STEEL INDUSTRY

HC Deb 25 January 1979 vol 961 cc825-78

10.18 p.m.

The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd)

I beg to move, That this House takes note of EEC Documents Nos. R/1135/78, R/1221/78, R/1292/78 and R/3454/78 on the Steel Industry.

Mr. Speaker

I should inform the House that I have selected the amendment in the name of the hon. Member for Sheffield, Heeley (Mr. Hooley).

Mr. Judd

I shall try in my opening remarks to put these documents in their general context and also comment in some detail on the proposals themselves and the attitude which the Government have taken towards them. However, the main responsibility for our steel policies lies with my right hon. Friend the Minister of State, Department of Industry.

Mr. John Ellis (Brigg and Scunthorpe)

On a point of order, Mr. Speaker. Some of us are vitally interested in this matter, but with hon. Members leaving the Chamber it is most difficult to hear the Minister.

Mr. Speaker

The hon. Gentleman knows that I kept the Minister waiting a little while while hon. Members were leaving the Chamber after the earlier debate. Perhaps I called the Minister a little too soon. I have begun the system of waiting until the House is cleared. It was not done before my time, as the House knows, but I shall follow that rule more rigorously in future.

Mr. Judd

My hon. Friend the Under-Secretary of State for Industry will reply to the debate and will be able to deal with the detailed Questions raised by hon. Members on this important subject.

The European steel industry has been particularly hard hit by the world recession. In the light of this crisis, the European Council decided in December 1977 that the steel industry was one of those whose problems warranted tackling at Community level. The first step was to give the industry a breathing space during which the necessary restructuring could take place. To achieve this, the Commission has negotiated a series of anticrisis measures, which include agreements on prices and quantities with third countries and on certain minimum and guidance prices for the intra-Community market.

We in the United Kingdom have always shared the view that anti-crisis measures go hand in hand with the process of bringing capacity more into line with demand. However, we feel that the social aspect of the problem must never be lost sight of and that we must retain control over the way and the speed with which we respond to a developing situation.

In an attempt to co-ordinate restructuring of the Community steel industry, the Commission has drawn up a set of general objectives. In order to ensure compliance with these objectives, and with the Commission still has to produce, the Commission is seeking agreement to a draft decision intended to enable it to monitor and control all State finance, in whatever form, advanced to steel undertakings.

The main reason given to justify this proposal is the inflexibility, in the Commission's eyes, of the provisions of the European Coal and Steel Community treaty dealing with State aids to the steel industry. The Commission's purpose in proposing this decision is to establish a Community regime for aids and to prevent member States from using such aids in a way which could thwart Community objectives.

At the last meeting of the Council of Ministers at which the State aids decision was discussed, my right hon. Friend the Minister of State, Department of Industry explained why this Government have been unable to assent to the Commission's proposals as set out in the draft decision in document R/1135/78.

The decision would effectively give the Commission overall control of the British Steel Corporation's investment plans and annual operating plan. We have made considerable progress with our national restructuring policy as set out in the White Paper on the British Steel Corporation's road to viability. But it is up to the British Steel Corporation to negotiate closures at its discretion in prior consultation with the Trades Union Congress steel committee and the local work forces. We cannot agree to any procedires which would be likely to interfere with this arrangement. Moreover, we are by no means satisfied that the Commission has the resources to deal with the proposals which would have to be notified to it. For this practical reason alone, quite apart from objections of principle, we cannot agree that the Commission should be in a position to hold up advances of finance to the British Steel Corporation pending investigation.

We have shown ourselves ready in the past to consult the Commission over major new investment projects by the British Steel Corporation. But the present decision seeks specifically to bring advances of working capital to nationalised industries under Commission control without imposing on them any of the penalties to which the United Kingdom Government and the United Kingdom taxpayers are liable as a result of wrong decisions or undue delay.

The draft decision also seeks to increase Commission control over regional aids. Again, this gives rise to difficulties. We have in general resisted Commission attempts to intervene in the matter of regional assistance, although we accepted a compromise in the special case of the fourth shipbuilding directive.

The draft decision seeks to ensure that all restructuring of the European steel industry complies with the Commission's restructuring plans. But we do not yet know what these proposed plans are. We must have agreement on these first. Restructuring, particularly closures, raises issues of great social as well as industrial importance. Restructuring decisions cannot, in our view, be taken in a vacuum. This Government will always have high among its priorities the need to deal effectively with the wider social and economic consequences.

Our legal advise is that the decision as drafted would effect a change in the balance of power between Community institutions. But such a change may be brought about only by a full-scale amendment of the European Coal and Steel Community treaty. It cannot be done under article 95 of that treaty as the decision seeks. To do so would, in our view, be contrary to the wording and intention of article 3.

These, then, are the arguments against the decision as at present worded which my right hon. Friend the Minister of State, Department of Industry has been putting forward with eloquence and conviction—I have had the good fortune to hear him doing it—at meetings of the Council of Ministers.

At the last Council meeting, a resolution was passed to the effect that the Council is determined to take as soon as possible, and by 1 April at the latest, its decision on Commission proposals concerning State aids for the steel industry. The decision is at present unacceptable to at least one other member State as well as the United Kingdom. It requires the unanimous consent of the Council of Ministers before it can be implemented. This resolution set out general principles on steel aid but gave no Council commitment on procedures or further Commission proposals.

As hon. Members are aware, the resolution was accompanied by a statement from the United Kingdom to the effect that our attitude to the Commission's proposals was governed by the extent to which the Commission's actions were in accordance with the treaties. We shall continue to examine carefully all proposals put forward by the Commission to ensure that they do not represent a further unacceptable extension of its powers. We shall also contend that article 232 of the EEC Treaty precludes the application of articles 92–94 of that Treaty to European Coal and Steel Community industries, since article 232 specifically states: The provisions of this Treaty shall not affect the provisions of the Treaty establishing the European Coal and Steel Community, in particular as regards the rights and obligations of Member States, the powers of the institutions of that Community and the rules laid down by that Treaty for the functioning of the common market in coal and steel. We shall particularly resist any attempt by the Commission to increase its powers with regard to regional aids and any attempt to require prior notification of advances of money to our steel industry.

I now turn to draft decision R/1292/78. which the Select Committee on European Legislation recommended for debate with R/1135/78, although the adoption of the decision by the Council need not await the debate.

Mr. Douglas Jay (Battersea, North)

My hon. Friend has told the House that the Government cannot accept certain proposals of the Commission. Will he assure us quite clearly that the Government will not accept them?

Mr. Judd

I hope my right hon. Friend will agree that I made it perfectly clear that we are not prepared to breach the provisions of the treaties as we understand them.

The effect of that draft decision would be to allocate to the Community all the receipts from customs duties levied on imports from third countries of European Coal and Steel Community products. At present those revenues, unlike the receipts from customs duties on EEC products, are retained by member States.

The reason for this proposal is the substantial additional expenditure incurred by the Commission in order to counter the effects of the steel recession. This consists mainly of a Community contribution towards resettlement aid to redundant steel and coal workers, and interest relief grants given on European Coal and Steel Community loans made towards the cost of projects to modernise steel and coal production and to employ redundant steel and coal workers. An example is the ECSC loan of £78 million recently approved towards the cost of the Ford Motor Company's projected new engine plant in South Wales.

It is not surprising that the large numbers of redundancies in the EEC steel industry have led to increased expenditure. Indeed, a problem has already been faced with the 1978 European Coal and Steel Community budget. Expenditure, at about £103 million, was about £26 million more than in 1977, even though the contribution made by the European Coal and Steel Community to the general EEC budget towards the administrative expenses of the Commission was reduced from £12 million to £3 million.

Under the treaty, Community expenditure is financed by a production levy on the steel and coal industries. The current difficulties of the steel industry make it undesirable to raise that levy. The Council of Ministers therefore decided in principle on 20 December 1977 that member States should make an additional contribution totalling 32 million European units of account. The allocation first proposed by the Commission was in proportion to national receipts from customs duties on European Coal and Steel Community products. The Commission later proposed an allocation based on gross national product. It was in this form that the Select Committee on European Legislation considered the proposal—the relevant document was R /674/78. I refer to the 27th report of the Select Committee on European Legislation, Session 1977–78.

Agreement was finally reached only in October 1978 in a last-minute compromise under which the United Kingdom share is 17.4 per cent. The United Kingdom will benefit and is expected to receive some 34 per cent. of the total Community expenditure on resettlement aids and interest relief grants in 1978, as well as a continuing share of European Coal and Steel Community research grants.

The contribution towards the 1978 budget takes the form of an ad hoc decision by member States meeting in Council on 30 October 1978. An Order in Council specifying this decision as a treaty under section 1(3) of the European Communities Act 1972 will shortly be presented for parliamentary approval. No agreement has, however, yet been reached in the Council on the proposal to transfer future receipts from customs duties on European Coal and Steel Community products to the Community. This would provide something of the order of 60 million European units of account a year.

We and a number of other member States have reservations. It is not certain that Commission expenditure need be maintained at such a high level over a long period, and it does not follow that the deficit in any year will be matched by the customs receipts. Moreover, the amount of duty collected does not correspond necessarily to individual member States' ability to pay or the needs of their industry.

However, the Commission faces a problem in balancing the 1979 budget. At the Council on 18–19 December last, member States, other than France, were willing in principle, but subject to the necessary budgetary and parliamentary procedures, to make a further ad hoc contribution in 1979. This will, of course, need further discussion in the Council.

The Select Committee on European Legislation also recommended draft decision document No. R/1221/78 for debate, although it said that adoption of the directive need not await the debate, and on 17 January it likewise recommended document No. R/3454/78. The purpose of the former instrument was to amend an earlier decision which required iron and steel dealers to conform to Community producers' list prices when making ex-stock sales of the steel products for which Community producers were subject to mandatory minimum prices. It also required dealers to issue certificates of conformity.

Document No. R/1221/78 provides for the extension of these requirements to direct as well as ex-stock sales. This was clearly only reasonable, as otherwise the mandatory minimum prices could be undermined by dealers' sales. I think that it is still as important as ever to ensure that the minimum prices for producers are not undermined at a time when market conditions are still putting heavy pressure on steel prices. Document No. R /3454/78 adds certain other products to the list of those for which dealers must not charge less than the Community producers' list price.

I hope that this introduction will have helped to clarify what the Government regard as the main issues raised by the documents under debate. Of these three proposals, it is the steel aids decision that causes us the greatest difficulties. The success of the anti-crisis measures show the value of tackling the problem of the steel industry and the world recession at Community level. Naturally, there has to be some co-ordination of the restructuring that must follow these measures. But we in the Government are not prepared to accept proposals that would go beyond the powers provided by the treaties in their present form or lead to interference with our policies for dealing with the problems of the United Kingdom steel industry as we ourselves see fit.

Mr. Deputy Speaker (Sir Myer Galpern)

May I remind the House that the debate can last for two and a half hours only? Almost every hon. Member present in the Chamber has a steel interest, and in order to accommodate as many speakers as possible I appeal to hon. Members to make their speeches reasonably brief.

10.36 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I beg to move, at the end of the Question, to add: 'but cannot accept proposals which would curtail assistance to and investment in the iron and steel industry and would damage employment in that industry.' This is an extremely important debate. Should the Council of Ministers by any mischance approve the decision that we are now discussing, and which in effect is set out in document No. R/1135/78, the matter would be out of the control of the House altogether, and so would the steel industry. In that event, no legislation by this House would be required if by some mischance this decision were approved.

The key to the matter lies in article 1 of the draft proposal. I should like to quote part of the text, which states: Aids and interventions in favour of the steel industry, financed or provided by Member States or through State resources in any form whatsoever, may be considered compatible with the orderly functioning of the common market if they satisfy the provisions of this Decision and if they do not affect competition and trade between Member States to an extent contrary to the common interest. Such aids and interventions shall only be put into effect in accordance with the procedures established herein. Therefore, wide—ranging powers over the steel industry would pass from the control of this House and this country to the Commission should this decision in any way be implemented. In some ways, the interesting part of document No. R/1135/78 is not so much the text of the decision as the preceding memorandum, which makes a number of quite astonishing statements. For example, it states that it is necessary. to create new rules… for the supervision and control of aids and interventions in favour of the steel industry". Apparently, the powers which already exist do not satisfy the Commission. It makes an equally remarkable statement with regard to regional aids. It states that regional aids are not always in the real interest of the regions". In other words, it suggests that the Commission in Brussels should have the power to determine whether the regional aids that this House may wish to give to particular regions are actually in the interest of those regions. I suggest that that is a matter for hon. Members to judge, and not for the Commission.

Mr. Hugh Dykes (Harrow, East)

When the hon. Member speaks of the Commission imposing rules on us, does he not appreciate that British officials are involved in the Commission? All the member States are involved, and the Commission therefore represents all the countries. When there is gross overcapacity in the steel industry, it is rational and sensible to act in concert to reduce the difficulties.

Mr. Hooley

I still do not accept that the Commission has superior wisdom in considering regional aids. That wisdom lies with this House. The power should be exercised by the House and not by the Commission.

Mr. David Watkins (Consett)

On the point raised by the hon. Member for Harrow, East (Mr. Dykes), will my hon. Friend bear in mind that members of the Commission are not there as representatives of their countries? They have to renounce such representation as members of the Commission.

Mr. Hooley

I am grateful to my hon. Friend. That is absolutely correct.

The memorandum goes on to say that it is unacceptable for Member States to have complete discretion to use their regional aid systems That is an astonishing doctrine. It further states that In the case of public undertakings the provision of finance must be supervised by the Community". In other words, in important respects the operations of the British Steel Corporation would come directly under the supervision and control of the Commission. But it goes beyond State finance. It states that aids and interventions by local authorities or parastatal institutions have to be brought under control. That means that if the NEB became involved in the steel industry, its activities would also fall under the control of the Commission.

My hon. Friend the Minister in opening the debate did not mention the cost level at which this control would apply. I understand that it is 5 million units of account, which is around £3 million. Any project in the steel-producing industry which exceeded £3 million would therefore become subject to control.

I am not sure whether aids for social costs and closures would be controlled by the Commission, but they would have to be monitored and reported to the Commission. Likewise compensation, financial arrangements or reduction in capacity would fall under the control of the Commission. The most astonishing aspect is that, even if a country had to take emergency action to rescue a plant or sort out some other difficulty, the Commission would insist that that action was strictly controlled and confined to the immediate difficulty.

The impact on our law and rules would be considerable. That is fairly pointed out by the covering document which the Department of Industry has provided for the House. It would limit the powers of the Secretary of State to provide funds under sections 17 and 18 of the Iron and Steel Act 1975. It would limit regional development grants under sections 7 and 8 of the 1972 Industry Act, which was passed by the Conservative Government. It would have an impact not only on the British Steel Corporation but on private steel producers.

The covering memorandum from the Department of Industry points out that as long as we belong to the EEC these limitations will apply to any other present or future United Kingdom legislation. This decision would have a far-reaching impact on important legislation already passed by the House in respect specifically of the iron and steel industry and, more generally, aids to industry at large. About 50 per cent. of the British Steel Corporation's investment programme over the next five years would be affected. Government assistance to private sectors would be subject to Commission control, and the operation of loss-making undertakings also would be affected.

The British Steel Corporation has made it perfectly clear by its policy and its actions—which have been thoroughly debated in this House—that there is a need for restructuring in the industry. Very hard decisions have been taken and more difficult ones may he ahead. I am quite sure that the Corporation, the Department of Industry and this House recognise the far-reaching restructuring that needs to be done and has already been done.

Apart from restructuring, there is the question of modernisation and new investment. This is extremely important. In 1976–77, £579 million new capital investment was carried through. In 1977–78, the figure was £480 million. In Sheffield we have the enormously important stainless steel project at Shepcote Lane costing £140 million, which is now coming on stream and proving extremely effective and successful. We have the arc furnaces at Aldwarke, the continuous casting plant at Templeborough and the River Don works, which five years ago were almost run down and are now operating very successfully and capturing contracts in the international market in the face of international competition.

In the period between 1970 and 1976, £160 million was invested by the special steels division in Sheffield, and last financial year the figure was £74 million. There have been important investments in the private sector in Sheffield as well. In Johnson, Firth Brown and in Dunford Elliott we have had very expensive and highly sophisticated forging machines, electroslag refining equipment and vacuum degassing equipment as well as other important investment. This would certainly have fallen under the supervision and control of the Commission had these projects been carried through when this decision was effective. I must emphasise that if this provision were carried through, the House would have no further control. No further legislation would be needed to put this into effect once the Commission had taken the decision.

In some ways, document R/1292/78 has a more fundamental principle than the other. It wants to extend to steel the absurdities that we have encountered from the levy system of finance which exists in the common agricultural policy. This would be a new departure—a very important and dangerous one, because the customs duty which is at present applied to steel products by the individual member States would then form part of the "own revenues" of the community and would pass totally out of our control. The only way one can control this bureaucracy is to control its money. If we allowed the principle set out in R/1292/78 to go through, an important precedent would be established. Not only in agriculture, but also in industry we would have the levy and the own resources principle pushed in and the Commission would have its foot in the door.

These documents have very important constitutional and financial implications for this House. I believe that they set a dangerous precedent, and I hope that the Government will accept our amendment. I hope also that they will continue to indicate that we will resolutely resist the propositions contained in the documents.

10.49 p.m.

Sir Anthony Meyer (Flint, West)

It is easy to find objections to the proposal to put aids to the steel industry on a European basis, but the hon. Member for Sheffield, Heeley (Mr. Hooley) has done so with his customary moderation, eloquence and knowledge of the industry. I have no doubt that he will be followed by others producing objections in less restrained language, portraying not so much an anxiety about the future of the steel industry as a determination to get Britain out of the EEC. We shall hear a good deal in the debate, and, indeed, we have heard from the hon. Member for Heeley—

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Gentleman. He has made two suggestions to the House, one on the future of the steel industry and the other relating to Britain coming out of the EEC. I remind him that the debate should centre on the likely effectiveness of the Community proposals. I hope that hon. Members will address themselves to that matter.

Sir A. Meyer

I assure you, Mr. Deputy Speaker, that I intend to stick closely to the matter before the House.

We heard a good deal from the hon. Member for Heeley and will, no doubt, hear more about the importance of allowing the British Steel Corporation to decide its own strategy. This makes a change. I have heard many objections from hon. Members on both sides of the House and I have myself voiced objections to the determination of the British Steel Corporation to push ahead with plans for the modernisation of the industry entailing massive closures of out-of-date plant. One of those plants, Shotton, is near my constituency. It is likely to be affected by the determination of the Corporation to phase out the production of steel except at five integrated steel plants.

Despite the plausibility of the objections to the proposals of the Commission for putting aid to the steel industry on a European basis, nobody can now seriously argue that the United Kingdom can sustain a steel industry on anything like the scale envisaged at the time when the 10-year strategy for steel was drawn up in 1972.

Mr. Jay

It is a temporary recession.

Sir A. Meyer

No, it is not a temporary recession. It is very far from being a temporary recession. It is not a cyclical recession but a permanent shift in the balance of production on a global basis.

Mr. Jay

Nonsense.

Sir A. Meyer

Hon. Members fail to realise what is happening in Korea and other developing countries. With modern plant and a highly skilled, work-devoted labour force, they will push not only British but also European steel production over the edge unless we can consolidate and concentrate and hit back at that competition with the most modern equipment and the most modern methods.

It is nonsense to suggest that this is a temporary recession caused by a fall in world demand. If any kind of steel industry is to be maintained in the United Kingdom, it will have to be a protected industry. Anyone who supposes that this nation alone can afford to protect a steel industry even of the modest size that we will need for our strategic needs and to provide employment in the areas where there are no other job possibilities is being wildly unrealistic.

It is an immensely expensive business to protect a steel industry. It requires a vast transfer of resources from the profits of other industries. It is beyond the capacity of this country to protect a steel industry of the size, even the small size, that we shall need for the two purposes that I have outlined—namely, for our essential strategic need and to provide employment in the areas where there is no other source of employment.

If there is to be the protection that will enable us to keep the steel industry going, clearly it must be on a European basis. A British share of a European steel industry, although small, will be a great deal larger than the type of British steel industry which we could maintain and protect by our own unaided efforts. That means that we have to accept the concept of a European basis for a British steel industry.

I have no hesitation in advocating that and accepting the logic of it. I do not pretend that I do so without misgivings. Of course I have misgivings. I am not at all happy about the spirit in which the Community has approached the problems of regional aid so far. We do not consider that the Community attributes enough importance to the need to develop the outlying regions where so much of the British steel industry is situated.

In this matter the Commission's record is a good deal better than the Council of Ministers' record. If I had to rely on the good intentions of one body rather than the other, I should much prefer to rely on the good intentions of the Commission. [HON. MEMBERS: "Rubbish."] I sometimes wonder about the cloud-cuckoo land in which Labour Members live. They seem to imagine that because the United Kingdom has a right to veto in the Council of Ministers, we can somehow protect our interest better there. They forget that there are eight other members who also have the power of veto and who are equally determined to maintain their vital interests by using that veto. They ignore that the Commission, which has no such power of veto, is dedicated to the well-being of the Community as a whole. A body which seeks the common good inevitably brings greater benefits to its members than one in which the principle of dog eats dog operates, as it does within the Council of Ministers.

I have reservations. I wish that the Community had a better track record on regional development. Aspects of the document make me uneasy. But I have more confidence in the ability of the Community to protect the British steel industry than in the ability of Britain alone to do so. And I have 10 times more confidence in the good will of the Commission in its attempts to create a steel industry which is of benefit to all its members than I should if the process were left to the Council of Ministers in which the veto operates.

Therefore, not without misgivings, I should like the recommendations to be accepted. I am sorry that the Government are adopting such a reserved attitude.

10.59 p.m.

Mr. Allen McKay (Penistone)

I believe that nothing is beyond the capacity of the nation when it gets its head down. In my maiden speech I said that the steelworks in my constituency were the best in the world. I referred to the need for investment in British Steel at Stocksbridge as being vital not only for the rehabilitation of the works but to increase the morale of an excellent work force in recognition of the good industrial relations between management and men at that works. It was needed also because without that steelworks a township would have stagnated and died.

I am very pleased that it has been announced, this week, that there is to be a £21 million investment scheme for that steelworks for tube steel production. and Stocksbridge works has thus been given a new lease of life. We have done that without the aid of the Community.

In the words of John Pennington, managing director of the Sheffield division: This important development is a vote of confidence in the future of steel production in the Stocksbridge area which has a long and proud history of achievement and is very good news at a time when our industry is faced with enormous difficulty. We look forward with confidence when the new technology begins production. This in itself is an achievement in co-operation by the trade unions, management, this House and British Steel. It has only been marred recently by the news that 14,000 men are likely to be laid off very soon through no fault of their own.

The steel industry is going through a period of reconstruction, which includes closure of plants, with consequent redundancies and social problems. But, again, with the co-operation of British Steel, management and men, we shall get over it, in the same way as the mining industry, which went through a similar period, which we overcame.

This development is being carried out quietly and successfully, in order to create from the legacy that was—a dying industry—an emergent, flourishing industry, helped by investment and grants decided by this House and by British Steel. The price of reconstruction is heavy, in terms of both men and finance, but out of it will come a strong and viable industry which will compete, unafraid and in competition on equal terms, with anything else in the world.

That is being done in a period of world recession, over-production and lack of stability. But the competition has not always been fair. Many of my hon. Friends on this side of the House have held meetings with Ministers, together with various local authorities, to try to overcome this problem. I am grateful to the Minister for the way he has helped in these cases.

We are competing with cheap steel being sold at less than production cost and being dumped in this country from outside and within the Community. However, by 1981, because of the policies of the present Government and the efforts of the steel industry, we shall be clear of this problem and the position will be very much altered.

We are grateful to the Minister and to Viscount Davignon for the way in which they have brought sanity to steel industry pricing and for bringing in a measure of stability.

It is in that context that I view the problems—which could be grim—which might be caused by the measures proposed in the Commission decisions which are contained in the documents before us. While accepting the intention in the decision and acknowledging the help given by the Commission, I cannot accept the present proposals, which interfere with British efforts to put our own steel industry in order and to make our own decisions as to where and when investment should take place and regional grants should be given.

The decision on the restructuring of British Steel is a domestic one, to complete existing projects, make essential replacements and improve quality. To accept a position in which the Secretary of State would have the power to provide funds to the Corporation only subject to the approval of the Commission, and which would lessen his power to make regional grants, is not in the best interests of the country or of the industry.

Mr. Tim Renton (Mid-Sussex)

I am following with interest what the hon. Gentleman is saying. Can he explain why he says that the decision to invest in British steel is entirely a domestic one when the BSC is a large exporter and has frequently made clear that its decisions to invest are dependent on its obtaining a substantial share of export markets?

Mr. McKay

I said that where to invest is a domestic decision because of the social consequences. It is not a European decision.

The Commission's proposals would be detrimental to this country and our steel industry and would be a setback for the industry in general. I would co-operate in any scheme to strengthen the industry, but I believe that the Commission's decision will weaken the industry and I back the Minister in his intent to keep the British Steel Corporation British and to keep our investment British.

11.6 p.m.

Mr. Neil Marten (Banbury)

I am grateful to be called, because I do not have a steel constituency. My constituency rolls aluminium, and I am fairly ignorant about the steel industry.

However, I am a member of the Scrutiny Committee and I thought it right to explain why the Committee referred the proposal to the Floor of the House. When the Leader of the House announced this debate last week, he referred to the relevant EEC documents. I wish that he had mentioned the Scrutiny Committee's report so that hon. Members could be made aware of our criticisms of those documents.

We said of document R /1135: The effect of this proposal appears to be to deprive Member States of the ability to assist their steel industries, except by Commission approval. That was why we felt it right that the proposal should be debated on the Floor of the House.

We do not want to give any more power to the bureaucrats in Brussels. They have too much already. It is absurd that power drips week by week from this House to the Commission. I want to speak in defence of our Parliament. We should not constantly give away more power.

I felt like making the same intervention as that made by the right hon. Member for Battersea, North (Mr. Jay) when the Minister said that the Government "cannot agree" with the Commission's proposals. He sounded tough, and I do not want to call his remarks weasel words, but why did he not say that the Government "will not agree"? There is a big difference there.

The Minister also said, in trying to give the impression of being tough and standing up to the Commission, that the Government "will resist" the proposals. Why did he not say that they "will oppose" them?

Mr. Stan Crowther (Rotherham)

The Government should veto them.

Mr. Marten

Either word—"oppose" or "veto"—would strengthen the genuineness of the Minister's speech.

If I may address myself to my Front Bench, I must say that it seems odd that the Conservative Party is not opposing all this price fixing. I know that the industry is in difficulties and that price fixing may be one way to help, but it is a strange Conservative philosophy not to oppose the formation of a cartel which fixes prices. In the recent history of this century, such action has caused great trouble in Germany and central Europe Is there not the adoption of a double standard, in a way, over this price fixing, because it is against competition? Our interpretation of article 3 of the Treaty of Rome is that it stands for the establishment of a system ensuring that competition in the market is not distorted. Surely this is distortion, and it is to these constant double standards that I object. We were told that if we acceded to the Treaty of Rome there would be all those wonderful opportunities, but when it suits the Commission or anybody else they go right against the principles of the Treaty of Rome. I find it rather hard that my own Front Bench colleagues condone that behavour when they ought to be attacking it.

Mr. Jay

Does the hon. Gentleman recall that recently the Commission wanted to close down the Milk Marketing Board because it infringed the laws of competition? Now it is establishing a cartel in the steel industry.

Mr. Marten

That is yet another example, and a very good one, of going against the principles laid down in article 3 of the Treaty of Rome. I quite agree.

Finally, in document R/1292 there are two rather un-Conservative things which I hope will be opposed by the Conservative Front Bench. One is that this decision would result in the loss of to the United Kingdom Exchequer of the revenue at present derived from customs duties, which in 1976 amounted to £12.2 million and in 1977 to £9.6 million. The transfer to the Coal and Steel Community of the receipts from these duties would increase the public sector borrowing requirement. My hon. Friend the Member for Mid-Sussex (Mr. Renton) is always speaking about cutting down the public sector borrowing requirement. I hope, therefore, that we shall hear from him that he opposes this proposal.

11.13 p.m.

Mr. David Watkins (Consett)

The hon. Member for Banbury (Mr. Marten) has, as always, put very cogent and penetrating arguments to the House. He was speaking, as he said, as someone who does not represent a steel constituency. I, as representing a steel constituency, have pleasure in following him, and I support the amendment put forward by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley).

Each of these EEC documents has some represensible feature, but document R/1135, dealing with aid and intervention in favour of the iron and steel industries, has, as my hon. Friend the Minister of State said in opening the debate, some particularly reprehensible features. I accept that he did not use the word "reprehensible", but he implied that it had especially reprehensible features in regard to interference in the British Steel Corporation, and especially in those sectors of the iron and steel industry in this country which are situated in development areas and in assisted areas.

The introduction to the document indicates first that the restructuring of the industry should not be impeded by measures taken by member States. It also points out that the Community is not in a position to meet all the industry's requirements for assistance. The net result of that is that the steel industry in regional areas and assisted areas would get the worst of all possible worlds. The Community may not be able to help as an entity, and at the same time, in these draft directives, the Commission wants the power to prevent member States from using their own resources for self-help. If the draft decision were adopted as it is presented before the House this evening, even short-term emergency aid in particular areas would be required to be notified to the Commission and negotiated with it.

In view of the slow and ponderous bureaucracy of the Commission, it is surely the case that even if it came to a favourable decision on an emergency matter which was referred to it, by the time it came to a decision the emergency would in any event be over, the plant would be closed, the people would be out of work and any steel town which was heavily dependent, as so many steel towns are, upon its steel plant would be turned into a state of industrial dereliction. This is quite unacceptable to the House.

As drafted, the document also requires every investment project exceeding 5 million units of account to be subject to Commission approval. That, taken together with the provisions for emergencies, would virtually wipe out major parts of the British steel industry, which, as far as I could see, was what the hon. Member for Flint, West (Sir A. Meyer) appeared to be advocating and wanted to take place.

My hon. Friend the Under-Secretary of State for Industry—the hon. Member for Nuneaton (Mr. Huckfield)—will be aware that on 14th February I shall be bringing to see him a deputation composed of representatives of the Derwentside district council and the Durham county council to represent to him, and through him to my right hon. Friend the Secretary of State, that there is an urgent need for special attention to the situation, which is of emergency proportions, in Consett. That is why I am particularly concentrating on and using my constituency to illustrate the emergency side of the proposals.

In Consett we have a steel plant in a special development area, where 50 per cent. of all the registered employed persons in the town are employed in the steel industry and another 25 per cent. are employed in industries directly dependent upon steel. Three-quarters of the people of Consett are dependent for their livelihood on this industry. At the Consett plant there were nearly 1,000 redundancies last year and more are expected this year.

It really would not be acceptable if we were to be told when we meet my hon. Friend the Under-Secretary on 14 February that the only power that the Government have would be to submit a case about our representation to the Commission, which might or might not approve of the case for emergency help which was submitted to it, and which might or might not approve it for six months, 12 months or perhaps two years. Whatever my hon. Friend tells us on 14 February, we really want something much more positive than that.

In response to your request for brief speeches, Mr. Deputy Speaker, I conclude by saying that the House must send these documents back to the place from whence they came. The British Steel industry is already seriously threatened by the world recession. Many steel towns are facing emergency situations. Indeed, it could be said that the whole industry is facing an emergency situation. We really must send the documents back and say that we are not prepared to accept these restrictions on our own capacity to help ourselves.

11.17 p.m.

Mr. Tim Renton (Mid-Sussex)

Unlike the hon. Member for Consett (Mr. Watkins), I do not represent the steel industry. There used to be an iron industry in Sussex many years ago, but that is no more. However, I fought a Sheffield seat against a neighbour of the hon. Member for Sheffield, Heeley (Mr. Hooley) in 1970. Also, for many years I worked for a firm which supplied the steel industry with its raw materials. With some of the Labour Members who are now in the Chamber, I was a member of the Select Committee which looked at the British Steel Corporation over an extensive period which ended with our reports of a year ago.

In the course of my working life before becoming a Member of this House, I had the privilege of representing British steel companies abroad as their export agent—United Steel Company, Stewarts and Lloyds, and John Summers—and I was very happy in those years to get to know the excellence of British steel. I speak, therefore, with some past knowledge of the British steel industry, as does my hon. Friend the Member for Arundel (Mr. Marshall).

I find it extraordinarily hard to understand the ambivalence, the double attitudes, of Labour Members in relation to the motion to approve these EEC documents and the amendment moved by the hon. Member for Heeley. Everyone knows that the British Steel Corporation is deeply grateful for the measures which have been taken by the EEC Commission to support the European steel industry over the last two years. Everyone knows that the British Steel Corporation would like those measures to be extended. Everyone who knows the steel industry knows that the BSC is not an island unto itself.

Contrary to the remarks made by the hon. Member for Penistone (Mr. McKay), the BSC today cannot by itself decide where its investment is to take place. There is no point whatsoever in the BSC building another cold steel production mill or another special steels plant if similar plants are being built in Belgium, France, Germany, Mexico and Korea, because that is bound to lead to surplus capacity which will depress world prices.

The BSC—again, contrary to what the hon. Member for Penistone said in answer to my question—depends on exports for a substantial part of its intended sales—I stress "intended"—so it cannot be oblivious in its investment decisions to similar investment decisions which have been taken in other parts of the world, notably within the EEC. Therefore, the management of BSC, as we know and as the hon. Member for Brigg and Scunthorpe (Mr. Ellis) certainly knows, is very relieved at the protective measures that the EEC has undertaken in the last two years.

Mr. John Ellis

rose—

Mr. Renton

When I have finished this point, I shall gladly give way to the hon. Gentleman.

I profoundly disagree with my hon. Friend the Member for Banbury (Mr. Marten) about our membership of the EEC, because I am a firm supporter of it, but he made a valid point when he said that he found it somewhat ambivalent of us to support protectionist measures. I agree that that is an ambivalent attitude, but, in terms of the British steel industry and the protection of its markets and, therefore, to some extent, of its employment, where would the BSC be today without the Davignon proposals? It would be in a far greater mess and would have made a far greater loss than it has made.

Mr. John Ellis

The hon. Gentleman referred to me by name. We all want to debate these important matters, so I shall be brief. I rather oppose the hon. Gentleman. He must not put words into my mouth—"as the hon. Member for Brigg and Scunthorpe (Mr. Ellis) knows". I know nothing of the kind. If there were not Davignon, we would work out our own salvation. I shall make my own speech, thank you very much.

Mr. Renton

I obviously made a mistake in giving way to the hon. Member. It is a pity that he rose to intervene. He could have made that point later.

The hon. Gentleman said that we would work out our own salvation. He thinks so. I do not know of anyone in the European steel industry who thinks so. Today, in Europe alone, there are 40 million tonnes of over-capacity. I am not talking about the whole of the world to which the BSC wishes to export. How in those circumstances, when steel is an internationally traded commodity, are we to work out our own salvation?

Mr. Hooley

rose—

Mr. Renton

I know that the hon. Gentleman has great knowledge of this subject, but I do not want the same kind of intervention as I had from the hon. Member for Brigg and Scunthorpe.

Looking at what has been done to reduce capacity in Britain compared with our European neighbours, it is clear that we have not gone nearly as far as they have gone. According to figures released not long ago by the British Iron and Steel Consumers' Council, since 1975 the United Kingdom has reduced its steel work force by 5 per cent. compared with 8 per cent by West Germany, 15 per cent. by France, 18 per cent. by Belgium, 22 per cent. by Luxembourg and 23 per cent. by the Netherlands. That implies not only a greater continuing inefficiency in the United Kingdom than in our Continental neighbours but that they have gone much further down the road of reducing overcapacity than we have.

Therefore, I find in the amendment moved by the hon. Member for Heeley an extraordinary reluctance to face the fact that the British Steel Corporation cannot continue to consider itself as the largest single steel producer in Western Europe—an isolated entity not affected by investment decisions taken on the other side of the Channel.

The amendment is typical of the attitude of Labour Members who wish to attack the Common Market and who wish to be totally anti-EEC in their attitude and in their approach to what Viscount Davignon has done. If, however, they succeed, they will end by destroying the British Steel Corporation.

Mr. John Ellis

Nonsense.

Mr. Renton

The hon. Gentleman may shout "Nonsense", but nobody in BSC top management regards it as nonsense. The BSC cannot be isolated from developments in the Community. Those developments are essentially of benefit to the Corporation. If hon. Members doubt that, I suggest that whoever speaks next from the Labour Benches—perhaps it should be the hon. Member for Brigg and Scunthorpe—

Mr. Deputy Speaker

Order.

Mr. Renton

I do not wish to usurp the prerogative of the Chair. As one who knows the industry very well, perhaps the hon. Gentleman will address himself to the problem of what will happen postDavignon. If the Davignon proposals are not extended beyond 1980, what then will the Corporation do?

Is the hon. Gentleman contending that, apart from the efficient competition of our French, Belgian and German neighbours, we shall be able to stand up to the competition in Third world markets by the Koreans, the Mexicans and the Japanese? The Japanese take only three man-hours to produce a tonne of steel. We are not yet in that league.

It is not necessary to go over the history of the last 25 years to examine why investment has not taken place in the British steel industry. We all know that it has not taken place. If we are to compete with the Koreans, the Mexicans and the Japanese, British Steel will not survive, because it is not efficient enough to do so. It is not capable of living in a post-Davignon world which does not have over it an EEC umbrella.

I am pro-European and I would rather I did not have to make that comment. I should like to think that British Steel is the most efficient producer in the Western world and able to compete with anybody. But it is not in that position yet. I believe that the Davignon proposals have been essential to the Corporation in helping it in part to get through the present terrible recession. There is no sign of that recession ending, and it was totally unforeseen by the BSC two or three years ago.

I realise that the Labour Party is greatly torn by our membership of the Common Market, that there are many Labour Members who would like to see us withdraw from the EEC and that—although this is not the wish of the Prime Minister or of many of his Cabinet colleagues—the Labour Party may well tight the European elections on a totally anti-EEC manifesto. I regret it, because I think that Labour Members are being purblind about the matter. But, whatever their anti-Europeanism. I believe that they should not carry it to the extent of destroying the British Steel Corporation. If they are totally anti-EEC, they will destroy employment in the steelworks in their constituencies, because the BSC now depends in some measure on our membership of the EEC and the umbrella that it provides.

11.30 p.m.

Dr. Jeremy Bray (Motherwell and Wishaw)

The House is plainly sensitive to the proposals, and I hope that the amendment will be given due weight by the Government and will profoundly influence their attitude in Brussels.

Perhaps we can put to our European colleagues our sensitivities on this matter by illustrating them with the sensitivities within Britain. My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) is fortunate in having had a vast amount of investment in his constituency. That has been pushing very hard some of the capacity that we have in mine.

I give a particular example. My hon. Friend has coming on stream in October a colliery arch bending plant with a capacity that exceeds the total output of the Lanarkshire works in my constituency and East Moors. Those are two works which can be simply closed down overnight when the new plant in Scunthorpe starts up.

One may say "Scunthorpe must win there", but what about my lads in Ravenscraig? We have had a massive investment there. We are coming on stream with 3 million tons a year capacity and with the job of upping output by 1½ million tons, at a time when everyone else in BSC is having his output reduced. Our chaps argue "Why should we in Ravenscraig be the ones who have to take the swings in output? Why should Llanwern and Port Talbot get by with all the shifts in the week that they want, and the earnings that go with them, and we have to take the swings when we have more modern, more efficient plant than they have?"

Into this sensitive position we have the European Community barging in. There is no concealing the problems. There is the excess capacity; there is the danger of excess investment. Consider what will happen when Greece, Spain and Portugal join the Community and massive investment goes into steelworks employing cheaper labour than in Britain. What would be our attitude to the wisdom of massively subsidised investment in Portugal? It might be said that the Portuguese would not be that silly, but I invite people to look at some of the Portuguese shipyards today.

I think that we accept the need for a degree of co-ordination within Britain, and we should be fools if we did not accept it within Europe. Our attitude to that would be made much easier if the Community could demonstrate over wider aspects of the operation of the steel industry something of the relative success it has had on steel pricing.

What can those areas be? The Community wishes to have powers over the financial relationship of, in our case, a public corporation to the Government. Does it want to have powers to control the borrowing limits of BSC, which are the powers that we have in this House? Or does it want to have powers that the Department exercises in permitting drawings on those borrowing limits? Or does it want to go still further down into the internal decision-making procedures within BSC? That is what is plainly indicated by the Commission when it talks about levels of investment of individual units of 5 million European units of account.

If the Commission is saying that it needs to have powers to go to that degree of detail of intervention, let us ask it what contribution it can make to the colliery arch problem, which my hon. Friend and I shall be arguing about very shortly, to the allocation of orders as between Llanwern, Port Talbot and Ravenscraig, and to the desperate situation that my hon. Friend the Member for Consett (Mr. Watkins) outlined.

There are constantly new developments in the steel industry. With the massive investment in general steel-making overseas, there is the need to upgrade the capacity of our plants within Europe and within the United Kingdom in particular. The Sheffield division is perhaps particularly unfortunate with the type of investment that it has been having. What contributions can the Commission make here?

All that we observe is that when the Corporation has made a difficult decision, when we have all known about it for months and when it has been approved by the Government, six months later along comes a press release from the Commission talking about the massive amount of money it is giving to stage 3 at Ravenscraig, or something similar, when it is simply an accounting operation, giving us back money that has been raised from us. That is not an adequate exercise of the powers that the Commission already has.

We in Scotland, as I am sure other areas have done, have invited Commissioner Davignon to come and see the problems of the steel industry and see what we are doing about them, which is an awful lot. I do not think that we had even a reply from the Commissioners. This was despite requests to the President of the Commission to use his good offices with Commissioner Davignon to encourage him to visit us. This is simply not good enough. To leap out of that vacuum of interest and ask for total regulatory powers overruling national Governments, having made no particular technical contribution to these wider decisions, is to get the cart before the horse.

I hope that my hon. Friend the Under-Secretary will be able to say that he will take back to the Commission a plea from us, as Members who understand the problems of the steel industry in this country and in the world, that it should think again. It should prove its mettle and show what contribution it can make to the steel industry before asking for these overwhelming powers.

11.36 p.m.

Miss Joan Maynard (Sheffield, Brightside)

I support the amendment. Commission document R/1135/78 shows that our steel industry would be further eroded by the EEC, particularly as regards investment and jobs.

On too many occasions when we discuss the EEC, we talk about the common agricultural policy. That is understandable, because probably the effects of the CAP are more obvious to the general public and all of us. However, what is going on behind the scenes in relation to our industry, particularly our manufacturing industry, and what that will mean for Britain in future are even more serious. For every £1 invested in Britain, £5 is invested in the EEC. I ask the House to consider what effect that will have on our industry in years to come. It is one of the consequences of the free flow of capital arising from our membership of the Common Market. If investment is affected in this way, so will jobs and modernisation be affected.

Our steel industry faces a world recession. In addition, it has to withstand the effects of our membership of the EEC. Document R/1135/78 could have a major effect on the British Steel Corporation's investment plans and on the steel industry, public and private.

I want to say a few words about the effects of imports on the special steels industry, which is, in the main, in the private sector, though there is public investment there too. The import penetration has been dramatic. Over the past 18 months about 3,000 direct jobs have been lost because of imports. These imports have come from within the EEC. I could give examples covering all the years from 1973 to 1978, but in the interests of brevity I shall confine myself to mentioning figures for 1973 and 1978 of tool steel, stainless bar and high-speed steel bar.

In 1973, import penetration in all those categories was 12 per cent. or less. In 1978, import penetration in tool steel was 56.5 per cent., in stainless bar 80 per cent. and in high-speed steel bar 30.5 per cent. However, Opposition Members talk about the protection of the market. If that is protection, I do not understand the meaning of the word.

The hon. Member for Flint, West (Sir A. Meyer) says that we shall not be able to sustain our steel industry. Obviously, we shall not be able to sustain it against the import penetration that I have described.

A further effect of import penetration is a much reduced capital investment programme for the industry. Running alongside that is continued rationalisation. That is taking place under the fabricated conditions that have been created. The purpose of the Common Market is to help the multinationals. It is certainly doing that. It is doing so at the expense of our steel industry.

A bonanza is taking place and the people of Sheffield are suffering as a result. When a delegation from Sheffield met Ministers of the Departments of Trade and Industry to draw their attention to the deterioration of its part of the steel industry, their answer was that little could be done because of the provisions of the Treaty of Rome. They said that they could not impose import controls because the United Kingdom would be taken to court.

The Government should introduce import controls. They should let the EEC take us to court. America has placed tight controls on imports. We have suffered because imports are entering Britain that would have gone to the United States. It is not merely import penetration; in some instances it is dumping.

One of the most positive suggestions offered to the delegation from Sheffield was for it to compile a report specifying the shape and size of the investment needed for the special steel sector. That is the investment that the delegation thinks is needed to sustain our home market and the proportion of the international market that our industry has previously supplied. It supplies our aerospace, power generation and chemical industries along with other high technology industries. The Labour movement in Sheffield would like to see a National Enterprise Board interest in the special steel industry—in other words, a public interest in that important part of the industry.

The compiling of the report that was asked of the delegation is proceeding with the assistance of the local authorities in the area. If the ideas and projections in the report are found to be sound and viable and capable of being acted upon, inevitably major investment will be required. The investment for reorganising and re-equipping a major part of the industry where a world lead is evident could be seriously affected by the introduction of document No. R/1135/78.

The steel industry is controlled not merely by the Paris treaty. A major part of the industry—most of the special steel sector—comes within the Treaty of Rome. How far is the plan for steel in document No. R/1135/78 to extend? The amendment tries to safeguard the position. It asks for the minimum future investment in a vital industry and the safeguarding of jobs within the industry, which is equally important.

11.44 p.m.

Mr. John Ellis (Brigg and Scunthorpe)

My hon. Friend the Minister of State. Foreign and Commonwealth Office used certain words that sounded tough. On analysis they might not be touch. His response to an intervention put the wind up some of my hon. Friends and myself. He said "subject to our treaty obligations". I hope that it will be made clear that the tough words were tough and that there will be no qualifications. I hope that the Government will hold firmly to the amendment, which states: but cannot accept proposals which would curtail assistance to and investment in the iron and steel industry and would damage employment in that industry". Several references were made to me before I rose to speak. I should tell the hon. Members concerned that I have no objection to co-operation with any country, be it France, Spain, America or Japan, as long as it is on the basis of what is good for our own steel industry.

One of the documents states: The draft decision is intended to ensure that actions taken by member states individually do not impede the overall process of restructuring the Community steel industry. It would apply certain restrictions to direct and indirect Government assistance (compensation of social costs of closures, assistance for loss making plants and emergency intervention) —in other words, direct intervention in all these vital areas. This is one of the most dangerous documents that we have ever considered, and we cannot accept it in any way, shape or form.

It so happens that I have a very modern steelworks in my constituency. Reference was made to it earlier. We have always recognised that important investment decisions are involved, just as they are in any industry. Some excellent speeches have been made in this House on that subject. But it should also be remembered that the workers themselves can make an important contribution. Those of us who sit with them on committees are constantly amazed at their depth of wisdom. After all, this is their own industry.

Government Ministers refer to all the proposals for change contained in these documents. But, instead of looking to the Common Market, I believe that they should consult in depth with the trade unions. I accept that there are features of the steel industry, be it specialist steels or a particular plant, where small is beautiful. But let the people involved in the industry have their say.

As was done when coal was restructured, we should tell them "We will talk with you", because at the end of the day, as a result of the argument and discussion, there will be agreement. To this day, however, my right hon. Friends in the Government have never given an undertaking that instead of discussing the steel industry's problems through Community documents they will go to the workers. If they did that, I believe that we would be more likely to achieve a consensus.

I am very keen about investment plans. Reference has been made to the terrific amount of investment that there has been. If the steel industry is to have a future, we must go on investing. But I recognise the difficulties.

It is my belief that the steel plant in Scunthorpe could produce another 1 million tonnes. But I am somewhat surprised that every time we approach the British Steel Corporation we are told "We are modernising the furnaces". However much it modernises them, we are still not making effective use of our existing steelmaking capacity. Last year, the steel plant in Scunthorpe made a loss, principally because the plant was not loaded. We must make the maximum use of that plant.

That is not to say that we should do this immediately. I recognise that at present there is over-production. I hope that contingency plans are being made. I look to the British Steel Corporation to say that those contingency plans have been made. If it is not right that those investments should be made, that is fair enough, but it seems ludicrous, especially when many millions of pounds have been invested in a plant, not to run it efficiently and well.

I want to make two brief points of detail. The documents refer to "rehabilitation money", or compensation for other industries. If we have already received that money, I should like to know where it has been spent. It has certainly not been spent in my area, where plants have been closed down. The way in which that money has been spent is a closed book. We want to hear where it has been employed. It is an anachronism to talk of fair competition.

Certain Continental producers were a long way from the coking coal and it had to be dragged to their steel plants. We had to put our money into the coking coal scheme. When the agreement was entered into, no one in the House knew of it. An agreement was worked out by the back door because it had no benefits for us. We gave the EEC the money, and it gave it back because it said that it did not apply. Someone in the Common Market woke up and there was another order. It was said that it was only an unwritten agreement and that we could not have the money back. Are we still having to pay for other countries' difficulties in dragging coking coal long distances to their steel plants?

I believe in fairness in debate. Although we on the Labour Benches may be anti-Common Market and against this legislation, with the honourable exception of that of the hon. Member for Banbury (Mr. Marten) the speeches from the Conservative Benches came close to being anti-British. I hope that in his reply for the Opposition the hon. Member for Arundel (Mr. Marshall) will reject the proposals of the hon. Member for Flint, West (Sir A. Meyer), who sought to destroy the steel industry as we know it. He could at least have said that we in this country would recognise our obligations and bring work to the communities that would be destroyed if he had his way. In my election address, I shall consider printing his speech and pointing out that that is what the Tories would do to our livelihood in Scunthorpe and elsewhere. He made a sad, gloomy and destructive analysis of the steel industry.

Sir Anthony Meyer

The hon. Gentleman says that he is fair in debate. It is not fair to postulate that people who ask us to face realities are anti-British. I want to preserve a British steel industry. I believe that it can only be done in the European context.

Mr. Ellis

When the hon. Gentleman reads his speech tomorrow, he will realise that he has wrapped up the steel industry. If his analysis is put into effect, the steel industry is finished, leaving only a fringe sector. He has completely destroyed the British Steel Corporation. He has ruined many communities.

Mr. Deputy Speaker

The debate is rapidly coming to a conclusion as far as the Back Benches are concerned. The Front Bench speakers wish to begin winding up at 12.10 a.m. This leaves 15 minutes for about three other speakers. I therefore appeal to hon. Members to make each speech last only five minutes.

11.54 p.m.

Mr. Peter Hardy (Rother Valley)

There are several points in the Opposition speeches which should be considered. None of my hon. Friends has referred to the fact that in the 1940s and 1960s the Conservative Party fought furiously to prevent national control of the steel industry. Today it is eager to hand it over to a supranational body over which this House has little control. That repudiation of past prejudice is important. I would rather have the Conservative Party seeking to concern itself with Britain than adopting this new approach, particularly if it embodies the pessimism of the hon. Member for Flint, West (Sir A. Meyer). I hope that he will read his speech tomorrow. There may be serious doubts about the viability in the long term of retaining open hearth furnaces, and we closed ours in South Yorkshire in the 1960s. From my area, despite the massive competition and the serious challenge from Japan and Korea, we are exporting 30 to 40 per cent. of our production—or as much of it as the present industrial dispute allows.

Perhaps the most serious speech from the Opposition so far was that from the hon. Member for Mid-Sussex (Mr. Renton), who spoke of the job decline in the period from 1975. In the British steel industry we have taken a longer view of the problem. For example, in South Yorkshire in the last 10 years we have shed between 8,000 and 10,000 jobs. But we have done it knowingly and in a humane way in order that we might have a steel industry which can compete with the rest of the world.

I shall not repeat the impressive list of achievements given by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). He spoke of our fine position in South Yorkshire. In the part of the Rotherham works in my constituency and within the Parkgate complex, we have, in addition to the Roundwood and the Aldwarke plants, the Thrybergh Bar mill, which is more successful and has broken more records than any of the plants in the countries which have so daunted Conservative Members. I do not believe that we should be daunted. At the same time, I do not believe that we should say that we should not have international co-operation. None of us would have deplored the pricing proposals which Commissioner Davignon introduced. But I do not think that we should encourage the Europeans or anyone else to believe that simply because the pricing proposals had a germ of sense we should surrender control.

At present, we in Britain are already importing too much steel. This is not in the form of bars and billets, or rod and coil, but in the form of motor cars and other manufactured goods. If we have any optimism—which has clearly departed from the Opposition Benches—we shall look to the day, perhaps not far off, when there will be a greater buoyancy within our economy and, therefore, a demand for the steel which we must retain.

In any consideration of the European steel industry, we should match considerations of population with those of steel capacity. If we carry out that comparison, we can see that there would be no justification whatever for any major reduction in British Steel. Unless I have a guarantee that there will be no major reduction and that the steel workers of South Yorkshire can continue to break world records, I certainly cannot support any alternative policy.

11.58 p.m.

Mr. Martin Flannery (Sheffield, Hillsborough)

I want to protest once again that a vital debate of this nature is taking place late at night with practically no members of the press here. Therefore, many people who might have heard about these proceedings will not do so.

When I first came to the House and saw the vast amount of EEC documentation coming forward, I was one of those who turned up on every occasion to try to struggle through it. However, we have been literally snowed under, and I notice that we are getting fewer in number. The reality is that we simply cannot read through all the documentation. It is so massive that it simply slips through. It is sad that so few people, both in this House and outside, will have even glanced at this documentation. Anybody who is fair-minded and who looks at the three documents will be appalled at what he finds in them.

When my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) came to me the other day to seek support for his amendment, I took a rather keener interest than I had up to that time. I got the documentation to look through it. First of all, let me make it quite clear to anyone who describes us on the Labour Benches as "Little Englanders" that there is not one of us here who has not a proud record of internationalism throughout his or her entire political life. None of us is a nationalist. But the odour of pessimism that has flowed across from the Opposition Benches, with the sole exception of the hon. Member for Banbury (Mr. Marten), could not fail to make us worry about the attitude to the British steel industry of hon. Members on those Benches who support the Market.

I find this documentation worrying. I am also worried, like my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis), by the ambivalent attitude of the Minister of State, who in one powerful sentence expressed more or less total opposition but then produced a form of words which appeared to contain a major retraction. The Minister mentioned one other nation with a similar attitude to ours. I hope that it is stronger than the ambivalence displayed by my hon. Friend.

I regard this documentation as an unacceptable interference in our steel industry. If these documents were put before the steel workers—my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) has already shown them to some of our people in Sheffield—they would be appalled. The interference in BSC investment is an example. We are putting vast amounts of money into BSC precisely because private investment in the steel industry was so pitiful. That is the reality. The Thrybergh mill, as soon as it was given the production resources, achieved a world record. That shows the pride that exists in our industry and its potential.

I hope that hon. Members on the Conservative Benches who are opposed to the Market will not object if I state that a complete lack of Socialist approach permeates these documents. We are biased in favour of putting more money into a nationalised industry, to strengthen it and make it more powerful. The contradiction in the Conservative approach was underlined by my hon. Friend the Member for Rother Valley (Mr. Hardy), who pointed out that Conservative Members were totally against nationalisation but, in the same breath, wanted internationalisation almost overnight. We are asked in these documents not to discriminate between private and publicly owned industry. I personally would discriminate because I am in favour of publicly owned industry. I see this documentation as hindering Socialism and a Socialist policy. That might appear sectarian, but we sit on these Benches because we hold different opinions from those of hon. Gentlemen on the Conservative Benches.

The documents state that restructuring plans for steel in the EEC must not be impeded by national plans. We are restructuring and hoping to put more money into our industry. We are convinced that the industry can flourish. We are convinced that without resorting to Little Englandism we can build a stronger industry. What would happen if we wanted to devote a large part of North Sea oil income to regenerating the steel industry and the EEC objected? We know that entrepreneurs all over South Yorkshire are building up stocks of special steels. We do not want interference. If we do not take action, our industry will be steadily run down by the EEC.

I find these documents intrusive and worrying. I would like a far more definite statement from my hon. Friend the Minister on his opposition to the documents.

12.5 a.m.

Mr. David Lambie (Central Ayrshire)

I intervene as a Scottish Member with a steel interest. But in that respect I am holding on with the skin of my teeth. All the steelmaking activities ended two days before Christmas in an area where there is already a 13 per cent. unemployment rate. Unless we can find an alternative industry, that unemployment rate will reach 35 per cent.

What has the EEC done so far for the steel workers in my area except to bribe them to sell their birthrights and their jobs? If the EEC gets away with tonight's regulations, with the support of the Government, there will be no future for the steel workers in my constituency and in the rest of the United Kingdom.

I support the amendment. I hope that the Under-Secretary of State will be more firm than the Minister of State. We might be within three to five weeks of a general election. We want to campaign in the steel constituencies on the basis that a Labour Government will veto any attempt by the European Commission to take control of the investment plans of the BSC and the future of the steel industry in the United Kingdom.

Only rolling mills are now operating in my constituency, but we still have tremendous potential. We are only seven miles from the Hunterston steel peninsula, where the BSC has invested about £145 million in the iron ore terminal and two direct reduction plants. But the intention is to mothball those plants when they are completed in June this year.

The Government and the BSC have said that the next steel development on a green field site will be at Hunterston. I want the decision on that development to be under the control of a British Labour Government. It must not be handed over to the bureaucrats in Brussels. We found it difficult enough to get that commitment from a British Labour Government. We have not a hope in hell of achieving such a commitment from the European Community.

The future of the steel industry in North Ayrshire depends on a British Labour Government and the British Steel Corporation. That is why I support the amendment. That is why I hope that the Government will make a commitment to the steel constituencies, if we are to face a general election in the next few weeks.

12.8 a.m.

Mr. Michael Marshall (Arundel)

On one matter at least I can agree with the hon. Member for Sheffield, Hillsborough (Mr. Flannery). Many of us regret that this debate is being conducted so late at night and in such a short time. I regret that in less than 20 minutes I have to try to reply to about 14 speeches and to put questions to the Minister.

The Minister fluttered briefly round the course. He used his well known "avoid the minefield" technique. The pro- and anti-European divisions exist within both parties. When the Minister reads Hansard he will find that even with his moderate and light-hand-on-the-tiller approach there was a storm of flak behind him.

It is not my task to try to give satisfactory answers on behalf of the pro-Europe case, but I should like to touch on a number of speeches which have been made tonight because one of the problems I face is trying to distinguish between those with genuine concern and the alarmist; between those who try to turn this into something party political across the Floor of the House and those who believe that it raises deep issues. We can fully understand hon. Members' views, both pro- and anti-Market.

It is clear that if one takes the broad view across the House one has to accept some kind of majority view. I start by making the assumption that in looking at these four documents we are concerned with matters which go to the very heart of the future of the British steel industry. My assumption is that membership of the European Coal and Steel Community, as with membership of the Community itself, is a fact of life and will continue.

One hon. Member—I believe it was the hon. Member for Brigg and Scunthorpe (Mr. Ellis)—suggested that we should consult more fully with the trade unions in trying to get a clear view about the Community. I draw his attention to the latest, December, issue of the Iron and Steel Trades Confederation magazine in which the ISTC's parliamentary panel member, the candidate seeking election to the European Parliament, Mr. Paul Flynn, was asked his views about this question and what should be done about investment. He said: For 30 years large scale decisions in our industry have been made on the European scale. The recent shock scrapping of the £200 million oxygen plant at Neuves-Maison"— the French oxygen plant— sent a shudder through the whole European steel industry. It was the nightmare possibility we thought could never happen. These are perilous times and it would be of enormous value to have a voice speaking for I.S.T.C. in the European arena I agree with that. If one thing has been made abundantly clear—

Mr. John Ellis

rose—

Mr. Marshall

I have got so much to say that I am afraid I cannot give way.

Mr. Ellis

The hon. Member referred to me.

Mr. Marshall

I am sorry. I shall have the same problem, with a number of hon. Members to whom, in courtesy to them, I should like to refer, but I must get on.

The important point I am making is that tonight the case has been made clearly for directly elected European Members. Many of the problems which have been raised tonight and many of the worries expressed will clearly become, after June, the concern of those colleagues who then become directly elected Members of the European Parliament. They are some of the people who, I trust, will go to fight for their corners and for their regions, as hon. Members have done tonight. I do not think we can adopt a static view of draft documents of the kind we have been concerned with tonight.

Therefore, my second assumption in looking at the future of these matters is that an integral part of our membership of the ECSC is a continuing commitment by this country and by other members to try to overcome the structural and human problems of overcapacity and overmanning and, as the explanatory memorandum in document R/1135 says on Community rules for aids and interventions, to tackle European uncompetitiveness arising from old or badly sited plant and modern working at less than optimum capacity. It follows, therefore, that we must consider active support for the restructuring plans upon which the Commission is currently working.

I should like at this point to put the point directly to the Minister. I hope he will be able to tell us when the Government expect those restructuring plans to come forward. It is a valid criticism of some of the rules which we have before us in draft form that if they are being put forward prior to the restructuring plan and if that restructuring is reasonably on its way there is not too much point to them. I suspect that this is a longer-term and vast problem but, nevertheless, it would be helpful to consider that aspect.

The third assumption—and I think that this brings us back to the short term—is the question of price restraint and tonnage restraint and the way in which the Davignon plan has operated. I believe it is common ground for the majority of hon. Members that Davignon has been of assistance. It is certainly the view of the British Steel Corporation and it is certainly the view of the British Independent Steel Producers Association. The chairman of the British Steel Corporation, talking to the Select Committee on nationalised industries in December, and as was reported in the press, said that if we did not have the Davignon plan it would have been necessary to invent another.

My hon. Friend the Member for Mid-Sussex (Mr. Renton) has put forward a consistent view—and I should like to pay tribute to the work he has done in the Select Committee on Secondary Legislation. It is because of that scrutiny that we are having this debate.

All hon. Members who take an interest in these matters must accept that in recent years we have seen great difficulties in the steel industry, and it is outrageous for hon. Members to attack my hon. Friend the Member for Flint, West (Sir A. Meyer), who was pointing to the real problems faced in steel making. No one can get any pleasure out of that. Anyone who glances at the BSC figures for the past five years will see that the tonnage has gone down from 18.1 million tons in 1973–74 to complete stagnation in the past three years at between 12.7 million tons and 13.4 million tons. Hon. Members must accept that we face a dilemma because the BSC is saying that these are now normal times. It cannot see a speedy end to the recession.

The hon. Member for Rother Valley (Mr. Hardy) was right to express one optimistic aspect. If we can get industry competitive—and, indeed, if we can get the whole of British industry competitive—there is, on the current sales of 50 per cent. of the British market, a target to shoot for. But even if we take the maximum amount of steel capacity—26 million tons at present—we must remember that the BSC already has the problem of overcapacity in relation to any possible sale.

There was a realistic element in the speech of the hon. Member for Motherwell and Wishaw (Dr. Bray) when he suggested that we had to think about the possibility of problems from subsidised Portuguese or Spanish industries. My hon. Friend the Member for Mid-Sussex was also right to strike a realistic note on how we must face up to these challenges. They will have to be faced by the present Government and, I trust, by the next Conservative Government.

The House has had to consider a number of important issues which go well beyond sheer technicalities. Let me look in more detail at each document. All hon. Members have felt most concerned about the rules. I spoke earlier about the commitment to Davignon. One side of that coin is price agreement and the attempt to achieve market restraint for a temporary period. We must look at it as a temporary arrangement. Price agreements are like incomes policies: they cannot be better than temporary. There comes a time when the mechanism will wear out.

Time is desperately short and I hope that we have enough time to move into areas of agreement on structural capacity and getting a balanced steel industry in Europe. I remind hon. Members that in looking at the balance sheet it is important to bear in mind the commitments that we already have to the Commission. To put it crudely, we must take into account what benefits we are getting from our membership of the Community.

We pay levies of between £7 million and £8 million a year. Against those, we must offset our annual returns. In the past 12 months, we have had £1.8 million for readaptation grants for those affected by rundowns and closures, and another £500,000 for cheap-loan housing for those who have to move as a result of that sort of plant closure. This year alone, 2,400 workers at Hartlepool, Shotton and East Moors will get the advantage of that sort of support. We must add to those sums £750,000 for research grants, £250,000 in low-interest subsidy for investment with an anti-pollution element, loan interest on £412 million of direct ECSC loans and £216 million from the European Investment Bank. The ECSC already has a direct and vital stake in our steel industry with a net balance in our favour.

One hon. Member suggested that we might be in some way moving into very dangerous waters in shifting over to the customs duty proposal. That is a matter for argument. I am perfectly willing to consider what is the best way to raise the levy. That we have to raise the levy seems to me inescapable for the reasons I have given.

When we look at the figures with which the Government have provided us, we can see that if we changed over to the customs duty arrangement it would cost us, on current estimates, between £11 million and £12 million per annum, as against the existing figures of between £8 million and £9 million per annum. Frankly, in relation to a turnover of £3,000 million per annum, we are talking of a relative drop in the ocean in this respect. The right hon. Member for Battersea, North (Mr. Jay) may well want to argue the principle, but I do not think that the amounts are significant in the terms that we are discussing tonight.

I now turn to the broader question of the basis upon which the rules ought to apply. That we should have rules cannot be escaped. It is the obverse side of the coin, as I have said, of the Davignon proposals. For the British Steel Corporation, it has meant directly a strengthening in demand for some products, as stated in the annual report, and when we saw the chairman of the British Steel Corporation he made it clear that, if it had not been for the Davignon proposals, it would have been impossible for the British Steel Corporation to move back up four percentage points in its flat steel products during the last 12 months, at a time when it was desperately trying to edge back over 50 per cent. of the market.

These are the kinds of arguments which have persuaded BSC that the Davignon proposals are in its best interest. For the British Independent Steel Producers Association, similar arguments apply. The hon. Member for Sheffield, Brightside (Miss Maynard), as far as I could see, was simply making a case for a better Davignon plea. She will appreciate that within the practical constraints of today it has only been by the attempts to make sure that some restraint is exercised that the market for special steels has not been even worse.

But there is a wider interest also for the independent producers. Transparent and open competition is crucial to a private sector which has always said that it wants to be in fair and equal competition with a massive State steel industry, of which it is, incidentally, a major customer. Those are the assurances that were given to that sector at the time of nationalisation.

I do not claim that the Davignon proposals are perfect. I would not be here tonight arguing that the proposals in the documents before us contain some perfect formula. But one would like to know from the Minister rather more about the Government's precise attitude on these negotiations. We had a very broad-brush approach from the Minister of State. He simply said that the Government had not felt able to do these things for certain reasons. We understand his broad reasoning, but we need to know, for example, on the question of regional aid, whether this is a matter which will be discussed in detail. To what extent would agreed lists be a feature of the initial agreement if an agreement were to be reached?

It is interesting to note how the documents presented to us single out Scotland, Wales and so on. The whole burden of the case of the Commission, if it were here to answer for itself, would surely be to point to the fact that this country and Italy, as presently constituted within the steel family, are likely to benefit from the Community more than other parts of the European steel industry, because that is the nature of the problem. Therefore, this must be something that we want to hear about from the Minister. We want to hear precisely what understanding exists. The Minister mentioned that there had been an agreement on shipbuilding. We were led by the press to understand that a similar kind of compromise agreement was to he reached on steel.

It is clear that the British Government and Italy have argued for a breathing space. We have until April to look at the matter again. The Government, while they remain in office, have a continuing responsibility in these matters. We want to hear from the Minister precisely what they intend to do as they go into further rounds of negotiations, armed with the benefit of the advice they have had from all sides.

In broad terms, we simply cannot consider scrapping the Davignon proposals in the present situation. It has to be accepted that in terms of the proposals we are obliged to continue with some form of negotiation as to rules. If we do not, we are simply saying, in effect, that we can destroy the Davignon proposals, or any other price agreement, by allowing subsidy at the other end of the scale. The hon. Member for Motherwell and Wishaw demonstrated that very well indeed.

In the amendment, certainly on paper, I find it difficult to see anything objectionable. The hon. Member for Sheffield, Heeley (Mr. Hooley) is, in effect, inviting us to join in invocation to reject sin. My difficulty is in seeing where he has been able to find any real reference within these documents which could bring about the undesirable matter that he has mentioned.

The nub of the matter is to be found in the Council resolution, in paragraph 2 and the following rules 1 to 6. In this House all of us must try occasionally to strip aside our prejudices—in this case, whether we are pro-Market or anti-Market. But, frankly, I could not help thinking, as will some other hon. Members who have read the rules, that when one reads out the rules one's tone of voice can almost make or break one's fears or happiness about the subject. Let us take: Aid, in whatever form, must promote restructuring and conversion and take account of the resultant social consequences and effects on employment". Who could object to that? Let us take: Competition must not be distorted by the aid. Who could object to that? One could continue down the list.

Mr. Hooley

Will the hon. Gentleman give way.

Mr. Marshall

No, I am very sorry. I have only four minutes.

The whole point is that it is very difficult to judge, without rehearsing some of our prejudices, precisely what is meant by some of these points as drafted. Surely the Government, who have had experience of negotiation, ought to be able to put some flesh and blood on the skeleton of these matters.

I sum up our attitude to these matters. The Opposition accept that, while Davignon is a continuing feature of international steel trading, there must be some measure of price restraint. Therefore, we understand the points put forward about steel merchants. As I understand it, there have simply been some opportunities for evasion, particularly on the matter of sale of cut-up coil, and so on.

We agree that the ECSC must continue to be funded. As I have said, the actual basis is a matter for argument. I have also said that I think that the present differential between one system and another in money terms appears to be relatively minor.

Our concern remains the Government's attitude to the Commission's proposals for aid to the steel industry. I share some of the reservations that have been expressed tonight, because looking at these matters cold is very difficult. In this situation we would have benefited from the advice of many of our colleagues who are Members of the European Parliament, who, for all kinds of reasons, as many of us know, cannot be with us tonight but who would make the case for the Euro-Members of the future.

However, in the proposals which I have read out, I cannot see anything like the anxiety which has been expressed by many hon. Members. It would be very hard indeed for us to explain to other members of the EEC if we simply say "We are trying to go this alone". As I think the Minister of State said, on the present estimate, 34 per cent. of all expenditure coming from the Community for steel is coming to this country. That really makes us the principal beneficiary. That has been our position over many years. That situation may well continue.

I think that the Government are moving towards accepting the amendment; I give the hon. Member for Heeley that guesswork in advance. I think that the Government are simply trying to keep him and his hon. Friends, particularly those below the Gangway, in a cheerful mood. The suggestion that there is some kind of party-political mileage and that this is in some way a matter on which, for electoral popularity, the Government are taking a tough anti-European line is all eyewash. Frankly, I think that hon. Members have realised that. They did so when they suggest that the Minister of State ought to have given them a bit more precise detail. I shall invite the Under-Secretary to do so shortly.

I simply say that the Government, in this matter as in so many others, are walking on a tightrope. They are trying to maintain EEC and ECSC membership, they want to have the benefits of Davignon, but they would like to avoid crunch questions—of which these are crunch questions. In this as in so many other matters, it will take a fresh look and a fresh Government from the Conservative Benches to bring us to reality.

12.30 a.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

I am afraid that I shall not bring any joy at all to the hon. Member for Arundel (Mr. Marshall) in the last respect that he mentioned. Indeed, the ambivalence that he expressed on behalf of the Conservative Party contrasted markedly with the firm determination expressed by my hon. Friends. The change of tune on the Opposition Benches, depending on where hon. Gentlemen sit tonight, was in marked contrast to the determination of my hon. Friends to preserve our steel industry, above all, to represent their constituents adequately and to keep the interests of the British Steel Corporation in their minds.

Tonight we had some good sense from the hon. Member for Banbury (Mr. Marten). I take on board the point that he made about the absence of any reference to the Scrutiny Committee documents. I shall certainly see that that is fed through to my right hon. Friend the Lord President.

The hon. Gentleman's good sense contrasted with what I thought was the incredible nonsense that we had from the hon. Member for Flint, West (Sir A. Meyer). I hope that his Labour opponent will make his constituents absolutely aware of his sentiments tonight. The hon. Gentleman's proposals to hand over the future of the steelworks and of steel workers in this country to the European Commission will not go down well in his constituency.

We had testimony to the achievements of the British Steel Corporation by my hon. Friend the Member for Penistone (Mr. McKay) in the £21 million investment at Stocksbridge. We had the anxiety expressed by my hon. Friend the Member for Consett (Mr. Watkins), and I look forward to receiving the deputation from Derwentside that he is to bring to me. My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) expressed the strong feeling that the Commission must prove itself. We then had a robust defence of the BSC's achievements by my hon. Friends the Members for Brigg and Scunthorpe (Mr. Ellis) and Rother Valley (Mr. Hardy).

I know that my hon. Friends the Members for Sheffield, Heeley (Mr. Hooley), Sheffield, Brightside (Miss Maynard) and Sheffield, Hillsborough (Mr. Flannery), from the way that they have pressed the interests of their constituents over the past weeks and months, are determined to do something to secure a better future for Sheffield steel.

My hon. Friend the Member for Brigg and Scunthorpe asked a specific question about rehabilitation expenditure from the European Coal and Steel Community. Those benefits have gone to workers who were previously employed at, for example, Hartlepool, East Moors, Ebbw Vale and Clyde Iron, and not into the BSC's pocket. The money comes jointly from Community funds and from Her Majesty's Government. If my hon. Friend would like further information, I can give it to him on some other occasion.

The hon. Member for Arundel, if he was ambivalent in some of his remarks, was quite right to pay tribute and testimony to the efficacy of the Davignon anti-crisis measures. I do not want to detract from that. I pay tribute to the fact that, because of Davignon, producers have been obliged to refrain from continued alterations in prices—price cutting—by the imposition of mandatory minimum and guidance prices and that importers have been prevented from buying steel at low rates from third countries for sale within the EEC.

The BSC recognises the benefits that it has gained from the Davignon anti-crisis measures. Indeed, we recognise that the anti-crisis measures have helped and that it is sensible for Community steel industries to look for some kind of joint solutions to their problems. But, at the same time, we must speak for and defend the best interests of our steel industry and workers.

The hon. Member for Arundel paid a glowing tribute to the money, in the form of a balance sheet, that we were supposed to be receiving from the ECSC. However, the figures for the last year do not accord with what he said. They show that BSC paid in about £6½ million and got back £2 million. The figures over different years probably balance out a little better than that, but the figures for last year do not justify the kind of eulogy given to the House by the hon. Gentleman.

Mr. Michael Marshall

Will the Minister accept that I obtained the figures I quoted from the BSC as the latest figures? I think it is useful for the House to examine them so that perhaps by tabling written questions we can help to clarify the matter.

Mr. Huckfield

I hope that the hon. Gentleman will be fair in giving the House last year's figures. Those figures show that we paid £6.5 million and got back £2 million.

The hon. Gentleman asked about the extension of the Commission's powers over United Kingdom regional aids. We have made clear to the Commission that we attach considerable importance to our freedom to offer regional assistance and that we shall resist any attempts to curtail this freedom. The Commission is well aware of the difficult situation that we would face if a decision on the extension of its powers over regional aids were made. I hope that will markedly contrast with the ambivalent attitude displayed on the Conservative Benches in this debate.

The proposed steel aids decision, as my hon. Friend said in opening the debate, would have the effect of altering the balance of powers between the Community institutions, and we believe that it would set a major precedent in conferring new powers on the Commission. I appreciate that that is what the hon. Member for Flint, West wants. Equally, the proposal permanently to transfer customs revenues on steel products to Community funds—this relates to document No. R/1292/78—would represent a significant change in the workings of the ECSC. Solutions to crises must be found, but we do not believe that any such crises should be used as an excuse for permanent changes.

Many of my hon. Friends have made plain tonight that in regard to document R/1135/78 the Commission's draft proposals on State aids are too rigid for us. We cannot be bound to follow policies designed to put the steel industry back on its feet without paying due regard to the social and economic consequences of such action on the country as a whole. The Commission and other member States cannot expect us to bind ourselves to agree to proposals which would, in effect, deprive us of the power to decide upon the speed and content of our restructuring programme. We have said that it is up to BSC to negotiate closures at its discretion and that no action will be taken without prior consultation with the trade unions and the work forces concerned.

Paragraph 14 of the White Paper "British Steel Corporation: the Road to Viability" reads: No action will be taken without prior consultation with the TUC Steel Committee and the local workforces. We intend to stand by those words.

Mr. John Ellis

Will my hon. Friend take the workers into his confidence, as was done in the coal industry? In that case there was not just consultation but, although it was a stony road, eventual agreement. Will the Government seek not just negotiations but agreement?

Mr. Huckfield

I take my hon. Friend's words to heart. With my right hon. Friend this afternoon I met a deputation from Bilston. The representatives expressed a strong case. My right hon. Friend believes that they must be consulted. Indeed, it has been our policy that the trade unions must be consulted.

We have made our stand on this matter and are on record as so doing. I accept the spirit of the amendment, and because I accept the spirit of their amendment I hope that my hon. Friends will not feel bound to press it.

Mr. Jay

My hon. Friend has said that the Government would resist the proposals and that they cannot accept them. Can he assure us that that means that they will not accept the proposals in their present form?

Mr. Huckfield

In view of the statements that my right hon. and hon. Friends and I have made, I am surprised that my right hon. Friend should even question me in that way. I have made the position very clear tonight, as has my hon. Friend the Minister of State, Foreign and Commonwealth Office.

Mr. Marten

rose—

Mr. Huckfield

I have only a short time, and I did make a rather glowing reference to the hon. Gentleman, which I genuinely meant.

Our policy has been set out in our White Paper "The Road to Viability". We explained our intention with regard to the corporation's future finance, and set out the action we are taking to put the corporation back on its feet. We made plain our intention to achieve an efficient, competitive and profitable steel industry in the 1980s.

My hon. Friends from Sheffield have made a special case for their area. I hope that my hon. Friend the Member for Heeley will take cognisance of the comprehensive answer I gave him yesterday, stating the Government's overall position on special steels. I also hope that he will carefully read the import figures which I gave him in a different answer yesterday. My statement, in reply to a series of questions, and those import figures show the improvement that is taking place in certain sectors of the special steel market. The figures show that the improvement is being maintained.

I refer particularly to the part of the Adjournment debate on 28 November when I told my hon. Friend: Of course, taking the broad areas, I am sure I my hon. Friend will recognise that so far, as a result of some of these activities"— I was referring to the activities that the Government had already undertaken— alloy tool, die and magnet steel import penetration has fallen from 73.01 per cent. in 1977 to 71.34 per cent. so far this year. Stainless steel bar penetration has fallen from 44.78 per cent to 41.25 per cent."—[Official Report, 28 November 1978; Vol. 959, c. 405.] Those are just a few figures dealing with a few special areas that I know have been of great concern to my hon. Friend. I hope that he will note that there has been that improvement. It must continue, and I think that the figures I gave him yesterday show that it is continuing.

Mr. Marten

I am grateful to the Minister for now giving way. He said that he accepted the spirit of the amendment. What I should like to know is whether he accepts the amendment.

Mr. Huckfield

If I had been asked personally, I would not have put the amendment quite in those words. What I am saying is that I accept my hon. Friends' vigorous defence of their constituents' interests tonight. Because I accept that, I accept the spirit of the amendment.

Mr. Marten

Does the hon. Gentleman accept the amendment?

Mr. Huckfield

If I am pressed I shall tell hon. Members that if I had been in their shoes I would not have put the amendment quite in the same words. Nevertheless, I accept its spirit.

We have in the past, although not too much tonight, had some criticism of the degree to which the Scrutiny Committee was kept informed of progress towards the adoption of the 1978 budget proposals contained in document R/674/78. The Committee considered the original draft decision on 7 December 1977, which paved the way for this, before the Council approved an allocation 32 million EUA in principle. It did not at that stage recommend a debate. The Committee also considered on 18 May 1978 a revised draft of R/674/78, providing for contributions to be made in proportion.

I hope that the hon. Members who speak as members of the Committee will read carefully the explanatory memorandums that have been sent to them, as well as the correspondence between the Chairman of the Committee and my right hon. Friends. That sets out the difficulty in which my right hon. Friends found themselves in wanting to get the measures operable as soon as possible, as was essential. Perhaps the fully detailed consultation at the appropriate time which the Scrutiny Committee might have sought was not then possible because of the speed at which a decision had to be taken. Nevertheless, I hope that hon. Members will accept the explanation which has been given and that the sentiments expressed in my hon. Friends' letters have convinced them that we take their representations seriously.

It is difficult nationally to establish a precise balance sheet. Although it is true that the British Steel Corporation and the steel industry have benefited to some extent from the Davignon anti-crisis measures, I recognise the strong feelings of my hon. Friends who have spoken on behalf of Sheffield special steel. As my hon. Friend the Member for Penistone said, on the matter of Sheffield special steel we have been in correspondence with Commissioner Davignon and we have sent his latest reply to the sector working party and to BISPA for consultation. We want to make progress. We think that the spirit in which the Commissioner has replied sets the framework in which we hope to be able to make progress.

However, the Government believe that any plan to restore a disciplined market in steel and to provide financial assistance and alternative employment to redundant workers must benefit Britain. Under the ECSC budget, we believe that we are not being asked to provide funds disproportionate to our receipts.

Division No. 52]	AYES	[12.47 a.m.
Bagier, Gordon A. T.	Hamilton, James (Bothwell)	Marten, Neil
Bain, Mrs Margaret	Hardy, Peter	Maynard, Miss Joan
Bishop, Rt Hon Edward	Harrison, Rt Hon Walter	Moate, Roger
Boothroyd, Miss Betty	Home Robertson, John	Smith, Rt Hon John (N Lanarkshire)
Bray, Dr Jeremy	Hooley, Frank	Snape, Peter
Cocks, Rt Hon Michael (Bristol S)	Huckfield, Les	Urwin, T. W.
Concannon, Rt Hon John	Hunter, Adam	Watkins, David
Cook, Robin F. (Edin C)	Jay, Rt Hon Douglas	Whitehead, Phillip
Cowans, Harry	Judd, Frank	Wise, Mrs Audrey
Cryer, Bob	Lamble, David
Ellis, John (Brigg & Scun)	Loyden, Eddie	TELLERS FOR THE AYES:
Evans, John (Newton)	Lyons, Edward (Bradford W)	Mr. Alf Bates and
Flannery, Martin	McNamara, Kevin	Mr. Jim Marshall.

NOES
Fairbairn, Nicholas	Penhaligon, David
Johnston, Russell (Inverness)
Lester, Jim (Beeston)	TELLERS FOR THE NOES:
Meyer, Sir Anthony	Mr. Tim Renton and
	Mr. Robert Rhodes James.

Question accordingly agreed to.

Main Question, as amended, put and agreed to.

Resolved, That this House takes note of the EEC Document Nos, R/1135/78, R/1221/78, R/1292/78 and R/3454/78 on the Steel Industry but cannot accept proposals which would curtail assistance to and investment in the iron and steel industry and would damage employment in that industry.

Mr. Michael Marshall

On a point of order, Mr. Deputy Speaker. The House is in a little confusion as a result of the vote. We had the somewhat peculiar situation of the Under-Secretary of State saying that he accepted the amendment but advised that it should be withdrawn. We are not quite clear whether the Government feel that they have carried out their undertakings to the House. Perhaps it would help if the Under-Secretary explained his advice a little further.

Mr. Les Huckfield

It is very simple. As I have consistently said to Opposition Members and to my hon. Friends, had I been given the choice I would not have used those words. That is all that I say. But, having said that and having voted for it, I hope that the Government's position is now clear.

Several Hon Members

rose—

I hope that my hon. Friends, recognising that I have accepted the spirit of their amendment, will not press the amendment and that it will be withdrawn.

Question put, That the amendment be made:—

The House divided: Ayes 35, Noes 5.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The general rule is that in these circumstances an intervention from each side is allowed. But I shall not allow any more.