§ Mr. Speaker
Before we begin the debate, I remind the House that many hon. Members are fully entitled to be called because steel is a predominant industry in their constituencies. However, they cannot be called unless hon. Members are brief. That includes Privy Councillors, who have the privilege of being called because they are Privy Councillors.
§ Mr. Norman Atkinson (Tottenham)
On a point of order, Mr. Speaker. Do Privy Councillors really have the privilege of being called because they are Privy Councillors and not because you have called them?
§ Mr. Speaker
The hon. Member for Tottenham (Mr. Atkinson) is splitting hairs. He knows that from the beginning of time, as far as we are concerned, a special privilege is attached to Privy Councillors.
§ Mr. Speaker:
Order. We are in the season of good will, or on the threshhold of it, and I want to be as obliging as I can. I am appealing to those who will be called to be fair to others. We have lost an hour already.
§ Mr. Atkinson
On a point of order, Mr. Speaker. You claimed to want to discard some of our traditions. A self-perpetuating privilege of this type should be high on your list.
§ Mr. Alec Jones (Rhondda)
I beg to move,That Class IV, Vote 24 be reduced by £10,000 in respect of the salary of the Secretary of State for Industry.I already regret that the figure of £10,000 is used. In view of the leak from the Treasury memorandum which appeared in the newspapers this morning, a more appropriate figure would be £10,010. That would demonstrate our contempt for the proposal which seeks to take £10 a week from the wives and children of workers if they dare to strike.
The Secretary of State for Industry is described as the chief architect of these proposals. He has suggested that no special provisions for hardship should be made, even in distressing circumstances. By that action the right hon. Gentleman has removed the mask which the Conservative Party wore throughout the election campaign. He now displays the cruel, callous and inhuman face of Toryism.
In the debate on the steel industry on 7 November, hon. Members on both sides of the House agonised over the decision to close Corby and Shotton. That was bad enough. Few hon. Members who were present then would have believed that within one month the British Steel Corporation would propose to reduce the BSC's manned steel-making capacity from 20 million tonnes to 15 million tonnes a year. That proposal is based on the Government's insistence on an unrealistic break-even date. The proposal will lead to the loss of 50,000 jobs in the steel industry, with devastating consequences for the coal industry. It will be a massive blow to many thousands of suppliers of goods and services to the National Coal Board and the BSC.
The Secretary of State for Industry's attitude is that these are not matters for him. In the previous debate he said that he was no manager. He can say that again.
At the end of his speech on 7 November, the Secretary of State said:Upon the competitiveness of the steel industry and the co-operation between management and work forces depend the security and 1564 standards of living associated with this industry."—[Official Report, 7 November 1979: Vol. 973, c. 456–7.]We all agree that competitiveness should be the goal for steel and other industries. This has been recognised by the steel unions and the workers in the industry for many years. How else could we have accepted the closures of the past 10 years?
The loss figures are interesting. The loss per tonne of steel in France is £32, in Italy £21, in Belgium £20 and in the British Steel Corporation £17. Those figures hardly support the view that our steel workers are less competitive than their counterparts in Europe. We accept that there should be co-operation. However, there must be two-way traffic. Co-operation does not mean that the management of BSC or any other industry should call in the work force and tell it of its plans. Co-operation means full discussion and negotiation on the content of plans before they are finalised.
Those plans which the British Steel Corporation has announced affect not only BSC but the lives of steel workers, their families and whole communities; and there has been considerable co-operation in the first half of this year. I quote from the interim statement of the British Steel Corporation:Certain plants achieved major improvements in costs and performance. Port Talbot, which lost £30 million last year and Scunthorpe, which lost £28 million, achieved break-even and Llanwern and Consett made substantial progress towards breakeven".How cynical that must sound now to those workers in Port Talbot, Scunthorpe, Llanwern and Consett who must surely now be asking what is to be their reward for the co-operation that they have given over the year.
The missing element in the analysis by the Secretary of State is that he does not accept any responsibility at all. He is apparently prepared to stand aside and to leave it to the British Steel Corporation, and to leave to the BSC alone decisions which could lead to the de-industrialisation of large parts of this country. But of course it is not only in steel that the Secretary of State has denied his responsibility. On Monday he and his other Ministers, answering parliamentary questions on Inmos and the sale of MG and the proposed sale of 1565 part of BSC, washed their hands of all responsibility in this matter.
One is drawn to ask; why on earth do we need a Secretary of State for Industry? We on this side believe that no Secretary of State can sit idly by and watch our steel industry being so savagely and hastily axed, with consequences for coal and other industries. Some Conservative Members, especially those with steel interests in their constituencies, expressed similar views in the debate on 7 November. They are beginning to get worried and some believe that at least a brake should be applied to the BSC proposals. If the right hon. Gentleman sticks stubbornly to his irresponsible policy of non-intervention, our modest motion to reduce his salary by £10,000 deserves to be carried, for unless he reverses his policy and accepts his responsibilities there will be little industry left for him to be responsible for.
For obvious reasons, I will concentrate on the steel closures in Wales, not because I am indifferent to the serious problems that exist in other parts of the United Kingdom—and I am sure my right hon. and hon. Friends will spell those out—but I hope that much of what I have to say they will regard as relevant to their parts of the United Kingdom as I believe them to be for Wales. I am sorry to say that. South Wales is likely to be the region worst affected in terms of plant closures, and I invite the House to consider the recent events in the month of November.
On Friday 9 November it was announced that steel making would end at Shotton with the loss of 7,000 jobs, despite a promise that it would be safe until at least 1982. On Wednesday 21 November, the Secretary of State for Wales told a meeting of the Welsh Grand Committee that on the previous day he had met the managing director of BSC's steel division, a Welsh division, and the Secretary of State said:The steel industry in Wales still faces serious problems but the improved performance at Llanwern and Port Talbot over recent months is encouraging…"—[Official Report, Welsh Grand Committee, 21 November 1979; c. 13.]So we were cheered up, but within 24 hours of that statement news was leaked of a further 2,000 jobs that were to go at Port Talbot by next March, in addition 1566 to the 1,000 previously announced. A week later we received a further blow, learning that a further 9,000 or 10,000 jobs are to disappear at Port Talbot and Llanwern. So 19,000 steel jobs will disappear, all announced in less than one month. These steel closures trigger off further redundancies in the public and private sectors of our industry. They will mean at a minimum the loss of 8,000 jobs in our coalfields and the closure of 11 pits.
That is not the end of the story. The National Coal Board in South Wales pays £56 million a year to firms in South Wales supplying goods and services, and £24 million of those sales will now cease, and with them many more jobs will disappear. So it is a minimum of 27,000 jobs in steel and coal, plus some thousands which are to be lost in other industries. It is a disaster for South Wales and these proposals, if carried out, will tear the heart out of industrial South Wales. Are the Government or any Secretary of State to say that they have no responsibility for that? No matter how much the right hon. Gentleman may seek to wash his hands of it, his hands will never be clean again.
The BSC axe falls not only on South Wales. The cuts spelt out by the corporation are a nightmare for many constituencies throughout the country. Consett, which is now most likely to be the new Jarrow of the North, Scunthorpe and Scotland are to lose 50,000 jobs in steel alone, and, however optimistic one may wish to be, if one takes losses in other firms supplying the BSC, the total job losses must run into many more tens of thousands. I hope that the right hon. Gentleman can provide us with his estimate of the total job loss when he speaks later.
In the debate on 7 November the Secretary of State referred to an "awkward tussle" between the British Steel Corporation and the NCB over the prices of imported coking coal. It is not an "awkward tussle" between those two nationalised industries. He has a responsibility in this matter. His break-even demands have obliged the BSC to seek the cheapest source of coking coal; but it is folly to allow even a short-term minimal advantage to one nationalised industry like steel to deal a mortal blow to another like coal, and a blow also to 1567 the long-term energy interests of the nation.
There has never been any question raised regarding the quality of South Wales coking coal. I do not deny that price is the problem. South Wales coking coal has been said to be £10 a ton dearer than American coal. But these prices vary, not just from week to week or month to month but with almost each shipment. I have been given figures which lead me to believe that the consignment of 18,000 tons which recently came in that much-publicised ship the "Maria Lemos" involved a difference of around £2 per tonne. Price differentials can be bridged, but not by the British Steel Corporation and the National Coal Board alone. That can be done only if the Government play their part. I believe that those price differentials can and should be bridged by a modest, tapering subsidy. In the working out of such a subsidy, the calculation should be made after we have had some kind of independent audit which examines the price differentials of delivered coal.
I know that subsidies are anathema to the right hon. Gentleman, but they are not so regarded by our partners in Europe who subsidise their coal far more than we subsidise ours. If the right hon. Gentleman wills that we have no such subsidy and we see the full effects of the BSC's proposals, the total consequences will be the loss of up to 15,000 miners, not just becoming unemployed but being lost to the industry for all time, and the closure of 21 collieries, and that coal lost for all time, because one cannot mothball a pit. Other coalfields face similar redundancies. If these men are driven out of the coal industry, they will not be available when we as a nation need them in the future, when North Sea oil and gas have run out. We could then find ourselves sitting on a bed of coal without the means of extracting it, because it is a fact of life that one cannot get coal without miners and we shall not find many miners being recruited from Finchley or Pembroke, and very few from Leeds, North-East. We should then become more dependent on imports of foreign coal, and those sending them could, in turn, charge us whatever they wished, or could even cut off our supplies if their home markets needed the coal. 1568 It would then be too late to accept the responsibility which rests on the Government now.
The Secretary of State in that debate—it was only a month ago, but it seems years—told us thatthe chairman of the BSC…plans and intends…to break even by the end of March 1980".—[Official Report, 7 November 1979: Vol. 973, c. 450.]That is what the Prime Minister told the Welsh TUC when representatives met her. Opposition Members and some Conservative Members then said that that was not possible, and so it has turned out. The British Steel Corporation in its interim statement states thatthe objective of break even by March 1980 will not be met…Therefore, the objective must stand for realisation at a very early date.The question is: how early is "very early"?
The unrealistic break-even date was a factor in encouraging the BSC to produce the closure plans that it announced recently. If the BSC continues to strive for an unrealistic break-even date, it will inevitably lead to hasty, irreversible and ill-judged decisions resulting in our iron and steel industry becoming incapable of meeting our own needs, especially when the upturn in the market comes—or are we building a steel capacity on the assumption that there will never be an upturn in the market?—and certainly incapable of competing in world export markets. This is not a plea from the Opposition only. Government supporters have made it, too.
Therefore, let the Secretary of State for Industry enter into urgent and meaningful discussions with the British Steel Corporation for more realistic progress to break even. If he wants some encouragement, in today's Western Mail—which I am sure the right hon. Gentleman reads avidly—there is a report of a meeting between British Socialist European MPs and the EEC Industry Commissioner Viscount Davignon, who told them thathe was prepared to meet representatives of the British Steel Corporation, the United Kingdom Government and the trade unions to see how the EEC Commission could help delay the massive redundancies and the period of retructuring the steel industry.I invite the Secretary of State to take him up on that offer
The BSC's assessment is that we, as a nation, need to produce only 15 million 1569 tonnes of liquid steel a year. From that assessment flow all the other consequences—the closures, the redundancies, the effects on other industries and the future of the steel industry itself. It is absolutely essential that we get the figure right. In my view, it is not enough for the BSC or, with respect, for the Secretary of State for Industry to be satisfied that it is right. It is of such crucial importance for the future of this country that the House and people outside should be satisfied. That calls for a complete opening of the books on this subject, for the BSC target of 15 million tonnes is partly dictated by apparent market trends.
As regards market trends and the consequences that flow from the BSC's decision, it seems that there has been too hasty a change in the BSC's assessment. In July it was so confident that it would break even that the Secretary of State was able to repeat it in the House a month ago. Now, apparently, there is no hope of that. That does not give me much confidence in the BSC's assessments.
The BSC is deciding its steel-making capacity and, hence, the future of the whole industry at the very time when the United Kingdom and most of the world are in the midst of a serious recession. It is not proper, nor is it common sense, to decide future productive capacity when demand is at its lowest. Of course, there was some suggestion in The Guardian last Wednesday, refuted by a rapid speech by Commissioner D'avignon on Saturday, that even members of the EEC Commission had some doubts and were talking about the gloomy forecasting made by the EEC itself.
To support my view that there are serious doubts about the validity of the 15 million tonnes target, the Steel Industry Management Association—I can hardly believe that it is rabid Marxist in its views—has said thatthe Association holds that the deep retrenchment now being proposed has been too hastily adopted and will needlessly further the process of failure compounding failure until the common heritage"—the steel industry—is virtually destroyed.Therefore, there seems to be considerable doubt whether 15 million tonnes is the right target. As long as that doubt persists, the decision to stick to the 15 million tonnes capacity should not be 1570 left entirely to the British Steel Corporation.
The BSC is in some ways already modifying its proposals. In South Wales just over a week ago, Sir Charles Villiers said that the only options were to close Llanwern or Port Talbot, or half of each. But we now know that a third option has been mentioned—scaling down the capacity of both plants to about 2¾ million tonnes of steel per annum. That is called work sharing. But it is not an easy or soft option. It is one means at least of ensuring that we retain a steel industry capable of supplying the home market of the future and of competing for exports.
§ Mr. Dafydd Wigley (Caernarvon)
Does the right hon. Gentleman accept that there is another option, not only in the context of South Wales but elsewhere, namely, to look seriously at the stopping of steel imports into the United Kingdom? That is a drastic solution that perhaps we would not want to contemplate in a general context, but, given these circumstances, is it not one that we must face?
§ Mr. Jones
I must advise the hon. Gentleman to wait until page 13, 14, 15 or even 75 of my speech—I am not sure where it happens to be—because I shall be coming to that point.
In the first half of this year, the British Steel Corporation claimed that it had maintained its share of the United Kingdom market at 54 per cent. British private steel producers accounted for another 26 per cent. That means that imports account for 20 per cent. of the home market. Direct imports of steel have increased from 13 per cent. in 1973 to 21 per cent. in 1978. I know that includes steel of a specialist nature. But are we to say that we must opt out of that kind of market? Even if we do, it still leaves 41 per cent. of our market in sheet steel dependent on imports. I should have thought that an enterprising British Steel Corporation would set out to capture some of this home market for itself. But the BSC seems content to accept 54 per cent. of the home market as its natural ordained share.
Few steel workers to whom I have spoken see any evidence of any determination or even desire on the part of the British Steel Corporation to increase its share of the market. The BSC may argue 1571 that it needs time for such efforts. Certainly it needs time, but I believe that it will need more than time. On previous occasions, we have welcomed the D'avignon plan as a measure of protection, to put it no higher, but the threat to our steel industry now comes from inside Europe.
The NEDO studies show that the cause of high input penetration into United Kingdom markets was sales by European companies at prices below production costs. I now reply to the hon. Member for Caernarvon (Mr. Wigley). I hope that the Government will look at a letter that has been sent to the Wales TUC from the office of the Secretary of State. The letter is not signed by the Secretary of State, but it points out that it was written at the Secretary of State's request. It says that the Governmentrecognises, however, that there may be instances where competition, particularly from low cost sources, increases at such a rate that a normally viable industry does not have time to adjust at a reasonable pace without unacceptable disruption and loss of jobs. Under such circumstances the Government would be prepared to consider selective import measures of a temporary nature.I put it to the Government that such circumstances exist now in the steel industry. The BSC's proposals have caused, and are causing, unacceptable disruptions and a loss of jobs that is unacceptable to many of us. If that letter from a Government Minister means anything, it must mean that the Government should act now as regards temporary selective import controls.
§ Sir Anthony Meyer (Flint, West)
At an earlier stage in his speech, the right hon. Gentleman referred to tapering subsidies. He has now referred to temporary import controls. In what circumstances does he foresee the end of those tapering subsidies and those temporary import controls?
§ Mr. Jones
The tapering subsidies to which I referred apply to the coal industry. The hon. Gentleman is aware that considerable investment has been made in the coal industry in recent years and that, as the Secretary of State told us in the Welsh Grand Committee a short while ago, productivity within the coal industry showed remarkable progress last year. In my view and that of the 1572 industry, the coal industry in South Wales will pay its way within a reasonable period of time and will not need subsidies.
I stress the word "temporary" as regards temporary import subsidies. If we rush and push the BSC into trying to break even far too soon, either we must say that we do not want a steel industry or the Government must accept the consequences and introduce the sort of control that I have suggested.
§ Mr. Edward Rowlands (Merthyr Tydfil)
Does my right hon. Friend accept that his argument applies not only to temporary steel imports but to temporary coal imports? That is vital to this issue. If we could operate temporary import controls on coking coal into the South Wales coalfields, we could save them.
§ Mr. Jones
I do not know that we need to go as far as that. We need only a fairly reasonable tapering subsidy on coking coal. But the coal industry, and in particular the coking coal industry, is being subsidised by those competing against us to a far greater extent than we are subsidising that industry.
What I said about import substitution and imports applies equally, but in a different way, to exports. Last year, exports of steel represented about 2.9 million tonnes. From my discussions with the BSC just over a week ago, the corporation seemed to be far too willing to give up that export market. Those in the industry see little evidence of the BSC's willingness to adopt a reasonably aggressive policy towards exports. On the contrary, it is anxious to withdraw from that market.
The Steel Industry Management Association—whose members are not card-carrying members of my party but people in the industry, predominantly middle management people who have grown up in the industry—has stated in the document submitted that foreign markets can be held and regained. The BSC should, therefore, seek to do far more in the export market.
§ Mr. John H. Osborn (Sheffield, Hallam)
The right hon. Gentleman is falling into the trap of being a manager in relation to that body. I have received the letter signed by Mr. Muir, the 1573 general secretary, and I agree with much of what he said. Surely it is up to managers to influence the managers above them and debate this issue Within the structure of an industry or a company, rather than write to us at this stage, when the decision has been made.
§ Mr. Jones
If I had held that attitude, after so many years in the House, towards all the organisations that write to me, I should have sent back 95 per cent. of my mail. It is reasonable for any organisation like this to express its view to Members of Parliament, since ultimately we may or may not part with money to support the industry.
§ Mr. Osborn
Surely they should express their views internally, within the BSC, and influence their senior managers.
§ Mr. Jones
They have probably done that, but there comes a time when one keeps knocking one's head against a brick wall. One knows that one is not getting any further and so one tries another source of advertising one's grievances. Because of that sense of grievance, there is a growing demand for a full examination of BSC's management. That wish was expressed by many hon. Members in the debate a month ago.
Why is that demand growing? There is a feeling in the industry that the BSC is reluctant to undertake genuine negotiations with its work force. There is a complacent attitude towards exports and towards import substitution. There is a disregard for solemn promises that have been made, for example, in Shotton, that must have a demoralizing effect on the industry as a whole. The extent of these present cuts and the sudden changes in the forecasts given by the BSC must cast doubt on the BSC's management. That is why The Guardian last week quoted officials of the European Commission as describing the BSC as a "completely demoralised organization".
It is time that the Secretary of State accepted responsibility and instigated that examination. In all these considerations—the time scale for breaking even, the subsidies for coking coal, the future size and capacity of our steel industry, and the management of the BSC—the House has a duty to ensure that hasty decisions forced on the BSC by the Secretary of State and the Government do not damage the long-term industrial prospects of 1574 Britain. That is the burden of our complaint against the Secretary of State.
Yesterday I made a suggestion in Committee that I shall repeat now. It may be worth while for the Prime Minister to consider transferring the Secretary of State to the Department of Health and Social Security. That would kill two birds with one stone. He made a mess of National Health Service reorganisation last time, but, in view of the consultative document, even he could not do worse this time. At least that would have the merit of taking him off the back of the BSC and of industry in Britain. Obviously that will not be acceptable, but the right hon. Gentleman does not earn the salary that he draws and the House should vote accordingly tonight.
§ 5.8 pm
§ The Secretary of State for Industry (Sir Keith Joseph)
The right hon. Member for Rhondda (Mr. Jones) made a strongly felt speech.—[HON. MEMBERS: "Where are Conservative Members?"] During the last debate in which I spoke, only two or three Opposition Members were present. It so happens that today there are some more, and I welcome them, because it is an important subject. I am glad that they are here in reasonable numbers.
I shall challenge the assumptions on which the right hon. Gentleman's speech was based, but I do not challenge his sincerity. It was a powerful speech and, to someone who has not looked behind the present position, it was perhaps a plausible speech. It was certainly a speech on a very important subject which no hon. Member would want to underestimate.
However, I think that the right hon. Gentleman was assuming, as are some of his right hon. and hon. Friends—only seven months after they have left office, with all the experience of that period in office apparently slipping from their memories—that Government intervention in nationalised industry management benefits the industry concerned. As I shall try to show, the evidence is that, however well-intentioned the intervention of Government is in nationalised industry management, it tends to do more harm than good. [HON. MEMBERS: "What about appointments?"] It is important that the Government should appoint management to the nationalised industries, set 1575 the management targets and let it get on with it. It may even be necessary to change the management. However, interfering in the judgment of management is a dangerous process. I shall argue that, had the previous Labour Government not interfered so much with the steel industry, we would not now be debating such a dramatic situation in steel.
The background to the present position of the British Steel Corporation reveals a catalogue of errors. I shall name only the headings of those errors. First, there was nationalisation. Then, after denationalisation by us, there was renationalisation by a Labour Government. It was renationalisation in the most centralised form. There was then an ambitious capacity target for the newly nationalised steel industry which was set by the Conservative Government in the early 1970s. It is now plain that that target, although it was not a bit obvious at the time, proved to be too optimistic. We may have been too optimistic in setting the target, but the Labour Party through its then spokesman, wanted to go even further. He wanted to have an even larger steel industry which, we have since found, was an overestimate of market demand.
The expansion which the Tory Government authorised and launched was carried out at a huge cost of more than £2 billion to the taxpayer. That was launched at a time when there was a seller's market but was carried out at a time when the world was turning ever more steeply from being a seller's market into a buyer's market. Therefore, the steel industry was modernised and expanded at huge cost for the purpose of becoming competitive. That was the express purpose of successive Governments—to produce steel at a competitive price so that the industry could become viable and could offer good and secure jobs with high output and, therefore, high pay to a self-respecting labour force.
It was always agreed throughout the House—it was agreed by the Labour Government as well as by Tory Governments, and it was agreed nominally by the British steel management and the steel trade unions—that a vast expansion plan which provided the industry with new equipment and modernised plant had to be accompanied by the systematic closure of the obsolete plant. It was also 1576 agreed by all sides that the new industry should have much higher productivity as the improved plant was brought into existence and in such old plant as remained in action.
The fact is—and this is one of the most severe charges against the Labour Government which undermines the right hon. Gentleman's argument that Government intervention does good—that the Labour Government flinched from taking those steps. As soon as they came into office in 1974, they instituted a review of the planned closures, which will always be remembered by the name of Lord Beswick. I do not want to question their sincerity or good intentions, but the Labour Government delayed the closures that were always part and parcel of a modernisation Man. Thus they loaded on to the corporation, its users, suppliers and work force the extra costs that go with too many plants, each of which is inadequately loaded.
It is also a fact that the higher productivity on which the whole plan was based was just not secured during the time of the Labour Government. The result was rocketing costs that forced even the Labour Government, after a series of dramatic debates in the House, and after a powerful report by an all-party Select Committee, to bring forward prematurely—compared with their pledged dates—some of the closures that had been delayed by the Beswick review.
Meanwhile, and here I cannot conceivably blame the Labour Government, new and more powerful steel industries had grown up in other parts of the world. Instead of building a new and modernised industry that would be able to capture a larger share of the home and world markets, British Steel found itself competing without being allowed to carry out closures, without being adequately encouraged and supported to secure higher productivity and with more and more powerful competitors from any other parts of the world.
§ Dr. Jeremy Bray (Mother well and Wishaw)
Does not the right hon. Gentleman agree that during that time employment in the steel industry fell by about 30,000, that there were a great many plant closures and that the labour costs per tonne were lower than in France, Germany or Holland? Is he not aware of those facts?
§ Sir K. Joseph
I have paid tribute to the fact that the Labour Government, after many debates in the House and a report by a Select Committee, were forced to allow some of the closures that they had previously delayed. The fact is that, at the end of the Labour Government's term of office, the output per man-year of workers in the British Steel industry was about half that of the best West European competition.
§ Sir K. Joseph
Labour costs per tonne must take many factors into account, including the exchange rate. Not only did British Steel find itself prevented by Government interference from carrying out the purposes of the plan, not only did it find that more powerful competitors had come into existence throughout the world, but it found that it was faced with a falling market. There was a falling market at home, where our own industrial troubles, especially in the car market and in mechanical engineering, reduced demand from some of its most important clients. There was also a world steel recession. Not only did it face a falling market at home and abroad, but it still had not solved all of its quality problems and, as a result, it could not even compete on quality in some of its activities.
Now, the British Steel Corporation, with modern plant but very low average productivity and still, alas, some quality problems, faces very much sharper competition in the most severe recession that steel has known in modern times. The position is not static. The market is deteriorating and dwindling. It is no wonder that the BSC has had to revise its plans.
The right hon. Member for Rhondda makes that into an indictment of the BSC, but the market has been changing for the worse and the prospects remain grim. It is that combination of factors—of slump in demand, more competition, high costs, low productivity and patchy quality—that the BSC faces.
§ Mr. Barry Jones (Flint, East)
The right hon. Gentleman knows that Shotton is due to lose its steel-making capacity but that 4,500 jobs will remain. Can he guarantee that those jobs will remain? 1578 Is he aware of the increasing speculation that they are no longer safe?
§ Sir K. Joseph
The hon. Gentleman knows that I am unable to give an answer—it is for the BSC management. I have no reason to cast doubt upon those jobs, but I am not the management—[Interruption.] No, I am the representatative for the time being of the owners of the industry. The hon. Gentleman may find that he has inadvertently done some harm to local confidence by posing that question, knowing that I would not be able to give an answer from my knowledge. I suggest that he asks the BSC management.
§ Sir K. Joseph
I still say that the hon. Gentleman should address his inquiries to BSC. Knowing the hon. Gentleman, I am sure that he already has.
BSC faces no market for a large part of its capacity. That reflects, not only the fact that successive Governments installed more capacity than the market has turned out to justify, but that BSC has not been allowed to run down its capacity and has not been encouraged to secure the higher productivity that would have made the remaining capacity more competitive. It is those facts that compel BSC to match supply and demand. We are now witnessing a commendable attempt by the management to deal with a difficult and fast deteriorating position.
The right hon. Member for Rhondda pointed out, rightly, that it would be wrong of BSC to reduce capacity to the extent that it would jeopardise its chances of meeting a rising market, when the market rises again. That is why BSC proposes to retain more capacity than will now be brought into use so that a reserve will exist for the expansion when it comes.
§ Mr. Donald Anderson (Swansea, East)
Is the right hon. Gentleman arguing that if whole areas of the country are devastated the Government have no responsibility over import policy and that they will stand by idly and watch the catastrophic effects of the policies that they are pursuing?
§ Sir K. Joseph
I do not suggest that for a moment. I shall come on to deal with both those propositions. Of course, the Government have responsibility for appointing the management of the nationalised industry and for doing what is practicable to remedy the social consequences of industrial change. We also have responsibility for the tariffs and law connected with imports.
§ Mr. Alan Clark (Plymouth, Sutton)
I hope that my right hon. Friend will appreciate that I am not commenting in any critical sense. However, if foreign imports are to be excluded and the market is to be protected against them, has my right hon. Friend made any comparative studies, or is he able to give an off-the-cuff estimate, of the relative difference between the effect on the economy of increased prices because of BSC's lower efficiency and the alternative effect on the economy and the PSBR of paying out enormous sums in unemployment benefit and severance pay?
§ Sir K. Joseph
I have made no studies of that precise sum in these circumstances. I am sure that my hon. Friend will recognise that we should not judge the unemployment consequences as if they were static and permanent. We must assume that there will be change.
§ Mr. Bill Homewood (Kettering)
The right hon. Gentleman has talked about excess capacity. Will he tell the House the present excess capacity of BSC and what it will be when the butchery has been completed? Will he also tell us what is the excess capacity of the rest of the EEC countries, Japan and America?
§ Sir K. Joseph
No, of course I cannot. That is a management decision. Labour Members may mock at my assertion that it is a management judgment and a matter for management decision, but I invite the House to look at what happened when the previous Government tried to second guess management over the Beswick review. They had to contradict themselves and allow closures to go ahead three years after they stopped them.
The target must be to compete profitably. I will return to the question of imports—I have not forgotten the question of the hon. Member for Swansea, East (Mr. Anderson).
§ Mr. Alex Eadie (Midlothian)
In the course of the right hon. Gentleman's remarks, when talking about the country's indigenous resources, he said that an industry should not be run down to such an extent that it could not be revitalised. How does he apply that dictum to the coking coal industry? My right hon. Friend the Member for Rhondda (Mr. Jones) pointed out that if coking coal pits are closed they will be closed for all time. That would be a terrible crime against the nation.
§ Sir K. Joseph
I am coming to the question of coking coal.
The target has always been, and must remain, that BSC should compete profitably in price and quality or else it will dwindle. I have tried to put the argument that I believe underlies the debate as strongly and in as relatively few words as possible. If BSC is not competitive that will destroy more jobs than those that will be lost by making it more competitive. That applies not only to the steel industry but to the users and as possible. If BSC is not competitive, will involve fewer jobs being lost than its not becoming competitive. Those who care about jobs—I am sure that that is true of all hon. Members—should recognise that fact. Some jobs must go to safeguard the rest.
§ Sir K. Joseph
If the industry is not competitive, it will lose more and more of its home market and will not win overseas markets. However, it is perfectly legitimate for Opposition Members to ask the Government, as the right hon. Member for Rhonnda has done, to give BSC longer to become competitive. Nevertheless, I am afraid that there is little time for BSC to put its house in order.
Imperfect as the Davignon measures are in some respects, they have created a reasonably ordered market in Europe. Some of the less efficient producers have been protected from the full force of competition from the more efficient producers. The measures are designed to provide temporary respite only, so that European steel producers can restructure their production to the demand of the market and compete on level terms. If BSC is to survive in that market—of 1581 which the United Kingdom is an inextricable part—rapid action is necessary to improve productivity to the best international standards.
Capacity reduction had to be undertaken. Productivity had to be increased. There is no point in spending more taxpayers' money at the expense of other forms of public spending to make steel that no one is willing to buy. Unless BSC reduces its output, it will be producing steel that no one will be willing to buy in current and predictable market conditions. The financial target that the Government have set is no more than a recognition of the situation. The cash limit will provide sufficient finance for BSC to undertake the necessary restructuring. To concede further funds to cover operating losses would ignore the short time that is available to BSC to return to viability.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. The hon. Member knows that sedentary observations are not approved of.
§ Sir K. Joseph
Some hon. Members have asked whether, if money is not to be provided from the taxpayer, imports should not be controlled.
§ Mr. James Callaghan (Cardiff, South-East)
Before the right hon. Gentleman leaves the question of finance, will he answer these factual questions? They are concerned not with management but with the Government. He said that he would not finance steel losses beyond 31 March. As I understand it, the BSC produced a plan which provided for substantial reductions within that context. It now says that it cannot break even by 31 March. Will the Secretary of State say what is the Government's policy and what the consequences of that policy will be in the year beyond 31 March? Will the corporation have to close more steelworks so as to break even or will the Government provide a temporary subsidy to enable it to break even?
§ Sir K. Joseph
The answer to the last part of the right hon. Gentleman's question is "No". The Government said that we intended to finance no operating loss in the year 1980–81. We are providing 1582 from the taxpayer £450 million for necessary capital expenditure and restructuring costs.
§ Mr. Callaghan
Does the Minister realise what uncertainty that reply is creating? If there is now a plan of closures that is based on breaking even—and we are now told that the Government and the BSC accept that it will not break even—is he not saying that the plan of reductions is not complete and that there will be more job losses? Will they be at Shotton? Where will they be? This is not a simple management question, as Government policy could obviate the reductions.
§ Sir K. Joseph
With great respect, the right hon. Gentleman is taking two different propositions. One proposition is—it comes from the BSC—that the corporation will not break into profit by the end of March 1980.
§ Sir K. Joseph
It will make a loss in the last quarter of the current year. The proposition to which I adhere is that the Government do not intend to use taxpayers' money to meet an operating loss in the next financial year. The right hon. Gentleman is talking about the position at the end of March 1980. The Government are talking about the whole of 1980–81.
§ Mr. Callaghan
May I try again'? I am sure that the right hon. Gentleman—within the limits which he sets himself, but which we do not accept—will want to tell the House what the position is. Our understanding is that BSC will make a loss in 1980–81. Is that his understanding? If he says that it will not make a loss, he is going against the assumptions that are being made by BSC today. That will have serious consequences. Is he saying, alternatively, that BSC will break even in 1981 although it makes a loss in the last quarter of 1979–80?
§ Sir K. Joseph
My assumption and intention are that the corporation should not make an operating loss during the 1583 year 1980–81 after depreciation and interest. I should have inserted the words "after depreciation and interest" in every other reference I made, to 1980–81.
I hesitate to say this. The right hon. Gentleman is confusing the position at the end of the year 1979–80. The British Steel Corporation said that it would not be making a profit at the end of the current financial year. I am saying to the corporation, on behalf of the taxpayer, that it must so organise its affairs that, after depreciation and interest, it does not make an operating loss in the year 1980–81.
No one can foretell—[Interruption.] The House would be wise to listen to the end of my sentence. No one can foretell what the market will be. No one can foretell what self-injury the steel industry may do itself. If the steel workers decided to strike, the consequences might well be more reductions in manpower and more closures because they would have frightened off and lost yet more of their market.
§ Mr. John Morris (Aberavon)
Is the Secretary of State aware that last week I met the chairman of BSC and asked him what, if he had all the cuts and all the closures that the board required, would be the considered view of the board as to when the corporation would break even? He was not able to give an answer. The corporation does not know.
§ Sir K. Joseph
The management faces a severely deteriorating market position. No one can be absolutely sure that break-even can occur without more changes. Certainly the British Steel Corporation put forward its present proposals to meet the reduced market. It will be able, through its changes, to break even next year on current assumptions.
I was asked about imports. The fact is that we export as well as import. In our view, import controls would be against the interests of this country. They would damage our efficiency and the service by our industry to our consumers and users. The only way in which to compete is not with the help of import controls or protection but through the higher productivity that modern plant makes possible.
§ Mr. Wigley
Does the Minister accept that many of the consumers for whom he had regard in what he said make a fairly marginal decision between buying United Kingdom-manufactured steel and steel manufactured abroad in terms of quality and availability? There would not be a substantial loss to home producers. If there were import embargos and there were therefore a greater capacity utilisation of the whole industry, which is capital-intensive, that would have a substantial effect on its prices and economics and could well lead to its viability.
§ Sir K. Joseph
No, I do not agree. The indirect damage done by protection would do far more harm to the industry, and therefore to users, than the relief that the hon. Gentleman foresees. I do not think that the way forward is through import controls.
I was asked about coking coal. The House may like to know that the chairman of the National Coal Board and the leaders of the trade unions are together meeting my right hon. Friend the Secretary of State for Energy next week to discuss the whole problem. That meeting is already planned.
The right hon. Member for Rhondda emphasised the consequences for coal of the present BSC plan. The damage that may be done to the demand for coal flows from the reduced demand for steel. Even if much more money were available to the corporation, if there is no purchaser the steel will not, or should not, be made Therefore, it is the reduced demand for steel that has the impact on the demand for coal.
The steel industry has not been deserted by the Government or by the taxpayer. It is receiving £700 million from the taxpayer this year. That is precisely the same cash limit as we inherited from the last Government. Next year it will receive £450 million towards the necessary capital and restructuring expenses.
The target that I set the BSC, which is to break even next year after depreciation and interest, follows the target set by the right hon. Member for Chesterfield (Mr. Varley) when he said that the policy of the Labour Government was that British steel should achieve profit in the year 1979–80. So the answer is "Yes". The Government adhere to their target. We note that the British Steel 1585 Corporation has offered an earnings increase to steel workers. I ask the House to bear in mind that the corporation has also offered them a share in any gains that may be made in productivity.
I have to say to the House—I am sure that this will be agreed on both sides—that, if the steel workers embark on a strike, they will harm suppliers, their users and the whole country. But a strike would harm one group even more gravely. The strike would harm steel workers themselves catastrophically. The steel industry would lose a market share that would be hard to recapture. A strike would drive the British Steel Corporation deeper into trouble and probably lead to further closures.
§ Mr. Douglas Jay (Battersea, North) rose—
§ Sir K. Joseph
I have given way far too much. Although I would have liked to give way to the right hon. Gentleman, I must not do so.
Suppliers to the steel industry who will suffer an impact from the proposed reduction in steel making are being hit not by the BSC plan as such but by the fall in demand for steel that the BSC plan reflects. That is the reality. I have to say to the House that the threat of a strike, even without a strike itself, is already doing, and has for some days been doing, damage to the interests of steel workers. Ever since the threat was uttered, users of steel have been seeking to second-source their steel supplies for fear of a strike.
§ Mr. John Silkin (Deptford) rose—
§ Sir K. Joseph
It would be discourteous to the right hon. Member for Battersea, North (Mr. Jay) if I gave way to the right hon. Gentleman. I must give way to his right hon. Friend if I am to give way to the right hon. Gentleman.
§ Mr. Jay
I wanted only to ask the right hon. Gentleman whether he understands the damage that is being done to the future defence capacity of this country by the destruction of the steel industry. That capacity largely rests on steel production. Will he look at some of the remarks made by his right hon. Friend the Prime Minister about the need to increase our defensive strength?
§ Sir K. Joseph
I wish I were in a position so to increase our defensive strength that we could absorb the spare capacity that the British Steel Corporation is keeping in hand even under its present plans.
§ Mr. John Silkin rose—
§ Mr. Silkin
The right hon. Gentleman will have seen the front page article in The Guardian today in which it is said that the right hon. Gentleman is saying that a strike would be advantageous to BSC because it would save money. Will he take the opportunity to refute that report?
§ Sir K. Joseph
Absolutely. It would be silly to maintain that a strike would save either the BSC or the taxpayer money. The consequences of a strike are unpredictable. I have never maintained that a strike would save the taxpayer money. I refute totally the statement I am alleged to have made that a strike would save money.
I hope that I will not be thought to be guilty of talking about this industry in an inhuman way. I have the highest respect for the men I have met in the steel industry. They are widely respected as individuals. Their jobs are respected. I beg them not to inflict self-injury on top of market injury by a strike.
Having said that we leave management to make management decisions, the Government accept that it is their responsibility to do what is practicable to cushion the social consequences of industrial change. When the plan is finally decided and carried through, we shall consider in each case what it is sensible to do, just as we have announced our intentions and changes in connection with Shotton and Corby.
I have taken a long time, because I have given way to a number of interventions. I want now to try to sum up the position. The right hon. Member for Rhondda has urged the Government to intervene. The whole emphasis of interventions by Opposition Members has been that the Government should intervene. But the catalogue of errors with which I began my speech today does not inspire anyone in the country, or in this House, to believe that it is sensible to rely on the Government's judgment when 1587 making decisions about a trading market. The evidence does not show convincingly that Governments and Ministers are so invariably right that they can be assumed to know better than management.
Opposition Members have urged deferment in achieving competitiveness and deferment of closures. That is not a sensible approach. Adaptations and redundancies that would have been adequate to secure competitiveness when first proposed often cease to be adequate when they are deferred. Redundancies that might have taken place when the market was stronger and competition less fierce and when there were more job opportunities have to be made, once deferred, in larger numbers because competitors have grown still more powerful at a time, perhaps, when demand is less, competition stronger and job opportunities fewer.
Deferment is not the remedy. We have already deferred too long in making this industry competitive. Nationalisation is with us. There may be opportunities for some non-steel parts of the British Steel Corporation to be sold off. I will encourage any such proposals. We have no plan to denationalise, if for no other reason than that this would not be practicable at the moment.
I must, however, say to the House that I believe that nationalisation has intensified and multiplied the problems of steel's adaptation to a changing market. Centralisation and politicisation of decision-making have handcuffed and straitjacketed the management of the industry. Had there been a variety of owners, efficient and inefficient, large and small, some would have adapted and would have been competitive while some would have gone out of business; and those who worked and invested in them would have found other jobs.
It is not necessarily the party that nationalises that is the most effective friend of steel. Labour has all too often given the impression that productivity is not crucial and that the industry could go on losing money at the expense of the taxpayer. [HON. MEMBERS: "That is wrong."] It is true. I wish to acknowledge that "Road to Viability", published by the previous Government in 1978, offered belated recognition of reality and 1588 brought about the closures that had been deferred under the Beswick plan. The Labour Party has tried to ignore reality. It will surely not want to encourage steel workers to destroy their industry by resisting what is necessary to keep a secure, competitive, high-output and, therefore, well-paid industry. I hope that the House will reject the motion.
§ Mr. John Morris (Aberavon)
We on the Opposition side of the House have listened horror-stricken to the Secretary of State, who now professes to have the stewardship of the steel industry of this country. One message that will go out loud and clear from this debate is that worse is to come. The right hon. Gentleman has spelt out his doctrinaire objections to public intervention and particularly to public ownership of steel. The right hon. Gentleman has forgotten that long before the last public ownership Act it was a Tory Government that intervened to split Llanwern and Ravenscraig. Tory Governments acted where private industry had failed to provide money to Colvilles and RTB. Government and State intervention has existed in the steel industry since long before the war and will be with it for as long as we can foresee. Against that background, it is exceedingly sad that the Secretary of State for Industry, with his doctrinaire and dogmatic attitude, should have the stewardship of that great industry.
This has been a black month for South Wales. Rumour has followed rumour and each in turn has been confirmed in the darkest terms. Only a few weeks ago, the House discussed the steel industry and the Welsh Grand Committee followed that with a discussion on the Welsh economy. There was not a whisper in either debate that the throat of the Welsh economy was to be cut.
Even while the Grand Committee was sitting, trade unionists at Port Talbot were being told of a new cut of 2,300 in the labour force. The Secretary of State for Wales confessed within days that no one had told him about it. The last Tory Minister to complain that no one had told him anything was poor Mr. Macmillan during the Profumo affair.
The Welsh Ministers are like the three monkeys. They see no evil, they believe 1589 that they speak no evil and they certainly hear no evil. To paraphrase the words of Aneurin Bevan, why should we bother with the monkeys when the organgrinder—the Secretary of State for Industry—has been here? The right hon. Gentleman's doctrinaire and blind devotion to cutting public expenditure and rolling back the frontiers of State interest, regardless of the consequences, is bringing South Wales to its knees.
Believe it or not, the right hon. Gentleman was responsible for Welsh affairs a few years ago. If he dares to come to Wales again, he will not find many voters, whether workers, business men or anyone else, who will admit to having voted Tory.
The tragedy for steel generally and for South Wales coal and steel in particular is that long-term decisions, with grave social consequences, are being taken on short-term evidence. The Secretary of State will preside not over a decrease in public expenditure but over an increase—because of social security and redundancy payments.
The right hon. Gentleman mentioned the sum available to the BSC board next year. Am I wrong in estimating that about £150 million will be needed for redundancy payments alone? Where will that money come from? Will it be at the expense of investment? We must have a clear answer to that question.
No one questions Sir Charles Villiers' approachability and courtesy, even in the most difficult circumstances, and in July I asked him whether he still believed that the BSC could break even by March. He pointed out that there would be difficulties but that that was still his aim, even though I made clear that no one believed that that goal was possible. He left me with no impression but that he maintained that it was attainable. Indeed, the stance of the Secretary of State today was a repetition of that view.
The right hon. Gentleman may not know that I asked Sir Charles last week when the BSC thought that it would be able to break even if it achieved all the cuts and closures that it had demanded. The reply was a limp admission that the board had not reached a conclusion. It might pay the Secretary of State to consult the chairman to find out the present view of the board. The right hon. Gen- 1590 tleman appeared to contradict my intervention in his speech.
The Secretary of State may seek to differentiate between his role and that of the management, but we are questioning his role of holding a pistol to the head of the corporation while it is on a journey with no idea of its length, no certainty about when harbour will be reached, but sure that many of its passengers and their dependants will be destroyed along the way. In addition, there is, as the right hon. Gentleman implied, worse to come. Given the BSC's track record, can we have any confidence in its forecasting? If ever there was a classic example of how not to take corporate planning decisions, the BSC is it.
Let me illustrate that fact with the example of Port Talbot. Less than three years ago, the BSC was still clamouring for an £800 million investment at Port Talbot to double capacity from 3 million to 6 million tons. In July 1976 the then Government offered £350 million, which included £250 million for a new hot strip mill. It gives me no comfort to say that my strong public and private advice to the BSC was that it should accept the offer. That was also the advice of Mr. Bill Sirs. The corporation rejected the offer because it was only half a loaf. Some loaf! That half a loaf would be a banquet at Port Talbot today.
Eventually, the Government agreed, in March 1977, to the £835 million for which the BSC was pressing. But before the ink was dry on the announcement the corporation found that the market had collapsed. Within a matter of weeks, it no longer wanted the money, although the annual statement a few weeks before had said that the plan wascommercial, prudent and practicable. BSC must at all costs regain its lost share of the markets.Within a matter of weeks, the board refused the Government's offer. The Government then offered £80 million, which is ongoing at current prices, for continuous casting. Let no one dare touch investment.
More investment is taking place at Port Talbot than at any steelworks in the United Kingdom, if not in Europe, yet it has had the option of closure hanging over its head in the past 10 days. No wonder my constituents feel that they are living like Alice in Wonderland. The 1591 gruesome inference from the Secretary of State's speech was "what next?"
A prolonged effort has been made at Port Talbot to reduce manning and to increase profitability. The fact that the works became over manned was not the fault of the workers. It was a deliberate management decision—long before the BSC came into existence—to bring in some of the finest and most mobile workers to exploit capital investment as quickly as possible.
In my time, manpower has fallen from 17,000 to about 12,000. Every time that agreement has been sought on manning levels, it has been achieved. There is no need for anyone to tell the work force at Port Talbot about the necessity to be competitive. Constructive and negotiated rationalisation, consistent with providing the steel that is required, will succeed. Let us take the other test, that of profitability. Losses at Port Talbot in the first half of the year were down to £2.1 million, and latterly the plant has been breaking even. The losses per man are among the lowest in the United Kingdom divisions, at £165 in the first half of this year. The plant has worked quickly towards breaking even.
Against that background, we are right to question the plans of the BSC. Given the corporation's track record, is it likely to be right in future any more than in the past? My right hon. Friend the Member for Rhondda (Mr. Jones) referred to the BSC estimate of 15 million tonnes, but that is not the total market. It is the BSC estimate of its share of the market. The market is very much bigger. The steel industry says that there is considerable overcapacity on these present forecasts.
Why should not the British Steel Corporation aim for a higher share of the market? Why should imports of sheet be coming into this country at 30 or 40 per cent. penetration? Is it quality, delivery or price? Are those not management decisions? Or is it that the Government have allowed the pound to become so strong that our steel cannot be sold abroad? All these things need some explaining, and we have had hardly an ounce of explanation from the right hon. Gentleman this afternoon.
There are about seven businesses within BSC, and I ask the board whether it 1592 is prudent for those seven businesses, for marketing purposes, to be in one pair of hands. I would welcome continued decentralisation if that meant that the marketing was more in tune with the centres of production. With the projected imports of steel for Ford of Dagenham next year so much higher, BSC management should do some considerable heart-searching. This should be of concern not only to BSC but also the workers and management at Ford. If South Wales becomes a distressed area, there will be one less market for the motor cars which that company produces.
In passing, may I say a word to fellow Welshmen at Trostre and Velindre? The salvation of Port Talbot lies partly in the hands of those Welshmen. Port Talbot has always been their traditional supplier. It would do them no good in the long run to prefer coil from Ravenscraig or Royal Dutch because it is longer and more profitable. Does anyone believe that, if Port Talbot went, the pressure would not begin to pick those plants off?
I was only a junior Minister but I was present when the Scottish TUC led a formidable and able delegation to my right hon. Friend the Member for Huyton (Sir H. Wilson), then Prime Minister, and four other Ministers demanding, very properly, a whole host of things. That delegation demanded one thing that stuck out like a sore thumb—a Scottish tinplate industry. I understood the aim of the Scottish TUC, even if I profoundly disagreed with its sentiments, and I hope my friends and colleagues in Trostre and Velindre will remember that when it comes to considering our steel.
My constituents ask a question—and it is right that they should ask it: given the staggering losses in the Scottish division of BSC—£3,261 per man per half year—and the fact that figures for Ravenscraig are not forthcoming, why is BSC gambling so much on increased production at Ravenscraig against a time scale of agreed cuts in South Wales by March 1980? I would like to know when Ravenscraig will break even. That is a matter that concerns my constituents.
§ Dr. Bray
My right hon. and learned Friend the Member for Aberavon (Mr. Morris) has made a very strong attack on a particular part of the steel industry. The increased output from Ravenscraig is 1593 being achieved. He was a junior Minister in the same Department in which I followed him. He is familiar with the steel industry and is well aware that the reason for the high losses at Ravenscraig was that there were long delays in the investment programme there. I am sure that my right hon. and learned Friend will agree that the future of the steel industry is something that we must solve nationally.
§ Mr. Morris
If my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) looks closely at my remarks, he will see that what I am suggesting is not an attack in any shape or form. I wish no one harm. I said that a gamble was being taken here by relying on increased production that has not come about—
§ Mr. Morris
—against the need for an agreement to cut production substantially right across South Wales by March 1980. Perhaps my hon. Friend will look at my remarks more closely.
It is with relief that I see that the board has gone beyond its original options—which I advocated it should do last week—in South Wales. There is a gleam of hope for both plants, though not for the individuals who will lose their jobs, by the new option of scaling down capacity at both plants as opposed to partially mothballing or closing them.
I know that negotiations are just about to begin at Port Talbot and I wish those involved well, regrettable though it is that we are travelling down this road of cutting production. I deeply regret that. Of the evils posed, I think this new option is the least evil. Once part of the plant is mothballed, I do not believe there is much chance of reviving it. Today's mothballing could be the death knell of the whole plant within three years. This option would mean that we could remain in business and be ready for an upturn or to fill the gap if others perform less well.
Enormous amounts of capital have been injected into BSC by successive Governments. An independent inquiry is needed to see how this enormous amount of capital has been utilised. The Minister must satisfy himself—there are Government officials on the board—that, at the board's behest, the industry can work 1594 within the current cash limits. He must satisfy himself about the rapidity of the turnover of current assets. That is central to the possibility of BSC operating within the cash limits.
I agree that it is important to get costs right, but it is also important to explain the falling away of the market. In addition to that, it is necessary to present the plans to show how BSC will win a much higher proportion of the market. We must not be baffled by the figure of £15 million. BSC must win a much greater share of the existing British market.
It is up to us all to do what we can. I hope that anyone who wants to make a new year resolution will resolve to put the British steel industry first when he considers the purchase of a motor car or anything else made from steel during the course of next year. Against that background, we must put the problems of the industry into perspective. I agree that £300 million is a lot of money, but on the aggregate turnover of BSC it amounts to only 5 per cent. We should, therefore, look at the whole picture against the background of the market and the strength of the pound and all the other problems of the industry.
The Secretary of State is wholly wrong to continue pushing BSC to make decisions within far too short a time scale and with no regard for the social consequences.
§ 6.7 pm
§ Mr. John H. Osborn (Sheffield, Hallam)
I am glad that my right hon. Friend the Secretary of State did not swallow the bait by taking on too much personal responsibility for British Leyland, shipbuilding, British Aerospace, the National Enterprise Board—including Rolls-Royce—and the control of coking coal. He has clearly stated that his task is not that of management. One of the tragedies is that Conservative Ministers, when they take up office after a change of Government, invariably find themselves caretakers of a Socialist-industrialist society. In a debate such as this, Opposition Members ask Conservative Ministers to pursue out policies that the Opposition know would be fatal.
In the debates in this Chamber on steel—particularly 10 or 12 years ago—it was always said that if a plant was 1595 lifted up by the roots and looked at too often it would wither. The danger is that this could be happening now. There was mention of the role of management. I remember, some 20 years ago, Project Spear of United Steels. I chaired a meeting in Westminster Hall when a film on Project Spear showed that management and industry were able to work together. That was certainly a feature of United Steels of Sheffield at that time.
I agree with my right hon. Friend. Most of what is happening at present is, ironically, the legacy of the dead hand of Socialism over at least the past 14, 15 or, perhaps, 35 years. My right hon. Friend explained how, after the 1945 election, the steel industry was nationalised. He also covered the denationalisation period. At that time decision-making was moribund because the banks, the Stock Exchange and the institutions could not underwrite the capital investment in the 1950s for fear of what would and did happen in 1966 and 1977. At that time there was the Iron and Steel Board and, I remember, the Iron and Steel Federation. But now there is the unsatisfactory sight of the British Steel Corporation writhing on the ground like a wounded dinosaur. That is not a pleasant sight, because so many people's livelihoods are tied up with it.
During the intermediate period of the 1950s, commercial criteria could not prevail and, therefore, sound investment policies could not prevail either. I am afraid that these have been absent from the steel industry since I first visited Temple borough melting works in Sheffield and the blast furnaces of Stewarts and Lloyds as a student reading metallurgy in the early 1940s, nearly 40 years ago.
This debate has been a personal agony for me because I have suffered, as a manager and director of a steelworks, from some of the decisions that Sir Charles Villiers has had to take vis-a-vis bankers and the institutions and those who provide funds for industry. This time the institution is the State.
I have had to hold export markets and I well remember that at the time of the Benson report we hoped to have export markets that would give Britain a capacity of 35 million to 38 million tonnes of steel. Therefore, the sight of this prehis- 1596 toric monster—the dinosaur—slow, ponderous, inflexible and ill-equipped to survive, gives no pleasure to any Member of this House. However, I stress to my right hon. Friend that that monster must not be allowed to die. It must not be killed, because the livelihood of so many people are tied up with it.
I well remember that during the Standing Committee proceedings on the nationalisation of steel my right hon. Friend the Member for Yeovil (Mr. Peyton) reminded me that "all Governments, including Conservative Governments, were incompetent. Therefore, the less they were given to do, the better." That was 15 years ago. Now it is too late. It is ironic that the national executive of the Labour Party is still trying to promote the growth of the corporate State. Has it not learnt that in Britain its record over 35 years has been catastrophic to jobs? My right hon. Friend the Secretary of State for Industry is quite right to dismantle the corporate State as soon as he can and to disentangle industry from the tentacles of Socialism that are threatening the jobs of so many people.
Lord Melchett, who was the first chairman of the BSC, was told by many in the industry that he was taking on an impossible task. I was able to tell Sir Monty Finniston that fact and he found that that was so. I am afraid that the heads of the State corporations are being given impossible tasks. One of the difficulties will be to find a successor to Sir Charles Villiers.
This House has had debates on Shotton, Port Talbot, Corby and even Scunthorpe which had such possibilities a few years ago as the Anchor Project Today, jobs are being lost everywhere. For too many years politicians, particularly Socialists and trade union leaders, have led the bulk of wage earners and many who are on the first steps of the managerial ladder up the garden path to a fool's paradise. The bulk of school leavers and students in our colleges and universities also have been led up the garden path by their academic mentors. Too often, wealth creation in working industry is not thought to be a suitable career. Too often, young people regard education and a job when they leave school as rights. But the world does not owe the British people or British industry a living. Therefore, 1597 nations, communities and groups of individuals must earn that living, whether in a mixed economy or the private sector.
Britain should have been the industrial dynamo of the European Community. After all, it pioneered the Industrial Revolution. During the war the British work force provided our munitions from 1939 to 1945. I am afraid that Britain has been too great a battleground for contrary political conflict, in the board room and on the shop floor. Possibly one-third of Labour Members support the NEC resolution extending the role of the corporate State and moving us towards a Soviet-style society where everything is owned by the State and everyone is employed by it.
Because of this, those who handle industrial pension funds—some of them in the steel industry or the car industry—trade union funds or investment from outside have found that investment in the British working man, his factories and his managers is a risky business. If investment in capital projects is so risky for private investors, is it right that the taxpayers' money should be put at risk?
I believe that until some of the integrity that I once had the privilege to work with as a young manager and the dedication of the skilled craftsmen and semiskilled workers returns, however good the product there will be a reluctance to invest because of unreliability. British industry will not buy British steel, because threats of strikes and uncertainties make a buyer lay off his purchases because he regards his source of supply as unstable.
§ Mr. Donald Coleman (Neath)
The hon. Member is a prominent man in the steel industry and we all know his record. Does he not agree that the reputation of the trade unions in the steel industry compares with anything anywhere else in the world?
§ Mr. Osborn
The record of the steel industry has been impeccable. I would support the pleas of my right hon. Friend the Secretary of State that the trade unions, particularly in Sheffield, do not put at greater risk the jobs of those in the steel industry.
In Brussels and Paris last year I met salesmen of British Leyland cars. They told me that they could obtain the orders but they could not guarantee deliveries 1598 because of unreliability of supply and even some doubt about the quality of inspection. Perhaps one reason for this is lack of discipline—an emulation of the confrontation to which hon. Members have become accustomed in our way of life in the House of Commons—and a willingness by a small group of people to turn their backs on their fellow workers, their own management and, above all, their customers.
§ Mr. Roy Hughes (Newport)
The hon. Member claims to know the steel industry. There have been works such as Shotton, where there has been hardly a single industrial dispute in its history. How does he reconcile this with his theories?
§ Mr. Osborn
I ask the hon. Member for Newport (Mr. Hughes) to listen to those who buy British products. Among the guarantees that any salesman must give are those of proper production control, cost control and process control. He must also guarantee the quality that people seek. It is essential that in the steel industry one has an impeccable record in this field. The hon. Member has diverted me from the theme of my speech.
There are problems ahead. The hon. Member for Wolver Hampton, South-East (Mr. Edwards) is the president of the all-party common ownership group in the House and the common ownership movement. My right hon. Friend the Member for Farnham (Mr. Macmillan) believes in wider share ownership. The Minister of State is a great supporter of small businesses, and I, for one believe that smaller is more beautiful. Above all, it is important that independent directors should draw finance for long-term projects, as well as short-term projects, in an area where management can assert itself. Those Conservatives who met Sir Michael Edwardes last week were satisfied. Responsible citizens would expect the Secretary of State for Industry to do much more, but on second thoughts they realise that he cannot do so. It is for management and those who lead industry to try to lead Britain out of what The Economist of last week described asThe ugly face of British industry.It points out that 60 per cent. of cars last month were imported. This affects 1599 markets in Sheffield. It affects steel companies, forgers and foundries which rely on a domestic car market. Therefore, a drop in output to barely 1 million vehicles now, as opposed to 2 million 10 years ago, is bound to affect job opportunities.
I met Sir Charles Villiers and Mr. Robert Scholey last week. I was a manager in Sheffield, and I can understand the arguments they now have to put to my right hon. Friend the Secretary of State. I have been in their position of arguing for institutional finance and for longer terms. I agree with the right hon. Member for Rhondda (Mr. Jones) when he put the views of Mr. Muir of the Steel Industry Management Association:BSC has moved from a stance of standing its ground in aggressive self-defence within a hostile economic environment, to acceptance of the inevitability of an ever-diminishing make of steel and a permanently maimed capability".I have been in that position, and I have argued in that way in other instances. Even Mr. Peter Jost, in a paper on import controls submitted to the Royal Society, has expressed firm views on the subject. Ten years ago he supported much of the Labour Government's legislation at that time. His words on import control were:In my view, most importantly, with the exception of temporary and/or very special cases protectionism of this kind has never in this country increased, but almost invariably adversely affected, industrial efficiency on which employment depends.Sir Peter Carey has put forward his views on the encouragement of the entrepreneur and the engineering profession. There are various views on how the nation can extract itself from the present dilemma. However, unless the British people as a team—we are a manufacturing nation—can deliver the steel and engineering goods with reliability and with good quality control, the problems will continue.
British industry has its internal defects, but they must be resolved by British industry, including the British Steel Corporation. There can be an intolerable burden with too heavy a social overhead, requiring too much company and private taxation. It is right for the Government to dismantle this. The previous Secretary of State had too much on his shoulders. 1600 The present Secretary of State has a great burden. He must continue to decentralise decision-making and take away control from Government. He must face up to further disengagement from the corporate State.
I hope that hon. Members will realise that diffusion of power leads to better participation and better consultation. It is the concentration in Whitehall that is strangling the chances of people maintaining jobs and employment in the steel and engineering industries and elsewhere. The events of the last 15 years must be reversed.
§ Mr. Roy Hughes (Newport)
The smears against British workers spelt out by the hon. Member for Sheffield, Hallam (Mr. Osborn) cause positive harm to British industry, particularly the steel industry, and to our competitiveness in world markets. Many sections of the steel industry have an impeccable industrial relations record.
I wish to express my bitter resentment at the callous indifference shown by the Secretary of State for Industry to the terrible problems facing the steel industry. The attitude of the Secretary of State and some of his colleagues will register in the hearts and minds of steel workers and their families. The problems faced by the steel industry cannot be solved purely by market forces.
In the general election campaign, the future of Llanwern was a prominent issue in my constituency. I predicted that if a Conservative Government were elected Llanwern would be very much at risk. The Conservative candidate—I do not remember his name—took a huge advertisement in the local newspaper to repudiate what I said. He said that I was talking a lot of nonsense. Today the people of Newport can judge for themselves. They know who was being realistic and who was speaking the truth. My campaign was based on the concept that if a Conservative Government came to power South Wales would endure experiences similar to those of the 1930s. The proof of the pudding will now be in the eating. Thousands of people were conned at the time of the general election.
As my right hon. and learned Friend the Member for Aberavon (Mr. Morris) pointed out, South Wales is faced with 1601 a catastrophic situation. The point I wish to make to some of my union colleagues is that the Iron and Steel Trades Confederation cannot carry the burden alone. I appreciate that the majority of members of the ISTC are in the steel industry. But there are other unions with a strong minority interest, including my own union, the Transport and General Workers' Union. I am chairman of its parliamentary group. I say to the members of the ISTC that these other unions have tremendous influence and power in many other sections of the British economy. The members of the ISTC will need full co-operation from the other unions if they are to be successful in their campaign against the closure programme of BSC.
In this difficult period for South Wales in particular, men of substance are needed, men of courage, men with backbone, who will stand and fight for their jobs—men who will not be knocked over like chocolate soldiers. This evil Government and the policies they represent must be resisted. Those who do so will be the real British patriots. This country needs a steel industry, and if it goes to the wall we shall be at the mercy of overseas suppliers in regard to prices and delivery dates.
Last week some colleagues and I visited the headquarters of the British Steel Corporation to meet its chairman, Sir Charles Villiers. One point that he made has remained with me. He said that the real damage to the steel industry was being caused by the mass of imports, not only of steel but of many other products composed of steel—cars, washing machines, and so on. He said that such imports were pouring in, eating up all our North Sea oil revenue and having a devastating effect on the steel industry.
§ Mr. John H. Osborn
Did Sir Charles Villiers stress another point which worried me and was in the BSC press statement last week? The growth rate in the EEC, excluding Britain, in the metal-producing industries and engineering has been considerable as opposed to the decline of Britain over the last five years. He pointed out that the steel industry and heavy engineering in other EEC countries, from their own and OECD statistics, were struggling to their feet.
§ Mr. Hughes
I certainly did not get that impression from Sir Charles. My understanding is that the steel industry the world over, and particularly in Western Europe, faces a massive recession and that there are all sorts of difficulties at the present time.
I am well aware that before Britain entered the Common Market there were many economic problems facing us—no one would dispute that—but two very important factors were working in our favour. One was that we were not bogged down by the common agricultural policy. We could purchase our food supplies in the markets of the world. Invariably they were relatively far cheaper than they are today, when our whole system is related to the CAP. The cheap food that we obtained had its effect on wage claims, which were lower than they are today. Our wage levels were lower than those of some of our principal competitors in Western Europe. Likewise, before we entered the Common Market, we still had small tariff barriers in this country. These two factors meant that our goods were still reasonably competitive in world markets. I know that the Germans were more efficient than we were, but, bearing these two factors in mind, our goods were still reasonably competitive.
It is becoming more obvious every day that eventually we shall have to get out of the Common Market. There were reports in responsible newspapers over the weekend that the Government were preparing emergency plans along these lines. Indeed, Conservative Members were tabling questions on this issue.
I am not only concerned about the £1,000 million or so that we are paying in EEC membership contributions. There is also the immense damage that is being done to vital sectors of British industry. We need import controls. I was glad to witness this afternoon the conversion of the Opposition Front Bench spokesman. It is a great step forward. My call for import controls for some years now has not been based on Bennery or Marxism. I have been trying to speak essentially as a British patriot, wishing to halt the flood of imports. This must be our objective. We must eventually scale them down.
Once our great industries, such as the steel industry, start to work to near capacity, we shall see the improvement. 1603 When we recall the capital investment that has gone into great plants such as those at Llanwern, Ravenscraig, Scunthorpe, Red car and so on, we realise that if they are to pay dividends they must work to capacity. When they are doing that, their unit costs are reduced and they become more efficient. Surely that must be a better economic strategy than to pay out millions of pounds in redundancy benefits, unemployment benefits, and social security provisions of one kind or another.
At this difficult time, I hope that nothing irreversible will be done concerning either Llanwern or Port Talbot. We know that there is a very grave recession facing the steel industry throughout the world. There must now be negotiations between the British Steel Corporation and the principal unions in the industry at least concerning the third option which has been put forward, for a temporary scaling down possibly at these two major works. These are the only negotiations which should be taking place about the future of these two works.
Meanwhile, the Government should abandon their non-interventionist position and provide the money to tide over this vital industry during a very difficult period. Those who are even contemplating or acquiescing in the closure of these two great plants and their mutilation will never be forgiven by this generation or by succeeding generations.
§ Mr. Michael Brown (Brigg and Scunthorpe)
We all recognise the seriousness of the position facing the British Steel Corporation and British industry. No one appreciates the seriousness of it more than I do, representing a constituency where there are 17,000 people employed in the BSC plant at Scunthorpe.
There was an announcement two days ago to the effect that there would be about 2,800 redundancies at the Scunthorpe plant, which is one of the most efficient in the country. There is an acceptance—albeit a reluctant acceptance—on the part of the trade union side and management, the Government, and even to some extent on the Labour Benches, that a certain slimming down is inevitable.
At Scunthorpe, the plant is extremely efficient. The hon. Member for Newport (Mr. Hughes) referred to the relative 1604 efficiency of the steelworks in his constituency as compared with Ravenscraig. We have to be careful with this sort of argument, because all plants in the BSC are to some extent interdependent. There is no doubt that considerable concern exits in the work forces, among whom there has been a good deal of pulling together over the last few months in order to try to assist the BSC. But, at the end of the day, what have they got? They have been offered a relatively small pay increase, and at Scunthorpe there are to be 2,800 redundancies, in spite of the fact that a half-year loss of £10 million last year was turned into a half-year loss for the equivalent period this year of only £5 million. Indeed, in the last quarter of the accounting period a profit of £500,000 was made.
The steel workers in my constituency have recognised readily that the Secretary of State for Industry and the BSC want to see a break-even point as soon as possible. The workers have therefore pulled together. But they are obviously concerned at what has happened. One can understand the reaction of steel workers who have done their utmost to accept their share of the burden. I believe that there is a realisation of the reality of the position, but there is a feeling that as long as they are one part of a large entity, however successful they may be, they still suffer with the rest of the corporation.
I fully recognise, Mr. Deputy Speaker, that this is not perhaps the moment at which to discuss the whole strategic future and organisation of the steel industry. We have to accept the position as it is and not as we would wish it to be. But perhaps the biggest indictment of nationalisation has come from the general secretary of the Iron and Steel Trades Confederation, a man for whom I have considerable respect, when he posed a question about the possibility of private capital in Corby and Shotton. One can almost hear the whispers beginning to sound rather louder among the work force that perhaps their individual steel plants should be more independently managed, on a competitive plant-by-plant basis, so that they can benefit from their own actions when they have helped to turn a loss into a profit.
The BSC is now doing what would have been easier and less painful had the 1605 decision been taken two or three years ago. My right hon. Friend's general aim for the steel industry is correct, but there is a continuing duty—which I think he accepted this afternoon—to support the steel industry while it implements the rationalisation plan. There is a difference between the present and three or four years ago, when the Labour Administration continued to give blind support without regard to the industry's future viability.
The BSC is taking steps to put its house in order. There is some element of quid pro quo required, and there is a responsibility for the Government to stand by, almost as the midwife stands by, to ensure the delivery of the BSC's future viability. That must mean an acceptance of some continuing financial support—I may not be popular with my right hon. Friend the Secretary of State for saying that, but one has to face reality and the position as it is rather than as we wish it to be—and a continuing responsibility for assisting the day-to-day operations of the BSC beyond the specific cut-off period that has been set. My right hon. Friend has set a clear, correct aim for the steel industry, and he recognises—as I recognise and as steel workers of Scunthorpe recognise—that the best guarantee for its future is profitability in the short term, and as soon as possible.
The market has changed since my right hon. Friend set a target for the BSC. We must recognise that the high interest rate has not assisted the BSC. We have from the BSC today that which we did not have three or four years ago—a clear attempt to achieve viability. If the work force of 152,000 is to be reduced within a short time to 100,000, that means that for every three steel workers in the industry today there will be only two in eight or nine months. There is bound to be a certain inevitable dislocation of social cost which we, as representatives in Parliament, must bear. We all understand the difficulty of hon. Members who represent constituencies such as mine, where steel is the only industry. There is responsibility for the Government to assist in the short term.
I am not arguing against an attempt to rationalise. I and the steel industry in Scunthorpe have always recognised that viability for the future, and for the massive investment put into the Anchor 1606 project, must mean some slimming down and some rationalisation. In the meantime, in my constituency and in other constituencies, there will be a substantial number of redundancies. I am fortunate in the sense that I represent a constituency where the infrastructure has already been set. In the South Humberside area there has been investment in motorways and in an airport. We now have the high-speed rail service. We have a responsibility to ensure that an alternative industry is provided in one-industry steel towns.
I have not always had a high regard for regional policy, but one has to accept that, while there is regional policy, and while there is assistance for surrounding areas that do not have the problems of steel towns, the Government have a duty—as my right hon. Friend the Prime Minister recognised this afternoon—to find some finance for remedial action.
§ Mr. Peter Hardy (Rother Valley)
My constituency has a clear interest in Scunthorpe. Does not the hon. Gentleman recognise that if the infrastructure is there and if existing investment in the steel industry is there, it would be ridiculous to try to find money for other forms of investment? Surely it would be wiser for the Appleby-Frodingham and the Normandy Park plants not to be operating at single vessel level. Would it not be much wiser to spend a small sum on improving the iron-making capacity at Scunthorpe so that it could benefit from the infrastructure and the current labour force?
§ Mr. Brown
I note the hon. Gentleman's remarks, but we have to face reality. We cannot continue to make steel and dump it in piles around the country if it is not being sold.
It is recognised that current capacity in the United Kingdom's steel industry could be increased if we did not have to face a 20 per cent. import penetration. One hesitates to use too much of the import controls argument. My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) drew attention to the fact that we have the power in our hands. If we can deliver British Leyland cars to foreign countries on time and if the work force at British Leyland recognises the responsibility upon it to produce the cars, there will be a demand for British steel. 1607 That will ensure that the massive investment in Scunthorpe and other plants can be more fully utilised.
As long as we have the coal miner imposing on the steel worker the price for his wage increase, and as long as we have the car worker feeling, to some extent, that he can get away with what the steel worker cannot get away with, one has to argue that the answer is in our hands.
I cannot ignore the fact that steel is coming into this country under Common Market regulations through the subsidies that are provided by, for example, West Germany for coking coal. I was pleased to hear my right hon. Friend the Secretary of State announce that discussions will be taking place between the National Coal Board and the BSC.
I should hesitate before saying that I wish to see coal imports, but if the coal miners and the NCB wish their industry to be protected, and if they wish to ensure continued production of coal, they have a responsibility to do their utmost to try to recognise through wage demands that the price of the coal supplied to the BSC is not so excessive that the BSC is forced to look to outside markets. I do not wish to see imported coal any more than I wish to see imported steel, and I recognise that similar logic has to be applied.
In Scunthorpe we recognise the limitations that are imposed by the current demand for steel. If we continue to be surrounded by areas that have development area status, Scunthorpe—which has 2,800 redundancies with which to deal—will find that it is unable to attract the industry that goes to Grimsby. When my right hon. Friend replies, I appeal to him to say whether he will be able to reverse the announcement that was made earlier this year concerning development area status for Scunthorpe. I ask him specifically whether he can give me some indication whether the assisted development area status that we had previously can be maintained and upgraded to development area status. I hope that my right hon. Friend will comment on that when he replies.
I have said that the coal miner and the car worker have a responsibility for the 1608 situation in which the steel worker finds himself. I shall refer to one or two other nationalised industries which also have a responsibility. I quote from a document produced by the Steel Industry Management Association, which I read with great interest. One paragraph states:In this country, BSC has been to some extent a captive market for NCB. Indeed, as is true for many UK wealth-creating enterprises, BSC is too much a captive market for a number of other public sector corporations and in its costs, Lames the penalties of GPO tariffs, electricity tariffs and British Rail freight charges. It is urged that Government should cross-check the reality or otherwise of subsidies by other EEC countries to their steel-making industries.I endorse that sentiment entirely. Now that there seems to be considerable pressure building up in all sections of the steel industry, I ask the Government to deal with the difficult issue of coking coal subsidies and unfair subsidies that are being provided by other Common Market countries. The British steel worker is having to pick up the tab.
I am aware that time is against me. I wish that I could speak for longer. I have made some clear comments to my right hon. Friend and I look forward to his reply.
§ Mr.Gregor MacKenzie (Rutherglen)
That is the second speech that I have heard the hon. Member for Brigg and Scunthorpe (Mr. Brown) make in the past two or three weeks. I admire his dexterity in managing to remain on the tightrope between loyalty to his constituents and loyalty to his Front Bench. Having heard the interesting speech that he made two or three weeks ago, I took the precaution of glancing swiftly down the Division lists. I hope that when the House next divides on a steel issue the hon. Member for Brigg and Scunthorpe will put his money where his mouth is.
§ Mr. Michael Brown
The remarks that I made two or three weeks ago and today are entirely in keeping with the trend that my right hon. Friend the Secretary of State for Industry wishes to see for the British Steel Corporation. I have always accepted and endorsed the argument that there will be no future for the British Steel Corporation in Scunthorpe or elsewhere unless it is viable. I have merely stated to my right hon. Friend 1609 that perhaps the time scale is not as short as he would wish.
§ Mr. MacKenzie
We shall have to wait for a few years—it may be a shorter period—and then the steel workers in the hon. Gentleman's constituency will be able to decide for themselves. I think that the steel workers in my constituency have already done so.
The hon. Gentleman said today that he has not always been too keen on regional policy. He used the word "reality" about half a dozen times. As a Member of Parliament for a steel constituency, he is now witnessing the reality of regional policy, which plays such an important part in the lives of so many hon. Members from Wales, Scotland and other parts of the United Kingdom.
The Secretary of State for Industry made an extraordinary speech. I do not expect the right hon. Gentleman to listen to all Back Bench speeches in the debate, but it would be nice if he appeared for a short time. He said a great deal today about his decision not to intervene. I do not believe that it is the responsibility of any Minister to breathe continually down the neck of management. However, Secretaries of State and members of the Government have a duty to intervene when they consider that decisions are being taken that will result in many thousands being unemployed. They have a duty to protect the quality of life. They have a duty to protect jobs. If the Secretary of State believes, as he said today, that his only task is to appoint the board and to let it get on with it, I must say that that was not the view that he took yesterday when we pressed him to declare his policy for the Post Office. He said that it was for the chairman of the Post Office to tell him who would go on the board. I am rather puzzled.
The Secretary of State must intervene in a situation where we shall have thousands and thousands unemployed. He intervenes in so far as he provides the broad general lines of policy. He sets out the financial limits within which the British Steel Corporation has to work. It is all very well for him to wash his hands of all these matters today, but many decisions would not have been taken if the right hon. Gentleman had not set such stringent financial limits.
1610 I shall confine my remarks to an issue that concerns my constituency and the West of Scotland. I refer to the decision of the BSC to shut the Hallside works in my constituency. I hope that my hon. Friend the Member for Consett (Mr. Watkins) and others who had thousands of their constituents declared redundant on Tuesday will bear with me while I talk about the 580 jobs that are involved in the closure of Hallside. However, they will know that those redundancies are the last part of the cluster of similar redundancies that have occurred in my constituency and in the West of Scotland over the past few months and years. Within my constituency we have lost the Clyde Ironworks and thousands of jobs at the Clyde bridge works. More recently we lost jobs at the Toll cross works. My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) has seen many jobs lost in his constituency. The West of Scotland once had thousands of steel jobs, but in my constituency it is now counting them in only hundreds.
The Secretary of State chides my right hon. and hon. Friends for not always being heroic when in Government. The Labour Government closed down what were regarded as obsolete steelworks. I was a Minister of State in the Department of Industry, and was saddened when the Government had to close an ironworks in my constituency. That was an unpleasant task. However, the decision was taken because we thought that it was the right thing to do. It was taken after we had made considerable plans for improving the infrastructure of the area and ensuring that other jobs would become available.
As I have said, I was saddened when my fellow Ministers in the Department of Industry had to take the decision to close an ironworks. However, there was one bright note in the Beswick report—namely, that we would keep the works at Hallside. The plant was to continue to operate well into the 1980s producing billets. Indeed, it was intended to increase its capacity.
My right hon. and noble Friend Lord Beswick took that decision because he knew that Hallside works was an efficient plant that produced good special steels. If the hon. Member for Sheffield, Hallam (Mr. Osborn) were in the Chamber, I should tell him that the works have an 1611 excellent industrial relations record, an excellent delivery record and an excellent relationship with customers, most of whom are in the West of Scotland and fairly close to the works in my area. We now know that the work that is being done at Hallside is to be transferred to other places.
A relationship has been built up over many decades at Hallside. The closure will mean the loss of a great many orders. As the Under-Secretary of State knows, the closure is taking place in the West of Scotland at a time when the area cannot take any more. There have been closures in the steelworks and redundancies in our shipyards, and Massey-Ferguson and Singer have closed. A catalogue of closures accounts for thousands of lost jobs within the last few months.
The Secretary of State should be aware of his social responsibilities to the steel industry. Indeed, he is enjoined by Act of Parliament to take cognisance of them. Steelworks are like coal mines. They operate within small communities. As the hon. Member for Brigg and Scunthorpe said, many of them operate as single industries. When a plant in my constituency closes, a father and perhaps two of his sons and his sons-in-law lose their jobs. There is no point in saying, as a junior Minister in the Department of Industry said the other day, that those men should find jobs elsewhere. If the Minister were to come to Scotland, he would find it exceptionally difficult to find those jobs.
I have listened in debates about steel closures to discussions on Corby and Shotton and I heard the speech of my hon. Friend the Member for Kettering (Mr. Homewood) a few days ago. He was pressing for development area status and all the other aids that the hon. Member for Brigg and Scunthorpe said that he disliked. He mentioned such aids as selective financial assistance. I happen to represent a special development area, or a recovery area, which, I am told, is rather better than a special development area.
No matter how busy the Scottish Development Agency and BSC (Industry) Ltd. may be, the Government are not planning for growth within Scotland or the 1612 United Kingdom. So long as the Government are not planning for growth, there is no point in special development areas, SFA and other aids, because the mobile projects will not be started. I hope that I am not being too pessimistic when I say to my hon. Friend the Member for Kettering that in my constituency we have gained a few hundred jobs but have never recovered—despite all the special aids—the thousands of jobs that we had in the past.
§ Mr. David Lambie (Central Ayrshire)
In the Garnock Valley in my constituency, where the open hearth steelworks were closed and where there has been tremendous activity by the SDA and by BSC (Industry) Ltd., we still have an unemployment rate of 19 per cent. In a so-called growth area such as Irvine new town in my constituency, the unemployment rate is 14 per cent.
§ Mr. MacKenzie
I am conscious of that. My hon. Friend will recall that when I worked in the Scottish Office I was conscious of the problems of the Garnock Valley. My colleagues in the Scottish Office were responsible for attracting a particular industry to go there at very high cost. That cost was criticised by Conservative Members, who were much more worried about the balance sheet than they were about jobs in the Garnock Valley.
What is the role of the BSC (Industry) Ltd? I think there is a good deal of potential for good in BSC (Industry) Ltd. In my area there is a small project called Clyde Workshops, which the Secretary of State's ministerial colleague will tell him about. That is a useful business which has produced 300 or 400 jobs. That shows that BSC Industries can do a great deal of good, but how can we ensure that it continues to do good? How is it to be funded, and will it be allowed the freedom to get on with the job that it enjoyed in the past?
My right hon. Friend the Leader of the Opposition asked the Secretary of State for Industry questions about finance today. I and many of my right hon. and hon. Friends did not understand the answers. I am left not knowing whether BSC (Industry) Ltd. will be properly funded over the next few months. It is 1613 urgent that it should be funded and allowed to get on with an important job.
§ Mr. MacKenzie
I hope that my hon. Friend's interpretation of the words of the Secretary of State is accurate. I thought that the Secretary of State's answers were less than explicit.
I understand that guidelines were published yesterday about how the SDA will function over the next few years. It is a pity that these guidelines are not placed in the Library as such documents were in the past. It would be helpful if, instead of those statements being made in Committee, we could read them. However, I will look up the Committee report. Those of us who are genuinely interested in these matters have not had the opportunity of examining the guidelines.
§ The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)
Copies of the guidelines were made available in Committee this morning and I understand that they are also available in the Vote Office today.
§ Mr. MacKenzie
I do not often miss such things. I looked for the guidelines particularly but must have missed them. I would certainly like to see them because in my area it is important that BSC (Industry) Ltd. and the SDA work closely together. What worries me about the SDA and BSC (Industry) Ltd. is that they have so many jobs to do. My particular interest and worry is the steel industry. Not only are we worried about steel in the West of Scotland, but we are concerned about our shipyards and about manufacturing generally.
How does the Secretary of State see the future of steel making in Scotland? In an intervention my hon. Friend the Member for Flint, East (Mr. Jones) asked the Secretary of State about the future of Shotton. He was told that he should address his question to the chairman of BSC. We cannot have the chairman of BSC at the Dispatch Box. I have always believed that it is the responsibility of the Secretary of State to carry the can 1614 in these matters. I hope that we shall have no more answers of that kind.
I want to know about BSC not from its chairman but from the Ministers. How do they see the future of the steel industry in Scotland? They are the people who fix the financial limits. How do they see the future of Clyde bridge, which is the only steel plant left in my constituency? I know that my hon. Friends the Members for Motherwell and Wishaw and for Central Ayrshire (Mr. Lambie) will want to know about the steel plants in their areas.
May I ask the Under-Secretary—if his right hon. Friend is unable to reply—to write to me and my hon. Friend the Member for Motherwell and Wishaw? We are concerned that the closure of Hallside steelworks should not affect the future of Craigneuk, on which our constituents are heavily dependent for jobs.
A novel suggestion made by my right hon. Friend the Member for Rhondda (Mr. Jones) was that we should make the Secretary of State for Industry Secretary of State for Social Services. However, many of my colleagues think that the right hon. Gentleman was not a huge success in that Department in days gone by.
The trouble with the Government is that they are too compartmented. The Secretary of State believes that, no matter how many people lose their jobs, he must balance his books. He believes that everything must be neat and tidy financially, irrespective of the social consequences. Perhaps it would be a good idea if the Secretary of State for Industry were made Secretary of State for Social Services because then he would know exactly how much had to be spent on social benefits and supplementary benefits. I believe that about £200 million a year will have to be paid in benefits if the planned redundancies go ahead. I am no economist, but I know that it is crazy to close works, deny people jobs and pay vast sums of money to keep people on the dole. As a simpleton, I regard that as being absolutely crazy.
I do not understand the Secretary of State's attitude. Does he want a steel industry in the United Kingdom at all? We certainly do and the steel workers certainly do. If he does, he is going the wrong way about it.
§ Mr. Raymond Whitney (Wycombe)
The right hon. Member for Rutherglen (Mr. MacKenzie) has painted a gloomy picture of the prospect for, and the present conditions of, the West of Scotland. He was joined by many of his hon. Friends. There is no one in the House who does not share the anxiety expressed by Opposition Members. However, this situation did not arise on 3 May. It is the result of a long-term process of which all of us have been aware. It seems from newspaper reports and statements by Opposition Members that a new word has been discovered—de-industrialisation. This is a prospect and threat of which hon. Members have been aware for many years. It was understood to be the basis of the last Government's policy on which they founded the so-called industrial strategy, of fond memory. Long hours were spent discussing the industrial strategy in the House and in the sector working parties. They achieved virtually nothing.
We should approach the problem constructively. None of us does the nation or the industry a service when we pretend that the situation is the product of political change. The problem is fundamental and we must all grasp it.
The policies followed in the years preceding the election on 3 May did not produce the answer. They did not cure the disease of de-industrialisation—rather, they hastened it. I offer the House two short statistics from the industries which are the subject of our debate. I am proud to say that I married into the mining industry. Although I have no connection myself with that industry, I do not feel as much on foreign territory as some Opposition Members accuse me of being. The South Yorkshire coalfield is well known to me. Indeed, I have told Arthur Scargill that I have had more pints in the miners' welfare club than he has. In fact, Mr. Scargill drinks halves. The Department of Energy figures for the coal industry show that in 1973 the average output per man-shift was 2.29 tonnes. In 1978 it was 2.25 tonnes. There is not a big difference, but when one considers the investment and effort nut into the National Coal Board over those years those are significant and important figures.
1618 The man-hours per tonne in the West German steel industry were 5.9 in 1978, in France 6.4 and in the United Kingdom 10.9.
§ Mr. Homewood
Such comparisons must be made with reservations. A document is being circulated containing an enormous list of jobs which relate to the steel industry. Many of those jobs are not included in the calculations in Germany, France or Japan. The document concludes that the difference in the steel industry in Germany and in Britain is only marginal.
§ Mr. Whitney
I accept that. The man whom I call my deceased constituent, Mr. Benjamin Disraeli, once repeated that there were lies, damned lies, and statistics. I should be surprised if the statistics for man-hours per tonne in the steel industry make a fundamental error. The same argument cannot be applied to the coal industry. I am talking about the British industry and British investment. In the five-year period, output per man-shift fell.
§ Mr. Allen McKay (Penistone)
If the hon. Member for Wycombe (Mr. Whitney) quoted face tonnes per man-shift, he would find that the figures have increased tremendously in the coal industry. He is quoting overall figures.
§ Mr. Whitney
We are back on Mr. Disraeli's territory. The traditional British industries have serious problems which must be tackled in a national spirit. Where there is unfair foreign competition, I look to my right hon. Friends to tackle that. We hear much about coking coal. I assure Opposition Members that overseas competitors look hard at the type of financial support that we have given to our own industry. From across the Channel that support looks like subsidy.
The majority of people understand what is happening. They understand that there is a real and fundamental problem. The trade unionists understand, as they are showing in vote after vote when they are given the opportunity to express an opinion. The majority of industrialists also understand.
Of course, there is worry about the relatively high pound. The high interest rates 1619 are bitterly disliked. Above all, the industrialists are worried about low productivity, which is the fundamental problem. The alternatives have been tried. No solutions have been offered from Opposition Members except those that were tried in that depressing period which ended on 3 May. We must bring the country back to realism. The majority understand the necessity of that and that it will be painful. They are ready to accept a gradual but steady return to reality, which is being led by my right hon. Friend the Secretary of State.
§ Mr. David Watkins (Consett)
Having listened to the speeches by the Secretary of State and the hon. Member for Wycombe (Mr. Whitney), I am strengthened in my conviction that I should support the motion to reduce the Secretary of State's salary. At the time when the British Steel Corporation needs help and support, it is being dogmatically, ruthlessly and almost contemptuously brushed aside. This has been the policy of the Government since they took office, and that was reiterated without the slightest variation by the Secretary of State this afternoon. As my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) pointed out in a letter published in The Times on 5 December, the BSC is being forced into cataclysmic closures. Those closures were contemptuously dismissed by the right hon. Lady the Prime Minister at Question Time this afternoon as being long overdue.
Nowhere will the effects of that policy be more cataclysmic than at Consett, and I intend to devote the rest of my speech to dealing with the situation in my constituency, though I do not propose to delay the House for too long. I can only say that the closure of the steelworks at Consett is an act of industrial vandalism which will devastate the area. Like my hon. Friend the Member for Newport (Mr. Hughes), I too made it one of the main planks in my platform at the general election that the election of such an extreme Right-wing Tory Government as we now have would certainly mean the closure of the steelworks at Consett; and it gives me no joy whatever to be proved right when the consequences for my constituents are so disastrous.
1620 I have described this closure as an act of vandalism because it comes at the very time when the works at Consett has been made viable. That state of viability has been achieved only after years of difficulty and sacrifice by the people involved in steel manufacture in the town. Apart from that, ten of millions of pounds have been spent on modernising the plant. We are talking about the shutting down not of some old, clapped-out works but of a modern and productive plant. This greatly emphasises a point made by so many of my hon. Friends, including my right hon. Friend the Member for Rhondda (Mr. Jones), about the necessity for an inquiry into the investment programme, how and why it was designed and what has been the net result of it.
This is a plant where, with the full co-operation of the trade unions, the work force has already been reduced from 6,200 to 3,700. That of itself was a traumatic experience for a community which is so heavily dependent upon a single industry—because the town of Consett is a one-industry town. Just a few weeks ago the plate mill was closed, with a further 420 redudancies. The hon. Member for Wycombe spoke about the realisation of the problems within the industry and among those who are involved, and that is absolutely true. It was recognised in my constituency that the plate mill was a loss-maker and had been for a long time, and, because of all kinds of circumstances which could not be controlled locally, it could not be made into a profitable proposition.
Even before it went, however, the rest of the works was becoming viable, and since the closure of the plate mill the plant has been operating at a growing monthly profit. The figures are publicly available for everyone to see. Every recent week has brought announcements of record production at Consett. So here we have a works which is running profitably at a high level of its capacity, showing that there is a market for its products. Yet at the very time when the investment, the sacrifice and the co-operation of years are producing results, at the very time when the Secretary of State's own criteria of competitiveness and profitability are being met, the whole works is to be shut.
I have said that this is an act of industrial vandalism, and those are the 1621 reasons why I describe it as such. It is an act which will devastate the town of Consett. I will refer to some of its effects. Consett is relatively a geographically isolated community where there are no alternative sources of employment, an area where the male unemployment rate at the last count was 11.3 per cent. and rising. As many as three-quarters of all people who are now in work maybe out of work due to the closure of the steel industry, and the ramifications of that will be immense. No other word can be used to describe them.
Every retail business, not only in the town of Consett but in surrounding villages where large numbers of steel workers' spending power, now faces bank-area which is dependent upon the steel workers spending power, now faces bankruptcy. In my constituency there are companies in industries such as construction and road haulage in particular which are totally dependent, for their existence, on their permanent contracts with the British Steel Corporation. They, too, face bankruptcy. The railway line from Consett to Tyneside which has been kept open, and kept busily open, because it is necessary to serve the steelworks, obviously faces closure. This is a freight line only but it faces shutdown at the very time when there have been informal talks on the possibility of reintroducing a passenger train service, a possibility which has now gone by the board.
There is another effect. The loss of rateable value and income to the county and district councils will be catastrophic and it will bring cuts to essential services of unimaginable severity. Surely this must count as one of the most cataclysmic closures of all those which we are debating today. This works is being closed even though it is meeting the Secretary of State's own criteria of viability and competitiveness. This morning I met Sir Charles Villiers, the chairman of the British Steel Corporation, and everything that he told me, and for that matter everything that I hear elsewhere, indicates that there is to be an early shutdown and that it will take place in the early part of the next financial year.
There is such a sense of anger and frustration amongst my constituents that they will not be prepared to take this lying down, and yet the community of 1622 Consett can survive this immediate catastrophe only with Government intervention. In the first place, with the imminent closure of such enormous consequence they must have time. Therefore, notwithstanding everything that the Secretary of State said, I call upon him to issue a directive to the BSC to reconsider this closure in time for something to be done.
§ Mr. David Crouch (Canterbury)
The hon. Gentleman is arguing fundamental points about the steel industry in regard to Consett, but he has told the House that Consett is now viable. He has told us that he talked today with Sir Charles Villiers, and then he spoke of the need for Government intervention. What did Sir Charles Villiers tell him? Did he tell him that it was viable? Did he tell him that it did not have to close or did he tell him why it had to close? Or did he say it needed Government intervention, and, if so, why?
§ Mr. Watkins
Sir Charles Villiers gave meno answer to any of those questions. He made it absolutely plain that the works will close, and close early. The figures of viability which I have mentioned are available and have been published by the British Steel Corporation, so my reason for calling for the intervention of the Government is that the decision of the BSC needs further looking at, and a further overruling if there are not to be the most catastrophic consequences in my constituency.
BSC (Industry) Ltd. is already working in Consett and is pulling out all the stops to try to attract new industry to the area. Only today, as this debate has been proceeding, BSC (Industry) Ltd. has been holding what obviously will prove to be a crucially important seminar in Consett, discussing its functions and the problems of the area. But its resources are limited. It cannot cope without an injection of public money to provide factories, roads and all the necessary things to build up new industries. I say to the hon. Member for Canterbury (Mr. Crouch) that Sir Charles Villiers agreed with me on that when I spoke to him this morning.
I referred earlier to the provision of alternative industries. In Consett there is a small number of empty advance factories, plus two which are under construction. Yet, even if those empty advance 1623 factories and the new ones when they are completed became fully occupied, they could provide only 300 jobs—pitifully inadequate in an area where nearly 4,000 people in steel alone and others in related industries face unemployment within months. Therefore, greatly increased expenditure is required not to bail out the area but to help it to help itself.
My constituents and I want all the resources of the area to be mobilised through the creation of a task force specifically to do that. I shall be discussing that matter in my constituency at the weekend. But that could work only if help is given, because the level of local resources is not adequate. If any help is to come from the European Coal and Steel Community, it will come only if there is British Government initiative first to ensure that British help is made available to the area.
I understand that the Secretary of State for Wales is to reply to the debate. That is interesting in more ways than one. Since the 1880s my constituency has had a number of Members with Welsh connections. That is not excluded from the present representative of the constituency, because his family roots are considerable in the Secretary of State's constituency, to which I am a regular anonymous visitor at holiday times.
Notwithstanding the totally negative speech by the Secretary of State for Industry earlier today, I call upon the Secretary of State for Wales to consider issuing a directive to the British Steel Corporation to reconsider the closure of the Consett steelworks and to face his responsibilities by stepping up Government help to the area so that it may help itself. That is what the area needs. It can survive only if it has that help.
This afternoon we heard from the Secretary of State for Industry the negative, irrelevant response to which we have become only too accustomed. I hope that at least in the winding-up speech by the Secretary of State for Wales we shall hear something more positive. If not—if all we get is yet another repetition of this negative response—it will show that the Secretary of State for Industry deserves the censure not only of the House but of the whole country.
§ Sir Anthony Meyer (Flint, West)
The hon. Member for Consett (Mr. Watkins) has my sympathy for the plight in which his constituency finds itself. It is a plight which the hon. Member for Flint, East (Mr. Jones) and I have endured for many years. A grim prospect faces the constituents of the hon. Member for Consett.
This seems to be a steel debate, but there is nothing on the Order Paper to say that is so. I do not intend to speak for any great length of time, but I propose to range a little wider than the subject of steel, as did my hon. Friend the Member for Wycombe (Mr. Whitney).
During the long years of the decline of the British economy we have got used to the idea of sliding down an increasingly steep slope, but we have asked "Where is the precipice?" There did not seem to be a precipice. But I have a nasty feeling that we are about to go over the edge of that precipice.
The figures for productivity, inflation and production in the steel industry and for the import of cars compared with those of our competitors are frightening. We have had five years of almost nil growth, five years of no increase in production since the three-day week.
We now face not just an employment crisis—an employment crisis of a sickening magnitude—but a survival crisis. This country must be industrially competitive if it is to feed its own people. The very capacity of our industry to earn us enough to keep our people reasonably fed is in question. That is the measure of the problem that we face. It is aggravated by the fact that what is economically inevitable is politically unacceptable. The laws of economics will not bend, so the laws of politics will have to do so.
It would have been nice to hear some recognition from some Opposition Member of the drastic changes in outlook that will be necessary. For example, it would have been nice to hear somebody deplore the action of the Iron and Steel Trades Confederation, which up to now has been one of the most moderate and responsible of unions, in calling for a general strike in the steel industry, not to protest against the closures but to reject a proffered pay 1625 increase of 2 per cent. from an industry that is in the throes of violent contraction.
I believe that it is right and necessary for the Government to intervene in the economy in such a way as to sustain a higher level of employment than market forces by themselves would produce. But those very market forces, which could in due course take up the slack and take advantage of a large pool of unemployed labour in the United Kingdom, are discouraged from doing so because of union insistence on depressing productivity and exerting monopoly bargaining power for wage increases which inhibit job creation. The unions and their supporters in the Labour Party must choose whether they want more jobs or pay packets bulging with banknotes which daily lose their value.
The Opposition accuse my right hon. Friend of being dogmatic. But they are the dogmatists—the Bourbons of national socialism, the Bourbons who learnt nothing and forgot nothing, the national socialists who are unable to envisage the solution to any problem in anything wider than purely national terms.
The Opposition accuse my right hon. Friend of going too fast, of insisting on British Steel breaking even at too early a date. It is a question not so much of too fast but rather of too late. Because it is too late, it has to be done too fast. None of us would wish to see British Steel compelled to break even in the course of the next 12 months. Few of us believe that it will be possible for it to do so. Indeed, few of us can regard the present proposals as other than a cobbled-up solution to meet an emergency. But matters could not go on as they were.
The hon. Member for Flint, East, put up a valiant battle to retain steel making at Shotton, and I gave him what support I could. I wonder what the verdict of history will be on our efforts. Will history say that with the very best intentions in the world we rendered the worst possible service to our constituents by delaying for five years the rundown of steel making at Shotton? If that rundown had begun in 1975, as was envisaged in the original strategy, who can seriously suppose that Ford would have gone to Bridgend? It would have gone to Deeside.
1626 That putting off of vital decisions has been the most catastrophic consequence of the Labour Party's policies. Now what? There is a need for flexibility, and I hope that my right hon. Friend the Secretary of State will demonstrate such flexibility. The most fruitful direction in which to look for the many thousands of jobs that will be necessary it is in the service industries. It is therefore disturbing that, under present provisions in assisted areas, service industries are not eligible for the full investment aid that goes to manufacturing industries. For example, there is a firm in my constituency, Iceland Foods, that wishes to expand within the Deeside industrial area. However, it will get no help because it is a service industry rather than a manufacturing industry. In replying, I hope that my right hon. Friend will indicate that he has taken that factor into consideration.
The answers to our problems are more than nation-wide. It will take a massive effort, on a more than national scale, to reconvert industry. Industry is becoming obsolescent, not only in this country but throughout the whole of the Western industrial world.
§ The Secretary of State for Wales (Mr. Nicholas Edwards)
My hon. Friend the Member for Flint, West (Sir A. Meyer) is not right when he says that no aid is available to service industries. I visited the Deeside industrial park about a week ago and found a number of successful service industries already established in the advance factories that have been built there. They are providing jobs.
§ Sir A. Meyer
I am glad to hear that, but I was told by Iceland Foods that it did not get the same degree of assistance as it would have got had it been a manufacturing industry.
§ Mr. Alan Williams (Swansea, West)
In March of this year I introduced a revamped scheme to give aid to service industries. That scheme gives £6,000 for every new job created in a special development area, £4,000 per job in a development area and £2,000 per job in an intermediate development area, with other back-up funds available.
§ Sir A. Meyer
I am grateful for that information. Iceland Foods was not 1627 aware of it, and I shall see that it is so informed.
I am glad that there has been a switch in emphasis, but it must be further accentuated. It is in the service industries that the best chance of creating jobs lies.
These problems need to be solved on a wider than national scale. The whole Western industrial world faces a crisis of over-capacity and obsolescence in its manufacturing industry. The only long-term answer is to raise the purchasing power of the Third world. That is something that is beyond the capacity or conception of any national Government. That is why it is so deplorable that the Labour Party, which claims to be the party of internationalism, has nothing to say on this subject. It is not only the most important issue of our time but the one hopeful avenue for the future.
§ Mr. Anderson
Whatever the merits of that proposal, it is a long-term solution. The de-industrialisation of Britain, and the EEC as a whole, is going on at a great pace and is aided and abetted by the strict monetarist policies of the Government Front Bench.
§ Sir A. Meyer
If the process of recon version had begun when the 10-year strategy of the British steel community was first mooted, we would not be in the difficulties we are in now. I know that it is a long-term solution and a large-scale solution, but that is not a reason why it be put on the shelf and forgotten. It requires extensive international cooperation if it is to succeed.
It is precisely because my right hon. Friend has an understanding of those wider issues, and is prepared to think in other than purely parochial terms, whereas I detect nothing but the merest parochialism from Labour hon. Members, that I shall have no hesitation in voting against the motion.
§ Mr. Alan Williams (Swansea, West)
In opening the debate the Secretary of State gave us a sermon on competitiveness. Although all of us would agree that we are in favour of greater competitiveness within British industry, the Secretary of State must understand that it is unfair to expect British Steel to be competitive when unsubsidised against imports that 1628 are taking its market because they are subsidised.
The Secretary of State refuses to recognise that reality, although hon. Members on both sides of the House have spoken in confirmation of it. There is a tendency to see productivity as an illusory touchstone that solves all problems. Strangely enough, as a former Minister of State, Department of Industry, I am in favour of higher productivity. However, that is not necessarily the answer to these problems, because productivity has to be purchased. Germany may produce 50 per cent. to 70 per cent. more liquid steel than we do in relation to manpower, but it also pays its labour twice as much. The Dresdener Bank carried out a survey of German manufacturing industry during the summer of last year which showed that unit labour costs in Britain were only 83 per cent. of unit labour costs in Germany. That is important.
One of the reasons why we have been able to attract American, German and Japanese companies is that, although our productivity is low, it is more than offset by the costs of our labour. Therefore, although it would be desirable to have higher productivity in the steel industry, let us not think that that productivity is a causal factor of our troubles. Although it has higher productivity, France is losing twice as much per tonne of steel produced as we are. I am not against productivity, but it is not a causal factor as regards steel.
The Secretary of State has continually stated that he does not intend to intervene. However, it was a policy intervention that led to the disaster we are discussing today. He gave a new and impossible remit to the steel industry that it must break even by April next year. Because of that, we face the prospect of closures and a job loss of 50,000 in the industry. Since that remit was given, circumstances have changed, and fulfilling the remit has become even more impossible since those changes, which are the result of other Government policies.
For example, the pound has been allowed to rise very high. I remember that when I defended the Labour Government's policy I was berated by Conservative Members because the pound was too high at $1.90 and $1.95. However, the pound is now at $2.17 and $2.18. It is because sterling has been allowed to rise 1629 to a non-competitive level that British Steel is losing domestic markets to imports and has had to write off a 2 million tonne export market. British Steel is uncompetitive for currency reasons, not because of the cost of production.
Much of the market decline to which the Secretary of State referred is not the fault of British Steel but is a consequence of the budgetary policy that is being pursued. The policy that has been pursued for the last six months has caused the Treasury to announce that there will be a 2 per cent. decline in gross national product and activity in this country. We all know how such a decline focuses, in terms of lost demand, on the basic industries of coal and steel.
Therefore, the Government's currency and budgetary policies have contributed to the BSC's loss of market. A third factor that the BSC could never have foreseen, particularly if it had listened to the Prime Minister and the Chancellor, is the interest rate policy.
As hon. Members know, companies have started de-stocking. Companies that were holding steel stocks are now using them up and not replacing them. They are running them down to the minimum levels in order to avoid the service charges on the capital that is tied up in those stocks. That is the result of the penal interest rate that has been adopted, but it has added an extra dimension to the cut-off in demand that has hit the British steel industry.
Therefore, since the remit was given, three elements in Government policy have made it even more unattainable than it was at the outset when we warned that it was utterly impossible to achieve. What will the Secretary of State do when British Steel does not break even next year? He was very careful to trot around that question. If the losses in the second half of this year are bigger than they were in the first half, and if those losses will be more than £150 million in the next six months, what chance will there be that British Steel will be able to break even in the following financial year? There is none whatever, particularly with the economy running into decline.
What does the right hon. Gentleman intend to do? Is he seriously saying that the Government will do nothing to fund 1630 those losses? What will happen with regard to wages and the payment of suppliers? Will suppliers be pushed into bankruptcy because the Secretary of State stands by his Calvinistic enthusiasm for monetarism? We all know very well that that will not happen, because it will not be allowed to happen. The fact is that we are seeing the most cynical political operation. The Secretary of State is deliberately sustaining the pretence that there will be no financial support towards losses next year in order to rush through rapid closures in the current financial year. We shall then get a humanitarian conversion of the right hon. Gentleman after he has achieved the closures that he wants at this stage.
The closures themselves are disturbing, and I accept that they are inevitably disturbing to all hon. Members. But, if the closures are frightening, the repercussions are terrifying, because one gets the reverse multiplier. One does not just lose 15,000 steel jobs in Wales, or 50,000 throughout the country; one loses as many in the coal and supplying industries because the purchasing power of those who are unemployed is reduced. Therefore, we are not talking about a 15,000 job loss in South Wales. We are talking of a job loss well in excess of 30,000 if these proposals are allowed to go through.
Yet, in one of his little philosophical asides, the Secretary of State accepted the duty to remedy the consequences of industrial change. But he is doing the exact opposite. At the very time when our steel-producing areas will be most in need of the financial assistance that was available under the regional policy of the Labour Government, the present Government arc running down that policy. For example, in West Glamorgan, which may experience the major job loss, there has been a massive de-scheduling of areas within the old assisted area. It is essential to West Glamorgan that the area again be raised to SDA status very quickly. But even if that happens—even if full assisted area status is restored—it will not put those areas back into the position in which they would have been in May.
Regional policy will never be the same because of another aspect of the decision that has been taken by the right hon. Gentleman. He has virtually abandoned the negative element of regional policy 1631 outside the assisted areas by saying that one can build up to the size of 50,000 sq. ft. without an industrial development certificate. At a time when, because of a budgetarily induced recession, there will be fewer fish to catch, most of the few fish that there are will be found in the South-East, because the Secretary of State's net will not be able to reach them. They will not have to apply for IDCs. Therefore, other regions of the country will have less chance than they ever had at a time when they most need job creation.
If Conservative Members think that that is an unfair expectation and that I am being unduly depressive about it, let them look at what is happening in Slough. Many of us have good reason to remember Slough as the area to which many of our miners had to march in search of work during the inter-war years. Slough has a 3 million sq. ft. factory building programme already, and it is thinking of expanding it because of the changes that have taken place in industrial policy. During the recess, Bristol announced that because of the great advantage that it had now secured by the running down of assisted area support for Wales, it would have a special promotional campaign because it has a greater chance than ever of attracting more of the industry that would have gone to Wales. I am not surprised that Bristol feels that way, because, in respect of an IDC that I refused to give to Marconi for 1,000 jobs just south of Bristol, the Secretary of State for Wales succumbed to the Secretary of State for Industry and granted that IDC almost as soon as the Tories came into office.
There is another problem. We share the agonies that people in Corby are going through. But let us not underestimate the challenge that Corby, with assisted area status, represents to the North, to South Wales, to Lancashire and to Merseyside. With assisted area status, Corby has a massive locational advantage over the areas that most hon. Members taking part in the debate represent. I do not begrudge Corby replacement employment. All I am saying is that what is happening in the non-assisted areas—in Slough, Swindon and Bristol—and what will be happening in Corby will make it even more difficult than it need be for us to solve the problem that has 1632 been imposed upon us by the right hon. Gentleman.
The consequence is that we shall return to the conditions of the 1930s. We shall return to the days when the young flooded out of the North, the North-West, Yorkshire, and Wales down to the South and South-East. That is inevitable. It is not only the young who will be forced out. A new and insidious problem is developing in our areas, because the skilled are being bribed out.
Only last night, the television news showed skilled Newcastle workers—and we know how scarce skilled workers are—being offered housing in Norfolk in order to leave the North and bring their skills further south. A few weeks ago, either the Evening Standard or the Evening News ran an editorial congratulating another South-East local authority on attracting Scottish skilled workers by offering housing in order to bring their skills out of the assisted areas into the South-East where there is a shortage.
Yet the area in which there is a shortage of skilled labour is the very area in which industrialists will be set absolutely free to build factories as they wish, totally outside any Government attempt at regional control or diversion. As a result, hon. Members in other areas will face the problem of ageing populations at the very time when our young people and skilled workers are filched from us in order to feed the South-East's appetite for industry, the needs of which it cannot meet in terms of skills.
The Secretary of State has condemned Wales and other areas to a decade of continuous decline and to a period of industrial devastation. He will never be forgiven in Wales and he will never be forgiven in the other assisted areas. In a few years' time. I doubt if he will forgive himself when he sees what he has done.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Before I call the next speaker, I remind the House that an hour remains before winding-up speeches. There are 14 hon. Members who wish to catch my eye, and a appeal for brief speeches.
§ 8 pm
§ Mr. Kenneth Carlisle (Lincoln)
In this debate, it must be made abundantly clear 1633 that all hon. Members hate unemployment. It is and always has been one of the great enemies of a good society. Opposition Members are misguided if they attack the Government on that score. Results in the long term matter, and they will be the first to recognise that their record has not been spotless. The House is united in its detestation of unemployment. However, what divides us is the way that we seek to cure that evil. The Opposition believe that subsidy and Government expenditure are the key. On the other hand, we realise that there can be no substitute for productive and competitive businesses. The right hon. Member for Swansea, West (Mr. Williams) said that productivity was not enough. I agree with him. We want the power to compete effectively. Productivity is just one element that goes into making up the power to compete.
Our wealth is created by productive and competitive businesses and by those who work in them. The Government spend the wealth. In the nineteenth century, our prosperity sprang from our ability to compete with a host of countries throughout the world in providing world markets for cheap textiles and other manufactured goods. Likewise, today, Japan's success stems from her ability to compete in a range of high-technology goods. Success at producing competitive goods and services is at the heart of good employment. A sad but significant example of that is shipbuilding.
At the end of the war, in the late 1940s, Britain had over 40 per cent. of the world market in ships. Today, we have less than 3 per cent. That decline occurred for a variety of reasons. We failed to modernise and compete. Our productivity fell way below that of our main competitors. One of the reasons for our failure to modernise was the understandable wish to preserve jobs in the shipyards. Traditionally, they are areas of high unemployment. But the regrettable result of that policy is that fewer people will be employed in shipbuilding than there would have been if we had gone flat out over the past 30 years on modernisation and productivity.
I fear that the same mistakes have been made in our car and steel industries. In both industries, the productivity of our 1634 main competitors is at least twice ours. As we know, the steel industry is depressed world-wide. Car sales, on the other hand, have never been so buoyant in the United Kingdom. Yet British Leyland's share—about 16 per cent. of the market—is half of what it was only a few years ago. As a result, BL has to make many redundancies. Again, the lesson is quite clear. Without the ability to compete, no jobs are safe.
If the Government are to save jobs in the long term, they must take steps to make all our large nationalised industries competitive with our overseas rivals. That task is made harder by the disruption caused in those industries by the programme of nationalisation over the last few years. That programme was promoted not because of commercial realities but to fulfil political dogma. All hon. Members accept that steel, which has been used as a political football, has been highly damaged by nationalisation, denationalisation, reorganisation and the rest.
The failure by Governments, especially in the last five years, to allow management to carry through measures to promote change and better competitiveness has made it much more difficult for those industries to get on a sound footing and it has made the steps to reform them that much more drastic. If a garden is untended for five years, it takes much more effort to restore it to a semblance of order. The effort is much greater than if it had been tended carefully and kept up to date each year. Unhappily, so it is with the State industries.
The task facing the Government is formidable. They would be failing Britain if they were not determined to reduce the losses of the nationalised industries, which are a burden on all other activities in the country. The losses being made by steel, shipbuilding and coal this year are equivalent to about lip on the rate of income tax. We should ask ourselves what right the industries have to continue to be supported by the tax-paying British public, especially, as history suggests, if those subsidies encourage the industries not to become competitive. It leads, as we have seen, to a reduction of jobs that will be available in the long term.
In the long term, my right hon. Friend the Secretary of State for Industry is 1635 doing the country a service by making the basic industries face up to their competitive decline. The sooner we face realities, the sooner we will be able to improve our performance. The sooner we become fully competitive, the more jobs we can salvage. Decisive action now means jobs in the long term. We all want jobs. On that matter, all hon. Members are united.
§ 8.6 pm
§ Mr. Peter Hardy (Rother Valley)
I shall endeavour to be brief, Mr. Deputy Speaker.
What has astonished me so far in the debate is that several Conservative Back Benchers have stressed the need for British industry to build up a good record of deliveries. BSC is urged to improve its quality and its deliveries. If BSC is to deliver, it must produce. BSC will now have to suffer a remarkable cut in its capacity to produce. Therefore, Britain is faced with an enormous increase in its requirement for imports.
Some hon. Members may envy the position of South Yorkshire. We are not immediately threatened. However, I believe that the Government's policies could put South Yorkshire in the position of Consett today and Corby yesterday. We are not out of the wood. The Under-Secretary of State knows the position in my area. We have a successful record in that we are one of the most successful steel undertakings in Western Europe. For the last three or four years, we have been consistently breaking world records, yet we find the going ever more difficult. It is more difficult for the reasons that some of my hon. Friends have already given.
We face competition with an exchange rate that is a great impediment. If Government policy persists, our difficulties will be intensified. I do not believe that the Government should take the short-term view that they are taking. They are looking no further than the development of the next oilfield or the flaring of the next trillion cubic feet of gas. Tomorrow at 4 pm I shall collect my youngest child from infants' school. When I look at that child and the others who come out of his classroom, I hope that I shall bear in mind the fact that by the time he is able to leave school at the statutory age of 16 our oil and our gas 1636 will have run out and the basis of the Government's high sterling rate will have disappeared. At that time, our capacity, because of the contraction of industry, will be such as to make it impossible to buy the things that the Government now encourage to come into Britain.
My concern is not so much with steel but with one of the spill-over effects. In my case, the cutback to single vessel operation at Norman by Park and Appleby-Frodingham at Scunthorpe might severely disadvantage the area. Indeed, the need at Scunthorpe, given the investment and improvement in infrastructure, suggests that investment in iron making may well have been a far wiser step than contraction of the existing capacity.
The cutback could be disadvantageous to the South Yorkshire area of the National Coal Board, which is among the two or three most successful deep mining areas in Europe. Substantial quantities of coal and coke from my constituency go direct from collieries such as Silverwood or from the ovens at Brook-house or Orgreave. If there is a marked cutback at Scunthorpe, or if economic pressure is maintained on the British Steel Corporation so that it feels it must import subsidised coal from abroad, the effect on the economy of South Yorkshire and the National Coal Board could be severe. It is a profitable area. It is no good the Minister saying to us in South Yorkshire that we could still sell the coal to the CEGB. That would be wasting good-quality coal. Obviously the price our coal commanded would be reduced. It is sensible to demand that the Government reconsider the question of imported coke.
I am delighted that the Under-Secretary of State for Energy has diligently sat through this debate. I hope that he can stay for another two or three minutes. The facts that I want to put to the Government are these.
In Germany the pithead price of coking coal is about 180 deutschemarks a tonne. The price of imported coking coal in West Germany is about 120 deutschemarks per tonne. The difference is covered by a production subsidy provided from the national funds in Bonn of about 50 deutschemarks a tonne. There is still a difference, which is split by a second subsidy. German industry is 1637 helped by a third subsidy from the Community. The subsidy goes to the German industry for every tonne of coking coal that crosses Community national frontiers. The British Coal Board is placed in a difficulty. The British Steel Corporation faces an unnecessary disadvantage. Our steel industry, in many areas, is at least as successful and competitive as that in Germany and our coal industry is far and away the most successful in Western Europe, but the German steel industry can obtain its coking coal for £10 a tonne less than that which the British Steel Corporation must pay.
There will be more unemployment, more losses of jobs. There will be all the other spill-over factors that my hon. Friends mentioned. If we are to avoid those blind and foolish consequences, we must look a few years ahead rather than the few weeks which seem to be the limit of the Government's vision. In that case I believe that this country and our industry will be preserved from the appalling escalation of de-industrialisation which surely must be beginning to concern and upset the Government.
§ Mr. Michael Brown
I am sympathetic to the line of argument that the hon. Gentleman puts forward. I agree that the two great industries, coal and steel, are bound up with each other. However, I ask him to comment on the point that all the time there is a monopoly supplier for BSC. When it picks up the tab for the 20 per cent. increase in miners' wages, does he not feel that the National Coal Board and the miners have a responsibility?
§ Mr. Hardy
We have a responsibility to ensure that Britain is equipped to face the challenges when the oil and gas have gone in the first part of the 1990s. That means that we must have coal and miners. I should much rather pay miners a decent wage than some of the incomes that are frittered away supporting the invisible earnings which seem to be the sacred cow of Conservative Party philosophy. To pay lip service to the principle that we must have and maintain the most open market in the world, we are supposed to sacrific everything to serve that end.
1638 The posture of the Secretary of State today is rather like that of the British general in the eighteenth century who sees the enemy soldiers lined up in their blue coats and looks at his own soldiers in their red coats, takes off his hat, bows and says "Gentlemen, shoot first". I do not believe that that was sensible then. It is certainly not the way to conduct the national economy today.
§ Mr. Allan Stewart (Renfrewshire, East)
I should first like to take up one or two of the points on regional policy made by my hon. Friend the Member for Flint, West (Sir A. Meyer), recognising that regional policy is important in itself and is obviously of particular importance and relevance in this debate on steel.
In the past, regional policy in Britain was based on at least two assumptions that must now, at the least, be seriously questioned. In the past, one of the arguments was that we had no spare resources, that in some parts of the country there were shortages of labour and capital, that there was pressure on resources in the South-East but that there were spare resources in other areas, unemployment being the most obvious. Therefore, it was efficient to move resources by various methods from the congested areas to the uncongested areas.
The second assumption was that the target—the engine of growth—was large manufacturing industry, and especially inward manufacturing investment. Both those assumptions are no longer valid. In common with the whole Western world, we have a national unemployment problem rather than a regional one. If that is the situation, it becomes much more difficult to move resources from one part of the country to another.
I do not believe that we can look to heavy manufacturing industry to provide the large number of new jobs that we require. In the 1980s we shall not see the traditional manufacturing industries, or even new manufacturing industries, creating a large number of new jobs. Therefore I come to the point made by my hon. Friend the Member for Flint, West about service industries.
There has been a change in the attitude towards service industries. We recognise—as the previous Government recognised—the importance that they may have in 1639 creating new employment in areas such as those that we are discussing. We must move furtherin this direction. I do not believe that we can any longer look just to any single solution, or to mobile manufacturing industry, for example, to provide the economic and social answers in the areas with which we are concerned.
I have not heard any great concentration on what was then a most significant decision on regional policy made by the previous Government, which was the abolition of the regional employment premium, without notice, without consultation and without phasing out. I commend the Department of Industry for the changes that it is now making in regional policy. It is giving industry a considerable time in which to adjust. It must make sense to concentrate our scarce resources on the areas of greatest need.
I am not as pessimistic as some about the future of our traditional industrialised areas. I live in the city of Glasgow. I am reassured when people come to my front door and offer to paint my house or to lay gravel along my garden path. I believe that inside every moonlighter there is a small firm trying to break out. This is not to suggest that if all moonlighters suddenly became small firms our problems would be solved. But there is an important role for that kind of development from below. We must look to indigenous industry to provide new jobs.
I do not wish to take up much more time on the steel industry many hon. Members wish to contribute. A number of hon. Members from Scotland have registered strong concern and worry about the position in Scotland. Hon. Members on both sides have analysed the situation. I should simply like to ask one or two questions. I hope that the Minister, in his reply, will be able to confirm the importance of Ravenscraig and to state that it has a genuine role. There is massive investment in Ravenscraig. A new spirit prevails, although it is recognised that there must be some sort of rundown. It will be immensely difficult for the Scottish steel division to achieve a target of breaking even by March next year.
I am sure that the whole House must welcome the fact that the Hunterston dispute was settled. That dispute not only 1640 involved immense economic losses but also represented to many people a symbol of all that is wrong with our industrial relations. A massive new investment was held useless for a long time because of inter-union disputes. I hope that we shall receive some assurances on the long-term implications of the agreement relating to the port of Hunterston and the national dock scheme.
There is some concern about the apparent reluctance of the British Steel Corporation to allow the private sector to bid for, and take over, parts of its capacity that it wishes to close. I hope that the Government will put forward a positive policy, if the British Steel Corporation agrees, to encourage those in the private sector who are prepared to bid for such resources.
§ Mr. D. N. Campbell-Savours (Workington)
Will the hon. Gentleman explain to Opposition Members what is the point of the private sector taking over sectors of a publicly owned industry if the argument is about capacity? The Secretary of State spent most of his time today trying to convince us that the argument is about capacity.
§ Mr. Stewart
We do not know for what purpose those in the private sector would use the resources. The British Steel Corporation may not see a future for a particular plant. How can we say that an entrepreneur from a related industry, or another industry, would not be able to use those resources and those people effectively in another way?
I believe that the BSC in Scotland has made great efforts to attract new jobs. These efforts may not have been immensely successful, but we need to concentrate on this approach, recognising that there are no instant solutions. I agree with my hon. Friend the Member for Lincoln (Mr. Carlisle) and those of my hon. Friends who have stated that we need to face reality. We cannot delay decisions. If decisions are delayed, they become more, not less, difficult. The managing director of BSC's Scottish division, looking back over his seven years in charge of the industry in Scotland, said:It has never been anything other than high drama since I took over. My hope is that by taking this current action we can get back to the point on which to stabilise and move forward again.1641 That is the key. That is why I support the Government. We are now facing reality. It is essential to face reality, however hard, if we are to move forward in the future.
§ Mr. Robert Edwards (Wolver Hampton, South-East)
I would like very much to follow the speech of the hon. Member for Renfrewshire, East (Mr. Stewart) but I have other points in mind. I shall, however, take up one aspect of the hon. Gentleman's speech. Why does the British Steel Corporation not sell some plants to private enterprise? The reason for bringing British steel under public ownership was that private enterprise would not supply the risk capital to develop the industry. While there have been four speeches from the Government Benches condemning, root and branch, the whole structure of public ownership, we should consider the reasons why the Labour Government were compelled to nationalise the steel industry.
Between the wars the British steel barons were part of a European, indeed an international, cartel. They cut back steel production without consulting anyone. They fixed quotas for production for each steel-producing nation and in 1939–one month before war broke out—British steel representatives were in Berlin allocating Nazi Germany a production quota twice the size of Britain's quota. The cartel allocated 22½ million tons to Nazi Germany and cut our steel production to 10½ million tons. That is no laughing matter. It is one reason why the Nazi military machine swept through Europe. It was backed by the steel factories of Germany.
That is why the British Steel industry had to he brought in to public ownership. When the Secretary of State speaks so bitterly about the failure of nationalisation, it is important that we should put on record the history of the public ownership of steel.
The hon. Member for Flint, West (Sir A. Meyer) asked why the steel workers' unions should resist a pay offer of 2 per cent. In fact, they are resisting not a rise of 2 per cent. but a cut of 15 per cent. With inflation running at 17 per cent., a 2 per cent. increase is, in fact, a 15 per cent. cut in wages. Would any of us tolerate such an offer? The pur- 1642 pose of trade unions is to look after the interests of their members. The miserable 2 per cent. offer by the BSC is a dastardly mistake. I take a poor view of the chairman claiming that BSC is broke. How can an industry with an asset formation of thousands of millions of pounds say that it is broke? That is like saying that the British Army or the Navy is broke. None of the armies and navies of the world can move without steel.
Steel is a strategic industry and must be sustained by the Government. Any Government who do not sustain that key industry are betraying the interests and future of our nation.
We have been producing steel in my constituency for 100 years. The plant at Bilston never lost money in 10 years of public ownership. Its surplus was £22 million. It had a 40 per cent. surplus on capital investment—the best record of any plant in the BSC. Yet the plant is to be closed, as if it had never existed, and that will double unemployment in my constituency.
After long months of weary negotiations, the BSC gave a pledge to keep open the rolling mills, with 400 workers employed there, and guaranteed at least five years' employment. The corporation went back on its word. The negotiations meant nothing. The plant is to close completely. In the past 10 years, 200 factories have closed and 16,000 jobs have been lost in the Wolver Hampton area. How can we make up for that loss of employment and deal with the despair that has been created, particularly in Bilston?
I hope that the Government will have second thoughts and not rush into this policy for steel. The European steel industry is expecting more growth. Why should we conclude that we have to cut back all the services, industries and everything that creates demand and helps growth in our economy? Why is there a reduction in the demand for steel? The answer is that we are cutting back on the building of houses, roads, universities, schools and hospitals—almost everything that we need. One only has to think of the slums that we have in this country that ought to be razed to the ground. What about the steel that is needed to rebuild those cities and towns for our children and for future generations? There 1643 is plenty of work to be done, but we do not have the will because we still think in terms of the 1930s.
§ Dr. Jeremy Bray (Motherwell and Wishaw)
There has been much anger in the House and it has been eloquently expressed by my hon. Friend the Member for Wolver Hampton, South-East (Mr. Edwards) and many other speakers. As a Member for another steel constituency, I think that the vicious attack on Consett has created a most savage wound. That is the murder of a town. It is a ghost that will haunt this Government for many years after they have been defeated at the polls.
I make a plea to the Secretary of State for Wales, if he is listening—because I think that he agrees—to give Consett a stay of execution for two years. If there was only one act that the Government could carry out that would soften the blow, that would be it. If the Government were able to do that, the total cost to the public and the effect on the economy would be slight. In those two years there would be time to look at the long-term future of Consett as a steel town. There would be time for the task force that Consett desperately needs to make good the deplorable lack of advanced factories and communications. That town has already lost 15,000 jobs through coal mine closures. The story of Consett is tragic. I hope that the Secretary of State for Wales will take a message back to the Cabinet, from some Conservatives and, I am sure, all of us on the Opposition Benches: will the Government look again at Consett?
I turn now to the wider issues of the steel industry, particularly in relation to Scotland. It is not simply a question of manning or labour productivity. We must look at the capital productivity of the industry. The capital employed per tonne of steel produced in Japan in comparison to that employed in this country is monstrous. The output of capital in Japan in the steel industry is far lower. One can make nonsense of comparisons by taking just one parameter and looking at that alone.
My right hon. and learned Friend the Member for Aberavon (Mr. Morris) compared the performances of the Scottish 1644 and Welsh divisions of the British Steel Corporation. I checked in the annual report and found that the output per man in the Scottish division is marginally higher than the output per man in Wales. The losses per tonne in Scotland were £64 per tonne last year, which is vastly higher than the losses in Wales, which were £18 per tonne. We all know the reason for that. It is because Scotland had a high level of investment in incomplete and imbalanced plant. That position has been changed by the completion of Ravenscraig. That made it inevitable that if BSC was to pick out one plant for full loading it would pick out Ravenscraig. I was sorry that my right hon. and learned Friend the Member for Aberavon felt that, in some way, that was to blame for the tragedy that we face in Wales today.
§ Mr. Coleman
Is my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) aware that we in Wales were told that the reason why that was done in Scotland was political?
§ Dr. Bray
If my hon. Friend the Member for Neath (Mr. Coleman) will forgive me, that cuts both ways. All of us in Scotland were astonished to read of the appearance of the Ford engine plant at Cardiff. We had no knowledge that such a plant was under discussion. However, I will not elaborate on that. In Scotland we have had just as many closures.
When I was Parliamentary Secretary in the Ministry of Power, there was a particular development for a computer control system of a strip mill and I specifically put it at Margam in South Wales although I represented another steel constituency. I believed that Margam was the place where it should go. As a result, that computer-controlled system is now a world beater and it is exported all over the world.
In the present state of the steel industry, we must realise that past traditions of that industry which were set in the cut-throat days of competitive private enterprise are simply inappropriate for today. It comes close to home within the trade union world. The seniority rule within the ISTC means that when a plant is closed a man with 25 or 30 years' experience in the industry will be transferred into the next plant with only two 1645 years' seniority. His earnings will suffer drastically as a result.
The output of a steelworks vitally affects the earnings of every steel worker in that plant. Yet today, when the output is achieved by pressing buttons and reading computer dials, it is a totally inappropriate basis for a wage. The pay of the power station worker, an oil refinery worker or a chemical plant worker does not go up or down in relation to the output of his plant, because his contribution to that effort does not change. If we had a different basis in the steel industry, wt would not get the pathetic suicidal arguments that are too often put forward.
In the big change that is going on in the steel industry, there is need to consider where real increases in efficiency can come from. At Ravenscraig they must come from a degree of continuing demanning. But there are only about 5,000 workers there. Suggestions of 12,000 or 15,000 steel workers in a plant are totally foreign to the situation in Ravenscraig. The real problems there are operating problems and particularly the speed of response. We have a turn-round time for a BOS vessel which is beating world records.
However, there are problems in quality control from the interruptions of continuous plants and problems that arise when instrument failures cause the loss of an hour's production elsewhere. To get the control right at a plant like this, one needs a different working tradition within the industry. My worry is that that is not understood and is not being fostered by the senior executives in the British Steel Corporation today. I have every respect for them, but they need to look more closely at the impact of present measures at working level—on manual workers and craftsmen, yes, but on technicians, and scientists too.
In this changed industry we must realise that we can no longer expect it to provide a basic employment for an area. If there is one lesson to be learnt from this tragic round of closures, it is that we must do away with the one-industry town. Corby, Shotton and Consett are vast human tragedies. I am making sure that in Motherwell we have our own bootstrap operation so that we do not remain a one-industry town, dependent upon Ravenscraig. I urge my hon. 1646 Friends who represent other steel constituencies to do exactly the same. I know that a number of them are doing so.
That is the longer-term horizon. I urge the Government now to consider the points that have been put, particularly by my hon. Friend the Member for Rother Valley (Mr. Hardy) about the coal subsidy. I stress the need to maintain capacity against an upturn in demand. It is pathetic to close down capacity to the lowest point of the deepest recession since the war and think that that is adequate provision for the future of the industry.
If the Government want real cost discipline in the industry, they must accept that there will be a deficit for another two years at least. I ask them to put the basis of control on cost and performance at plant level and not simply on break-even. That is a crazy target to set for the steel industry today.
Against the broader strategy of economic policy, monetary policies, producing an exchange rate which makes it impossible for the steel industry to compete either against imports or in the export market—it seems that BSC has really given up in world trade—are making it impossible for other manufacturing industries, too, to compete with foreign competitors.
It is a serious prospect that within five years a quarter of our manufacturing industry will be closed down, and it will not be the least efficient quarter. The steel industry is not among the least efficient industries. It is making huge losses, but in terms of technical performance, investment and so on it is a great deal more efficient than many other industries.
The Government will receive some appalling shocks if they persist with their present broad economic strategy and their policy of strangling growth and boosting the exchange rate. Some Conservative Members must be very worried about that. They must be telling Ministers what they are being told by industrialists who cannot put up with an interest rate of 20 per cent. on their overdrafts and who cannot tolerate an exchange rate which is at least 25 per cent. overvalued against the dollar. For heaven's sake, will the Conservative Front Bench think again?
§ Mr. Peter Rost (Derbyshire, South-East)
No words spoken here today could possibly do justice to the social problems and human tragedies facing many thousands of people and their families who have dedicated perhaps a lifetime to the steel industry. I find it depressing that the situation was entirely predictable and entirely avoidable.
I represent a constituency in which many people work for a British Steel Corporation plant, but far fewer people than used to work there. Since 1970 I have watched a gradual decline of what used to be one of the gems of the British steel industry before nationalisation—part of the Stewarts and Lloyds group, Stanton and Staveley. That was a profitable unit. There was pride of participation. Many employees were shareholders in Stewarts and Lloyds. It was probably the most profitable steel company before nationalisation. Since nationalisation, that unit has gradually declined. First, the iron foundry was closed. Then even parts of the spun pipe business were closed down.
From the figures that are available, it appears that the unit near Ilkeston has continued to make profits—even under nationalisation. What has happened to those profits? They have been siphoned off back to head office and used to subsidise low productivity units in other parts of the country. The result is that a unit in Derbyshire which could have expanded to meet an expanding market has been starved of capital because it has not been allowed to use its own generated cash flow for development. This is why I say that the tragedy we face today was entirely predictable and avoidable.
The steel-using industries in this country have declined—many of them because they have been nationalised. As examples, we have only to look at British Leyland or the shipbuilding industry. Other parts of the steel-using industries, such as heavy engineering, have suffered from severe competition because they have not been sufficiently competitive.
In my constituency, I have just about the largest manufacturer of bathroom and kitchen steel equipment in this country. Whenever I go there, I see an increasingly tragic story of its inability to use British steel sheet, except in declining quantities, because of the inadequate quality and 1648 uncompetitive price. Gradually over the years more and more has been imported. This is just one example. We all know of other examples where the home market for British steel has gradually declined.
What I find so disastrous and so unacceptable is that if the industry had not been nationalised, as it was, in a doctrinaire way, for doctrinaire reasons, we should not be in this position today. The industry under private enterprise had problems, of course, but it is quite untrue that the industry had to be nationalised, as some hon. Members have tried to suggest, because it was not investing or was not getting the capital for expansion and modernisation.
Is it surprising that the industry did not get the money it needed for expansion under private ownership when for several years it was under threat of nationalisation, with vague talk about whether compensation would be adequate or inadequate? Is it surprising that private investors, some years before the industry was nationalised, went on strike because it was under that threat?
Looking at the nationalised industry today, would any hon. Member put his hand on his heart and be prepared to say that if a progressive and profitable company such as Stewarts and Lloyds had not been nationalised it would have failed to take advantage of the biggest boom in steel in the twentieth century—the production of high-quality under-sea-pipe, which we are now desperately having to import, mostly from Japan, to meet the North Sea oil and gas development?
Is it not a scandal that literally every incsh of that high-quality pipe has to be imported because the nationalised industry did not bother to develop the capacity to produce that quality material? How many hundreds of millions of pounds worth of that steel pipe are we having to import? Yet we are only just beginning to develop the continental shelf. The development will go on for the next 20 or 30 years.
How much offshore oil and gas does Japan have? Why did Japan have to develop that industry? It was not because of Japan's home market. We could have scooped the world market—or a large part of it—in that product. Certainly we could have coped with our own home market. Yet we have not the capacity 1649 to handle the biggest growth area in steel today—the development of the under-sea oil and gas pipe.
It is a disaster that the industry was nationalised, and that the centralised, bureaucratic structure siphoned off profits from those areas which could have expanded, in order to subsidise over manning and uncompetitive production in other areas. If there is any blame or guilt to be shared, it should not be with those working in the industry. Many of them regret ever having supported a party that was dedicated to nationalisation. Let anyone ask those who are left at Stanton and Staveley whether they support nationalisation.
The guilty men, or their representatives, are sitting on the Opposition Benches. They are guilty of nationalising the industry, refusing to face the realities of life and not allowing the industry to develop in a competitive manner. Over many years they postponed the inevitable decisions that would have eased the pain of higher productivity and over manning and allowed the industry to remain viable enough to reinvest and remain competitive in world markets. They are the guilty men, and they have much to answer for.
§ Mr. Barry Jones (Flint, East)
The hon. Member for Derbyshire, South-East (Mr. Rost) has not been so animated in debate since his long and sustained campaign in the early 1970s to defend the proposal to end free school milk. There has been a sub-debate on public ownership. We would not have the State steel industry now if there had not been State investment and State leadership.
I hope that the BSC'srecent assurances on the future of the Shotton finishing mill are based on sound assessment. Many of my constituents are disturbed by new speculation of further job losses. Britain has imported over £9 billion worth of foreign motor cars during the past decade, with £2 billion worth being imported in the past year. In 1978 alone, iron and steel imports were over £1 billion. Those are terrifying statistics, and they are worsened by the strong pound.
It is no exaggeration to say that we face a great emergency. There is a crisis 1650 of confidence in the steel industry. Some may say that the BSC is demoralised, and certainly the work force is outraged, resentful and bewildered. The board of the BSC is embattled, the Government are bullying it and the unions denounce it. It appears that the accountants rule and that the balance sheet is supreme.
To attack the BSC might be to make the mistake of blaming the monkey rather than the organ-grinder. My complaint is that the Government are sanctioning measures that are induced by panic. They are simply reading the balance sheet and they are ignoring the social consequences. It is inevitable that higher welfare payments and a lower tax revenue will result from plant closures.
Perhaps, as one sees with the benefit of hindsight, the 1972 plan to modernise the industry went too far in concentrating on large coastal sites. We do not now have a sufficiently flexible response to changing patterns of demand. We are in danger of cutting back too harshly on our productive capacity. When the world demand for steel increases, as it must, our industry will not be able to benefit from the opportunity to export. I fear that Britain may have to import more steel in future.
The Government have blundered by permitting the BSC to offer a miserable and humiliating 2 per cent. pay increase. The Government have allowed a moderate union and its general secretary to be driven into a corner, and in a very public way. The Government, and especially the Secretary of State, are surprised. They are dismayed by the uproar and the threats that have followed. It is a case ofFor, as you sow, you are like to reap".The Secretary of State should compensate the corporation for the loss of its export markets following the strong pound. He should relax his severe financial policies. He should endeavour to obtain a subsidy on coking coal. He needs to listen to the informed viewpoint of steel workers. He should abandon his policy of non-intervention. I hope that he will insist on full consultation by the board with the TUC steel committee. Above all, he should reconsider his policies, especially with a view to avoiding what might be a confrontation. He 1651 should not be afraid of stringent selective import controls if the case for them becomes increasingly stronger.
I previously labelled the right hon. Gentleman as a sort of Count Dracula. Having heard his speech today, I have not changed my view. In the nature of the way in which he is dictating his policies, he will destroy the industrial base of Great Britain. I know for sure that he is draining from the steel industry all its hope, all its confidence and all its vitality. In not many months' time the whole population will bitterly regret the result of the general election and the fact that the right hon. Gentleman was made Secretary of State for Industry.
§ Mr. Deputy Speaker
The Front Bench speeches will start at 9.15 pm. If Back Bench speeches are limited to five minutes each, that will help the Chair to call many of the hon. Members who have been sitting in the Chamber since the debate began.
§ Mr. David Alton (Liverpool, Edge Hill)
I am not sure how helpful the motion will be—it is an attempt to vilify the Secretary of State for Industry—in finding solutions to the seemingly intractable problems of the British Steel Corporation and the National Coal Board and in curing the cancer of unemployment that we face. However, the debate gives us the opportunity to articulate the fears, frustrations and worries of many of our constituents. The Secretary of State must realise that the rigid, doctrinaire monetarist approach that he and his Government are pursuing is leaving us with a legacy of chaos in many communities throughout the land. In many ways I believe that he and his colleagues are sleepwalking to disaster.
The right hon. Gentleman claims to be the guardian of the public purse. He claims to be concerned about safeguarding public expenditure. However, as many hon. Members have said today, the measures that he is introducing will inevitably lead to more money being spent on unemployment benefit and social security and on curing many of the problems that large-scale and widespread unemployment will cause.
There has been an over-reaction to the "money-grows-on-trees" mentality of the right hon. Gentleman's predecessors. I 1652 believe, as he does, that throwing money at problems is like putting poultices on wounds. I do not go along with the view that we should go to the other extreme and say that we must never intervene and never participate in trying to save jobs, to save livelihoods and to try to help those who will suffer as a result of Government initiatives.
I bring to the right hon. Gentleman's attention the problems on Merseyside. In that area there are now 25 people trying to get every job that becomes available. About 12 per cent. of the population is unemployed. That 12 per cent. represents about 86,000 people, which is more than the entire number of jobless in Wales or Northern Ireland. I think that everyone must accept that the unemployment-vacancy ratio more accurately reflects the prospects of employment in an area. As I have said, on Merseyside there are 25 people pursuing every vacancy. It is almost a pit of despair in which every door is marked "No Exit". For anyone who is registered under the category of general labourer, the prospects of obtaining a job are even more remote. There are 145 vacancies in that category for 32,272 unemployed, a ratio of 222: 1. By anyone's standards those are long odds.
I shall have to forgo many of the remarks that I wanted to make in view of your stricture, Mr. Deputy Speaker. I understand the reasons for that.
The Minister of State intervened yesterday, quite rightly, in the Mecca no dispute in Liverpool where a further 1,000 people are being thrown on to the scrap heap of unemployment. The Minister rightly said that the Mecca no company was acting like an eighteenth century mill owner. In circumstances like those, there is sometimes room for Government intervention. The Government should play their part and not abdicate their responsibilities.
The Secretary of State should address himself to several questions. Will employment on the present scale always be necessary, desirable or even possible? How and by whom should work be organised? How should business organisations be established and to whom should they owe duty? How should their existing and future wealth be distributed? How should the financial institutions be organised, and how should finance be 1653 made available to industry? Should we have growth under any circumstances, and how large should an organisation be allowed to become?
The Secretary of State should also ask himself whether different shades are possible between free enterprise and the nationalised industries. Above all, any fundamental re-examination of work and industry must recognise the value of experience and the danger of strikes and lost confidence arising from the overthrowing of existing rights and jobs, which is what the Secretary of State appears to be doing.
I believe that we must devise a social and economic system in which there is no inherent conflict between the aims of efficient enterprise and the public good. We need a new approach to enterprise, management, work and related economics. We should replace existing princoples of free enterprise, company law and the purpose of work while acknowledging past experience.
We need a new system of democratic enterprise and work which involves an insistence on a participative style of management. We need to recognise the interests of employees and the public and the need for a fundamental change of economic and tax policies. We should aim for an equality of economic opportunity by major degrees of employee financial participation in, or ownership of, existing firms and by means of new, employee-owned firms.
That system would create incentive and opportunity and reject bureaucracy and centralism. It would not necessarily rely on growth and would always aim for quality of life. It would not accept that people should be thrown on to the scrap-heap of unemployment from which there is no return.
The Secretary of State should address himself to these questions and not walk away from the legitimate responsibilities of this Government. Those responsibilities come with office and no Secretary of State, whoever he may be, has the right to abdicate those responsibilities.
§ 9.2 pm
§ Mr. Donald Coleman (Neath)
We on the Opposition Benches do not hide our anger in this debate. Why should we 1654 when anger and bitterness have become the order of the day in the communities that we represent?
More than 500,000 of our people were forced to leave Wales between 1921 and 1939 to look for work as a result of the great depression of the Welsh economy. Some members of the Tory Party have treated those facts as a myth—as the folklore of the valleys. Once again, under a Tory Government the spectre of depression of the 1930s, and what it did to Welsh men and women haunts the people of Wales.
We have been told that we are to expect redundancies of between 11,000 and 15,000 as the result of the announcement from the British Steel Corporation this week. The Western Mail—a newspaper not noted for its support of the working people of Wales—has put the figure of 15,000 before us. It has told the Tory Government that, unless a new regional policy is fashioned to cope with the latest crises, Wales is destined to become an economic wasteland and to remain one.
For us in Wales it would seem—as it would in other steel communities of the United Kingdom—that the right hon. Member for Bourn mouth, West (Sir J. Eden) and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) told the truth about Tory plans for the steel industry when they spilt the beans during the Administration of the right hon. Member for Sidcup (Mr. Heath) and were sacked for their honesty.
The offspring of Selsdon man and the Iron Lady have visited us in Wales with the most disastrous consequences. Our troubles rest not only on what will happen as a result of the swingeing cuts in capacity and employment in the BSC. The National Coal Board has also warned that the loss of outlet for coking coal is likely to mean the shutdown of a further 11 South Wales collieries with at least 8,250 redundancies in the mining industry. The NCB has also warned us that such a situation would throw into chaos the long-term investment programme to put the coalfields back on a solidly profitable footing.
We must also remember the plight of the ancillary industries to the two giants. "Mr. Pastry" and "Black Bob" are humorous nicknames, but there is nothing humorous about what Villiers and 1655 Scholey have done to the people of Wales. The level of unemployment will rise to 12 per cent. or 15 per cent. in Wales, but there are no redundancy proposals for that non-productive steel plant in Grosvenor Place. That is where the loss-makers in the industry are to be found.
There is strong feeling against Villiers and Scholey, but the role of the Secretary of State for Industry is worse. He seems to be hell bent on destroying us. He knows that the BSC cannot break even by March 1980. That is not on. His insistence on holding the BSC to an undertaking which was given in a moment of euphoria is beyond comprehension.
The Secretary of State has taken away our regional assistance. That makes hopeless the task of bringing new employment to Wales on the scale needed to cope with the enormity of the unemployment which faces us. Wales deserves better than the Secretary of State. The Secretary of State for Industry should know about the fragility of the Welsh economy and that monetarist policies and theories applied to the Welsh economy will spell its death knell. The right hon. Gentleman enjoyed a fair reputation in Wales. Does he want the Tory Party to preside over a devastated Wales in the 1980s and 1990s as it did in the 1920s and 1930s? For the sake of the people of Wales, I hope that he does not.
§ 9.7 pm
§ Mr. D. N. Campbell-Savours (Workington)
I thank you, Mr. Deputy Speaker, for calling me so late in the debate.
Much of the debate has been about the tragedy in the traditional steel-producing areas. I speak in the debate in order to try to avoid a similar tragedy in my constituency. Workington is a major producer of pig iron, and voices are being raised about future pig iron capacity. Alarm bells are being rung. Of a work force of 5,223, 1,100 workers in my constituency work in the pig iron section of the BSC. We have the only United Kingdom blast furnace for pig iron. We contribute £35 million a year to the balance of payments.
The future of pig iron capacity in the United Kingdom relies on the capacity being maintained at Workington. There 1656 has been a reduction in the domestic production of pig iron. In 1976 we produced nearly 500,000 tonnes. It is forecast that by 1980 that figure will be down to about 340,000 tonnes, or even lower. That decline in the pig iron industry stems from a number of reasons. The prime reason is new technology and its effect on pig iron content in castings. Recessions in the automobile, building and engineering industries, as well as in the steel industry, have also contributed.
There has been a reduction in the output of castings in the United Kingdom. In 1965, 6 million tonnes were produced but in 1979 only 3 million tonnes will be produced. That is a 50 per cent. reduction, and it is declining even further with the closure of foundries. We are subjected to intense pressure from import competition from the Brazilians, who have been found to be subsidising the export of pig iron to the tune of 70 per cent. In America they have to petition for relief against these aggressive levels of imports.
The Brazilians now take 5 per cent. of the domestic market in the United Kingdom, but their share is exceeded by the Germans, who now take 18 per cent. of the British market, with 60,000 tonnes. They have had no increase in the price of their pig iron in our market for five years and yet throughout this country the pig iron price has had to be raised by 300 per cent. in the same period. Yet it can be proved that the German pig iron industry is losing money, and one of its major companies nearly went bankrupt last year and had to be rescued by one of the municipal authorities in Germany. They have refused to reduce their capacity since 1973 and their whole intention is to dominate the European pig iron market.
The response of the British Steel Corporation has been to negotiate bilateral agreements with the pig iron producers in Germany, but the Germans are now breaking those agreements and in doing so they are doing immeasurable damage to my constituency. As a result, whereas in 1976 we had three blast furnaces in operation in Workington producing pig iron, by 1977 we had two, and now in 1979 we have effectively one and a half, since the second furnace is not producing to maximum capacity.
1657 The problem that we now have in Workington is that we are on the borderline of viability in our pig iron producing capacity and we cannot afford to lose more business. If the Government do not take drastic action and are unwilling to intervene in this particularly difficult area, the future of many jobs in my constituency will be jeopardised. We want the Government, through the European Commission, to support the British Steel Corporation in its efforts to obtain fair trading arrangements with the Germans and to stop the irresponsible activity in our market.
Last week I put down a question to the Department of Industry which asked the Ministerwhat is his long-term policy on the maintenance of a pig-iron producing capacity in the United Kingdom?I got an appalling answer:The future of its pig iron producing capacity is a matter for the British Steel Corporation. Pig iron capacity in the private sector has all been closed or mothballed as uneconomic."—[Official Report, 10 December 1979; Vol. 975, c. 460.]Incidentally, that reply was from an hon. Member who was a former employee of the steel industry in Workington in the 1960s.
The British Government must have a policy for pig iron production in the United Kingdom, because unless they are willing to formulate a policy large numbers of jobs in my constituency will be put at risk. I believe that it is the duty of this Government to enter into a positive partnership with the trade unions and with the management of the British Steel Corporation to rescue jobs wherever it is possible, in the national interest, and to preserve constituencies in the Northern region like mine that have problems of increasing unemployment. My hon. Friends have been agonising over their closures. Let us hope that we can see some change in the future.
§ Mr. Donald Anderson (Swansea, East)
I have three questions for the Secretary of State.
I ask the right hon. Gentleman to give the best possible estimate of the total job loss in South Wales as a result of these proposals by the British Steel Corporation. Secondly, if the Government will 1658 not fund the operating loss of the BSC—and we know that there will be an operating loss in the financial year 1980–81, because the £300 million-plus lost this year will not be turned into a positive situation next year—what will be the effect? Will we see the BSC defaulting on wages and defaulting on payments to its suppliers, because it will then be technically bankrupt?
Finally, will the right hon. Gentleman prevail upon his right hon. Friend the Secretary of State to leave his monastery to visit South Wales to capture the bitterness and foreboding as we see our own regional economy crumbling? If he makes that visit, will he still adopt the philosophy of the folded arms and still remain on the sidelines as our regional economy in South Wales crumbles even further as a result of this Government's policy?
§ Mr. Michael Foot (Ebbw Vale)
I believe that the debate can help to awaken a feeling about the seriousness of the situation not only in the House, but throughout the country. I do not believe that the Government's response has been satisfactory in any sense whatever, as I shall seek to explain. I do not think that anyone who has listened to the whole debate, as I have, can doubt the strength of feeling in all affected areas.
My hon. Friend the Member for Consett (Mr. Watkins) made a speech that the whole House should study and remember. We hope that it will also have an effect on Government action. But that applies to the speeches made by all my hon. Friends who have referred to the problems in the threatened areas in their constituencies.
The Secretary of State for Industry did at least say that we were facing the most severe depression in modern times—and we are.
§ Mr. Foot
He now says "For steel". I think that the qualification should be removed. The right hon. Gentleman might be wiser if he removed the qualification.
We are facing the most serious depression in the steel industry for generations. Indeed, many of us believe that, looking at the world scene, we are facing the most 1659 serious crisis since the 1930s. Because of that and a combination of facts, we believe that the Government's response is squalidly inadequate for dealing with the situation.
The right hon. Gentleman should have dealt more extensively and openly than he did with many of the questions posed by my right hon. Friend the Member for Rhondda (Mr. Jones) and others who spoke later in the debate who have raised matters previously.
The right hon. Gentleman said that there were to be further discussions about coking coal. That is inadequate. He knows that there have already been long discussions. For example, he knows the figures. They have been given to him by my right hon. Friend the Member for Rhondda, my hon. Friend the Member for Rother Valley (Mr. Hardy) and the National Union of Mineworkers. The Government have the figures. They must know that it is not possible to defend absolute non-intervention regarding coking coal. There are subsidies in other countries. Therefore, the Government must consider whether to continue to adopt this non-interventionist policy and condemn to disaster not only the steel industry but a considerable section of the coal industry.
When the Prime Minister has replied to questions in the House on this matter, she has taken a more non-interventionist attitude than the Secretary of State for Industry, if that is possible. The Government have so far shown no inkling of a recognition of what they face in this respect and what Wales and the coal industry face. It would be a calamity not only for Wales but for the whole country if, at a time of wolrdwide energy crisis, the Government, because of their theories and their refusal to intervene and to contemplate a subsidy for a period, were to allow such grievous wounds to be inflicted on one of the industries on which we depend mainly for our future.
Therefore, we suggest that the Government's response—in particular the Secretary of State's response—on that subject has so far been totally unsatisfactory, and we hope to have something better in the replies that they attempt to give in future.
§ Mr. Whitney rose—
§ Mr. Whitney
I am grateful to the right hon. Gentleman. I came into the Chamber before he began speaking. I do not deny that there is a case to be examined as regards coking coal, but does the right hon. Gentleman agree that the public money that has been given to the BSC and to the National Coal Board may be considered by other countries to be the equivalent of subsidies?
§ Mr. Foot
Other countries may think that, but, in the light of what happens to coking coal subsidies in other countries, we want to know whether the Government will defend the interests of the British coal industry and the British people.
My second reason for saying that the Secretary of State's speech was inadequate is that he made no attempt to describe what the Government intend to do in order to deal with the serious economic and social consequences of events in Wales and other parts of the country—acknowledged by the Secretary of State—if the Government's policy is pursued.
The Secretary of State claimed that he had foreseen these events. He shakes his head, but the Prime Minister said only today that these closures were long overdue. The right hon. Gentleman has been saying that the Government have been too slow in taking these measures. However, when it comes to the closures that will affect the livelihoods of people and whole communities, the Government do not bring forward any comprehensive plan. The Secretary of State's words have only given rise to worse confusion, if that is possible.
When my right hon. Friend the Leader of the Opposition cross-examined the right hon. Gentleman about what would happen to the steel industry, steel workers, their customers and all other industries dependent upon them if the Government adhere to their decision to bring down the chopper on 31 March next year, the Secretary of State did not give any answer. One may draw the conclusion that he is prophesying further closures, in addition to those forecast by the BSC.
1661 On all those counts, and there are more, the speech of the Secretary of State was quite inadequate to deal with what he himself described as the most serious depression and crisis in this industry. He is responsible to this House and to the country, however much he may try to shed those responsibilities.
I stress that criticism in the light of the Prime Minister's replies to questions this afternoon. I do not know whether Conservative Members, and in particular the Secretary of State, appreciate how offensive it is to places such as Consett to be told by the Prime Minister that those closures are long overdue. I notice an attempt to withdraw that remark on behalf of the Prime Minister, and that is not surprising. Does the Secretary of State still think that these closures are long overdue? The Government cannot say that about Consett, nor about many of the other plants. The Prime Minister and the Secretary of State should never have spoken in that manner about a major crisis in a major industry.
Of course, the major deficiency in the Secretary of State's speech, apart from the items that I have already listed, is that the right hon. Gentleman does not face the important issue. He does not face the major issue of what is to happen to an industry of this nature and significance in our economy at a time of worldwide slump. For the right hon. Gentleman at such a moment merely to fall back on preaching the doctrines of pure competition, as he did, shows how utterly unfitted he is for this office.
Consider, for example—if anyone wishes—the defence industry. What nonsense it is for the Prime Minister to go around the world shaking her fist at the Russians with one hand while at the same time strangling the coal and steel industries of this country with the other. [Interruption.] Conservative Members who have just come in during the latter part of the debate have not appreciated the serious nature of what we have been discussing. We have been discussing the whole future of an industry upon which our defence industry will have to depend in the future. On those and other grounds, we say that it is quite untenable for the Government to have said that they accept the proposition of a 15 million tonne 1662 figure as the right figure for steel production in this country.
It is on that basis that the Government have apparently supported what is being proposed. Indeed, the actions of the Government have been largely responsible for the BSC having to come forward with such propositions. But on a variety of grounds, partly the ones that I have mentioned but also with regard to the future economy of the country, we are not prepared to accept that steel production in this country—a great industrial nation with a great industrial future ahead of it if we can organise our affairs properly—can be based on a figure of 15 million tonnes.
I know that the BSC has said that there is a possibility that there will be a slight enlargement of that figure and that some facilities have been left for that purpose. But the top figure that has been suggested is 17 million tonnes. We believe that that is a doubtful figure. We believe that, in order to maintain the well-being and future of a great country such as ours, steel production should be worked and planned for on a considerably higher basis than that, particularly when we are importing huge quantities of steel at the present time.
There are a variety of different reasons for that, but that is all the more reason for not putting out of existence the capacity to make up for those steel imports. [HON. MEMBERS: "Why?"] It is no good hon. Members asking "Why?" There are a variety of reasons, but the principal reason is the one that the right hon. Gentleman acknowledged at the beginning of the debate. It is that we are facing the biggest worldwide recession in the steel industry that we have ever known. That is the principal cause of the difficulty which the steel industry has had to face, and the right hon. Gentleman acknowledged that.
The right hon. Gentleman asks that in the case of the steel industry we should follow his precepts and what he is recommending. The right hon. Gentleman might make such a recommendation because he felt that the Government had been so brilliantly successful in other respects. Even though he does not know very much about steel, had he been so brilliantly successful in the touch that he and his fellow members of the Government have shown in dealing with other 1663 economic affairs, we might have been prepared to take him on trust. But they have failed in almost every other respect. Indeed, in almost every other respect they have contributed to the problems of the steel industry.
The Government's policies on currency, interest, and tackling inflation have all contributed greatly to the crisis of the BSC. In the last few months, that crisis has been greatly aggravated. Of course, hon. Members do not have to take my word for that. I know that I am not always taken immediately on trust by all Conservative Members. However, recently there was a good article in the Financial Times by a Mr. Anthony Harris, who gave an account of what he thought had happened to the application of the policies for which the right hon. Gentleman had been responsible—his monetary policies and his general outlook. Mr. Harris wrote:The sad fact is that the first few months of the experiment have been almost a solid setback. Monetary targets have not made trade unionists rational or businessmen competent and now the very methods used are under question. But so, unfortunately, are the methods used by the would-be reformers. The automaticity"—he used that horrible word—so beloved of the theorists looks in real life like a Frankenstein monster with several screws loose.I am sure that that is not a reference to the right hon. Gentleman.It is a scheme of Byzantine complexity when all the major indices of money supply are moving in different directions.Of course, that is what has happened in the last few months. Every monetary policy advocated by the right hon. Gentleman—all those policies on which he made such converts of the right hon. Lady the Prime Ministers and others—has been applied during the past two or three months with such effect that already they are having serious consequences in one industry after another.
We claim that the main objective in facing what the right hon. Gentleman has described as the worst depression for generations must be to sustain throughout that depression, recession or slump some of the great basic industries of this country. Among them, we say, are coal and steel. It would be a tragedy of the first order for this country—not merely Wales, Scotland, Durham and the places 1664 where coal and steel are produced—if we allowed those basic industries to go out of existence.
There was a debate on steel in the previous Parliament, in which the right hon. Member for Sidcup (Mr. Heath) spoke. I know that the Prime Minister does not like the introduction of that right hon. Gentleman's name in this Chamber, but he made out a reasonable case. He said that if some of these great industries go to the wall, that does not mean to say that other industries will sprout up in their place, particularly in a period of recession. We are discussing Wales in particular tonight, and the Secretary of State for Wales will be replying to the debate. It is a question not only of what has happened throughout the country and our determination to ensure that we do not allow the basic industries to be destroyed but of whether the Secretary of State for Wales, whose salary needs to be reduced even more dastrically than that of the Secretary of State for Industry, has the intention of carrying out the undertakings that he gave when he and others were returned to the House in the May election.
The Conservative manifesto said:We shall continue to see that adequate resources are found for the public sector, particularly the productive public sector. We shall continue the modernisation of the coal and steel industries that are still so important in Wales.Instead of attempting to pursue that policy, the Government, in the past few months and particularly in the past few weeks, will deal to the coal and steel industries the heaviest blows that they have had to bear for generations. We will fight those proposals. We shall resist them with everything in our power. In the House of Commons we shall return to these subjects time and again. Soon after we return at the beginning of next year we must face them again in one form or another. The Opposition are determined to save British industry from all the ravages not only of the recession but of the Prime Minister and the Secretary of State for Industry and their right hon. and hon. Friends.
The Secretary of State for Wales (Mr. Nicholas Edwards): The right hon. Member for Ebbw Vale (Mr. Foot) gave us a lecture on the brilliantly successful 1665 management of the economy—or the failure to manage it with brilliant success. Some may feel that we are suffering today from the consequences of the management of the economy during the past five years and that that is one of the problems facing the steel industry today. He talked about the Conservative Party pledge to continue to give support to the productive public sector. That, of course, is what we are doing and why, in this current year, some £700 million is being given to the steel industry and another £450 million next year.
The right hon. Gentleman opened his speech by referring to the concern that was expressed in the House. No one concerned with industrial affairs in Britain, no one concerned about his fellow men and women, no one concerned about Wales—and certainly no one in my office—could fail to be shocked and dismayed by the scale of the industrial and social situation with which we are faced.
The right hon. Gentleman is not alone in understanding the harsh realities of what is happening. I, as Secretary of State, have in Wales the responsibility for responding to it. The right hon. Gentleman has every reason to understand what that responsibility must mean as he has personal experience of it. As a leading member of the last Government, he played his part in the dicision to close the steelworks that formed the heart and soul of his constituency in Ebbw Vale. That was a difficult decision. It meant 4,000 jobs lost. This afternoon the Leader of the Opposition reminded us that for him the closure of East Moors, under Labour, with the loss of over 3,000 jobs, was almost as traumatic an event for his constituency. I hope that at least the right hon. Member for Ebbw Vale will give my right hon. Friend and me the credit for understanding and regretting what is involved. I for one would certainly find another way if there were one. It is very tempting to cast around desperately for alternatives and put off the evil day, yet if we do that the price to be paid may be even higher.
We are faced in the world situation by the realities of market demand and competitiveness. Although we may dodge them for a bit, in a remorseless way they catch up with us in the end as there is a 1666 limit to the amount that we can spend, borrow and extract from other productive industries in order to disguise the lack of a buyer for our product.
The Labour Government knew that. In their 1978 White Paper they saidThe over-capacity that would result from unchanged policies would be more costly than either the Corporation or the country can afford.The hon. Member for Wrexham (Mr. Ellis) made the point in a striking fashion in a debate in the Welsh Grand Committee in May 1975. He warned that we should not confuse the task of saving jobs with that of saving the steel industry. He said:One must ask the question: what market in steel is required to absorb the output of the British steel industry with its present manning, at a level of productivity comparable to that of our foremost competitors?…the basic point is simple…unless we rapidly alter the technical efficiency of the steel industry in Wales…the whole of the Welsh steel industry is doomed. That is the question we must face."—[Official Report, Welsh Grand Committee, 7 May 1975; c. 85. 86.]He was right.
However, the previous Government failed to face it adequately. They paid lip service to it. Apparently they did not mean it. They were not really prepared to see their words carried into effect. Now we face the consequences. The reality that the hon. Member for Wrexham recognised four years ago is with us with a vengeance. Despite the steady fall in demand throughout the period from 1975–76 and the clear evidence that we could not match our competitors, nothing like enough was done. The tragedy that we now face—it is a tragedy—is due to the fact that everyone has been dodging reality for too long.
I have been reminded that in the Welsh Grand Committee on 21 November I commented upon the improved output at Llanwern and Port Talbot in recent months. I had been encouraged by what I had heard from BSC management about the co-operation received at that time towards demanning. But it has happened too late. It may come as a surprise to hon. Members to learn that the numbers employed today at Llanwern are actually higher than five years ago. A little over 9,000 are now employed there. All those jobs are at risk because of the failure to recognise that one could not sell steel, 1667 particularly in a declining market, if one needed more than twice as many people as one's competitors to make it.
§ Mr. Alec Jones
If the right hon. Gentleman is now in a position to give these figures on over manning, why did he not give them to the Welsh Grand Committee? Did he ask the management of British Steel what was the situation on the very figures that he has now mentioned to the House?
§ Mr. Edwards
I asked the management of British Steel. I was told that there must be considerable demanning. We all knew that. I went on to say it in the Grand Committee.
§ Mr. Edwards
I hope that the right hon. Gentleman, who is a man I respect, will have the honour to withdraw that remark. If he looks at what I said—
§ Mr. Speaker
Order. I did not hear the remark. But if it was the word "liar" the right hon. Gentleman should withdraw it.
§ Mr. Alec Jones
If I used a word that is offensive to the House, I withdraw it. But the right hon. Gentleman did not make that statement in the Welsh Grand Committee. He knows it.
§ Mr. Edwards
I talked about the need for continuing improvement. The right hon. Gentleman knows it. The right hon. and learned Member for Aberavon (Mr. Morris) told us that the workers at Port Talbot had met every requirement on international manning levels. The fact remains that BSC needs twice as many men to make a ton of steel as almost all its competitors. The hon. Member for Motherwell and Wishaw (Dr. Bray) pointed out that only 5,000 were employed at Ravenscraig, not the 12,000 there are at Port Talbot.
Sir Charles Villiers admitted in September that BSC's productivity was the lowest in the world and that, despite the expenditure of more than £3,000 million over the last four years and the commitment by this Government of another £450 million next year, we were still at the bottom of the league table. By almost every index of measurement, BSC's 1668 performance is worse than that of its competitors. That is why BSC is now in no condition to withstand the sharp fall in demand that has occurred. BSC believes that there is not sufficient market for its steel and that long-term trends are poor. It is that situation and that conflict between the competitive position of BSC and its market that is the cause of the present crisis, not the financial target set by my right hon. Friend.
§ Mr. Anderson rose—
§ Mr. Edwards
Having accumulated over £1,300 million of losses over the last four years, BSC found itself in the position where it was likely to be operating at more than 25 per cent. below capacity. In that situation, no steel company in the world could remain competitive and losses were bound to accelerate upwards again.
§ Mr. Anderson
Will the right hon. Gentleman comment on the fact that the BSC has decided, as an act of policy because of the overvalued pound, to go out of 2 million tons in the export market? That 2 million tons is the equivalent of the output from Port Talbot or Llanwern.
§ Mr. Edwards
The fact remains that, despite the difficulties and problems, BSC is still exporting more than it imports. It is clearly important that it should continue to maximise those markets.
Running steel plant at reduced capacity, particularly at the heavy end, is expensive, as the hon. Member for Newport (Mr. Hughes) recognised in his speech. Energy and raw material costs per ton of iron rise dramatically and quality suffers if blast furnaces are not run close to their design capacity. That is the situation which forces action. If the BSC failed to react, its very existence would be threatened.
Government policies, financial targets and cash limits do no more than highlight the essential need rapidly to adapt to the market if the long-term future of the business is to be saved.
Dodging the issue in the past has brought us to the point where the existence and sheer survival of the British steel industry depends on bringing capacity into line with demand and on reducing the manning levels to those of our competitors.
1669 Whether steel making survives at all at Llanwern, Port Talbot, Scunthorpe, with its reduced level, Sheffield, Red car, Lackenby and Ravenscraig is critically dependent on adequate utilisation. If there can be no dodging of the need to cut capacity, it is fair to ask, as did the right hon. Member for Rhondda (Mr. Jones) and the right hon. and learned Member for Aberavon, about the assumptions made by the BSC, its assessment of the market, the viability of its plan and its management record. They are legitimate questions. I have asked them all myself.
I have to tell the House that the Government have no reason to question BSC's judgment on the size of the market. All previous forecasts have proved too optimistic. It seems a long time since we foresaw a requirement for 36 million to 38 million tons of steel-making capacity by the early 1980s. If the estimates are too low, the corporation can, by reactivating existing plants, quickly raise capacity to 18 million tons and, over a longer period, to a great deal more.
The right hon. Member for Rhondda and other hon. Members asked about imports. I do not believe that import controls are a solution. Imports from non-Community sources are already the subject of voluntary restraint agreements between the Commission and the main supplying countries as part of the Commission's anti-crisis measures.
§ Mr. Edwards
I have already given way to the right hon. Gentleman, and I should like to finish the point that I am making.
Imports of finished steel have generally remained fairly stable, in the region of 21 per cent. of total deliveries in the United Kingdom, since 1975. Imports of sheet and plate have fallen and the United Kingdom is exporting ½ million tons more than it imports.
The only sure way of recapturing a larger share of the domestic market is by being competitive in price, quality and service. Import controls must mean higher prices, poorer material for customers and a higher burden on important customers 1670 such as British Leyland. I do not believe that hon. Members should be requesting that.
§ Mr. Alec Jones
If that is now the Secretary of State's view on import controls, why did he send a letter to the Welsh Trades Union Congress indicating that there was a place for import controls when massive redundancies and dislocation were taking place? That is what the Secretary of State said in a letter that went from his office to the Welsh TUC.
§ Mr. Edwards
What I said has been said by my right hon. and hon. Friends on previous occasions. When unfair subsidised imports are destroying markets, temporary action is required to deal with that.
The right hon. Member for Swansea, West (Mr. Williams) suggested that other countries subsidised their steel industries while we did not. Over the past four years, more than £3,000 million has been put into our steel industry and £1,250 million has gone into losses. If that is not subsidising our steel industry, I do not know what is.
A number of hon. Members asked about the effect on coal. It has been argued that the British Steel Corporation's plan will lead to pit closures. It is not the plan that will do that but the inability to sell steel. Additional steel capacity does not require one ton of extra coal. It is the ability to manufacture and sell steel which requires coal.
The issue of coking coal imports was raised. It is imperative that BSC has commercial freedom to purchase its raw material requirements when it wishes and where it will obtain the best deal, taking account of price and quality. I am sure that that is in the best interests of all those who work in the steel industry.
The Government do not exclude the possibility of a coke and coal subsidy but it must be the outcome of a proper agreement between the two nationalised industries. Those discussions are taking place and my right hon. Friend the Secretary of State for Energy will meet the chairman of the National Coal Board and the unions on this subject on Tuesday. We must await the outcome of those discussions.
The right hon. and learned Member for Aberavon asked about redundancy 1671 payments and the possibility of BSC breaking even in 1980–81. The Leader of the Opposition asked the same question. On redundancy payments, the provision of £450 million next year is expected to cover redundancy costs as well as further investment. I confirm that on present assumptions, and if planned proposals are implemented in the time proposed, BSC expects a profit over 1980–81 taken as a whole.
I turn now to the speech made by my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown), who asked for help for his constituency during the transition period. I understand my hon. Friend's concern. He said in the House on 7 November thatif we encourage the high-cost new plants to operate below their capacity we shall build up a tremendous problem for the steel industry in future. No steel worker will forgive us if we fail to take the urgent steps that are necessary."—[Official Report, 7 November 1979; Vol. 973 cc. 479–80.]My hon. Friend went on the say this afternoon—I am sure he is right—that we cannot continue to make steel and drop it around the country. That is the problem that we face.
The right hon. Member for Rutherglen (Mr. MacKenzie) raised a number of points. I shall see that the comments he made about the Scottish steel industry are referred to the chairman of BSC, and my hon. Friend the Under-Secretary of State for Scotland will write to him about the Scottish Development Agency. The right hon. Member asked about BSC (Industry) Ltd. and its funding. I know that the steel workers' trade unions and everyone involved in the steel closure areas have a high regard for the activities of BSC (Industry) Ltd. I assure the right hon. Member that the finance for BSC (Industry) Ltd. can be provided out of the restructuring funds that will be made available, and it is up to BSC to decide on the amount it allocates to BSC (Industry) Ltd.
The hon. Member for Consett (Mr. Watkins) spoke in moving terms about the affairs of his constituency, and I shall say a word more about that in a moment. He spoke about the advance of Consett to viability and the threat that it was now under, which seemed so unfair in present circumstances. I would not quarrel with what he said about the plant and the men at Consett. However, 1672 if one has a nationalised industry one is bound to plan nationally, and that may mean sacrificing one plant to improve the loading of another. Had Consett been in independent, private hands it might well have survived. On the other hand, it must fairly be said that it might not have received the investment that has taken it to its present state.
§ Mr. David Watkins
Is the Secretary of State seriously saying that Consett must be sacrificed to make other places viable? If so, what are these places?
§ Mr. Edwards
It can make little sense to BSC to have large, modern plants, in which there is huge investment, not being fully utilised.
I turn to the question of the scale of the problem. No one can doubt that it is enormous. Although it is true that we are in this position because of the failure of action in the past and because every interference by the Government in the internal management of the BSC has been disastrous, it is the present communities that suffer the consequences. It is right for every Government to cushion the violence of change, ease the impact of closure and encourage further employment.
I make no attempt to disguise the scale of the problem that we must tackle. [Interruption.] I hope that hon. Members want to hear about the remedial measures. I made it clear when I outlined what we will do at Shotton that we attach the highest priority to taking effective action in these areas. I have no doubt that even more formidable action will need to be taken on a considerable scale in the areas that are now affected.
The Prime Minister made it clear earlier today, as did the Secretary of State, that we recognise the obligation of the Government to take effective action. But until we have the final plans, particularly in South Wales, for the way in which the closure will be carried out, I cannot be specific about the areas that will be considered for upgrading under regional policy provisions or what particular assistance should be generated for those areas. I shall consult the Welsh Development Agency and BSC (Industry) Ltd. about the level of the programme that will be made available. They have a smaller budget, but we made it clear in Shotton that additional funds will be 1673 made available to meet the new problems that we face.
In this debate hon. Members have expressed shock and dismay at what is happening. I share those feelings. I have committed the Government to vigorous action to tackle the social and industrial consequences. But I cannot accept that it would be right for the Government to intervene to stop BSC from carrying out its life-preserving task of restoring its competitive position. Nor can I accept the blame and criticism that have been heaped upon my right hon. Friend and this Government. The blame lies with
§ those who shirked taking the necessary measures for so long. They knew the realities, they spelt them out and then they ran away from their responsibilities. The blame lies with those who missed the opportunity for a phased rundown as a new capacity came on stream and the market shrank. Thousands of people will now suffer the consequences of that failure of the Labour Government.
§ Question put,
§ That Class IV, Vote 24 be reduced by £10,000 in respect of the salary of the Secretary of State for Industry:—
§ The House divided: Ayes 253, Noes 310.1677
|Division No. 126]||AYES||[10 pm|
|Abse, Leo||Douglas-Mann, Bruce||Johnson, James (Hull West)|
|Adams, Allen||Dubs, Alfred||Johnson, Walter (Derby South)|
|Allaun, Frank||Duffy, A. E. P.||Jones, Rt Hon Alec (Rhondda)|
|Alton, David||Dunn, James A. (Liverpool, Kirkdale)||Jones, Barry (East Flint)|
|Anderson, Donald||Dunnett, Jack||Jones, Dan (Burnley)|
|Archer, Rt Hon Peter||Dunwoody, Mrs Gwyneth||Kaufman, Rt Hon Gerald|
|Armstrong, Rt Hon Ernest||Eadie, Alex||Kerr, Russell|
|Ashton, Joe||Eastham, Ken||Kilroy-Silk, Robert|
|Atkinson, Norman (H'gey, Tott'ham)||Edwards, Robert (Wolv SE)||Kinnock, Neil|
|Bagier, Gordon A. T.||Ellis, Raymond (NE Derbyshire)||Lambie, David|
|Barnett, Guy (Greenwich)||Ellis, Tom (Wrexham)||Lamborn, Harry|
|Barnett, Rt Hon Joel (Heywood)||English, Michael||Lamond, James|
|Beith, A. J.||Ennals, Rt Hon David||Leighton, Ronald|
|Benn, Rt Hon Anthony Wedgwood||Evans, loan (Aberdare)||Lestor, Miss Joan (Eton & Slough)|
|Bennett, Andrew (Stockport N)||Ewing, Harry||Lewis, Arthur (Newham North West)|
|Bidwell, Sydney||Field, Frank||Lewis, Ron (Carlisle)|
|Booth, Rt Hon Albert||Fitch, Alan||Litherland, Robert|
|Boothroyd, Miss Betty||Flannery, Martin||Lofthouse, Geoffrey|
|Bottomley, Rt Hon Arthur (M'brough)||Fletcher, L. R. (Ilkeston)||Lyon, Alexander (York)|
|Bray, Dr Jeremy||Fletcher, Ted (Darlington)||Lyons, Edward (Bradford West)|
|Brown, Robert C. (Newcastle W)||Foot, Rt Hon Michael||Mabon, Rt Hon Dr J. Dickson|
|Brown, Ronald W. (Hackney S)||Ford, Ben||McCartney, Hugh|
|Brown, Ron (Edinburgh, Leith)||Forrester, John||McDonald, Dr Oonagh|
|Buchan, Norman||Foulkes, George||McElhone, Frank|
|Callaghan, Rt Hon J. (Cardiff SE)||Fraser, John (Lambeth, Norwood)||McGuire, Michael (Ince)|
|Callaghan, Jim (Middleton & P)||Freeson, Rt Hon Reginald||McKay, Allen (Penistone)|
|Campbell, Ian||Garrett, John (Norwich S)||McKelvey, William|
|Campbell-Savours, Dale||Garrett, W. E. (Wallsend)||MacKenzie, Rt Hon Gregor|
|Canavan, Dennis||George, Bruce||Maclennan, Robert|
|Cant, R. B.||Gilbert, Rt Hon Dr John||McMahon, Andrew|
|Carmichael, Neil||Ginsburg, David||McMillan, Tom (Glasgow, Central)|
|Carter-Jones, Lewis||Golding, John||McNally, Thomas|
|Cartwright, John||Gourlay, Harry||McWilliam, John|
|Clark, Dr David (South Shields)||Graham, Ted||Magee, Bryan|
|Cocks, Rt Hon Michael (Bristol S)||Grant, George (Morpeth)||Marks, Kenneth|
|Cohen, Stanley||Grant, John (Islington C)||Marshall, David (GI'sgow,Shettles'n)|
|Coleman, Donald||Hamilton, James (Bothwell)||Marshall, Dr Edmund (Goole)|
|Concannon, Rt Hon J. D.||Hamilton, W. W. (Central Fife)||Marshall, Jim (Leicester South)|
|Conlan, Bernard||Hardy, Peter||Martin, Michael (GI'gow, Springb'rn)|
|Cook, Robin F.||Harrison, Rt Hon Walter||Maxton, John|
|Cowans, Harry||Hattersley, Rt Hon Roy||Meacher, Michael|
|Cox, Tom (Wandsworth, Tooting)||Haynes, Frank||Mellish, Rt Hon Robert|
|Craigen, J. M. (Glasgow, Maryhill)||Healey, Rt Hon Denis||Mikardo, Ian|
|Crowther, J. S.||Heffer, Eric S.||Millan, Rt Hon Bruce|
|Cryer, Bob||Hogg, Norman (E Dunbartonshire)||Mitchell, Austin (Grimsby)|
|Cunliffe, Lawrence||Holland, Stuart (L'beth, Vauxhall)||Mitchell, R. C. (Soton, Itchen)|
|Cunningham, George (Islington S)||Home Robertson, John||Morris, Rt Hon Alfred (Wythenshawe)|
|Cunningham, Dr John (Whitehaven)||Homewood, William||Morris, Rt Hon Charles (Openshaw)|
|Dalyell, Tam||Hooley, Frank||Morris, Rt Hon John (Aberavon)|
|Davidson, Arthur||Horam, John||Morton, George|
|Davies, Rt Hon Denzil (Llanelli)||Howell, Rt Hon Denis (B'ham, Sm H)||Moyle, Rt Hon Roland|
|Davies, Ifor (Gower)||Howells, Geraint||Mulley, Rt Hon Frederick|
|Davis, Clinton (Hackney Central)||Huckfield, Les||Newens, Stanley|
|Deakins, Eric||Hudson Davies, Gwilym Ednyfed||Oakes, Rt Hon Gordon|
|Dempsey, James||Hughes, Mark (Durham)||Ogden, Eric|
|Dewar, Donald||Hughes, Robert (Aberdeen North)||O'Halloran, Michael|
|Dixon, Donald||Hughes, Roy (Newport)||O'Neill, Martin|
|Dobson, Frank||Janner, Hon Greville||Orme, Rt Hon Stanley|
|Dormand, Jack||Jay, Rt Hon Douglas||Owen, Rt Hon Dr David|
|Douglas, Dick||John, Brynmor||Palmer, Arthur|
|Park, George||Sheldon, Rt Hon Robert (A'ton-u-L)||Varley, Rt Hon Eric G.|
|Parker, John||Shore, Rt Hon Peter (Step and Pop)||Wainwright, Edwin (Dearne Valley)|
|Parry, Robert||Short, Mrs Renée||Walker, Rt Hon Harold (Doncaster)|
|Pavitt, Laurie||Silkin, Rt Hon John (Deptford)||Watkins, David|
|Pendry, Tom||Silkin, Rt Hon S. C. (Dulwich)||Weetch, Ken|
|Penhaligon, David||Silverman, Julius||Wellbeloved, James|
|Powell, Raymond (Ogmore)||Skinner, Dennis||Welsh, Michael|
|Prescott, John||Smith, Rt Hon J. (North Lanarkshire)||White, Frank R. (Bury & Radcliffe)|
|Race, Reg||Snape, Peter||White, James (Glasgow, Pollok)|
|Radice, Giles||Soley, Clive||Whitehead, Phillip|
|Rees, Rt Hon Merlyn (Leeds South)||Spearing, Nigel||Whitlock, William|
|Richardson, Miss Jo||Spriggs, Leslie||Wigley, Dafydd|
|Roberts, Albert (Normanton)||Stallard, A. W.||Willey, Rt Hon Frederick|
|Roberts, Allan (Bootle)||Steel, Rt Hon David||Williams, Rt Hon Alan (Swansea W)|
|Roberts, Ernest (Hackney North)||Stoddart, David||Williams, Sir Thomas (Warrington)|
|Roberts, Gwilym (Cannock)||Strang, Gavin||Wilson, William (Coventry SE)|
|Robertson, George||Straw, Jack||Winnick, David|
|Robinson, Geoffrey (Coventry NW)||Taylor, Mrs Ann (Bolton West)||Woodall, Alec|
|Rodgers, Rt Hon William||Thomas, Dafydd (Merioneth)||Woolmer, Kenneth|
|Rooker, J. W.||Thomas, Jeffrey (Abertillery)||Wrigglesworth, Ian|
|Ross, Ernest (Dundee West)||Thomas, Mike (Newcastle East)||Young, David (Bolton East)|
|Rowlands, Ted||Thomas, Dr Roger (Carmarthen)|
|Ryman, John||Thorne, Stan (Preston South)||TELLERS FOR THE AYES:|
|Sandelson, Neville||Tilley, John||Mr. Joseph Dean and|
|Sever, John||Tinn, James||Mr. Terry Davis.|
|Sheerman, Barry||Torney, Tom|
|Adley, Robert||Clegg, Walter||Hamilton, Hon Archie (Eps'm&Ew'll)|
|Alexander, Richard||Cockeram, Eric||Hamilton, Michael (Salisbury)|
|Amery, Rt Hon Julian||Colvin, Michael||Hampson, Dr Keith|
|Ancram, Michael||Cope, John||Hannam, John|
|Arnold, Tom||Cormack, Patrick||Haselhurst, Alan|
|Aspinwall, Jack||Costain, A. P.||Hastings, Stephen|
|Atkins, Rt Hon H. (Spelthorne)||Cranborne, Viscount||Havers, Rt Hon Sir Michael|
|Atkins, Robert (Preston North)||Critchley, Julian||Hawkins, Paul|
|Atkinson, David (B'mouth, East)||Crouch, David||Hawksley, Warren|
|Baker, Kenneth (St. Marylebone)||Dean, Paul (North Somerset)||Hayhoe, Barney|
|Baker, Nicholas (North Dorset)||Dickens, Geoffrey||Heath, Rt Hon Edward|
|Banks, Robert||Dorrell, Stephen||Heddle, John|
|Beaumont-Dark, Anthony||Douglas-Hamilton, Lord James||Henderson, Barry|
|Bell, Ronald||Dover, Denshore||Heseltine, Rt Hon Michael|
|Bendell, Vivian||du Cann, Rt Hon Edward||Hicks, Robert|
|Bennett, Sir Frederic (Torbay)||Dunn, Robert (Dartford)||Higgins, Rt Hon Terence L.|
|Benyon, Thomas (Abingdon)||Durant, Tony||Hogg, Hon Douglas (Grantham)|
|Best, Keith||Dykes, Hugh||Holland, Philip (Carlton)|
|Bevan, David Gilroy||Eden, Rt Hon Sir John||Hooson, Tom|
|Biffen, Rt Hon John||Edwards, Rt Hon N. (Pembroke)||Hordern, Peter|
|Blackburn, John||Eggar, Timothy||Howe, Rt Hon Sir Geoffrey|
|Blaker, Peter||Elliott, Sir William||Howell, Rt Hon David (Guildford)|
|Body, Richard||Emery, Peter||Howell, Ralph (North Norfolk)|
|Bonsor, Sir Nicholas||Eyre, Reginald||Hunt, David (Wirral)|
|Boscawen, Hon Robert||Fairbairn, Nicholas||Hunt, John (Ravensbourne)|
|Bottomley, Peter (Woolwich West)||Faith, Mrs Sheila||Irving, Charles (Cheltenham)|
|Bowden, Andrew||Farr, John||Jenkin, Rt Hon Patrick|
|Boyson, Dr Rhodes||Fell, Anthony||Johnson Smith, Geoffrey|
|Braine, Sir Bernard||Finsberg, Geoffrey||Jopling, Rt Hon Michael|
|Bright, Graham||Fisher, Sir Nigel||Joseph, Rt Hon Sir Keith|
|Brinton, Tim||Fletcher, Alexander (Edinburgh N)||Kaberry, Sir Donald|
|Brittan, Leon||Fletcher-Cooke, Charles||Kershaw, Anthony|
|Brocklebank-Fowler, Christopher||Fookes, Miss Janet||Kilfedder, James A.|
|Brooke, Hon Peter||Forman, Nigel||Kimball, Marcus|
|Brotherton, Michael||Fowler, Rt Hon Norman||King, Rt Hon Tom|
|Brown, Michael (Brigg & Sc'thorpe)||Fox, Marcus||Kitson, Sir Timothy|
|Browne, John (Winchester)||Fraser, Peter (South Angus)||Knight, Mrs Jill|
|Bruce-Gardyne, John||Fry, Peter||Knox, David|
|Bryan, Sir Paul||Galbraith, Hon T. G. D.||Lamont, Norman|
|Buchanan-Smith, Hon Alick||Gardiner, George (Reigate)||Lang, Ian|
|Buck, Antony||Gardner, Edward (South Fylde)||Langford-Holt, Sir John|
|Budgen, Nick||Garel-Jones, Tristan||Latham, Michael|
|Bulmer, Esmond||Gilmour, Rt Hon Sir Ian||Lawrence, Ivan|
|Burden, F. A.||Glyn, Dr Alan||Lawson, Nigel|
|Butcher, John||Goodhew, Victor||Lee, John|
|Butler, Hon Adam||Goodlad, Alastair||Lennox-Boyd, Hon Mark|
|Cadbury, Jocelyn||Gorst, John||Lester, Jim (Beeston)|
|Carlisle, John (Luton West)||Gow, Ian||Lewis, Kenneth (Rutland)|
|Carlisle, Kenneth (Lincoln)||Gower, Sir Raymond||Lloyd, Ian (Havant & Waterloo)|
|Carlisle, Rt Hon Mark (Runcorn)||Grant, Anthony (Harrow C)||Lloyd, Peter (Fareham)|
|Chalker, Mrs.Lynda||Greenway, Harry||Luce, Richard|
|Channon, Paul||Griffiths, Eldon (Bury St Edmunds)||Lyell, Nicholas|
|Chapman, Sydney||Griffiths, Peter (Portsmouth N)||McAdden, Sir Stephen|
|Clark, Hon Alan (Plymouth, Sutton)||Grist, Ian||McCrindle, Robert|
|Clark, Dr William (Croydon South)||Grylls, Michael||Macfarlane, Neil|
|Clarke, Kenneth (Rushcliffe)||Gummer, John Selwyn||MacGregor, John|
|MacKay, John (Argyll)||Patten, John (Oxford)||Stewart, Ian (Hitchin)|
|Macmillan, Rt Hon M. (Farnham)||Pattie, Geoffrey||Stewart, John (East Renfrewshire)|
|McNair-Wilson, Michael (Newbury)||Pawsey, James||Stokes, John|
|McNair-Wilson, Patrick (New Forest)||Percival, Sir Ian||Stradling Thomas, J.|
|McQuarrie, Albert||Peyton, Rt Hon John||Tapsell, Peter|
|Major, John||Pink, R. Bonner||Taylor, Robert (Croydon NW)|
|Marland, Paul||Porter, George||Tebbit, Norman|
|Marlow, Tony||Prentice, Rt Hon Reg||Temple-Morris, Peter|
|Marshall, Michael (Arundel)||Price, David (Eastleigh)||Thatcher, Rt Hon Mrs Margaret|
|Marten, Nell (Banbury)||Prior, Rt Hon James||Thomas, Rt Hon Peter (Hendon S)|
|Mates, Michael||Proctor, K. Harvey||Thompson, Donald|
|Mather, Carol||Pym, Rt Hon Francis||Thorne, Neil (Ilford South)|
|Maude, Rt Hon Angus||Raison, Timothy||Thornton, Malcolm|
|Mawby, Ray||Rathbone, Tim||Townend, John (Bridlington)|
|Mawhinney, Dr Brian||Rees, Peter (Dover and Deal)||Townsend, Cyril D. (Bexleyheath)|
|Maxwell-Hyslop, Robin||Rees-Davies, W. R.||Trippier, David|
|Mayhew, Patrick||Renton, Tim||Trotter, Neville|
|Mellor, David||Rhodes James, Robert||Van Straubenzee, W. R.|
|Meyer, Sir Anthony||Ridley, Hon Nicholas||Vaughan, Dr Gerard|
|Miller, Hal (Bromsgrove & Redditch)||Ridsdale, Julian||Viggers, Peter|
|Mills, lain (Meriden)||Rifkind, Malcolm||Waddington, David|
|Mills, Peter (West Devon)||Roberts, Michael (Cardiff NW)||Wakeham, John|
|Miscampbell, Norman||Roberts, Wyn (Conway)||Waldegrave, Hon William|
|Mitchell, David (Basingstoke)||Rossi, Hugh||Walker, Rt Hon Peter (Worcester)|
|Molyneaux, James||Rost, Peter||Walker, Bill (Perth & E Perthshire)|
|Monro, Hector||Royle, Sir Anthony||Walker-Smith, Rt Hon Sir Derek|
|Montgomery, Fergus||Sainsbury, Hon Timothy||Waller, Gary|
|Moore, John||St. John-Stevas, Rt Hon Norman||Walters, Dennis|
|Morgan, Geraint||Scott, Nicholas||Ward, John|
|Morris, Michael (Northampton, Sth)||Shaw, Giles (Pudsey)||Warren, Kenneth|
|Morrison, Hon Charles (Devizes)||Shaw, Michael (Scarborough)||Watson, John|
|Morrison, Hon Peter (City of Chester)||Shelton, William (Streatham)||Wells, John (Maidstone)|
|Mudd, David||Shepherd, Colin (Hereford)||Wells, Bowen (Hert'rd & Stev'nage)|
|Murphy, Christopher||Shepherd, Richard (Aldridge-Br'hills)||Wheeler, John|
|Myles, David||Shersby, Michael||Whitelaw, Rt Hon William|
|Neale, Gerrard||Silvester, Fred||Whitney, Raymond|
|Needham, Richard||Sims, Roger||Wickenden, Keith|
|Nelson, Anthony||Skeet, T. H. H.||Wiggin, Jerry|
|Neubert, Michael||Smith, Dudley (War, and Leam'ton)||Wilkinson, John|
|Newton, Tony||Speed, Keith||Williams, Delwyn (Montgomery)|
|Nott, Rt Hon John||Speller, Tony||Winterton, Nicholas|
|Onslow, Cranley||Spence, John||Wolfson, Mark|
|Oppenheim, Rt Hon Mrs Sally||Sproat, Iain||Young, Sir George (Acton)|
|Osborn, John||Squire, Robin||Younger, Rt Hon George|
|Page, John (Harrow, West)||Stainton, Keith|
|Page, Rt Hon R. Graham (Crosby)||Stanbrook, Ivor||TELLERS FOR THE NOES:|
|Parkinson, Cecil||Stanley, John||Mr. Spencer le Marchant and|
|Parris, Matthew||Steen, Anthony||Mr. Anthony Berry.|
|Patten, Christopher (Bath)||Stevens, Martin|
§ Question accordingly negatived.
§ Original Question again proposed.
§ It being after Ten o'clock, the debate stood adjourned.
§ Mr. Speaker
I now have to put the Question as required by Standing Order No. 18 on the outstanding total amounts to be granted from the Consolidated Fund.