

The trade unions certainly deplore these reports. So does the Scottish TUC, the Welsh TUC and the Labour Party in Wales. If any hon. Member requires the written evidence of that, I have it here and I can provide photocopies of the correspondence to bear out what I am saying.

The solutions put forward are essentially the philosophy of the United Steel companies organisation. It is alleged that the principal architect of the reports is none other than the hon. Member for Arundel (Mr. Marshall), who was an employee of that company for 15 years.

Mr. Hardy

will my hon. Friend give way?

Mr. Hughes

No.

Mr. Michael Marshall

The hon. Gentleman gives me too much credit. We all worked on the Committee. We produced unanimous reports and all played our part. I pay tribute to all of my colleagues, and I regret that I cannot confirm what the hon. Member has just said.

Mr. Hardy rose—

Mr. Hughes

I shall not give way to my hon. Friend. I appreciate the reticence of the hon. Member for Arundel in this matter, but we are fairly well informed on these issues. I served on the Sub-Committee and I appreciate, as my hon. Friend the Member for Feltham and Heston, who was Chairman of Sub-Committee B, said, that it is of an all-party nature. Nevertheless, the present Labour Members serving on it have no excuse, because they are essentially in a majority.

I am sorry to have to say that the reports offer no satisfactory solution of the problems of the industry. The reports should be consigned to the dustbin.

7.17 p.m.

Mr. Michael Marshall (Arundel)

I am glad to have the opportunity of following the speech of the hon. Member for Newport (Mr. Hughes) in the light of one or two comments that he made. I have had the opportunity to talk with the hon. Gentleman on a number of occasions and I know of his deep interest in the industry. Today he seemed to put too much of a political gloss on his speech. I spent most of my working life in a major part of the old private sector, and I entered the House four years ago with a particular interest in seeing what could be done to help the steel industry in the future.

The industry is in a grievous state. This is a world-wide problem. The Secretary of State is right about that. Every hon. Member is concerned about the matter. We do ourselves no credit if we try to avoid the basic issues. We are all realistic, and it is understandable that the Secretary of State and the Minister of State should want to get the matter on to party political lines.

Mr. John Mendelson

Why are we having this debate today?

Mr. Marshall

I shall come back to the hon. Gentleman's point.

The Secretary of State has talked at Question Time and on other occasions about Tory plots, and so on. I came into the House because I was opposed to the nationalisation of the steel industry. It undermined the job that I had, and I felt passionately about it. But I have come to the conclusion over the years that there is no way in which the steel industry can thrive by an attempt to denationalise at this point.

Having reached that view, I have to think what is the best way to go ahead. Over the last two years I have come to believe that there is a very serious and important role to be played by Select Committees such as our Select Committee, in trying to find common ground to carry the steel industry forward.

I understand what the hon. Member for Penistone (Mr. Mendelson) is saying. I understand that in a perfect world it would be nice if we could wait until the Government replied and provided time for debate. But, as I said to the hon. Member for Colne Valley (Mr. Wainwright), it has been made clear that the Government were not prepared to give time before the statement, which is what the Select Committee unanimously recommended.

The Secretary of State said that he expected to come forward with legislation after Easter. I hope that we shall hear more about that in the Minister's reply. In those circumstances, unless the Opposition had provided time we would not have had a debate before we had the major statement, which has been long awaited after eight or nine months of crisis, followed immediately by legislation, which many of us believe will be confined to the limit of borrowing and perhaps financial reconstruction. Those are the likely moves. None of us should look a gift horse in the mouth. We have an opportunity for debate and a great deal of sensible use has been made of this opportunity today.

Mr. Mike Thomas

I do not quarrel with the hon. Gentleman or with his right hon. and hon. Friends when they argue that there should be a debate. I believe that my right hon. and hon. Friends were wrong not to give time for a debate. But I take issue with the hon. Gentleman on the following matter. With me, he signed the motion to take note of our reports. Why is he now, in support of his Front Bench colleagues, going for a motion to approve, which can only have a political purpose?

Mr. Marshall

The hon. Gentleman is a wily fox. I have appreciated his skills over recent years. He will have to wait for my peroration to find out my intentions.

The basic matter here is the balance of the argument. I am willing to concede that no Select Committee trying to look at the steel industry, with its massive complications and problems, can get everything 100 per cent. right.

The hon. Member for Coventry, North-West (Mr. Robinson), who made an intemperate speech, which was the only non-constructive contribution today, missed the point. It must be recognised that the argument has been going on for the past two years because of the British Steel Corporation's massive increase in indebtedness, which is now up to £4 billion. I am confident that the Corporation will be coming to us for an increase of borrowings over that limit and perhaps for financial reconstruction. The House has had placed upon it the responsibility to act as banker.

As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) pointed out, one of the most crucial sets of figures, quickly disavowed, was the whole five-year cash flow forecast on which the future of the Corporation was based when borrowings went up from £2 billion to £4 billion. The disavowal of those figures and Sir Charles Villiers's refusal, despite repeated requests, to give updated versions of those figures, first triggered off the Committee's concern.

On top of that, when we were putting our report together last summer we found that the whole basis of our conclusions was invalidated within two months because the predictions that our own advisers were making through a computer study were proving to be more accurate than the BSC's. The BSC and Ministers were apparently making no warning noises. That is why we reconvened, and not only reconvened but felt it our duty to return to the House to give all hon. Members an opportunity of sharing in considering what seems to be almost a matter of make or break for the Corporation.

Therefore, I regret to say that when we talk about misleading figures we have had a long history of them. Ministers have shown a notable reluctance to give any more than they have been asked for. The Secretary of State will persistently say "I was not asked for this or that". He knows full well that for a long period there was the feeling that we were not receiving accurate figures—a feeling heightened time and time again by our own computer study, based on some first-class work by three top-class advisers.

It is all very well for the hon. Member for Coventry, North-West to talk about the advisers as he did—

Mr. Robinson rose—

Mr. Marshall

The hon. Gentleman has said his piece. He has done his mudslinging, and now I shall give him some replies.

One of our advisers was a former managing director of Round Oak, the 50–50 public-private organisation of British Steel and the private sector. He is a first-class industrial consultant and a leading academic. All three advisers are people with knowledge in these matters, and they helped us greatly.

I hope that it will not embarrass Labour Members on the Committee when I say that they were clearly under tremendous pressure as the reports came out. They felt that they must stick to their guns, because that was the only way to see a solution to the industry's problems, which is what we should be addressing our minds to.

There is a general feeling of malaise, of uncertainty about operating results, about the way in which the investment programme has been allowed simply to dwindle in a piecemeal fashion. I take one specific problem that we highlighted in our report. We made the point that the provision of cash limits was in some senses helpful but was a crude measure, and that the Corporation was robbing its capital account to pay for wages, raw materials, and so on. That means that once more the investment programme is being delayed.

We must try to reach a clear understanding of what is at stake in this delay. The background has been described, and I shall not go over it in detail. It is a fact that between 1968 and 1973, throughout the process of centralisation, decentralisation, centralisation and now the current decentralisation, there has been a massive discontent in the Corporation's management circles, and much concern has been felt by the trade unions.

I hope that when they introduce legislation after Easter the Government will take on board the matters that we have urged upon them. I hope that they will examine the iron and steel legislation, because it has been shown time and time again to be totally inadequate to the needs of the relationship between BSC, the Department of Industry and the House. I could give many examples, but I quote only the way in which the consultations between Ministers and the Chairman of BSC led Sir Charles, in my view fairly, to argue the difficulty of serving two masters. But if the House is to act as banker it will, regrettably, have to take a continuing interest. That is why a stronger Select Committee, rather than the reverse, is needed.

When the Iron and Steel (Amendment) Bill was before us, the acceleration of indebtedness was the only warning signal that the House had. On average, the increase in take-up of borrowing at £1 billion a year has led us to the point at which, as the Chief Secretary to the Treasury pointed out in evidence to us, the level of indebtedness plus losses is being met at the expense of many other things, such as schools, houses, hospitals, and rate support grant. The problem has reached such a size that we must do what we can to put it right.

What can we do? There are many obvious short-term measures, emergency moves of the kind that BSC has already taken generally. But we must consider the Department of Industry's attitude throughout the whole period. Perhaps it is unfair that we have had to go after the BSC, because, although Ministers take departmental responsibility, in a relationship of the kind with which we are dealing there is a vested interest in keeping matters as quiet and cosy as possible.

Ministers have pointed to the change in the market, but, as we pointed out at the beginning of our First Report, the crisis is not simply a matter of the collapse of the market recently. I urge hon. Members to read again the first paragraph of our First Report, in which we said that The Economist had pointed out that the collapse of the market began a year before 22nd November 1975.

We want answers to questions covering the whole three-year period. What sort of contingency plans did the Corporation and the Department consider? What short-term opportunities are open to them? We all accept that there is no way in which the 1973 10-year development strategy to raise output from 26 million tonnes to 36 million tonnes is valid. What is the new priority? What is the variation in the investment programme?

Those are the matters which we should be talking about today and Ministers should be addressing themselves to. I find it sad that they should have got into a frame of mind in which they seem to regard themselves as being in an embattled position below the parapet. Like my right hon. Friend the Member for Sidcup (Mr. Heath), I hope that they can look rather wider and beyond the immediate problems and the personality clash that has conic out of the report.

In many parts of its report the Select Committee points to the cost of delay. It is the burden of our argument that, sadly, the cost will be far greater in jobs and cutbacks in investment than it would have been if action had been taken sooner. The report almost entirely underlines the validity of the investment policy proposed in the 10-year strategy. It has tied the provision of capital to the agreed demanning programmes.

It is rubbish for hon. Members to talk about anyone relishing the prospect of seeing these people out of work. All hon. Members would be delighted if the British Steel Corporation could retain its employment at 200,000. It would be one fewer problem for this House. But we recognise that throughout the world other great industries have streamlined.

The Minister used the example of the great Bethlehem Steel situation which in the first nine months was losing as much as the British Steel Corporation but which began to show a profit in the fourth quarter and had work for 5,000 people. But here we are still waiting for a statement. At the end of three years of the collapse of the steel industry we are no further forward as to what is going to happen.

I am willing to concede that many people who have been criticised have reasonable excuses which they could fairly bring forward. I believe that Sir Charles Villiers was much too quick to nail himself to the cross, because he had the difficulty of taking over from a predecessor and he inherited forecasts that he might not like. He has problems within his own top management which are well known outside the British Steel Corporation.

In that situation it is even more important that Ministers should try to be much franker, not only with the Select Committee but with the House, as well as to hon. Members who are willing to play a constructive part and who should know the facts.

There is an air of uncertainty. I recall that during the proceedings of the Select Committee the hon. Member for Bedwellty (Mr. Kinnock) spoke of the problems felt by his constituents as a result of continuing uncertainty. The lack of certainty and delay has been one of the most worrying aspects in this regard. The lack of clear-cut ideas within the Department is reflected when Ministers speak at the Dispatch Box. If there is one disease in the British Steel Corporation it is that of delay. The whole argument has been based on the Beswick plants, whose closures have been postponed. No one has said whether they will be retained. With one or two marginal exceptions, such as Shotton, the Beswick proposals in general have simply been postponed.

I remember my hon. Friend the Member for Flint, West (Sir A. Meyer) pointing out how many of the people in his constituency who worked in Shotton were moving away. That is the effect which one gets when uncertainty feeds upon itself.

There are two or three points from the report that I should like to emphasise although they will not be easy to implement. But the situation will be improved if we try to see what has happened. First, Ministers must be willing to put the costs and the full effect of social decisions in writing and seek reimbursement by the Treasury to the Corporation. The effect of the Beswick plans has cost the British Steel Corporation about £100 million a year. Something ought to be done so that the rest of its activities, including many of its successful parts, can be judged fairly and more widely.

I go more widely than the report. This is a personal view. The report suggests that the provision of capital must be tied to a phased reduction of overmanning. But in my mind there is a strong case for trying to make sure that the provision of capital takes into account the good industrial relations and track record. We must change the climate in which the Corporation operates. As hon. Members of the Select Committee will know, when we went to Sheffield and Scunthorpe we were asked—and we gave no answer—what we were doing to stop the effect of political investment decisions. That has been a problem which has created the maximum uncertainty and the maximum of doubt about the future of this great industry.

The role of the Select Committee has been reinforced and strengthened by this inquiry. At present it seems to be the only early warning system that this House has. In the report, we have tried to be a general early warning system. We have tried to pinpoint the problems, in the hope that the whole House will be part of the tough, difficult but necessary decisions that are required if we are to save this great industry.

7.35 p.m.

Mr. David Lambie (Central Ayrshire)

One of the most telling speeches today has been that of the right hon. Member for Sidcup (Mr. Heath). I found myself in agreement with most of what he said. I was beginning to wonder whether he was in competition with the leader of the Labour Party or the leader of the Conservative Party. I believe that he completely demolished the speech of the right hon. Member for Leeds, North East (Sir K. Joseph). When one looks at both sides of the Opposition Gangway one realises that the first-class Tories are to the right of the Gangway and that the second-class Tories are leading the Conservative Party at the present.

I also listened with interest to the speech of my hon. Friend the Member for Feltham and Heston (Mr. Kerr), the Chairman of the Select Committee. I accept that he was not and nor were my hon. Friends who were Members of the Select Committee gulled by the Tory members of that Committee. I accept that they tried their best to put within the recommendations things which they thought would be of value to the Labour Government and the Labour Party.

Reading through the minutes of evidence, and the reports of the various meetings of the Select Committee, reminded me of the Bible—that any fool or rogue could use any argument from it to justify the principles in which he believed. As a Scotsman it reminded me of the works of Robert Burns. On 25th January every year the Labour Party claims Burns as its own and it can justify it, as does the Tory Party. The Tory Party can produce evidence that he was a great imperialist, but we can produce evidence to prove that he was a great internationalist.

I accept that my hon. Friends who were Members of the Committee were not gulled. My criticism is of the way in which the report was used by the media, the television and the Press, immediately it was published. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) highlighted this fact by holding up the next day's issue of the Daily Mail which contained a direct attack on the British Steel Corporation and a direct attack on the Labour Government. It is in that respect that my hon. Friends must be answerable, not only to this House but to the Labour and trade union movement.

I am glad that the Government have not been stampeded into a decision on the future of the British steel industry, despite the fact that the Select Committee recommended that they should publish their review of the situation as quickly as possible as a matter of urgency. I am glad that the Government did not take a decision last July.

During my time as a Member of Parliament I have sat through many chairmen of the British Steel Corporation. Chairmen come and go, but the people who run the British Steel Corporation are aware that Black Bob is still there. I should like to see Black Bob being put in the Tower instead of Sir Charles Villiers.

I am glad that the Government were not stampeded on 24th November when certain elements within the British Steel Corporation were putting out leaks to the television and the commentators about a crisis within the Corporation and trying to pre-empt a reasonable decision on social and political grounds. I hope that the Government will take that into account before they produce their final statement on the present review.

I congratulate Government Ministers on standing up against these pressures and I hope that when we get the decision—which I hope will be soon—it will be one that can be justified to the steelworkers, the trade union and people who have voted Labour all their lives. I hope that it will be a decision taken on social and political grounds, as well as economic grounds.

I was very disturbed by the way the argument has gone in the House tonight. We have suffered too much at the hands of chartered accountants in this House, and there have been too many chartered accountants speaking today. One of the faults of British industry is that it is dominated by too many bookkeepers and not enough people with the training and skills to run industry. I hope that the Government will take account of other considerations.

In its report the Select Committee asked that the Government or the BSC should look at the future of certain of the Beswick plants. One of the Beswick plants is the Glengarnock steelworks in my constituency. Following the publication of the Beswick Report, we were given a reasonable outlook for steelmaking at Glengarnock. We were told that we would lose our open-hearth furnaces. Steel plants cannot exist by making steel in open-hearth furnaces, and ours were to be phased out by 1980. By then we would have steel coming from Hunterston to Glengarnock. We accepted that there would be redundancies, but we believed that some of these redundant workers would move nine miles down the road to the new and developing complex at Hunterston. We believed that we would have a satisfactory and modern steel complex giving viable employment to the majority of these workers.

Now we see the recommendation of the Select Committee that the British Steel Corporation should go around to steel plants and ask workers whether they are willing to sell their jobs. We had the agreement at East Moors only today, and some people say that the East Moors workers have sold out. They sold out because their steelworks was to be closed. The BSC, however, is trying to make men sell out their jobs in other plants. No steelworker has the right to sell out the jobs of young boys who are still in school.

We are told that the sell-out at East Moors will cost the BSC £9 million—that is, £3,000 per worker. That amount will not even buy a decent family car. To obtain this average amount a worker must be unemployed for two years. We are not talking about £17,000 or £20,000—figures that have been bandied about for selling the jobs of boys still in school: we are talking about £3,000 on average. I hope that the steel workers will resist these blandishments by the BSC.

I hope that the Government will stop this agreement between the BSC and the unions to go around among workers urging them to sell the jobs of people who still could have a viable future in a modern steelmaking plant. I hope that the Government will not accept the recommendation of the Select Committee and will continue with the recommendations of the Beswick Report.

All we need for a viable steelworks at Glengarnock is a reheating furnace. This would give us one of the most viable and most competitive plants in the whole BSC empire. Later steel will come from Hunterston—a distance of nine miles—and this will make us more competitive as a part of the Hunterston complex. This in turn will make us one of the most viable and modern plants in the whole of Western Europe.

Another recommendation from the Select Committee was that the Government should look at the investment programme and the plans made in the Beswick Report again. The report says that areas like Hunterston are in jeopardy. I cannot accept that.

Mr. Kinnock

The reference to Hunterston is in the summary on the first page of the Second Report. It refers to Press rumours that were circulating in the early autumn of last year. We did not pursue that and we drew no conclusions from it.

Mr. Lambie

In dealing with that point the Second Report says: In addition, the proposals for electric are furnaces at Ravenscraig and Hunterston in Scotland, and at Shelton in the Midlands, and for the eventual construction of an integrated steelworks at Hunterston were said to be in jeopardy.

Mr. Mike Thomas

By the Press.

Mr. Lambie

That does not come out in reading the report. I do not accept that the Select Committee came out fairly and squarely against the BSC and the Government looking at the commitments to the investment programme in the Beswick Report. Investment at Hunterston is in jeopardy.

What has happened following Beswick? We have a terminal at Hunterston which will receive its first bulk carrier soon. Hunterston is the best deep-water harbour in Europe but the steel will be coming into an area where we cannot utilise its advantages and assets in view of the threatened cut-back in the investment programme.

The BSC intends to mothball the plans for electric are furnaces at Hunterston and Ravenscraig. There are those of us who have taken part in the Hunterston campaign since 1968. We have gone through Secretary of State after Secretary of State, Government after Government, and continuous opposition from the Tories, the Liberals and the SNP. Four years later, we find that a Select Committee on which there are Labour Members of Parliament is attempting to put us back to square one.

Mr. Mike Thomas

I understand my hon. Friend's depth of feeling and appreciate it. However, he must not misrepresent the Select Committee. In paragraph 21 we say that there are three principal lines of action open to the Government to take in order to deal with the present situation. It is unarguable that something must be done, and one of the things on the shopping list k the reconsideration of the investment programme. There is no mention of Hunterston other than that.

Mr. Lambie

My hon. Friend has just defined what I am saying. The Select Committee Report lists the places where investment must be examined. It says, as a direct quote, that Hunterston is in jeopardy.

Mr. Mike Thomas

I apologise for intervening again, but my hon. Friend surely is not arguing that in the present situation every piece of proposed investment by the BSC is able to go ahead. That cannot be the case.

Mr. Lambie

No, I am not arguing that. I am arguing that those of us who are interested in the future of steelmaking in Scotland realise that the investment at Hunterston must go ahead, because if that does not happen there will be no future for the Scottish steelmaking industry.

There is now an ore terminal and two direct reduction plants which are nearly completed. However, the Corporation says that it will not go ahead with investment on electric are furnaces. The next stage should lie in making Hunterston a modern, integrated, green field site. I hope that the Government will not accept the Corporation's recommendation or the recommendation of the Select Committee and will carry on with the investment at Hunterston.

The fault of the Corporation, and indeed of British industry in general, is that we have never invested at the right time. Surely this is the time to invest in the Corporation and to make it into a modern and viable industry. We are still importing 5 million tonnes of steel per year and, even if we had import controls, the Corporation would still have to honour many of those orders because they were made at a period when there was a world steel shortage. In order to maintain its orders, the BSC signed contracts to take steel from overseas, and it is still committed to those contracts.

I hope that the Labour Government will continue with the investment plans that are now in hand. It would be a disaster for the Labour Government, particularly in Scotland, to stop investing in Hunterston. Hunterston marks a psychological point in Scotland. We have been fighting for it for nearly 10 years. The Labour Government gave us the beginning of that complex, and they cannot take it away from us.

The Carnock Valley area in my constituency has 14 per cent. unemployment, but at the nearest employment exchange to Hunterston the figure is as high as 15 per cent. If the steelworks at Glengarnock close, the direct unemployment rate in my constituency will leap from 14 to 35 per cent. But let us remember that the Corporation wants to close the plant immediately. That would create direct unemployment of 35 per cent. and indirect unemployment of up to 45 per cent. in the service industries.

No Labour Government can take a decision—whether it be advocated by the BSC, the Tories or certain Select Committee Members—to close the Glengarnock steelworks creating 45 per cent unemployment in my constituency. Many of us have voted Labour all our lives and we expected advantages to be gained for workers because of the existence of that Labour Government. Therefore, I ask the Government to continue their good faith, to retain the Glengarnock plant, and to honour the recommendations contained in the Beswick Report.

7.55 p.m.

Mr. Douglas Crawford (Perth and East Perthshire)

I wish to correct one matter mentioned by the hon. Member for Central Ayrshire (Mr. Lambie). I wish to inform him that the SNP supports the integrated project at Hunterston.

Mr. Lambie

I am sorry to intervene so early in the hon. Gentleman's remarks. I know that he has not been a member of the SNP for long. We appreciate that not very long ago he was undertaking work as a research officer in the Tory Conservative Party. The hon. Gentleman certainly knows nothing about the history of Hunterston. A prospective candidate for the SNP gave evidence against the steel development at Hunterston at the public inquiry. Therefore, if the hon. Gentleman has been converted, it is a late conversion.

Mr. Crawford

I am trying to put it on record—I do not wish to go into detail about what the hon. Member for Central Ayrshire said—that the SNP is in favour of developments at Hunterston.

Mr. Norman Buchan (Renfrewshire, West)

It is now.

Mr. Crawford

The hon. Member for Renfrewshire, West (Mr. Buchan) has not been present for very long.

Mr. William Ross (Kilmarnock) rose—

Mr. Crawford

I am not giving way; I am trying to start my speech.

Mr. William Ross

What my hon. Friend the Member for Central Ayrshire (Mr. Lambie) said was quite right.

Mr. Crawford

We would not have been debating this matter today—

Dr. Bray

Before the hon. Gentleman sits down, will he allow me to intervene?

Mr. Crawford

I only wish that the people of Scotland could be here to see this performance. I understand the Labour Party's difficulties, because they are bound to suffer at the hands of the SNP at the next election. I would not have mentioned this point had it not been for the barracking in my speech. The hon. Member for Central Ayrshire has been urging the Labour Government to take action, but they have not done so. I agree with the hon. Gentleman on the need to consider the social as well as the economic consequences of closure.

The report, as the Secretary of State for Industry said, serves a useful function. I agree entirely with the comments on page 83 of the report and proceedings of the Committee, which recommended that: Direct experience of industry, if not of the Corporation, is essential for civil servants who take some part in the Corporation's affairs and that the period of assignment of civil servants to the relevant divisions of Her Majesty's Treasury and the Department of Industry should be extended. But on one vital matter the Select Committee does not go far enough. It does not dwell on the Gargantuan size of the Corporation. I wish to suggest to the House that business enterprises can grow to such an extent that economies of scale become diseconomies of scale, that the tendency towards centralised management becomes a tendency towards fossilised management, and that there is a need to break up these latter-day dinosaurs. I understand that is what Michael Edwardes is trying to achieve at British Leyland.

The Select Committee failed to point out that one reason why BSC losses were so slow in manifesting themselves was the fact that, just as it took a great deal of time for the dinosaur's brain to realise that its tail was being cut off, so it took the centralised management of the Corporation far too long to realise what was happening financially in its geographically scattered manufacturing outposts.

It is all very well for the Select Committee to say that reporting and accountability procedures should be tightened. What it should have advocated was the dividing up of the Corporation into more manageable units of direction, management and administration. That would produce more effective, and certainly much earlier, financial warning systems, a corresponding ability to adjust investment and production in the light of financial performance and a corresponding speedier reaction to market trends, and much better accountancy systems in the plants of the much smaller segments of the BSC, so that profitable plants would not have to be closed.

Hence, the SNP put forward a policy providing for the establishment of a Scottish steel corporation. I suggest that a work force of 20,000 people employed in the steel industry in Scotland is a more manageable unit than that which the Corporation now controls, amounting to 200,000 people.

The argument about profitable plants being closed is especially relevant. I wish to quote Mr. Arthur Bell, Scottish organiser of the ISTC, as reported in The Scotsman of 25th February. He said that BSC was using "dirty criminal tactics" to disillusion employees at Glengarnock. The only pity is that Mr. Bell and his English counterpart, Bill Sirs, wrote only to Scottish Labour Members of Parliament and not to all Scottish Members of Parliament about this matter. However, we have now been asked by Mr. Sirs for SNP support tonight, so I suppose it is better to have that move late rather than not at all.

What the trade unions fail to realise is that they have been powerless to stop profitable works being closed. It is a fact that the rod mill at Dalziel was closed in 1970 despite the fact that in the last year of its life it made a profit of £500,000. Those are not my figures; they are ISTC figures. There is no question that Hallside and Dalziel as a whole are profitable by any standards.

What the Select Committee failed to point out is that the establishment of a Scottish steel corporation would encourage the growth and development of an integrated multi-product industry in Scotland. I quote the Scottish Council, which on 8th February 1978 stated: that within the Scottish investment programme, the trend should be towards the production of higher quality and special steels and that increasing concentration on steel of special qualities would not only broaden the base of the Scottish steel industry but would have beneficial effects on the growth of existing manufacturing companies and on the establishment of new ventures in the area We in the SNP say Amen to that.

Mr. Buchan rose—

Mr. Crawford

No. The hon. Gentleman has not been in the Chamber for much of the debate.

Mr. Buchan rose—

Mr. Crawford

No. I shall not give way. Time is short.

The Scottish Council also said—it is not an SNP front organisation— that for the present and short run, Scottish steel output should be maintained at not less than its traditional proportion of steel production and, on completion of current developments, Scotland's output should be at least 15 per cent, of total BSC steel-making output in efficient plants. This proportion of steel can be made as efficiently in Scotland as in any other area of the United Kingdom. The Scottish Council went on to advocate that investment by the BSC in Scotland should be at least 15 per cent. of the Corporation's overall figure in order to safeguard the future growth and efficiency of the Scottish element of BSC. A similar line was taken by the economic and industrial development committee of the Strathclyde Region in December 1977.

Words are one thing and deeds are another. Here is what is happening. There is a delay in any starting date—this is what we heard from the hon. Member for Central Ayrshire—for the construction of the integrated complex at Hunterston. Clyde iron works at Toll Cross-Cambuslang has been left to die. Dalziel is once again under threat, even though it has an important role as the main producer of special quality heavy plates.

Dr. Bray

That is the most utter rubbish. It has a definite future and it is getting its full share of orders.

Mr. Crawford

I am delighted to hear that. I am delighted that that is on the record.

Reference has already been made to Glengarnock. The story can be repeated throughout the rest of Scotland.

I turn to the point made by the Daily Record on 24th November 1977. I hope that the hon. Member for Central Ayrshire, although he is not totally on my side, will take note. James Rutterson, who is employed at Craigneuk, was quoted in the Daily Record of 24th November as saying: The work will go to England—it always does. We will be left with no work and no hope. For me that means one thing—I lose my dignity. That's all—but that's everything. On the same day in the same paper William Bowman, who works at Ravenscraig and faces the prospect of the dole, was reported as saying What do I tell my kids? There are a thousand high-flown words I could use. But I am going to sum it up in a sentence—I was promised the earth and then chucked on the scrap heap.

Dr. Bray rose—

Mr. Crawford

I shall give way a little later.

Mr. Alexander Fletcher (Edinburgh, North)

The hon. Gentleman must not make these assertions.

Mr. Crawford

I am quoting from the Daily Record of 24th November. I am quoting what was said by Mr. Rutterson and Mr. Bowman.

Dr. Bray

The hon. Gentleman must do better than quote casual remarks quoted by a popular newspaper. It is a very good newspaper but perhaps its source was not very reliable. The hon. Gentleman should not mislead the House in these matters. The Craigneuk foundry is the subject of major development work. The bar mill at Craigneuk is getting the same share of orders as the brand new works at Thrybergh. The Ravenscraig works will be one of the only two completely integrated and fully planned steelworks in the country.

Mr. Crawford

I do not know what relevance that has to the comments made by the two gentlemen whose comments were reported in the Daily Record.

Mr. Hardy

Disgraceful!

Mr. Crawford

I accept that the Secretary of State and the Minister of State are aware of the social consequences. However, I am not sure whether that can be said of the right hon. Member for Leeds, North-East (Sir K. Joseph), bearing in mind the contents of his speech in opening the debate on behalf of the Opposition. I am afraid that what now confronts us is what the centralised management of the steel industry has done.

The Conservatives, with their calls for further public expenditure cuts, would make matters even worse. They have failed to come forward with any proposals. All they say is that they approve of the Select Committee's recommendations. Which works will they close? Will they close Hallside, Craigneuk, Dalziel, Glen garnock, Clydebridge or Tollcross? I shall be interested to hear which steelworks in Scotland the Conservatives would like to close. It may be that we shall be told when the Conservative spokesman replies.

Serious though the steel recession world-wide and in Britain is, this is no time to panic. Planned investments should go ahead. There should be no wholesale massacre of older plants that are needed to maintain a balanced industry that is able to respond flexibly to demand. That is especially true for Scotland today. The main cause of the crisis is the recession world-wide and in Britain. This always hits steel harder, later and longer than any other industry.

Whatever the justification of the BSC's commercial policies, the appropriate reaction to the commercial results is not to cut back investment projects needed to raise the efficiency and balance up the capacity of the BSC in Scotland. The EEC Commissioner Davignon has already warned the steel industry against cutting investment.

Specifically the electric arcs should go ahead at Hunterston and Ravenscraig, the electric are capacity at Hallside should be expanded, secondary steel making should be expanded at Ravenscraig, and the necessary de-bottlenecking should be undertaken at Gartcosh. Unless we get over the phase of being half developed and half obsolete, we shall never compete.

Those are not my words but the words of the hon. Member for Motherwell and Wishaw (Dr. Bray), in a paper to the Scottish Parliamentary Labour Party on 7th November 1977. I agree with those words and I hope that we go ahead on that basis.

The time has come to tell the people of Scotland that the Labour Government are trying but failing, because we are living with a Gargantuan British Steel Corporation. I ask the Minister for an assurance—the hon. Member for Central Ayrshire did not ask for this assurance but I do—on Hunterston and Glengarnock.

There is no way in which my party can support the Tory motion to approve the Select Committee report, which states, on pages 18 and 19, These decisions should, however, be subject to a clearly defined specific reduction in the size of the workforce in each of the next five years… The fulfilment of the above recommendation is the necessary pre-requisite for the continued capital development expenditure". There is no way in which my party can stand up for pages 18 and 19 of the report.

Mr. Alexander Fletcher

Who is going to use the surplus steel?

Mr. Crawford

I am interested in the hon. Gentleman's question. His right hon. Friend the Member for Leeds, North-East said that he wanted to cut back. Which steelworks would the Tories back?

The hon. Member for Paisley (Mr. Robertson) said on the Third Reading of the Scotland Bill—it was a moving speech—"Let our people go". I extend that to steel. I say that we should let the Scottish steel industry be controlled by the people of Scotland. They should be given control of the industry. Control should go back to those who are employed in the industry in Scotland. That would ensure prosperity and continuity of employment for them. I suggest that it would be totally impossible for the people in Scotland to make a bigger mess of their steel industry than the mess that has been created by Westminster.

8.9 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

It has been an extremely interesting debate in which many high level principles have been discussed. I should be less than human if I did not try to follow the dictum of Dr. Johnson that criticism is best illustrated by example and say a few words about the steelworkers in my constituency. I am sorry that my hon. Friend the Member for Central Ayrshire (Mr. Lambie) has left the Chamber as I should have liked to take up the spirit of his contribution, even though I could not summon up similar passion.

One of the features that has emerged from the debate is the simple fact that we know that the British Steel Corporation has enormous problems. No one disputes that. We also accent from the Members of the Select Committee that something has to be done. However, we should not become bemused in our attempts to find a solution to the massive problems of the Corporation. We should not become bemused with the esoterics of financial control—whether on 6th or 7th October a deficit of £X million or £Y million would confront the BSC.

The BSC faces problems other than those of financial control. It may be that we shall have to pay greater attention in future to plants which are not of maximum, or I suppose I should say jumbo, size. Big is not always either the most beautiful or the best. Since both before and after the Beswick review massive plants have run into problems. The diseconomies have become almost frightening in many ways, whether we refer to commercial confidence, industrial relations or the quality of the product.

I am on the verge of making an attack on my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis), of which I have given him due warning. These great firms, the jewels in the BSC crown, are making mounting losses. They were supposed to have all the answers to the low-cost quality product. I know nothing about accountancy. In financial matters I am totally innumerate. Some of these new low-cost plants, which in some instances took a couple of years to get off the ground after they had been completed, are making tremendous losses.

Mr. John Ellis (Brigg and Scunthorpe)

Will my hon. Friend give way?

Mr. Cant

Just let me pursue this matter a little further. I have not yet really started. My hon. Friend reminds me of the great plant in Scunthorpe. It has moved from an estimated profit of £28 million to a loss of £58 million. That is going on all the time. A turn-round of about £80 million in the financial out-turn raises certain matters of interest.

Mr. John Ellis

I think that I should point out that the multi-million pound plant at Scunthorpe is running at nowhere near capacity. I say to my hon. Friend with compassion and understanding that Scunthorpe could produce another 1 million tonnes. That is part of the dilemma that the industry faces.

Mr. Cant

My hon. Friend is being very decent to me, because he has not given the complete Scunthorpe answer.

The Shelton works in my constituency, despite many difficulties, some of which are deliberately contrived, can this year make a profit of about £1 million. My hon. Friend the Member for Brigg and Scunthorpe appears to be engaged in a private discussion with another member of the Select Committee, my hon. Friend the Member for Bedwellty (Mr. Kinnock). It is a statistical coincidence that the £1 million profit that Shelton can make is equal to the £1 million loss that Scunthorpe will make on its canteen this year.

I want to come back to the point that Scunthorpe has run into a deficit of £58.1 million because it has capacity which is not being used. Of course, that might be called planning or something else.

Another facet of the problem is contained in a secret report. Everything is secret these days. It is suggested that a substantial uplift at Scunthorpe is unlikely unless the iron and steel making at Shelton is closed down. In other words, Scunthorpe could move into profit if the small profitable plant at Shelton were to close its operations so that Scunthorpe could take over the work being done successfully at Shelton. That is not on.

I have asked the Government and the Select Committee, which by implication recommended the closure of Shelton, about this search for size. Some years ago Sir Monty Finniston bought the Japanese blueprint for the maxi plant for £500,000. That has always been a gleam in the eye of the BSC—five maxi plants and nothing else. I suggest that there is a place in the scheme of things for electric are furnaces at Sheffield, Hunterston and Shelton.

Mr. Hardy

And at Rotherham.

Mr. Cant

And at Rotherham. I am trying to make friends.

I agree with my hon. Friend the Member for Central Ayrshire that we must get more integrity of management into the BSC. I do not propose to use affectionate terms about the chief executive officer of the BSC. Whether he is Black Bob or any other colour, he has communicated an approach to management in the BSC which has seeped down to the division in which the Shelton works is located. There is what is known in Shelton as a "dirty tricks department" somewhere in the BSC. The Minister of State wrote to me on 18th October saying that it was still Government policy that steel making at Shelton should not end and that there was a commitment to install an electric furnace.

But things have happened which, as a Socialist have saddened me. Not only has the Shelton steelworks been saddled with non-profit-making dumped export orders to the United States, but the order loading has been reduced from 5,000 tonnes to 1,000 tonnes a week without any explanation. Despite the Government's tripartite agreement about an electric are furnace for Shelton, in the annual operating plan all provisions for an electric are furnace was stripped out and all orders which had been placed were cancelled.

I do not propose to go into the distasteful attempt by the NUB—against the spirit of the tripartite agreement to which the Beswick review was subject—to withdraw the blast furnacemen's labour. I shall not mention the delay that has been engineered by the BSC on work measurement incentive schemes. But I shall mention the bitter and unjustifiable attack that was made on the quality of Shelton products. A telegram was sent to Scunthorpe saying that the losses to be incurred by Shelton this year would be £4 million. That was a lie. Shelton said that a mistake had been made by the computer. Yet that information was sent to headquarters.

I could go on about rumours that have been spread around concerning the new management arrangements in Scunthorpe. I do not want to be personal, but everyone at the Shelton plant, which has struggled since 1971 for survival, knows that BSC has taken steps to sack the general manager, to appoint the manager of Irlam as the overall manager of Shelton and to make the general manager of Shelton the chief engineer of Shelton. All these motions were gone through to offer jobs at Scunthorpe to three senior Shelton men.

At a confidential meeting someone asked the boss at Scunthorpe "Is the general manager of Shelton to be replaced?" The answer was "In no circumstances whatsoever; that is sheer speculation which has no foundation." That man has since gone.

Let us stop being bemused by these giant plants. Let us get a few electric are furnaces to give the industry some flexibility.

Mr. Stan Crowther (Rotherham)

I am sure that my hon. Friend will agree that there is a total potential production level for electric are furnaces brought about not by demand but by the availability of scrap and pelletised iron. I hope he agrees that there is no point in building electric are furnaces that cannot be fed.

Mr. Cant

It so happens that Shelton is in the best scrap-producing area in the West Midlands.

During the Beswick review, when we mentioned to a director of BSC, who has now sunk without trace, that we should have a pelletisation plan, at Shelton, long before Hunterston was thought of, he said "We never spend money on untried technology." Six months later orders had been placed for Hunterston.

Let us get more humanity into the management of BSC, so that the people who have struggled along without strikes producing good quality products will not in future be treated as they have been treated. If Shelton closes, there will be disapointment, and bitterness will seep into the folk memory of the Potteries people because of the way these workers have been treated by the BSC management.

8.24 p.m.

Sir Anthony Meyer (Flint, West)

I agree with the hon. Member for Stoke-on-Trent, Central (Mr. Cant) on the importance of maintaining production in small profitable units.

I cannot support the motion tabled by my right hon. Friends because I cannot agree with the report of the Select Committee. I do not necessarily reject its strictures, but the furore these strictures have aroused, which we saw exemplified in the grotesque speech made by the hon. Member for Coventry, North-West (Mr. Robinson), has unfortunately distracted attention from what should have been the important part of the report—the recommendations for future action. I do not fully agree with those recommendations, but it is the recommendations that we should have been debating. We should not be devoting our energies to charges and counter-charges about whether the Select Committee was misled.

The 10-year strategy of the BSC, supported by the previous Conservative Government and for which I voted in 1973, envisaged a modernised, efficient and large steel industry. It also envisaged the closure of out-of-date or wrongly sited steelmaking plants, of which Shotton was deemed to be one, wrongly as I thought. In the expansionary conditions of that time, I believe that general policy was the right policy, but I voted for it only after having had an assurance from Mr. Tom Boardman, the then Minister for Industry, that Shotton would have a sufficient reprieve either to establish a case for the continuance of steelmaking or to bring other employment into the area to absorb the redundancies resulting from the closedown of steelmaking.

Things look very different now. There is no expansionary climate, and the case for a large British steelmaking industry has been swept away, not only by the long standing recession and the drop in world demand for steel but also by the enormous growth of steelmaking capacity in the Third world and among low-cost producers, which is a factor which my right hon. Friend the Member for Sidcup (Mr. Heath) rather rode over. Whatever may happen to cyclical demands, I fear that it is the growth in the output of low-cost producers that will represent a growing threat to our ability to maintain a very large steel industry.

At the same time as we have this depression in the steel industry, the chances of finding new jobs for steelworkers made redundant are infinitely worse. We are in a new and much grimmer ball game. It is no longer defensible to cling to the 10-year strategy.

The British steel industry must be a slimmer and smaller industry than was envisaged back in 1973. It must be based on a much more modest expansion than was envisaged in the strategy of such plants as Port Talbot and Redcar which are ideally situated near deep water. It must also be based on the utilisation of small producers like Shotton, which have a proven track record of good industrial relations and making the best of the facilities they have. A modest investment in works such as these could yield a far better return for the steel industry than massive investment in new greenfield plants.

8.29 p.m.

Mr. Stan Crowther (Rotherham)

One of the most unfortunate aspects of the whole of this sorry episode is the fact that the Select Committee reports are really dealing with two quite separate matters. On this point I am in agreement with the hon. Member for Flint, West (Sir A. Meyer). We are getting the two confused. One of them is detracting attention from the other. It has certainly done so in this debate. That is very unfortunate.

The constitutional niceties of relationships between nationalised industries and the House of Commons or between Government Departments and Select Committees may be very interesting to a lot of hon. Members, and I do not doubt that they are important, but that is a matter which should be discussed quite separately from the problems of the steel industry. I am afraid that we have got these matters very confused.

What Sir Charles Villiers may or may not have said to the Select Committee or the Department, and what the Department may or may not have said to the Committee, is not enormously exciting to the people who are living in my constituency. They are much less concerned, for example, with the question whether Sir Charles might have been clapped in the Tower—diverting though it would be—than they are with the question of what the Government, the BSC and the trade unions are doing to solve the deep-seated problems of the industry. Those problems were there long before the Select Committee started looking at them. The problems would have existed and would still have needed solving if there had never been a Select Committee.

I certainly congratulate my right hon. Friend the Secretary of State on not allowing himself to be panicked into snap decisions. It is most important to get the right answer. However, the time in which to get the answer is now running desperately short. I realise the difficulty of making any sensible long-term forecasts, but it seems clear that there are certain conditions which must be part of the final blueprint for the future of the industry. As some of my hon. Friends have said, one of them is that we must not contemplate massive reductions or any really severe reductions in total productive capacity.

I shall not pursue further the matter of electric are capacity because my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) allowed me to make my point during his speech.

I am absolutely sure that it would be a gross mistake to make any major cuts at all in the capital programme, because if we are going to have a successful industry it must, of course, be a modern industry. I am very pleased that that point is made in the Government amendment. I hope that the Government are taking the matter very seriously.

No doubt there will be some further reductions in manpower, but again, I think that we have to be very cautious on this matter. People who speak very glibly about gross overmanning in the industry have completely overlooked the enormous amount of demanning that has taken place in the last 10 to 15 years. The right hon. Member for Leeds, North-East (Sir K. Joseph) obviously has not the faintest idea of what has been happening in the industry since the early 1960s. It is obvious that he just has not examined it. It is unfortunate that he does not familiarise himself with these problems before coming to the House to talk about them.

In my area, the number of people employed in the industry is down by about 40 per cent. compared with the 1960 figure. I should imagine that that is fairly typical of quite a number of other constituencies.

I am afraid that I am about to say something that I have said previously in this connection. It would be a great deal easier to deal with the problem of obsolescence in the old established industries, the problem of doing away with the old plant and reducing the number of people involved, if we had an effective regional development policy that brought in new jobs to replace those that are lost. People may say that there are not many jobs around and that there is not much industry on the move. This problem was being experienced in areas such as mine when there was supposedly full employment in Britain, and still we could not get any Government to take the matter seriously.

Individual redundancy payments go so far. If they are reasonable, they help to solve the personal financial problems of the people concerned. But they do not solve the problems of their sons and daughters who are leaving school and finding that there is no job to which to go because the works has closed down or has become modernised to the point at which it employs only half of the people that it used to employ. That is the real problem, and it is the real reason for so much resistance.

My hon. Friend the Member for Central Ayrshire (Mr. Lambie) was absolutely right when he talked about the danger of people selling out jobs. No job belongs to the individual. He inherited it himself, and it should be there to pass on to his successors. This is the real danger of people rushing into redundancy agreements.

On the news this morning I heard about the agreement at East Moors. I am not quite sure how reliable are the figures that we are given in the light of some information that I got this afternoon about the very strange arrangements that the BSC has made for giving information to the Press. That is a matter that will have to be pursued at some stage. Assuming those figures are right, they are not over-generous for people who are probably never going to work again.

Last month the Rotherham works, the Templeborough mill, finally closed, with about 90 redundancies. This was the last of five mills being closed down as part of the scheme which has brought into existence the Thrybergh bar mill which hon. Members will know is already famous for its record-breaking. In other words, the Templeborough bar mill is not being closed to cut losses but as part of a process of making more profits. That is the position in the Rotherham works.

I find it difficult to see any justification for the men at Templeborough being treated any less favourably than those at East Moors or elsewhere. I have no doubt the trade unions will have something to say on that in due course, but one thing that is absolutely clear to me is that, whatever form the long-term future of the industry is to take, the trade unions must be fully involved in the planning and policy-making at every stage and at every level. This has been a failure in the past. Unions must have a positive role in the planning and the development of the industry and in shaping the capital programme, and they must have a say in how money is to be spent. They must not be brought in merely to solve the BSC crisis.

There are few industries in which the employees have as deep a sense of personal involvement as in the steel industry. It may be difficult for hon. Gentlemen opposite to understand the pride that many steelworkers take in their industry. I suppose to take a pride in making steel may be a little incomprehensible to people who can take pride only in making money, but those who test the success of any enterprise solely on the strength of the profit it makes will have difficulty in understanding what workmanship pride really means. The most precious asset of the steel industry is the experience and skill of its work force and I mention as an example that within the last two weeks more remarkable achievements have taken place in Rotherham Works, this time involving the Templeborough cogging mill, a very old plant, and Aldwarke melting shop. I am happy to mention those in passing.

My final point is that any future policy for British Steel has to be aimed at making the fullest possible use of that skill, experience and expertise which rests among the labour force, and anything which is going to cut numbers to any major extent, losing this enormous wealth of skill, will be very damaging to the industry.

Several Hon. Members rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. With five-minutes speeches before the winding up we should be able to allow four additional hon. Members to take part in the debate.

8.40 p.m.

Mr. Tim Renton (Mid-Sussex)

I am sure that everyone taking part in this debate on both sides of the House will agree that it is vitally important to get the British Steel Corporation into the right shape now and over the next few years for the next generation. This is important not only for employees in the industry but for all manufacturing consumers and fabricators who use its steel; and it is important, too, for the taxpayer who pays the bills. Bearing in mind the caveat that you have issued, Mr. Deputy Speaker, I shall not dwell on that aspect of the problem. My thoughts on the future will have to await the next debate on steel, whenever it happens, when the Secretary of State makes a statement or brings forward a Bill to increase borrowing powers.

This evening, trying to be brief, I wish to concentrate my remarks on two key retrospective issues, both dealt with in the reports of the Select Committee we are, I hope, to approve this evening.

First, could the Corporation have acted responsibly, but more quickly, in dealing with the developing crisis and, secondly, did Ministers, as the crisis was explained to them, match the urgency of the situation with appropriately intense effort to find a fair solution? Did the attention they gave to the matter match up to the needs of an extraordinarily complex and rapidly developing situation?

The first question is dealt with in the Committee's First and Second Reports. The situation in the BSC was confused by the change of chairman in September 1976. Sir Charles Villiers did not want openly to go back on the excessively optimistic forecasts of his predecessor, though it is plain that he became increasingly worried about the forecasts. In essence, the Corporation was caught with its trousers down as the industry went into a deep recession at the beginning of 1977.

The Corporation had a great deal of unfructified investment, which meant that it was building a great deal of expensive plant that was in the early stages or halfway through construction, and was not even contributing to revenue, let alone profit. It had a lot of obsolete expensive plant and rising indebtedness. As a result of this combination of factors, together with increasing interest payments because of the rising indebtedness, it was faced with the prospect, as the Committee was told, of having to operate at 92 per cent. capacity just to break even. No steelworks in the world normally operates at 92 per cent. of capacity.

The Committee could see from these facts that the Corporation was heading towards a situation in which, in normal commercial terms, unless there was a sharp and rapid upturn in the market it would go bust.

The situation was complicated by the additional problem of a large degree of overmanning in the Corporation and this was largely perpetuated by the election promises of Labour Members some of whom are now Ministers. The degree of this commitment is spelled out by the Secretary of State for Industry in answer to Question No. 289 in the Fifth Report. I shall not go over all the comments that he made but it is clear that the Corporation was no longer in control of the situation. Even if it had wished to do so, it could not have laid off workers, because of the election commitments made by Labour Members.

A further problem was the obstructionist and even bloody-minded attitude of some shop stewards, some small groups of workers and even some union leaders. We went over this briefly in our debate on 22nd July.

In the past two years, we have seen Port Talbot held up by five electricians, the Llanwern blast furnace not blown in because of the actions of a handful of blast furnace men and the Redcar sinter plant not commissioned because of a handful of boilermakers. Sadly, a small group of men in each case would not give up their traditional practice and insisted on going on with their old crafts. They held up many hundreds of millions of pounds of investment for a number of months.

This could not have happened except in a nationalised industry. I do not believe that it would have been possible for unions in the private sector to take the same attitude as that taken by some small groups in the steel industry.

On top of all this, we saw only a month or two ago, at the time the Corporation was telling us that it was losing £10 million a week, the largest union in the Corporation demanding a full 10 per cent. wage increase. It was not content with the 6½ per cent. offered by the management. To many people, that was an incomprehensible attitude. The Corporation could not afford to pay any wage increase, but the biggest union went down the line demanding a full 10 per cent.

I turn to the second issue—the role of Ministers. This is a key issue for the House. I am glad that the Minister of State is in the Chamber. I believe that the role of the sponsoring Minister in the nationalised industries is supremely difficult. I remember the Secretary of State giving evidence to us. In a telling phrase he said that it was difficult to get a razor blade between some of his engagements. Ministers are torn between the wish to let the nationalised industries get on with the job and the need to exercise a general supervision, especially of financial requirements.

This duty is notably more extensive in the case of a nationalised industry which is running with the largest corporate loss ever known in the United Kingdom. It is necessary to put into context the problem of the borrowing powers of the Corporation today. By the end of this year the BSC will have borrowed about £4 billion. On present form, in each of the next two years it will borrow about £1 billion, so that by the end of 1980 it will have borrowed £6 billion. That amounts to £125 for every man, women and child in the country. For the average family unit of four it amounts to paying £500 to the Corporation by the end of 1980. That sum would go a fair way towards allowing the first-time buyer to pay the deposit on a house.

We often think that the National Coal Board has the greatest requirement for borrowed money. It employs 242,076 people—40,000 more than the BSC—and currently borrows only £1 billion a year. That is only a quarter of the BSC requirement.

Throughout this year the impression that many of us have received from Ministers is that they hoped that this problem of the BSC would just go away; it would be forgotten in the recess, and that our report would get buried. They hoped that there would be a market upturn.

I accept that for Ministers this has been a very embarrassing situation, primarily because of the commitment to maintain jobs in Labour constituencies. We must remember that this maintenance of employment—because of the operation of the cash limit—has meant a cut-back in capital investment.

For the past four years the Government have been maintaining jobs at the expense of future jobs within the steel industry. There is no hope of maintaining our market share in the steel industry without the most modern capital equipment. Capital investment has now been cut in order to stay within the cash limit and preserve jobs.

Ministers constantly hoped that this problem would disappear without comment. This is epitomised in one telling quotation, when the chairman of the BSC appeared before our Committee on 30th January and answered a question from the hon. Member for Bedwellty (Mr. Kinnock) about a meeting that he had had with the Secretary of State on 18th July 1977. The hon. Member said: After you had said that in response to the Secretary of State's question as to whether it would be £250 million or £350 million, what did the Secretary of State say then? The Minister of State was present. Doubtless he will be able to recall whether this answer was correct, because Sir Charles said I do not recall him —that is, the Secretary of State— saying anything. I think he accepted that. On my diary I have no record of him replying. The right hon. Gentleman said nothing. He hoped the problem would go away.

The duty of care is I believe the nest definition that exists of the duty of directors of companies in the private sector. But it is this duty of care, in this case on behalf of the management of the BSC and all those employees in the Corporation who do not work in Beswick plants, and on behalf of taxpayers, that has been conspicuously lacking among Ministers in the Department of Industry.

Finally, I turn to the narrow point concerning the events of the week of 17th–27th July last year. The week started with Sir Charles being told by his managing director (finance) and chief executive that the Corporation's loss was likely to be £440 million rather than £350 million. It ended with the Minister of State saying that the upturn that was taking place would assist the Corporation.

A meeting was held on 18th July between Sir Charles Villiers, the Secretary of State and the Minister of State. The operating plan showing a loss of £350 million had been known to the Department of Industry since 26th April. Three months had passed in which, in the words of Coopers and Lybrand, the market situation was "deteriorating rapidly". Yet the Ministers apparently accepted without any question that the loss was still only £350 million, or it might be £100 million less, even though the market had been going down all those months. Surely it was more likely that the loss would be greater, that it was much more likely to be £400 million than £250 million.

I can come to only two conclusions. Either Ministers did not probe sufficiently and did not ask enough questions in advance of the debate on increased borrowing powers which was to take place four days later. In that case they can be accused of negligence. Alternatively, they did probe more and were told more but they concealed the facts from the House. In that case they misled the House.

Naturally, the House will form its own conclusions. Since I am a generous person, I prefer the first conclusion, but I shall listen very carefully to the Minister of State tonight when he gives the House an account of the way in which he has discharged his duties and responsibilities.

Mr. Deputy Speaker

My contribution is to say that I do not know why we have clocks in the House.

8.49 p.m.

Mr. John Ellis (Brigg and Scunthorpe)

Most hon. Members were trying to keep to five-minute speeches, and I hope that Conservative Members will note that by the inordinate length of his speech the hon. Member for Mid-Sussex (Mr. Renton) has deprived one of them of the chance to speak.

In considering all the things that have been revealed by the report the House should bear in mind that with a nationalised industry the only way in which it, and therefore the people outside, can probe is by reason and by virtue of the Select Committee. That is one of the reasons why I think that we should be complimentary to the Select Committee and the Sub-Committee for giving us the opportunity to look below the veil and for the job that they did. I have always held it important that it be open to the House either to agree or disagree with the conclusions, but the most important fact was that it was able to probe and get evidence for the House.

Mr. Mike Thomas

Before my hon. Friend leaves that point, does he agree with me that Select Committee members have very clear responsibilities to their parties and to their Front Benches, to the steel industry and to steelworkers, but they also have clear responsibilities to the House and to the truth, and that we have pursued both of those objectives?

Mr. Ellis

I would agree with that. One of the things that I should like to say about the Committee, in view of some of the criticisms made of it, rightly or wrongly, is that we should not have had the reports or this debate were it not for the Select Committee. We should not have had page 73 of the Fifth Report, which some of my hon. Friends should have read. It reveals: Secondly, we will have to face up to a retrenchment of capacity beyond Beswick. That was going on inside the BSC secretly. My hon. Friend the Minister and my right hon. Friend the Secretary of State subsequently gave evidence that that was never revealed to them.

Therefore, one of the matters that we have to look at immediately is the relationship between this nationalised industry and the Minister down to the House of Commons. We are the people who report to the nation so that the world at large knows what is going on. It is revealed very graphically that we should not have had those matters revealed had it not been for the Select Committee.

We on the Labour side believe in nationalisation. The Government must look radically at the whole relationship of the trade union movement with the industry. They must look at who is saying what. In the past we have tended to put in management which has been left to operate entirely on its own, it seems, with very little regard to accountability to anyone.

Scunthorpe is a town entirely dependent on the steel industry. There has been massive investment of millions of pounds. The Select Committee said that in view of this investment and the fact that we can produce much more steel there should be a modest investment in order to capitalise on the potentiality of that huge Anchor steel project.

I listened to my hon. Friends' speeches about the particular difficulties at the older plant. I understand the position. In Scunthorpe the cards have fallen in such a way that we have that multimillion pound investment. We ought to have a little more blast furnace capacity. In order to do what? It was expected that we should need 36 million tonnes by the mid-1980s. The analysis has been done elsewhere. The figure is now half that.

It may be that the massive investment at Scunthorpe in such a big programme as Anchor would never have been made if it had been known at the time. I understand the difficulties of my hon. Friend the Member for Stoke on Trent, Central (Mr. Cant). He was a little unfair when he spoke of what we had lost at Scunthorpe. We have all lost.

My workers also depend on steel, and we have only been running at a slight capacity compared with the capacity at which we could operate. We ought to have a further modest investment so that we can utilise those millions of pounds worth of capacity that exist.

Having said that, I know that there are steelworkers in other parts of the country at older plants who probably work harder than my boys because we have the modern machinery. That is a problem that we face. If Scunthorpe is to utilise that capacity, as I believe it must, because it is a low-cost plant, that is another million tons of steel that we can get out.

What should we do with it? We could sit back and say "We shall work all the hours God sends and produce it better than anywhere else." But the steelworkers to whom I have spoken do not say that. They recognise that there is a problem. They acknowledge that the trade union movement will have to discuss all these matters.

We must see that we do not import steel when we can produce it. We must make use of the people available, though not through the worker-director system, to change the Corporation so that we all work as a team. When my hon. Friends and I talk about the industry we must see how we can make advances, but on the basis of trust and a change of organisation and approach by this huge nationalised industry. At the end of the day we must have a viable and efficient steelmaking industry.

Several Hon. Members rose—

Mr. Deputy Speaker

I call the hon. Member for Kingston upon Thames (Mr. Lamont).

Mr. Mike Thomas

On a point of order, Mr. Deputy Speaker. It may have escaped your notice that whereas both Conservative Members of Sub-Committee B of the Select Committee on Nationalised Industries have been called to speak none of the three Labour Members has been called. Will you draw that to the attention of Mr. Speaker when you report to him on your conduct of the Chair and point out that those hon. Members involved felt that this was not a satisfactory use of Mr. Speaker's powers of selection?

Mr. Deputy Speaker

I believe in a direct approach to Mr. Speaker himself, who will soon be in the Chair.

9.1 p.m.

Mr. Norman Lamont (Kingston upon Thames)

The first question I must answer is that put by some Labour Members, whether we were right to hold this debate on the Select Committee reports at all. I immediately concede that it would have been much better if the Government themselves had provided the time for the debate, if they had agreed to the Select Committee's recommendation that there should be a two-day debate before any decisions were taken and before any statement was made.

It was clear from what I heard Ministers say that whereas they were prepared for Parliament to be a spectator, they were not prepared for it to participate and to influence the decisions. I find Ministers' accusations and attitudes extraordinary. Serious charges have been made against them, and one would have thought that they would welcome the earliest possible opportunity to rebut those charges, as they say they can.

Mr. Mike Thomas rose—

Mr. Lamont

I should like to get on.

The second reason why I think we were right to hold the debate is that if one wants the Select Committee system to develop, as I do, one sees that it can do so only if the work of the Select Committees is related to the Chamber, where the main action is, where decisions are debated. The great threat to Select Committees is that they will become simply academic studies, making interesting bedtime reading but having no real influence on the guts of politics and the decision; of Government.

No one can dispute that the three reports have had a remarkable Press reception, if for only one reason. The hon. Member for Feltham and Heston (Mr. Kerr) is riot present now. I do not suppose that he is used to the experience of finding himself Man of the Week in the Financial Times. Perhaps on a future occasion he will find himself Executive of the Year in the Wall Street Journal.

But the Press perhaps got the emphasis wrong, because I believe that the First Report is just as important as the Second and Fifth Reports. The Secretary of State was perhaps reading from his prepared script, because it was unfair to say of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) that he hardly dwelt on the First Report but concentrated on the Second and Fifth Reports. That was precisely the opposite of what my right hon. Friend said. He addressed himself to the main issues in the First Report, which I regard as being the central issues—the questions of employment and the finances of the industry.

I have been amazed to read in the Press the comments ascribed to Ministers that this report is the work of amateurs, a bunch of hopelessly misinformed people. I do not believe that anyone who reads the First Report, with its analysis of the scrap situation or the finances of the Steel Corporation, can conclude that it is anything other than essential reading for any politician who wants to become involved in the affairs of the British Steel Corporation.

Of course, we can all pull out nuggets of information to satisfy our own particular prejudices, even from the minutes of evidence. I read with some interest the view of Sir Charles Villiers in his evidence that Alpha Steel in the private sector was actually able to get a better manning agreement precisely because it was in the private sector and not in the politicised sector.

But the main issue—one on which my hon. Friend the Member for Arundel (Mr. Marshall) concentrated—which arises out of the First Report is the relationship between Whitehall and the nationalised industries. We find that this report confirms many of the views that we have long held. We have long held that the nationalised industries and the Steel Corporation ought to be free from day-to-day intervention. It ought to be set targets as a Corporation, which it does not have at present. The Secretary of State has the ultimate sanction. He can change the board and the chairman of the Corporation.

We find the tenor of that aspect of the report very acceptable. I would strongly commend to the House the recommendation in the report that the whole apparatus of the reporting system—anyone who has gone into this knows that it is an extraordinary bureaucratic labyrinth—should be re-examined with a view to seeing what parts could actually be cut out.

The Committee has also much to say about the way that the system of cash limits operates. It puts forward the suggestion for consideration that there ought to be a separate cash limit both for revenue and investment. It is worried that the Corporation might become like British Leyland—a company plundering the money for investment in order to pay the wages bill. I think the Committee demonstrates quite clearly that the cash limits discipline is not biting on the Corporation in the way in which it was intended. By running down stocks and other things the Corporation is able to push the problem back from one year into the next.

What we particularly applaud is the realism in the report. It faces up to the basic problem of the industry. The grim facts of the British Steel Corporation crisis are spelt out. There is no flinching the industrial relations situation in the Corporation, and the Committee makes quite clear that this situation is worse than in manufacturing industry as a whole. It does not refrain from pointing out that the Corporation has very little hope of financing its own investment and that for that reason the Corporation will be a drain on public funds for years to come.

The report emphasises, as did my hon. Friend the Member for Mid-Sussex (Mr. Renton), the extraordinarily high break-even point of the Corporation. It has to operate at over 90 per cent. of its 25 million to 26 million tonne capacity. Last year it produced only 17 million tonnes. I do not think anyone reading that First Report can conclude anything other than that the finances of the Steel Corporation, which are over 10 per cent. of the public sector borrowing requirement, will other than remain a threat to the Government's IMF-imposed economic policy for some time to come.

It is not only the negative aspects of the report that we endorse. It also has recommendations for the future. It suggests how the board ought to be strengthened. It seems to me absurd for a Corporation of this size to have a board with only four executive members. Grosvenor Gardens is the biggest office that I have ever seen for four people.

The report also says that the investment programme needs urgent reappraisal. While one does not need to accept every single word of the recommendations, the general thrust of the message must be right—that it is better to concentrate on modernising the existing successful parts of the Corporation than on developing massive green field sites and new plate mills.

There is no doubt that the original plan for the BSC—the 10-year plan—has been overtaken by events. Who on earth would buy all the steel that the plants would be producing? We cannot export it because more and more countries of the Third world are producting their own steel. All the assumptions of the 10-year plan go beyond the demand for steel that could have come from domestic engineering or construction industries. The central problem of the steel industry is how does one reconcile the output of more and more steel from overmanned plants when there is an acute shortage of demand both at home and abroad?

I turn to the controversial question of manning and keeping open uneconomic plants. The views of the Conservative Party have been confirmed. We have always said that the Corporation is overmanned and that this matter should be treated urgently. Whenever my right hon. Friend the Member for Leeds, North-East has mentioned this matter and put forward his views fearlessly, as he does, he has had abuse heaped upon him. Yet the Select Committee comes down firmly on his side.

The Committee says that productivity needs to be increased urgently within the Corporation and that, furthermore, it needs to be increased not by new investment adding surplus capacity but by cutting down to internationally competitive levels of manning.

Mr. Mike Thomas

I do not allow my hon. Friends to misrepresent the Select Committee, so I cannot allow the hon. Member for Kingston upon Thames (Mr. Lamont) to do so either. The Select Committee made it clear that the Corporation could not survive unless certain pieces of investment took place. It recommended investment that is not in the current development programme.

Mr. Lamont

I accept that, and I am coming to the point about new investment. At present, however, I am emphasising that the Corporation needs internationally competitive manning levels. The key point that has emerged from the report and the one that we want to put across is that the longer action is delayed, the more jobs will be lost eventually. The Committee warned that as delay has continued and we have failed to grasp the nettle, so costs to the Corporation have increased. Costs of redundancy payments, for example, increase with every delay.

In the last report, the Committee says firmly that unless the nettle is grasped, there is a danger that the disease will appear later in a more virulent form. That is the message that we want to get across over and over again—jobs cannot be preserved by making them uncompetitive. The only jobs saved by overmanning in British Steel are jobs in Nippon Steel, United States Steel, and Thyssen Steel. Only by reducing overmanning do we have a chance of recapturing our share of the market. Only in that way can we justify more investment. Only then will more jobs be created in the Steel Corporation and in the metallurgical industries which supply it.

Over and over again the Government have adopted tie same ostrich-like attitude. Mention has been made in this debate of the Beswick plants. Here I come to the points raised by my right hon. Friend the Member for Sidcup (Mr. Heath). New investment and the closure of plants are related. One cannot be justified without the other. Without closures new investment cannot be justified.

By setting up the Beswick review and delaying closures, the Government have put at risk the whole future of the BSC. Old plants have lost more and more money, and the cost of investment in new capital has gone up to skyscrapingly high levels. In the meantime, our competitors have forged ahead while we have been treading water. So much money and time have been lost that it has become more and more difficult to proceed with investment. This proves that when industrial decisions become political they are invariably disastrous. The tragedy is that a policy designed to save jobs leads directly to increased unemployment.

The only way to save jobs in steel is to have not a job-embalming industry, but a wealth-creating industry. It is not so much a question of the Government deceiving Parliament. They are deceiving the people working in the steel industry by giving them a false sense of security by encouraging them to believe that there is a future on a scale that cannot be implemented.

I believe that the Secretary of State knows and that he has sound views. We know what he thought about Drax B and Chrysler and we admired him for his views. The trouble is that we are not sure that we are backing a winner. The right hon. Gentleman always plays the game, but he always loses.

The reason that we wished to have this debate was that we felt that the Committee made a detailed and careful study of the facts and the economic facts of life in the Corporation. We have been pointing out those facts of economic life for a long time. I hope that these will not be regarded as the views merely of the Conservative Party but will become part of the common ground, and that there will be a little less stridency, mud-slinging and blood-curdling prophecies of unemployment from the Minister of State.

Mr. Mike Thomas

If that is the hon. Gentleman's genuine ambition, why did not he and his right hon. Friends table the bi-partisan motion that was agreed by all the Select Committee Members? Why did the Opposition chose to table a party-political motion?

Mr. Lamont

For the simple reason that we believe that the Select Committee had the courage to face difficult facts and to advocate difficult decisions. We respect the members of the Select Committee, but we would respect them even more if they displayed in this Chamber the same courage as they showed in Committee.

Mr. Mike Thomas

The hon. Gentleman is making a direct imputation. I ask him to remember that no member of Sub-Committee B was called to speak in this debate. We all had our speeches ready.

Mr. Lamont

I had no wish to make personal imputations against the hon. Gentleman.

Let me turn to the matters raised in the Second, Third and Fifth Reports of the Committee. Those reports raise important constitutional questions about the relationship between the nationalised industries, Ministers, Select Committees and the House of Commons as a whole.

I turn first to the question whether the Select Committee had information withheld from it and whether it was entitled to it. I sympathise with the view expressed by Ministers and by Sir Charles Villiers. We do not want to create another layer of bureaucracy. We do not want to add to the reporting system.

I accept at once that it would not be a good idea if year after year on every occasion a Select Committee were able to demand all the correspondence passing between a chairman and the Secretary of State. But against that let me say that this was the first investigation by a Select Committee into the BSC for some years. The Select Committee has a good record and was not betraying confidences. In the past it has not gone on unnecessary fishing expeditions. Above all, when an industry has as consistently bad a record as the Steel Corporation and when it faces an unprecedented crisis, it is hardly surprising that the questions asked by a Committee will be inconvenient and embarrassing to Ministers and officials.

I do not wish to dwell on that point. All I would say is that perhaps it would have been wiser had Sir Charles Villiers not expressed the view, as he did at the beginning of the investigation on 6th December 1976, that the Committee would get all the information that it wanted. Plainly, the Committee does not believe that it got all the information that it wanted.

On the question of forecasts, again I recognise that it is all too easy to be right, with hindsight. I share the view both of Sir Charles Villiers and of Ministers that forecasts ought to be treated with considerable scepticism. Therefore, I am prepared to accept some of the explanations that have been put forward about the operating plan which showed up a £466 million loss in July not being acted upon and not being publicly revealed.

I can understand that, but I find it extremely difficult to understand how, when the operating plan of the Corporation as long ago as April had predicted a loss of £350 million, Ministers could have said what they said and Sir Charles Villiers could have used the words that he used in July.

I have read Sir Charles Villiers' words over and over again. To me, they clearly implied that the losses of the BSC would be between £95 million and £255 million. That was unwise. I notice again in the evidence that Sir Charles gave to the Select Committee in January that he, too, accepted that perhaps that was not the wisest form of words to use.

But, given that this forecast of a loss of £350 million had been around since April and had been passed on to Ministers soon thereafter, I cannot for the life of me begin to understand how in July Ministers thought that the loss was going to be less than £250 million. I cannot see what reason they had for thinking that, except the most Micawberish reason that something was going to turn up.

One reason that has been put forward has been that the annual operating plat was based on the assumption of there being no policy changes—a worst assumptions forecast—and that the Corporation did not believe it because it always thought that it could do something to prevent it from happening.

That was the defence made by Sir Charles in his evidence to the Committee in January this year. But he made it clear that, when talking about action to prevent the £350 million loss becoming a reality, he was talking about the closure of plants and demanning, not just about the Beswick plants. His evidence makes it clear that he was thinking of action which would go well beyond the closure of Beswick plants. In other words, he did not believe his forecast of £350 million, because he assumed that Ministers would allow him to do precisely what they said all along they would not have accepted at any price. At the same time, Ministers were accepting his soothing view of the world, even though they could not contemplate the one assumption that would have made it possible. They were willing the end without the action. Contact between the Secretary of State and Sir Charles Villiers in July seems to have been nothing more than a dialogue of the deaf.

I turn now to the debate on 22nd July and what information should have been provided to Parliament. The whole thrust of the Iron and Steel (Amendment) Act 1976 was that, whenever these borrowing orders came before the House, as much information as possible should be provided. Formal amendments to that effect were put down, but the Minister dissuaded hon. Members from voting on them. He said that it was not necessary, because he was "a compulsive provider of information." What has happened to this compulsive provider of information? When the BSC came along to increase its borrowing powers from £3,000 million to £4,000 million a year ahead of schedule for the second year in succession, the Minister of State gave us less information than a provincial bank manager would require for a newsagent's overdraft.

On that occasion the Minister of State accused the Opposition of scaremongering. He accused us of seeking headlines. He criticised us for using phrases such as "the Corporation is drifting to disaster". It was in that debate that he used the phrase the upturn that is taking place will assist the corporation."—[Official Report, 22nd July 1977; Vol. 935, c. 2136.] He used that phrase despite the fact that Sir Charles had told him a few days previously that he could see no sign of an upturn taking place.

I am sure that the Minister has been burning candles at both ends trying to find a reason for saying that. However, whatever the reason—I accept that the Minister may have had a reason—surely he at least owed it to the House to have admitted that his view of the future was very different from that of the chairman of the Corporation.

The kindest explanation that may be put forward of the Minister of State's behaviour—it is the one that I endorse—is that he is a compulsive provider not of information but of the first thing that comes into his head when asked a question. It was in reply to my hon. Friend the Member for Mid-Sussex that the hon. Gentleman used the phrase. The hon. Gentleman had no justification for using that phrase. It was nothing but vapid nonsense.

It is not deception but complacency and lack of urgency on which the Government stand indicted. The Select Committee indicates over and over again that that is so. It indicates the belief that mastery inactivity would somehow suspend the laws of the market place. It indicates a desire to shuffle the blame on to international factors, just as the Government have tried to do with almost every problem with which they have been confronted, whether it has been unemployment, crime or anything else.

We all remember that shortly before the debate last July the Minister of State was telexing round the world to different embassies to get figures that could show that some companies were losing rather less money than the British Steel Corporation. However, it is one thing to give highly selective statistics to the House, and quite another thing for those selective statistics to be reproduced in the Corporation's house magazine that is issued to those who work in the Corporation. What hope have we that those people understand the gravity of the crisis if Ministers' replies on a selective basis are passed down even to those who work in the industry?

The tragedy of the situation is that the longer action has been delayed the more difficult it has become. If it was politically impossible, as the Minister says it was, to deal with a prospective deficit of £350 million in July, how is it any easier to deal with a deficit of £520 million today? That is the tragedy of the situation.

The Minister loves to chill a great deal of blood. He likes to tell us how my right hon. Friend the Member for Leeds, North-East will create an industrial desert. However, we know now that the Minister of State is planning his own private little Sahara. We all know about the Kaufman Plan being revealed in the Daily Mirror. The Minister of State was talking about cut-backs. They were not confined to the Beswick plants. They were cut-backs that went well beyond that. They applied to every area except specialist steels, which, as we all know, represent only a very small part of the Corporation's activities. It is the Kaufman report that illustrates the truth of what we say—that the longer action has been delayed, the graver the crisis has become, and the more painful the decision will be to take.

We say that the main issues in this debate are the rights of Parliament to be informed and the rights of Parliament to assert the interests of the taxpayer. I do not believe that Ministers have acted in the interests of Parliament, or of the taxpayer. Above all, I do not believe that they have acted in the interests of those who work in the industry. They had a cruel deception practised on them, and their problem will be even more grave as a result of the delay and inaction that has taken place. It is because I believe that that is the clear implication of the reports that I urge all my right hon. and hon. Friends to vote for the Opposition motion.

Mr. Mike Thomas

On a point of order, Mr. Speaker. I apologise to my hon. Friend the Minister of State. I raise the point of order at the suggestion of your Deputy and particularly in the light of the remarks made by the hon. Member for Kingston upon Thames (Mr. Lamont). Is it not uniquely unfortunate that, although both the Conservative Members of Sub-Committee B of the Select Committee on Nationalised Industries were called to speak in the debate, none of the three Labour Members of that Sub-Committee was called?

Mr. Speaker

The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) is quite right. It is unfortunate. I have been studying the list and I see that there were long speeches at the beginning of the debate which altered my expectations of who would get in. I am very sorry that none of the hon. Members concerned was called.

Mr. Kinnock

Further to that point of order, Mr. Speaker. I also apologise to my hon. Friend the Minister of State. I wonder whether you could encourage a certain flexibility in the Chair so that as the clock gets towards 9 o'clock hon. Members who have a particular interest in debates such as this could be called even for a short time?

Mr. Speaker

The hon. Member for Bedwellty (Mr. Kinnock) is quite right. I have learned an important lesson from what has happened, and I am very sorry that the hon. Members concerned had no opportunity to express their points of view.

9.31 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

For the most part this has been a constructive debate. My hon. Friends were determined to look to the future. So was the right hon. Member for Sidcup (Mr. Heath) who, in a wide-ranging speech, totally punctured the partisan case which had been advanced by his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). When the hon. Member for Kingston upon Thames (Mr. Lamont) accused the Government of a desire to shovel off the blame on to international factors, he totally failed to understand the world conspectus in which the right hon. Member for Sidcup had set the whole of the steel crisis.

While the debate looks to the future, it is inevitable that we should examine the events of the past. A significant event in that past was the debate on the Iron and Steel Borrowing Powers Order on 22nd July 1977. The Fifth Report of the Select Committee examines that debate, and my part in it, to see whether the House was given a realistic picture of the crisis then facing the British Steel Corporation. Was I in that debate fostering over-optimism by the statement that I made? The report quotes that statement: As the Chairman in his public statement this week has not sought to put a gloss on the current very serious situation, I do not think that he is indulging in over-optimism. In that statement, to which I referred, Sir Charles had certainly not put hon. Members in an over-optimistic frame of mind. It was a very gloomy debate. Indeed, the hon. Member for Arundel (Mr. Marshall), a member of the Select Committee, in his speech in that debate said: I pay tribute to the way in which Sir Charles Villiers, in his Press statement this week, put forward very plainly many of the grave problems that the Corporation faces. That was a fair statement by the hon. Gentleman, who always speaks fairly.

Mr. Michael Marshall

The Minister of State must understand that when I made those comments I was not aware of what is now seen to be an understatement by Sir Charles Villiers in terms of operating results.

Mr. Kaufman

I shall deal with that point.

In my speeches—I made two, moving the order and winding up—I too tried to draw the attention of the House to the grave problems to which the hon. Gentleman referred. I said, in column 2135: steel remains in the grip of the longest and most severe depression that any of those currently engaged in the industry have had to face ". In column 2136, I said: the recession has been much more severe and long-lasting than was expected. In column 2167, I said: the world steel industry is facing almost unprecedented problems. Further down the same column, I referred to: the real, serious and profound problems of the BSC, which I should not seek to underestimate. In column 2174, I said: I have not sought in any way to pretend that the problems of the Corporation are not very great."—[Official Report, 22nd July 1977; Vol. 935, c. 2135–74.] No false optimism there, Mr. Speaker.

But a reader of the Select Committee report may wonder why I did not quantify those problems by putting before the House a forecast figure for the BSC's likely loss. The Fifth Report, in paragraph 11, says of me: he was speaking to a House which, on the basis of the Press Statement of 19th July, was expecting a loss of between £95 million and £255 million, in the private knowledge that, on unchanged policies, the loss would be of the order of £250 million to £350 million. But I did not have precise private knowledge of that kind. It had been a developing situation, as the months went by.

Earlier in the year, the Corporation had predicted a loss of about £250 million. This was indicated in the cash figures presented to Parliament in March in the financial statement and budget report. On 26th April my Department was warned that the loss might be between £300 million and £350 million. The quarterly report of the Corporation sent to us in mid-May had a figure of £350 million.

Paragraph 8 of the Select Committee report records that on 18th July, four days before the debate, at a meeting with my right hon. Friend and myself, Sir Charles Villiers said that the situation was not as bad as had been painted, the Corporation were unlikely to lose as much as £250 million to £350 million in the current financial year. All these figures that I have given to the House included a contingency allowance then amounting to £85 million or more, specifically for events that could not be predicted. That was my private knowledge, and that was why I told the Select Committee in my evidence on 6th February that: It might have been misleading the House to give them a specific figure. So, far from having any intention of misleading the House, I sought to avoid misleading the House. That is what I assured the Select Committee.

Paragraph 11 of the report also corn-pares words of mine, spoken in the House in the borrowing powers debate, with evidence given by Sir Charles Villiers to the Select Committee on 30th January. The report states that There is also a very marked contrast between his"— that is, my— optimistic statement in the debate that 'the upturn that is taking place will assist the Corporation' and the more pessimistic statement made to him in private by the Chairman of the Corporation four days previously that 'I am bound to say I do not yet see a significant upturn in demand or price '. I was glad that in his speech today the hon. Member for Arundel deprecated selective quotation, because the House should know that those 10 words from my speech quoted in the report do not represent the sense of what I said. They are not even a complete sentence. My remark came in an exchange with the hon. Member for Mid-Sussex (Mr. Renton), who intervened in my speech with this question: Has the BSC any finite reasons for expecting demand to improve in 1978, in the period that the hon. Gentleman has just mentioned, or is it rather that it cannot see any improvement during the current year, which I understand, and is therefore optimistically hoping for an improvement next year? I replied: Clearly there is no utterly definable reason that one can provide for such an expectation. The hope is that the upturn that is taking place will assist the Corporation. The report quotes only those last 10 words as though they were my complete statement. In any case, a reading of my full speech shows that Sir Charles and I were talking about two different kinds of upturn. Sir Charles was talking about an upturn in demand and price for steel and said that he did not yet see a significant upturn. I had dealt with that aspect earlier in my speech, when I stated: However, the signs of an upturn in world steel markets, which appeared briefly in the early part of last year, were not sustained."—[Official Report, 22nd July 1977; Vol. 935, c. 2135–6.] In this part of my speech a little later I was referring to a more general economic upturn. This can be seen by my reference, a couple of sentences later, to the recession. The House will recall that around that time there was a widespread expectation that an upturn in the United States would help to pull our economy out of the recession and the expectation was that steel industries would benefit from that upturn.

This was certainly a view that was widespread in the Press at the time. For example, on 4th July 1977 the International Herald Tribune report from Pittsburgh, the steel centre of the United States steel industry, under the headline "Steel officials confident of strong second half", this statement by Robert Lauterback, chairman of the Wheeling Pittsburgh Steel Company: I am sure the second part of the year will be better by 5 to 7 per cent. I am very heartened by the continuing strong trend of our orders.

Mr. Tim Renton rose—

Mr. Kaufmann

I shall give way to the hon. Gentleman but I wish to finish this passage in my speech. Mr. M. J. Curto, vice-president of the United States Steel Corporation, the biggest steel company in the United States, said that the company was sticking 100 per cent, to its prediction that this year would turn out to be significantly better than last. That was the view of two leading United States steelmen. They were both wrong. We were all wrong. When the Chairman of the Select Committee, my hon. Friend the Member for Feltham and Heston (Mr. Kerr), questioned my hon. Friend the Secretary of State in the Select Committee on 1st December he asked—and I quote his words: Would not the Secretary of State agree with me that a large part of the difficulties in terms of the forecast that went rather badly wrong was owing to the major hiccup which occurred in the American economic recovery in July and August last year? Did that not lead to the miscalculation? That was what my hon. Friend asked, and he was absolutely right. It was indeed a miscalculation, but to miscalculate is not to mislead.

Mr. Renton rose—

Mr. Kaufman

I shall give way to the hon. Gentleman in a moment. I have been preparing for him. If there was one hon. Member who in any case should not have been misled it was the hon. Member for Mid-Sussex, because, later in the debate on 22nd July, he commented on my remark and said: I asked the Minister of State about the upturn in sales next year upon which the Corporation has attached so much hope. He naturally said that the BSC could only hope but that it could not be certain. That was an honest answer. So much of the Corporation's chances of getting back into profitability depends upon the upturn in the market."—[Official Report, 22nd July 1977; [Vol. 935, c. 2161.]

Mr. Renton

I am amazed that the Minister should quote that comment of mine, because when I said it was an honest answer I did not know that he had the BSC operating plan showing a loss of £350 million, and I did not know that a meeting had taken place between him and the chairman on Monday 4th December.

My question to him is different. He refers to the optimism in the United States in July as justifying his reference to an upturn. How was it that in that same quarter, as he has so often reminded us—that is, the third quarter last year—Bethlehem Steel reported a loss of 750 million dollars, and laid off about 10 per cent, of its work force?

Mr. Kaufman

For the same reason that was given by my hon. Friend the Member for Feltham and Heston (Mr. Kerr). The recovery which had been expected faltered. As for the reply of the hon. Member for Mid-Sussex to me, he explains now what he meant then. It is interesting that if one is questioned in March 1978 about a speech made in July 1977, one has to explain oneself.

The hon. Member for Mid-Sussex said that he did not know on 22nd July what the chairman of the Corporation had said to me. That is true, but the hon. Gentleman is a member of the Select Committee and he knew on 30th January, because that is when Sir Charles Villiers quoted those words about an upturn in evidence to the Select Committee. The hon. Gentleman knew on 30th January and he knew a week later on 6th February when I went before the Select Committee to give evidence.

Those words of mine about the upturn were quoted by an hon. Member at that meeting, but that hon. Member was not the hon. Member for Mid-Sussex. The only hon. Member to quote those words was myself. It was I who drew the attention of the Select Committee to that passage in my speech. I said: If the Committee will bear with me, because I think it is important to get this on the record, in column 2136 I said: "The hope is that the upturn that is taking place"—we actually thought an upturn was taking place—"will assist the Corporation". Even then, the hon. Member for Mid-Sussex did not question me. He certainly was not tongue-tied, because in the next column he took up the questioning again on something completely different. If he was so disturbed by what I said, why did he not question me then?

Mr. Renton

Would the hon. Gentleman like to direct that question to his hon. Friend the Member for Feltham and Heston (Mr. Kerr) who, as Chairman of the Select Committee, conducted the questioning? They will see that I tried many times at that point to intervene in the Minister's remarks.

Mr. Kaufman

The hon. Gentleman said that when the Secretary of State did not probe and press, he was negligent. The same applies to the hon. Gentleman. Sometimes, other Members have to explain themselves.

Paragraph 17 of the report, to which my hon. Friend the Member for Feltham and Heston has referred, lists a series of what are called "crucial dates" culminating in this quotation: Sunday 11 September: A meeting took place between the Chairman of the Corporation and the Secretary of State for Industry at which it was agreed to try to accelerate the closure of the Beswick plants. My hon. Friend the Member for Feltham and Heston has fairly pointed out that the meeting never took place. There was no such meeting and the report offers no evidence to suggest that there ever was such a meeting. I have checked carefully and I find that on that day, Sir Charles Villiers held a meeting with colleagues in the BSC at Windsor. On the same day, my right hon. Friend the Secretary of State was at home with his family at Staveley, Derbyshire, 130 miles away.

Obviously there is a simple explanation. Presumably this was no more than a slip made in the haste of compiling the report. No one would allege that the Select Committee has misled the House in listing this imaginary meeting as a crucial date in its report.

I am sure that the Select Committee would accept that it has as great a duty as Ministers to provide the House with accurate information. As my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) said in an intervention, Select Committees have clear responsibilities to tie House and to the truth.

Mr. Mike Thomas

Will my hon. Friend make it clear that he is prepared to describe this event as a misunderstanding of the evidence and that in no circum- stances would he describe it as an invention of evidence by the Select Committee?

Mr. Kaufman

I regard it as a slip. Slips can happen.

Mr. Norman Lamont rose—

Mr. Kaufman

I have a lot to say and many questions to answer. It is right that I should be allowed to speak.

The three reports of the Select Committee deserve better of this House than simply to be subjected to minute textual analysis. They contain many detailed and often constructive recommendations which are being considered carefully by the Government. We shall respond in the way in which the hon. Member for Colne Valley (Mr. Wainwright) said that we should. That is the way to do it. The recommendations also provide a background against which we can consider the current problems of the British Steel Corporation in true perspective.

It was a bleak heritage that private ownership handed over 11 years ago. The First Report describes it like this: Prior to nationalisation, the Sub-Committee were told, the rate of capital expenditure in the British steel industry was insufficient to maintain the existing equipment and to improve it in line with the substantial technological advances which were being made. It was particularly low in comparison with investments which were being made in the steel industry abroad". In 1967 the State was handicapped by a backward, primitive steel industry completely uncompetitive against the foreign industries on the Continent and in Japan which had invested and modernised. Before it could tackle that heritage the newly formed British Steel Corporation was confronted with a vindictive Tory Government absolutely intent on making its job impossible. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and his cronies marched into the Department of Trade and Industry determined to take the axe to the British Steel Corporation.

The outcome of their efforts was a constitutional monstrosity—a joint steering group of civil servants and Corporation officials which was set up in 1971 and which for nearly a year completely hamstrung the activities of the BSC. Paragraph 143 of the First Report describes what happened in these words: Suspension of investment projects and investment decisions during the period of the Joint Steering Group between 1971 and 1972 resulted in a lull in investment expenditure and a loss of momentum during the early years of the Strategy which affected the Corporation and plant suppliers alike". In 1972 Lord Melchett, when chairman of BSC, described to a previous Select Committee what had taken place. He said We did not really like the whole concept of the joint steering committee. It was really imposed on us in difficult circumstances and it completely broke all the normal routines with regard to dealing with our investment programme and consultations. Some of the time lost can never be made up. The people who were engaged in this very time-consuming inquiry and discussion had to be our top people. While we were engaged in these discussions, writing papers for consideration and so forth, we could not be doing other things". For nearly a year the control of the Corporation was taken out of the hands of the board—and the Tory Government flatly refused to supply to Parliament any of the reports of that JSG. This is how the responsible Minister sought to justify that refusal: The report contains such material of a commercial confidential nature that publication would damage the commercial interests of the Corporation by revealing plans and expectations to competitors. It is important that Ministers must retain the right to receive the most confidential information from experts with no punches pulled and with no fear of subsequent publication". Yet those are the very people who have the nerve to attack this Government for failing to be open with the House—

Sir K. Joseph rose—

Mr. Kaufman

I will not give way. I have a lot to say. After the Second Report was published—

Sir K. Joseph

Will the hon. Gentleman give way?

Mr. Kaufman

Very well.

Sir K. Joseph

Will the Minister of State tell the House the truth, that it was nationalisation by the Labour Government and then the renewed threat of nationalisation throughout the second half of the 1960s that left this country behind—[HON. MEMBERS: "Rubbish."]—when all our competitors were investing?

Mr. Kaufman

That is the kind of party nonsense that this Select Committee Report demolishes.

Hon. Members

Resign.

Mr. Speaker

Order. Everyone has had a reasonable hearing up to now.

Mr. Kaufman

The Tories have always had a vendetta against the British Steel Corporation, but a vendetta is no substitute for a policy. The Tories have no policy for steel, and today in a debate that they have gratuitously forced they have given us no idea of what they would do with the industry if they had the chance—

Mr. Norman Lamont rose—

Mr. Kaufman

—but the country and the steel workers have the right to know. They have the right to know what the Tories would do about investment in the industry. The Conservatives voted against investment in the Iron and Steel (Amendment) Bill. The country has the right to know what the Conservatives would do about redundancies. The Select Committee report calls for a clearly defined specific reduction in the size of the workforce in each of the next five years". Do the Opposition accept that recommendation—[HON. MEMBERS: "Do you?"] They are calling on the House to approve the report. If they accept that recommendation how—

Mr. Norman Lamont

Will the hon. Gentleman give way?

Mr. Kaufman

Yes, I shall give way because I have lost my voice.

Mr. Norman Lamont

Will the Minister of State now tell us the truth about the reports of the Kauman plan by which, we read in the papers, the Government are planning to leave the British Steel Corporation only as a producer of specialist steels?

Mr. Kaufman

It is utter rubbish. The standards of accuracy of the Daily Mirror have greatly deteriorated since I left the staff.

The Tory Party refused to commit itself on these matters. It has no policies, only vague talk on which it is too craven to commit itself. Last month it was immigrants, and this month it is steel workers.

We shall examine the Select Committee report on its merits and we shall reply in the way that the House expects us to reply to a Select Committee report of this kind. We shall do what Bill Sirs asked when he told the Select Committee that time was needed in which we can work together with the unions and the

Corporation for a modern industry. That is what we intend to achieve.

Question put, That the amendment be made:—

The House divided: Ayes 302, Noes 254.

Division No. 143]	AYES	[9.59 p.m.
Abse, Leo	Dunnett, Jack	Lambie, David
Allaun, Frank	Eadie, Alex	Lamborn, Harry
Anderson, Donald	Ellis, John (Brigg & Scun)	Lamond, James
Archer, Rt Hon Peter	English, Michael	Latham, Arthur (Paddington)
Armstrong, Ernest	Ennals, Rt Hon David	Leadbitter, Ted
Ashley, Jack	Evans, Fred (Caerphilly)	Lee, John
Ashton, Joe	Evans, Ioan (Aberdare)	Lestor, Miss Joan (Eton & Slough)
Atkins, Ronald (Preston N)	Ewing, Harry (Stirling)	Lever, Rt Hon Harold
Atkinson, Norman	Ewing, Mrs Winifred (Moray)	Lewis, Ron (Carlisle)
Bagier, Gordon A. T.	Faulds, Andrew	Litterick, Tom
Bain, Mrs Margaret	Fernyhough, Rt Hon E.	Lomas, Kenneth
Barnett, Guy (Greenwich)	Fitch, Alan (Wigan)	Loyden, Eddie
Barnett, Rt Hon Joel (Heywood)	Fitt, Gerard (Belfast W)	Luard, Evan
Bates, Alf	Flannery, Martin	Lyon, Alexander (York)
Bean, R. E.	Fletcher, Ted (Darlington)	Lyons, Edward (Bradford W)
Beith, A. J.	Foot, Rt Hon Michael	Mabon, Rt Hon Dr J. Dickson
Benn, Rt Hon Anthony Wedgwood	Ford, Ben	MacCormick, Iain
Bennett, Andrew (Stockport N)	Forrester, John	McDonald, Dr Oonagh
Bidwell, Sydney	Fowler, Gerald (The Wrekin)	McElhone, Frank
Bishop, Rt Hon Edward	Fraser, John (Lambeth, N'w'd)	MacFarquhar, Roderick
Blenkinsop, Arthur	Freeson, Rt Hon Reginald	McGuire, Michael (Ince)
Boardman, H.	Freud, Clement	MacKenzie, Rt Hon Gregor
Booth, Rt Hon Albert	Garrett, John (Norwich S)	Maclennan, Robert
Boothroyd, Miss Betty	Garrett, W. E. (Wallsend)	McMillan, Tom (Glasgow C)
Bottomley, Rt Hon Arthur	George, Bruce	McNamara, Kevin
Boyden, James (Bish Auck)	Gilbert, Dr John	Madden, Max
Bradley, Tom	Ginsburg, David	Magee, Bryan
Bray, Dr Jeremy	Golding, John	Mahon, Simon
Broughton, Sir Alfred	Gould, Bryan	Mallalieu, J. p. W.
Brown, Hugh D. (Provan)	Gourlay, Harry	Marks, Kenneth
Brown, Robert C. (Newcastle W)	Graham, Ted	Marshall, Dr Edmund (Goole)
Buchan, Norman	Grant, George (Morpeth)	Marshall, Jim (Leicester S)
Buchanan, Richard	Grant, John (Islington C)	Mason, Rt Hon Roy
Butler, Mrs Joyce (Wood Green)	Grocott, Bruce	Maynard, Miss Joan
Callaghan, Rt Hon J. (Cardiff SE)	Hamilton, W. W. (Central Flfe)	Meacher, Michael
Callaghan, Jim (Middleton & P)	Hardy, Peter	Mendelson, John
Campbell, Ian	Harrison, Rt Hon Walter	Mikardo, Ian
Canavan, Dennis	Hart, Rt Hon Judith	Millan, Rt Hon Bruce
Cant, R. B.	Hattersley, Rt Hon Roy	Miller, Dr M. S. (E Kilbride)
Carmichael, Nell	Hayman, Mrs Helena	Mitchell, Austin
Carter, Ray	Healey, Rt Hon Denis	Molloy, William
Carter-Jones, Lewis	Heffer, Eric S.	Moonman, Eric
Cartwright, John	Henderson, Douglas	Morris, Alfred (Wythenshawe)
Castle, Rt Hon Barbara	Hooley, Frank	Morris, Charles R. (Openshaw)
Clemitson, Ivor	Hooson, Emlyn	Morris, Rt Hon J. (Aberavon)
Cocks, Rt Hon Michael (Bristol S)	Horam, John	Moyle, Roland
Cohen, Stanley	Howell, Rt Hon Denis (B'ham, Sm H)	Mulley, Rt Hon Frederick
Coleman, Donald	Howells, Geraint (Cardigan)	Murray, Rt Hon Ronald King
Colquhoun, Ms Maureen	Hoyle, Doug (Nelson)	Newens, Stanley
Conlan, Bernard	Huckfield, Les	Noble, Mike
Corbett, Robin	Hughes, Rt Hon C. (Anglesey)	Oakes, Gordon
Cowans, Harry	Hughes, Robert (Aberdeen N)	Ogden, Eric
Cox, Thomas (Tooting)	Hughes, Roy (Newport)	O'Halloran, Michael
Craigen, Jim (Maryhill)	Hunter, Adam	Orbach, Maurice
Crawford, Douglas	Irvine, Rt Hon Sir A. (Edge Hill)	Orme, Rt Hon Stanley
Crawshaw, Richard	Irving, Rt Hon S. (Dartford)	Ovenden, John
Cronin, John	Jackson, Colin (Brighouse)	Padley, Walter
Crowther, Stan (Rotherham)	Jackson, Miss Margaret (Lincoln)	Palmer, Arthur
Cryer, Bob	Janner, Greville	Pardoe, John
Cunningham, G. (Islington S)	Jay, Rt Hon Douglas	Park, George
Cunningham, Dr J. (Whiteh)	Jeger, Mrs Lena	Parker, John
Davidson, Arthur	Jenkins, Hugh (Putney)	Parry, Robert
Davies, Bryan (Enfield N)	John, Brynmor	Pavitt, Laurie
Davies, Denzil (Llaneill)	Johnson, James (Hull West)	Pendry, Tom
Davies, Ifor (Gower)	Johnson, Walter (Derby S)	Panhaligon, David
Davis, Clinton (Hackney C)	Jones, Alec (Rhondda)	Perry, Ernest
Deakins, Eric	Jones, Barry (East Flint)	Phipps, Dr Colin
Dean, Joseph (Leeds W)	Jones, Dan (Burnley)	Price, William (Rugby)
Dell, Rt Hon Edmund	Judd, Frank	Radice, Giles
Dempsey, James	Kaufman, Gerald	Rees, Rt Hon Merlyn (Leeds S)
Dolg, Peter	Kelley, Richard	Reid George
Dormand, J. D.	Kerr, Russell	Richardson. Miss Jo
Douglas-Mann, Bruce	Kilroy-Silk, Robert	Roberts, Albert (Normanton)
Duffy, A. E. P.	Kinnock, Neil	Roberts, Gwilym (Cannock)
Robinson, Geoffrey	Stallard, A. W.	Walker, Terry (Kingswood)
Roderick, Caerwyn	Steel, Rt Hon David	Ward, Michael
Rodgers, George (Chorley)	Stewart, Rt Hon Donald	Watkins, David
Rodgers, Rt Hon William (Stockton)	Stewart, Rt Hon M. (Fulham)	Watkinson, John
Rooker, J. W.	Stoddart, David	Watt, Hamish
Roper, John	Stott, Roger	Weetch, Ken
Rose, Paul B.	Strang, Gavin	Weitzman, David
Ross, Stephen (Isle of Wight)	Strauss, Rt Hon G. R.	Wellbeloved, James
Ross, Rt Hon W. (Kilmarnock)	Summerskill, Hon Dr Shirley	Welsh, Andrew
Rowlands, Ted	Swain, Thomas	White, Frank R. (Bury)
Ryman, John	Taylor, Mrs Ann (Bolton W)	White, James (Pollok)
Sandelson, Neville	Thomas, Dafydd (Merioneth)	Willey, Rt Hon Frederick
Sedgemore, Brian	Thomas, Jeffrey (Abertillery)	Williams, Rt Hon Alan (Swansea W)
Selby, Harry	Thomas, Mike (Newcastle E)	Williams, Alan Lee (Hornch'ch)
Sever, John	Thomas, Ron (Bristol NW)	Williams, Rt Hon Shirley (Hertford)
Shaw, Arnold (Ilford South)	Thompson, George	Wilson, Alexander (Hamilton)
Sheldon, Rt Hon Robert	Thorne, Stan (Preston South)	Wilson, Gordon (Dundee E)
Shore, Rt Hon Peter	Thorpe, Rt Hon Jeremy (N Devon)	Wilson, Rt Hon Sir Harold (Huyton)
Short, Mrs Renee (Wolv NE)	Tierney, Sydney	Wilson, William (Coventry SE)
Silkin, Rt Hon John (Deptford)	Tinn, James	Wise, Mrs Audrey
Silkin, Rt Hon S. C. (Dulwich)	Tomlinson, John	Woodall, Alec
Sillars, James	Tomney, Frank	Woof, Robert
Silverman, Julius	Torney, Tom	Wrigglesworth, Ian
Skinner, Dennis	Tuck, Raphael	Young, David (Bolton E)
Smith, John (N Lanarkshire)	Varley, Rt Hon Eric G.
Snape, Peter	Wainwright, Edwin (Dearne V)	TELLERS FOR THE AYES:
Spearing, Nigel	Wainwright, Richard (Colne V)	Mr. Joseph Harper and
Spiggs, Leslie	Walker, Harold (Doncaster)	Mr. James Hamilton.
NOES
Adley, Robert	du Cann, Rt Hon Edward	Howe, Rt Hon Sir Geoffrey
Aitken, Jonathan	Durant, Tony	Howell, David (Guildford)
Alison, Michael	Dykes, Hugh	Hunt, David (Wirral)
Amery, Rt Hon Julian	Eden, Rt Hon Sir John	Hunt, John (Ravensbourne)
Arnold, Tom	Edwards, Nicholas (Pembroke)	Hurd, Douglas
Atkins, Rt Hon H. (Spelthorne)	Elliott, Sir William	Hutchison, Michael Clark
Atkinson, David (Bournemouth, East)	Emery, Peter	Irving, Charles (Cheltenham)
Awdry, Daniel	Eyre, Reginald	James, David
Baker, Kenneth	Fairbairn, Nicholas	Jenkin, Rt Hon P. (Wanst'd&W'df'd)
Banks, Robert	Fairgrieve, Russell	Jessel, Toby
Bell, Ronald	Farr, John	Johnson Smith, G. (E Grinstead)
Bennett, Sir Frederic (Torbay)	Fell, Anthony	Jones, Arthur (Daventry)
Bennett, Dr Reginald (Fareham)	Finsberg, Geoffrey	Jopling, Michael
Benyon, W.	Fisher, Sir Nigel	Joseph, Rt Hon Sir Keith
Biffen, John	Fletcher, Alex (Edinburgh N)	Kaberry, Sir Donald
Biggs-Davison, John	Fookes, Miss Janet	Kershaw, Anthony
Blaker, Peter	Forman, Nigel	Kimball, Marcus
Body, Richard	Fowler, Norman (Sutton C'f'd)	King, Evelyn (South Dorset)
Boscawen, Hon Robert	Fox, Marcus	King, Tom (Bridgwater)
Bottomley, Peter	Fraser, Rt Hon H. (Stafford & St)	Kitson, Sir Timothy
Bowden, A. (Brighton, Kemptown)	Fry, Peter	Knight, Mrs Jill
Boyson, Dr Rhodes (Brent)	Galbraith, Hon T. G. D.	Knox, David
Brittan, Leon	Gardiner, George (Reigate)	Lamont, Norman
Brocklebank-Fowler, C.	Gardner, Edward (S Fylde)	Langford-Holt, Sir John
Brooke, Peter	Gilmour, Rt Hon Ian (Chesham)	Latham, Michael (Melton)
Brotherton, Michael	Gilmour, Sir John (East Fife)	Lawrence, Ivan
Brown, Sir Edward (Bath)	Glyn, Dr Alan	Lawson, Nigel
Bryan, Sir Paul	Goodhart, Philip	Lester, Jim (Beeston)
Buchanan-Smith, Alick	Goodhew, Victor	Lewis, Kenneth (Rutland)
Buck, Antony	Goodlad, Alastair	Lloyd, Ian
Budgen, Nick	Gorst, John	Loveridge, John
Bulmer, Esmond	Gow, Ian (Eastbourne)	Luce, Richard
Burden, F. A.	Gower, Sir Raymond (Barry)	McCrindle, Robert
Butler, Adam (Bosworth)	Gray, Hamish	Macfarlane, Neil
Bendall, Vivian (Ilford North)	Grieve, Percy	MacGregor, John
Carlisle, Mark	Griffiths, Eldon	MacKay, Andrew (Stechford)
Chalker, Mrs Lynda	Grist, Ian	Macmillan, Rt Hon M. (Farnham)
Churchill, W. S.	Grylls, Michael	McNair-Wilson, M. (Newbury)
Clark, Alan (Plymouth, Sutton)	Hamilton, Michael (Salisbury)	McNair-Wilson, P. (New Forest)
Clark, William (Croydon S)	Hampson, Dr Keith	Madel, David
Clarke, Kenneth (Rushcliffe)	Hannam, John	Marshall, Michael (Arundel)
Clegg, Walter	Harrison, Col Sir Harwood (Eye)	Marten, Neil
Cockroft, John	Haselhurst, Alan	Mates, Michael
Cooke, Robert (Bristol W)	Hastings, Stephen	Mather, Carol
Cope, John	Havers, Rt Hon Sir Michael	Maude, Angus
Cormack, Patrick	Hawkins, Paul	Maudling, Rt Hon Reginald
Costain, A. P.	Hayhoe, Barney	Mawby, Ray
Critchley, Julian	Heath, Rt Hon Edward	Maxwell-Hyslop, Robin
Crouch, David	Heseltine, Michael	Mayhew, Patrick
Crowder, F. P.	Hicks, Robert	Meyer, Sir Anthony
Davies, Rt Hon J. (Knutsford)	Higgins, Terence L.	Miller, Hal (Bromsgrove)
Dean, Paul (N Somerset)	Hodgson, Robin	Mills, Peter
Dodsworth, Geoffrey	Holland, Philip	Miscampbell, Norman
Drayson, Burnaby	Hordern, Peter	Mitchell, David (Basingstoke)

Moate, Roger	Rees, Peter (Dover & Deal)	Stewart, Ian (Hitchin)
Monro, Hector	Renton, Rt Hon Sir D. (Hunts)	Stokes, John
Montgomery, Fergus	Renton, Tim (Mid-Sussex)	Tapsell, Peter
Moore, John (Croydon C)	Rhodes James, R.	Taylor, R (Croydon NW)
More, Jasper (Ludlow)	Ridley, Hon Nicholas	Taylor, Teddy (Cathcart)
Morgan, Geraint	Ridsdale, Julian	Tebbit, Norman
Morris, Michael (Northampton S)	Rifkind, Malcolm	Temple-Morris, Peter
Morrison, Charles (Devizes)	Roberts, Wyn (Conway)	Thatcher, Rt Hon Margaret
Morrison, Hon Peter (Chester)	Rossi, Hugh (Hornsey)	Thomas, Rt Hon P (Hendon S)
Mudd, David	Rost, Peter (SE Derbyshire)	Townsend, Cyril D.
Neave, Airey	Royle, Sir Anthony	Trotter, Neville
Nelson, Anthony	Sainsbury, Tim	van Straubenzee, W. R.
Neubert, Michael	St. John-Stevas, Norman	Vaughan, Dr Gerald
Newton, Tony	Scott, Nicholas	Viggers, Peter
Nott, John	Shaw, Giles (Pudsey)	Wakeham, John
Onslow, Cranley	Shelton, William (Streatham)	Walder, David (Clitheroe)
Oppenheim, Mrs Sally	Shepherd, Colin	Walker, Rt Hon P (Worcester)
Page, John (Harrow West!	Shersby, Michael	Wall, Patrick
Page, Rt Hon R. Graham (Crosby)	Silvester, Fred	Walters, Dennis
Page, Richard (Workington)	Sims, Roger	Warren, Kenneth
Parkinson, Cecil	Sinclair, Sir George	Weatherill, Bernard
Pattie, Geoffrey	Skeet, T. H. H.	Wells, John
Percival, Ian	Smith, Dudley (Warwick)	Whitelaw, Rt Hon William
Peyton, Rt Hon John	Smith, Timothy John (Ashfield)	Wiggin, Jerry
Pink, R. Bonner	Speed, Keith	Winterton, Nicholas
Prentice, Rt Hon Reg	Spence, John	Wood, Rt Hon Richard
Price, David (Eastleigh)	Spicer, Michael (S Worcester)	Young, Sir G. (Ealing, Acton)
Prior, Rt Hon James	Sproat, lain	Younger, Hon George
Pym, Rt Hon Francis	Stainton, Keith
Raison, Timothy	Stanbrook, Ivor	TELLERS FOR THE NOES:
Rathbone, Tim	Stanley, John	Mr. Anthony Berry and
Rawlinson, Rt Hon Sir Peter	Steen, Anthony (Wavertree)	Mr. John Stradling Thomas,

Question accordingly agreed to

Main Question, as amended, put and agreed to.

Resolved, That this House takes note of the First, Second and Fifth Reports from the Select Committee on Nationalised Industries, and accordingly calls upon Her Majesty's Government to bring forward proposals in consultation with the British Steel Corporation and the trade unions to secure a future for a modern competitive and profitable industry.