§ 4.33 p.m.
§ Mr. Barry Jones (Flint, East,)
I beg to move, That this House do now adjourn.
Leave having been given on Monday 16 July under Standing Order No. 9 to discuss:the proposed closure of steel making at the BSC Shotton works ".I come to praise Shotton, not to bury it. I declare an interest, because for a brief period I laboured underneath the blast furnace of Shotton steelworks. My father worked there for a long time and was a branch official of what is now known as the Iron and Steel Trades Confederation and my grandfather worked at Shotton for many years and had the great honour of having sold the first Daily Herald in Shotton steelworks.
I am glad to see in the Chamber not only the Secretary of State for Industry but the right hon. Member for Sidcup (Mr. Heath). My mind is taken back to 1973, when I took a deputation to the right hon. Member for Sidcup, when he was Prime Minister, to stress that the proposed closure of Shotton by the then Tory Government was wrong.
I have been comparing and contrasting the treatment that I received then with the treatment that I have received in the past few days. I recollect that in 1972 the right hon. Member for Worcester (Mr. Walker) who was Secretary of State for Trade and Industry came to the House and had the courage to tell us what he was about—even though it was to include in his proposals the closure of steelmaking at Shotton.
I was later able to take a large number of my constituents to 10 Downing Street to meet the Prime Minister and to debate the matter with him for one and a half hours. I recollect the right hon. Gentleman's patience, the way that he debated the issue, and how he and his colleagues bent over backwards to try to effect an easement of the situation for my constituents.
The treatment meted out to me and the steel workers over the past few days has been arrogant, offhand, evasive and totally unworthy of a Government. I guess, however, that it is, by now, totally typical of the present Government.
1328 The point at issue is that at least 6,300 jobs are to be lost. The work force of 10,800 reside in one sub-region and, by any estimate, 7,000 or more live in my constituency. That is a large concentration of steel workers. The only skill possessed by the great majority of steel workers is the great skill of making steel. Most of them left school at the age of 14, and for a generation they have been working making skilfully some of the best steel in the world.
Perhaps once a year a steel worker will save from injury, at least, another steel worker. That sort of working comradeship engenders for a whole community a feeling of brotherhood. There is a special feeling in any steel constituency, and that is certainly the case in my constituency. At my constituency Labour Party meetings the women of the meeting will leave at 8.30 p.m. in order to prepare sandwiches for the night workers on the shift that starts at 10 o'clock.
The worker-director at Shotton has four sons working in the steelworks. Perhaps the best way of illustrating the dependence of my area on steelmaking is to describe a frequent occurrence at night when the blast furnace is tapped. In certain climatic conditions, particularly when there is heavy cloud, the whole area for many miles around is suffused in a red glow when the furnace is tapped. A proud community lives in that area where the glow of hot metal is reflected on the skyline, and I believe that that community is at risk because of the Government's actions.
Central to the whole debate are the attitude, posture and policies of the Secretary of State for Industry. If there had not been a class war, I would look to the right hon. Gentleman to invent one. One of the images that I have of the right hon. Gentleman is that of an inventor. I think of him in Victoria Street, poring over his books and potions like some medieval alchemist casting his spells, earnestly seeking the transmutation of economic lead to economic gold and murmuring many times " entrepreneur ". Of course, this sorcerer's apprentice is the Prime Minister.
I am also beginning to see another image of the right hon. Gentleman. That image is of the back-street bruiser. With the Secretary of State for Wales holding 1329 his coat, he is mugging the chairman of the British Steel Corporation. He is pistol-whipping, knuckle-dusting and bother-booting Sir Charles Villiers. That violence is brought about by the necessity, according to the Government, for the break-even policy.
The Corporation has moved against Shotton because the Government have inflicted crude cash limits that are crippling it. If Shotton falls, after it will come Llanwern, Port Talbot and even Ravenscraig. Successively, the right hon. Gentleman's cash limits will bankrupt these plants. The current policy is stupid and deeply injurious to the social fabric of our steel communities. The Government have endorsed a policy that can destroy the British steel industry. It is crippled by imports, smothered by cash limits, supervised with the utmost severity, and it may well wither on the vine. The current policy is a monumental disaster. The only way to get the break-even policy to work is to close steel works over and over again. In that way we shall destroy the remaining steel industry in the United Kingdom.
That brings me to the pledge. The chairman of the British Steel Corporation said that the Shotton steelworks would be required for many years to come. I quote from the speech on 21 May of my right hon. Friend the former Secretary of State for Industry, who was quoting the pledge that was given.' In view of our commercial objectives and of our proposals for the development of Port Talbot on the above basis, we have decided to remove any proposal or date for closure of iron and steel making at Shotton. This decision will not be reviewed during BSC's current five-year plan beginning in 1977. ' "—[Official Report, 21 May 1979; Vol. 967, c. 700.]In the Corporation's annual report for that year a whole page was given to the pledge on Shotton. That pledge should be reconstituted.
The rundown at Shotton is scheduled to take place over a period of less than two years. My ministerial experience tells me that 9,000 new jobs cannot be delivered to a stricken area in anything like two years, and I fear that those in my area who go on the dole will rot there for the rest of the decade. I urge the Government to think again.
Fortuitously I received from the Secretary of State for Wales a letter on 11 1330 July. Given the speculation that I sensed about the future of Shotton, I had the prudence to ask if he could tell me how many jobs were to come to my constituency—how many were in the pipeline and how many had been made. I got a truthtful answer that there were few. I have written down here " only 800 ". If we are to lose 6,300 jobs directly and perhaps several thousand more indirectly on the domino theory of dependence of main jobs, what sort of society will we have on Deeside in two or three years' time? Will unemployment rise to 20 per cent? Will masses of our young people either have to meddle away their time without a job locally or leave the area to make their fortune elsewhere? What will happen to the dozens upon dozens of local shops and small local jobbing builders? What social fabric will we have in three years' time if the Government insist that the decision go forward? Shotton in the 1980s must not become what Jarrow was in the 1930s.
§ Mr. David Alton (Liverpool, Edge Hill)
Perhaps the hon. Gentleman will also consider the ripple effect that the closure of Shotton will have on not only Deeside but on Merseyside? It will have a disastrous effect on the Bidston dock. It will cause consequential unemployment problems to the people of Merseyside, who are also suffering at present.
§ Mr. Jones
If the Shotton rampart falls, the people in unemployment queues in North-West Wales—in Gwynedd—will be doomed to stay there until the year dot. There will be no hope of pushing new jobs to North-West Wales if the main objective is to find 9,000 jobs for Deeside in the decade ahead. A strong civic and political alliance with Merseyside was forged in the Shotton fight. I do not doubt that if the Shotton rampart falls, the Deeside area will become directly competitive with stricken Merseyside for jobs that are in short supply. The Government had better think again. Only half an hour ago they said that they would seek to get a better regional policy of aid for Merseyside.
§ Mr. Eric S. Heffer (Liverpool, Walton)
Does my hon. Friend agree that in the fight to maintain Shotton he received tremendous support from Merseyside Labour Members and the Merseyside 1331 Labour movement? All sections of the Labour movement have stood four-square with my hon. Friend in the battle, and we shall do so today, because the issue affects the people of Merseyside whom we represent.
§ Mr. Jones
The efforts of Labour Members in Merseyside, Liverpool and Greater Merseyside have been little short of heroic. Lord Sefton skilfully organised the civic alliance for us. With the help of Labour Members Shotton has been able to stay in the production ring for over half a decade. I do not doubt that in the months ahead, if the Shotton work force looks in the direction of Merseyside for help in its constitutional struggle against that unjust decision, Merseyside Labour Members will not be found wanting one whit.
I have not come here today to belabour the British Steel Corporation. World trading conditions are manifestly discouraging. OPEC has twice conspired to disrupt forecasts, but the Corporation has progressively modernised its productive capacity, almost exorcised the malicious ghosts of the old steel masters and at times in the 1970s delivered profits. It has had three chairmen in seven years, dealt with five Governments, contended with regional lobbies, recently found a strong pound a disincentive to export activities and suffered from the catastrophic importation of foreign steel through the flood of imported cars. I suspect that if pressed the Corporation would ruefully concede that if only the British car industry had had the same productive spurt since 1964 as the French, demand for sheet steel would have been 1 million tons higher today and the Shotton steelworks would have been going great guns.
Mine is in no way an attack on a nationalised industry. However, if I am permitted the ghost of an attack, may I direct it towards the Government Front Bench? The Secretary of State has played a most unsatisfactory part in all this. It is a long time since we have seen such a political image walking the Welsh stage. It has been a portrayal of feeble action, divided loyalties and pusillanimous policies. I rate the Secretary of State as unloved, unwanted and ineffectual. He is a survivor of Globtik, 1332 yet he is the proponent in our lovely land of the ugliest features of the market economy. The history of working people throughout Wales has been one of struggle and adversity, but the right hon. Gentleman weighs very heavily on our shoulders. In the name of God, he should go and free us of his baleful influences. The Secretary of State for Wales has not in any way defended the interests of the North Welsh people. He has surrendered the entitlement to work of thousands of my constituents and he has rendered the area hopelessly and pitifully vulnerable.
§ Mr. James Tinn (Redcar)
My hon. Friend has been more than generous in his references to the British Steel Corporation. Will he go a little further and recognise the dilemma of the Corporation and the industry? It has carried through a development programme which many of us said at the time was inadequate. But now the Corporation faces a catastrophic fall in world demand for steel which means that it must decide whether to put its modern plants in mothballs or to under-utilise them at high cost in order to maintain the older conventional plants which make our industry internationally uncompetitive.
§ Mr. Jones
My hon. Friend has said it all better than I could say it. There speaks a friend of a great nationalised industry.
I complain to the Secretary of State for Industry about the shabby way in which we learnt of the Shotton decision. First, the steel workers were told that the chairman himself would tell them of their fate. There was no statement from Industry Ministers to the House, and certainly no letter was sent to me on that day to warn me of the impending statement by the BSC. The national joint planning committee last month was not told of any proposals for Shotton, even though that is a very high-powered employer-trade union committee. The TUC's national steel committee was given a statement by the BSC last Thursday—the very day of the decision—when it went to meet the Corporation. Therefore, it is true that there were no consultations at all. What has occurred has been a unilateral act against the spirit of understanding with the trade unions.
§ Sir Anthony Meyer (Flint, West)
Who, in the hon. Member's opinion, should have had the first information about the decision? Should it have been the workers of Shotton, the national trade unions or this House?
§ Mr. Jones
I look forward to hearing the answer to that question from the Minister.
Trade unionists in my area believe that they have been bounced very cynically. They are very angry. On 12 July I received a letter from the Secretary of State for Industry. That letter was dated 10 July and it contained some details about Shotton steelmaking, but there was not a ghost of a mention about the imminent closure proposals. The Department of Industry has not played fair with the House or with the workers at Shotton.
I raise briefly a question about the plans to transport 1½ million tonnes of sheet steel from Scotland to Shotton when the steelmaking capacity at Shotton ceases. Can the Scottish plant at RavensCraig produce that amount of steel regularly for Shotton? The trade unionists have been given no sight of any figures about the cost of transporting that amount of sheet steel across Britain. They want to know who will pay for the new rolling stock that will be used to transport this sheet steel.
§ Dr. Jeremy Bray (Motherwell and Wishaw)
My constituents in Motherwell who work at Ravenscraig will support my hon. Friend and his constituents in flatly opposing the closure of Shotton in the absence of any alternative employment. The capacity of Ravenscraig to produce is now being proved by the workers there. However, this is a part of the wider strategy in the tragedy of having failed to provide alternative employment in the steel areas. The Minister will find that all the steel workers are united against precipitate closures which maker it impossible to have alternative plans rolling in advance.
§ Mr. Jones
I am grateful to my hon. Friend for his comments. I shall study Hansard closely, and show his remarks to my constituents.
A large amount of sheet steel is to be produced in Scotland and transported to Shotton. It is said at Shotton that 1334 large-scale expenditure will be required to erect buildings to store such amounts of sheet metal. It is even said that the cost of storage will exceed the amount of money that would be needed for new investment to make the furnaces more modern and to prevent Shotton from closing.
The central point about the transportation of sheet steel over many hundreds of miles to Shotton is how regularly can this be delivered. Can it be delivered day in, day out, year in, year out? Can there be guarantees against industrial disputes in a steelworks, or on the British Rail system? If these guarantees cannot be given, this renders very vulnerable the 4,000 jobs at the finishing complex at Shotton. It is here that Government Ministers have been taken for a ride. They have not done their homework and they will find it extremely difficult to guarantee regular supplies to enable those 4,000 jobs to remain safe. It is widely believed in the constituency that it will be only a matter of time before those jobs are rubbed out.
I accuse the Secretary of State for Wales of dereliction of duty. I urge the reconstitution of the pledge given by the chairman of the Corporation. I believe that the Secretary of State should leave his office. I propose that the modest investment at Shotton which is needed to enable steelmaking to continue should be given. Shotton's role in the United Kingdom steel policy should be as a balancing plant, giving insurance cover against over-dependence upon too few, too vulnerable giant steelworks operating in Britain.
I give notice to the Government that the Shotton steelmen will oppose, oppose and oppose these offensive Government policies. They will fight, organise and lobby and they will do these things honourably, ably, persistently and constitutionally.
I believe that the free market policies will run for another 18 months only. I predict that the Secretaries of State for Defence, Employment, the Home Department, Agriculture, Fisheries and Food and Foreign and Commonwealth Affairs will seek an audience with the Prime Minister and they will say " Either you go or the right hon. Member for Leeds, North-East (Sir K. Joseph) goes ". I believe that the Prime Minister will dump her 1335 Industry Minister. But will Shotton survive until then? If the pledge of the chairman of BSC is reconstituted it might survive.
Shotton desperately needs time to stay in production and to retain its steel-making capacity. The Tory Government are switching off the life-support system of my constituency. They are doing so directly because of their naive, simplistic and pathetic adherence to the ideological economic policies of the Secretary of State for Industry. I warn the House that Shotton is but the first victim of these foolish and wrongful policies. Steelworks, shipyards, aerospace factories, motor car and motor cycle factories had better beware.
Working people in Britain should know that they are being sought out for punishment by an ideologically crazed Government. Their punishment will be the dole. The Government believe in massive dole queues as an instrument of policy.
§ 5.1 p.m.
§ The Secretary of State for Industry (Sir Keith Joseph)
I thought that it would help the House if I spoke briefly at this stage. My hon. Friend the Minister of State will hope to catch your eye, Mr. Speaker, at the end of the debate.
My right hon. and hon. Friends understand entirely the sense of shock that must have been felt in Shotton at the decision of the British Steel Corporation. The people of Shotton have built up an excellent reputation as a work force over many years and I pay my respectful tribute to them. The House will be aware that when the Labour Government nationalised steel in the late 1960s they gave the management responsibility to the Corporation. Therefore, I have no power—and I do not suggest that if I had the power I would necessarily use it on this occasion, for reasons that I shall explain—under a Labour statute to veto a closure that is decided upon by the Corporation.
The hon. Member for Flint, East (Mr. Jones) made a speech that does credit to his heart, but it does not do much credit to the understanding—
§ Mr. Heffer
The right hon. Gentleman is misleading the House. He knows that he does not have the actual power, 1336 but any Secretary of State has a great deal of influence and power, and he can bring in the chairman of BSC to discuss the matter with him. If the Cabinet wished, it could take a decision on the matter.
§ Mr. Heffer
My hon. Friend is right. The Cabinet could take action against the chairman if he did not carry out its views. In 1974 the Labour Government took the decision to delay closures while the position was examined. The right hon. Gentleman knows that Governments can take such action if they have the desire to do so.
§ Sir K. Joseph
The hon. Gentleman confirms that I have no statutory power in the matter. It is true that Ministers can use influence, and the hon. Gentleman has made a point for me that I was to reach later in my speech. A Labour Minister called in the chairman of BSC in 1974 and imposed by influence and not by statutory power a delay in the decision about the Beswick plants.
The hon. Member for Flint, East made something of the promise by the chairman of the Corporation, a promise that was quoted by my Labour predecessor. That was a promise that Shotton would continue steel making at the heavy end for a period of five years. There is a precedent for such a promise in the promises that accompanied the delays in the closure of the Beswick plants. Those promises came about because of the influence of Labour Ministers, as the hon. Member for Liverpool, Walton (Mr. Heffer) has reminded the House. What happened to those promises? No doubt, every one was given with good intentions but every one was broken. Promises were made about Clyde Iron, Glengarnock, East Moors, Hartlepool and Shelton steelworks.
It may seem kind to delay closures, but when events, factors and market situations changed, even under the Labour Government the Corporation was allowed to go ahead and close those plants before the promised date. The promise given in connection with Shotton was part of a total programme including the rebuilding of Port Talbot. When the world market fell away, and that programme with it, 1337 the context changed. It is not for me to defend the chairman of the Corporation—he can defend himself. The hon. Member for Walton is underestimating events if he does not recognise the change in context of the circumstances that accompanied the pledge. However, there was a pledge, and the right hon. Member for Chesterfield (Mr. Varley) has repeated that pledge in the House. The statement by the chairman of the British Steel Corporation acknowledged, in initiating the closure arrangements, that a pledge had been made.
§ Dr. Bray
Does the right hon. Gentleman agree that the present action of BSC and a number of further actions that are likely to follow in the next few months are made inevitable by the financial target that he has statutorily set of reaching break even by March 1980? Most people in the Corporation believe that target to be totally unachievable, yet the attempt to achieve it will force all sorts of ill-considered actions upon the Corporation.
§ Sir K. Joseph
There was no break-even pledge to justify the closures of Clyde Iron, Glengarnock, East Moors, Hartlepool or Shelton, yet each one was closed before the date that was promised by the then chairman of the Corporation and the Minister in the previous Labour Government.
§ Mr. Eric G. Varley (Chesterfield)
The right hon. Gentleman should get his facts right. He has been badly briefed on the matter. With regard to the steelworks to which he referred, there were negotiated closures on the basis of full consultation with the TUC steel committee and the local work force. That is the difference. The closures were not imposed in the way that we are now being told the closure of Shotton is being imposed. The right hon. Gentleman should not pick up pieces of paper from his Department without knowing the full facts of the case.
§ Sir K. Joseph
The practice that occurred in connection with those closures is being embarked upon now by the present chairman. The Government have not made a decision about Shotton, but the chairman has started from similar consultations with the aim of forcing such closure as occurred in the episodes to which the right hon. Gentleman referred.
1338 I am happy to accept responsibility where I have it. However, when I am told that it is only the break-even requirement that I have imposed upon the Corporation that is causing the present activity, I remind the House that the right hon. Member for Chesterfield said in May 1978:The BSC must get its finances straight as quickly as is practicable. My hon. Friend will know that in the last financial year BSC, in common with many comparable steel companies overseas, lost money. It lost £440 million. Part of the Government's policy is that the financial objectives of the BSC should be to break even by the financial year 1979–80."—[Official Report, 22 May 1978; Vol. 950, c. 1105.]The requirement that I am imposing is a little later than that imposed by the right hon. Gentleman. He imposed a break-even task for the year 1979–80. I am imposing it for the end of the year 1979–80. There is no change in that break-even requirement. I think that there is now more chance that it will be achieved, but the House must realise that, even if it is, it is only a break even on revenue account.
I have said that I am not prepared to ask the British taxpayer to finance losses from the end of this financial year. I have said to the House and the Corporation that we shall be asking the taxpayer to provide money towards the capital expenditure of the Corporation next year.
§ Dr. Bray
The right hon. Gentleman made the crucial point that, whereas the previous target adopted by the Corporation and supported by the Secretary of State was a legitimate target, he has backed that target by a flat refusal to finance deficits after March 1980. It is that damaging situation that has put the Corporation's chairman in an impossible position. What is the chairman to do in March 1980?
§ Sir K. Joseph
The hon. Gentleman is splitting hairs. The right hon. Member for Chesterfield spoke of the Government's objective, not the Corporation's objective. He said that the Corporation should break even by the financial year 1979–80, which were my own words precisely. Is the hon. Gentleman saying that his right hon. Friend did not mean what he said?
§ Mr. Varley
There is a great deal of difference between stating an objective 1339 as something that one should aim for and imposing a straitjacket. The right hon. Gentleman should address his comments to the pledge on Shotton given by the chairman of the BSC. It was said that the decision would not be reviewed by the Corporation during the current five-year plan. The right hon. Gentleman is now saying that he thinks that the Corporation should break that pledge. That is what we are complaining about.
§ Sir K. Joseph
As I have said, the pledge was made. The Corporation's chairman acknowledged that fact and included it in his announcement about his intention to start discussions about closure. The present Government had no association with that pledge. Indeed, the then Conservative Opposition, at the time when the Secretary of State for Industry announced the pledge, dissociated themselves from it. There was a pledge between the Corporation and the Shotton work force in respect of discussions on closure.
The speech made by the hon. Member for Flint, East did not sketch in the background. The steel industry, which is an important industry in terms of the welfare and prosperity of our country, has received from the taxpayer a sum of £3,000 million in the last few years in order to modernise itself. Everybody in the House welcomed the intention to modernise. The logic of modernisation is that when there is excess capacity it is not the modernised plant that is taken out. The hon. Member for Redcar (Mr. Tinn) made the point effectively in an intervention. What is the BSC to do when there is world over-capacity? Does it expect the taxpayer to pay endlessly?
§ Mr. Dennis Skinner (Bolsover
What is the taxpayer expected to do in that situation? I can only draw from experience in the coal industry, because many of the comments made by the right hon. Gentleman were applied to that industry. It was said that the coal could not be sold, that the industry was operating with ancient machinery, that production in many areas was low, that some pits should be closed and that the non-economic end should be cut. The things that are now being said about the steel industry were applied to the coal industry in the mid-1950s and throughout the 1340 1960s until about 1968. Some of us said in those days that the production of coal was not the same as the production of vegetables and that coal would not rot in people's back yards. We said that coal was a product that we were capable of producing and that before long the oil industry, with its powerful lobby, would take over in such a way that it would be able to demand prices that could not be sustained. That argument has been proved without doubt. I ask the right hon. Gentleman to judge by experience. If he needs to err, he should err on the side of caution. Experience in the coal industry makes that clear to all of us.
§ Sir K. Joseph
On that argument the British taxpayer would be asked to pay for surplus capacity in every one of our basic industries, even beyond the amount of money that is already paid to a number of them. I believe that the British taxpayer already feels overtaxed.
I am not competent or qualified to answer the detailed technical questions put to me about Ravenscraig. They are matters for the management of the Corporation. Ministers do not manage British Steel. There is a management designed for that purpose. However, I must put the larger issues before the House.
There are two points that I wish to make, and I ask the House to take them seriously. First, if British Steel does not become competitive, the steel industry will lose more and more of its domestic customers and will enter a loss-making spiral, with ever-increasing demands on broadly unsympathetic taxpayers. It is essential, in the interests of the jobs of the majority of those who work for British Steel, that the Corporation should become competitive in price, quality and delivery as soon as practicable. It may seem kind to preserve surplus capacity, but it is not kind to the vast majority of people who work for British Steel because, unless it is competitive, even more jobs will be in danger.
All is not as bad as the hon. Member for Flint, East sought to convey. The work force at Shotton has an excellent reputation. That force will be inherently attractive to employers seeking to locate business activities. The Government have power to take a limited range of useful actions. My right hon. Friend the 1341 if such happenings were due to some cos-Secretary of State for Wales, who has been in the Chamber since the hon. Member for Flint, East began his speech, has already spoken in the House of some of the actions that would be open to the Government in considering the regional grading of the area of Shotton and in encouraging and facilitating factory building. The reputation of the workers is their best hope.
Self-help is one of the best forms of help, but in what we hope will be the more active industrial vitality in the months and years ahead many employers should be looking for work forces with high reputations with which to embark on new activities. Therefore, the hon. Gentleman will do a disservice to his constituents if he spreads too much gloom in the area of Shotton. However, I fully accept the sense of shock which the initiative of the Corporation may have caused in the area. I repeat that the excellent reputation of the workers concerned will stand them in best stead.
§ Mr. Robert Parry (Liverpool, Scotland Exchange)
The right hon. Gentleman says today in a written answer on industrial policy that Rhyl will be upgraded from intermediate status to development area status and that Wrexham is to be upgraded from development area status to special development area status. Is he not adopting double standards, and does he not appreciate that as the result of his proposals unemployment in North Wales and on Merseyside will be devastating?
§ Sir K. Joseph
The discussions about closure have only just been initiated. We have said that if closure occurs we shall consider upgrading the area concerned. That remains our position.
§ 5.20 p.m.
§ Mr. Bill Homewood (Kettering)
I am hardly likely, after my short time here, to match the eloquence of my hon. Friend the Member for Flint, East (Mr. Jones). Nor have I the temerity to suggest that the Secretary of State for Industry should be dismissed. After all, he might be able to claim unfair dismissal because of the short space of time that he has occupied the post.
I have listened a number of times to Government spokesmen disclaiming re- 1342 sponsibility for industrial occurrences as mic control. It must be the extrapolation of the metaphysical with which the Leader of the House controls the business. No Government can disclaim responsibility for the threat to the Corby iron and steel works. Corby was not created by the free play of market forces under the aegis of Adam Smith's influence. I understand that the Secretary of State is a great admirer of that revered economic anarchist. I assure him that the ideas of the classic economists had little connection with the birth or growth of Corby.
In the early 1930s the iron and steel works, and most of the houses and amenities in the town were developed by the use of cheap Government loans, even in those days. What would £7 million be worth today? That led to a population increase from 1,000 in 1932 to 17,000 by the late 1940s, but such growth was not rapid enough to service either the national need for the product or the profit desire of the owners. In 1951 the Government intervened again to accord the area new town status.
I hear murmurs around me that Corby is not Shotton, but anyone who thinks that the two cases are separate in anything but their historical antecedents is not living in the same age as myself. Corby was created a new town with a difference, in that all the people induced to move to the place, and all its bricks and mortar, were designed to serve one purpose only—the continuance and the development of the iron, steel and tube works in the town.
Neither the Government nor the Opposition in this House can say that they have no responsibility for the tragedy that is now being mooted in the suggestion that the iron and steel works should be closed. Lord Keynes said that, in the long run, we are all dead. If, in the short term, the iron and steel works are closed, that can only be described as the rape of a town—in this case, incestuous rape in that the town is the child of the iron and steel industry and of Government.
The population of the town is now 52,000. It has an unemployment level that fluctuates between 7 per cent. and 9 per cent. depending upon the time of year when statistics are taken.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. I am sorry to interrupt the hon. Gentleman, but he must relate his remarks to Shotton. I believe that he is talking about another steel mill.
§ Mr. Homewood
I am advised that I should say Corby, with Shotton in brackets. I am sure that the situation in Corby is parallel to that in Shotton. The figures are almost identical. My hon. Friend the Member for Flint, East talked of the loss of 7,000 jobs. In Corby, the British Steel Corporation has supplied a definitive number of 5,500 within the iron and steel works. I am sure that my hon. Friend the Member for Flint, East is also taking into consideration the multiplier in a one-industry town. This means a spinoff to the extent of 1,500 jobs, bringing the total to 7,000. Such a figure would mean, at its very least, an unemployment level of 25 per cent., and at its worst—most of us believe that it would be the worst—of 35 per cent.
I am sure that my hon. Friend's constituency has suffered, as Corby has, from being a one-industry community. Employers have been inhibited from moving into the area because of the higher level of earnings, owing to shift work and unlimited overtime, that steel workers enjoyed until a few years ago. Other industries were not competitive. In Corby as, I am sure, at Shotton, innumerable efforts, persistent and consistent, to attract new industry to the area have failed.
I do not know the statistics for Shotton, but in Corby, from 1967, when the vulnerability of the area was appreciated, probably for the first time, when the boom of the 1950s and the 1960s was dying away, and when people became aware of their circumstances, great efforts were made to diversify the industrial structure. Yet, 10 years later, we have finished up with fewer people in non-steel manufacturing trades than when we started.
I do not know what the situation is like in Shotton, but in Corby it is bad— 1344 very bad. There are many poor people. The number of children who receive free school meals is double the average for the rest of Northamptonshire. The infant mortality rate in 1976 was 50 per cent. higher than the average for England and Wales. As a result of the imbalance in the social structure created by there being only one industry in the area, educational attainment is lower than perhaps anywhere else in the country.
From what my hon. Friend the Member for Flint, East said, it seems that the people of Shotton have not gone into the economic case as closely as we have in Corby. The British Steel Corporation says that the closure of the Corby works would result in a £40 million cash saving for that Corporation. That figure is not dissimilar to the figure cited by my hon. Friend the Member for Flint, East.
The Corby figures have been examined by academics. They have discovered that they represent a gross overestimate of the savings involved. I am as suspicious of academics as I am of industrialists and politicians.
§ Mr. Homewood
At the moment I exclude only myself.
The academics say that the BSC has got its figures wrong to the extent of £34 million a year. The academics say that the saving will be £6 million against the BSC's estimate of £40 million.
Because of my suspicions of both sets of functionaries it is safer to drive straight down the middle. It seems that we are talking of a £20 million a year saving in economic activity. Of course, that sum does not include the social costs, any more than does the saving that applies to Shotton.
If I had been elected, as the Government have, on a platform of cutting public expenditure, I should examine carefully the BSC figures. I do not wish to advise the Government to their benefit, but I want to look after my constituents and those of my hon. Friend the Member for Flint, East. When the Government examine the figures they will find that the closure of the steelworks at Shotton and Corby will add to the public sector borrowing requirement.
1345 I do not believe that the Government are at one with the BSC. The Government believe that if they tell the BSC that they are no longer prepared to subsidise its immense financial loss, a priori they will save money. That is not necessarily a consequence of such action. It is possible that a reduction in subsidies to the smaller steelworks will lead to the Government having to take on board a social commitment that will outweigh the gain for the BSC. That is not good economic management.
§ Mr. Marcus Kimball (Gainsborough)
The hon. Member has made a great study of the figures. What percentage of the 5,000 men in Corby will want another job after they have drawn their redundancy pay? There are many long-serving men in the area. The hon. Member is not being fair to the House. He is trying to make a comparison with the situation in Wales. When I drive through Corby, I see a lot of new industry on the Rockingham Road estate.
§ Mr. Ogden
On a point of order, Mr. Deputy Speaker. This debate is supposed not to be about the British Steel Corporation and associated problems but about Shotton. Many hon. Members who live in that area want to take part in the debate, so the question put by the hon. Member for Gainsborough (Mr. Kimball) should be ruled out of order.
§ Mr. Deputy Speaker
A total of 21 hon. Members are seeking to take part in the debate. Brief contributions would be helpful.
§ Mr. Homewood
I shall conclude my remarks quickly. The Corby plant is based upon indigenous iron ore. It uses domestic coal. The strip that is to replace it will be based on imported iron ore and 55 per cent. of the coal will have to be imported. In view of the balance of payments and the energy crisis, that is not good economic management.
I could have answered the question put to me by the hon. Member for Gainsborough (Mr. Kimball). It was not burdonsome. Whatever he believes will happen, we are heading for confrontation with the trade unions if the Government try to close the works.
§ 5.38 p.m.
§ Sir Anthony Meyer (Flint, West)
I congratulate the hon. Member for Flint, 1346 East (Mr. Jones) on initiating today's debate. I am glad to be able to take part in it. I have no doubt that my hon. Friend the Member for City of Chester (Mr. Morrison) would have taken part were he not condemned by his office to monastic silence.
I support the case put by the hon. Member for Flint, East, although I deplore the personal tone of some of his remarks. If I do not support him in all his arguments, he will pleased to know that I shall support him with my vote.
§ Sir A. Meyer
We must get on with the debate. I shall not give way. I am sure that the hon. Member for Flint, East will acknowledge the support that I have given him throughout his fight to maintain steel making at Shotton. I believe that the closure of Shotton steel making is a tragic mistake for the workers there and a dreadful mistake for Britain.
I believe that nationalisation has been disastrous for Shotton. If it had stayed in private hands the Summers family would long ago have re-equipped and diversified it and would have foreseen the kind of situation in which it finds itself today.
At this stage it serves no useful purpose to make party political points out of a tragedy. The Conservative Government are allowing the British Steel Corporation to close down Shotton steel making, a move that it has been itching to make for seven years. Can anyone really doubt, however, that the previous Government were on the point of allowing it to do so?
During the general election campaign I asserted—it was only a hunch—that permission for the BSC to close down steel making at Shotton was sitting on the Minister's desk. It was significant that at no point during the general election campaign was that assertion challenged. It passes belief for the right hon. Member for Chesterfield (Mr. Varley) to claim that he did not know of my challenge. Was he not in communication with the hon. Member for Flint, East, who must read the newspapers in which my challenge was being published? If we are treating this issue as a whodunnit and looking for a guilty party, there, surely, 1347 was the dog that did not bark in the night.
§ Dr. John Cunningham (Whitehaven)
The hon. Member is being somewhat less than fair to my right hon. Friend the Member for Chesterfield (Mr. Varley). The hon. Member should recall, since it was in his speech to the House on 21 May this year—it is at column 700 of Hansard—that my right hon. Friend gave the hon. Member the very denial that he now says was never given.
§ Sir A. Meyer
I recall that very well indeed, and I recall that the denial was made after the election, when there was no possibility of the Labour Party having to make good that denial. That is the whole point of my remarks.
While both Governments have been playing the game of pass the buck, the British Steel Corporation has consistently planned to sacrifice small works such as Shotton, however efficient they might be, to its ever-receding ideal of a large-scale internationally competitive British steel industry based on five major integrated producers. That strategy makes no room for medium-size producers like Shotton, even though Shotton is as near deep water as are Llanwem, Scunthorpe and Ravenscraig.
No account is taken in this strategy of Shotton's uniquely fine record of labour relations. There has been no major strike at Shotton, except those forced upon it by nationwide industrial action, for the past 50 years. Size was everything. The Japanese mirage beckoned invitingly over the horizon.
§ Mr. Kilroy-Silk
Does the hon. Member recall that some four hours ago he was to be heard on the radio strenuously supporting the intentions of the Secretary of State for Industry to remove development area and intermediate area status from, among others, my constituents? He was saying that strong measures of this kind were needed to teach the country a lesson. Is Shotton somehow different for the hon. Member? Does he apply one standard for Shotton and another for the rest of the country, or is the hon. Member just another typical Tory hypocrite?
§ Sir A. Meyer
The hon. Member must be responsible for his own remarks. He 1348 must not put remarks into my mouth. I said nothing about teaching the country a lesson—
§ Sir A. Meyer
I certainly did not. I said that I welcomed my right hon. Friend's proposals because I thought they would bring more effective help to the areas that needed it most. I adhere to that view, and I shall be dealing with that point later in my speech.
§ Mr. John Morris (Aberavon)
Will the hon. Member for Flint, West (Sir A. Meyer) clarify one matter for the assistance of the House? Did he tell the electorate that his assertion that there was a letter on the Minister's desk was based on a hunch, as he has just told the House? Did he use the word " hunch "?
§ Sir A. Meyer
I certainly do not withdraw the word " hunch ". How could I possibly know what letters were on the Minister's desk—[Interruption.] I said that precisely in order to give—
§ Sir A. Meyer
Does the right hon. and learned Gentleman seriously think that I employ spies within the offices of the various Departments? Of course not. There was every opportunity to deny my claim, and the right hon. Member for Chesterfield waited until after the general election, when he had no further responsibility in the matter, before doing so.
In the expansionist climate of the early 1970s the concept of a large competitive British steel industry, based on the Japanese example, was perhaps permissible. In today's climate, however, of a protracted world trade recession and the growing competition of low-cost producers, there is no longer a case for a large-scale competitive British steel industry. The case for British Streel now is primarily a strategic one, that it is necessary to maintain a steel-making capacity in this country in contemplation of a possible national emergency such as a military or economic blockade. If the case is strategic, Shotton is obviously the best bet because it has proved itself more reliable than Port Talbot I [...]lanwern or Ravenscraig.
1349 However, and this is where I turn to vain regrets, the option of keeping Shotton open as part of a plan for a strategic steel industry was foreclosed by the failure of the BSC to invest in the modernisation of Shotton's steel making equipment during the period of the reprieve and by the terrifying mounting losses of the British steel industry as a whole at a time when the need for cuts in Government expenditure became inevitable.
The British Steel Corporation cannot go on imposing its intolerable burden of losses on the rest of British industry without dragging the nation into bankruptcy. In the same way, the Shotton workers can be left in uncertainty no longer. The delay itself was becoming intensely damaging. The Government must therefore stop the haemorrhage.
What, then, are the consequences for Shotton? What future does it face if the steel making goes, and what is the future for North-East Clwyd when 10,000 jobs are to be removed at a stroke? How can Shotton's finishing lines, on which the remaining 4,000 jobs depend, be fed with coil? Is it to come from Ravenscraig, where the ore terminal at Hunterston, which is an essential element in the operation, still, after a year, has not handled an ounce of ore?
Is the coil to come from abroad? I say frankly that when we get to the appropriate point I shall argue most strongly that to enable the finishing lines at Shotton to operate profitably, coil from abroad must be brought in if necessary.
The BSC must be compelled to produce much more convincing figures than it ever produced when it was proposed in 1973 to feed Shotton's finishing lines with coil from Port Talbot. Those sums just did not add up, and nothing that we have been allowed to see—and we have been allowed to see very little in the way of costings for bringing the coil from Ravenscraig to Shotton—encourages the belief that the finishing lines at Shotton can be supplied more cheaply from Ravenscraig than from Shotton's own steel making equipment.
§ Dr. Bray
In his attack upon nationalisation and the strategy the hon. Gentleman does not seem to take account of the fact that the original proposal was 1350 put forward in the Benson plan, while the industry was still in private ownership, and that that set the pattern that has been followed by the British Steel Corporation since. As to the possibility of supply from Ravenscraig, the hon. Gentleman will, no doubt, be aware that Ravenscraig is already knocking 2 million tonnes a year, with new plant, and is in a position to go up to 3 million tonnes later this year. The actual detailed phasing of it, in conjunction of the relining of the third blast furnace, is a matter which the Corporation is looking into at the moment.
I suggest that the hon. Gentleman would serve his constituents best if, instead of producing romantic visions of strategic justification of excessive capacity throughout the Corporation, he were to address himself to the human problem, as my hon. Friend the Member for Flint, East (Mr. Jones) did, and say where the jobs are to come from, concentrating attention on that.
§ Sir A. Meyer
I am grateful to the hon. Gentleman for making my speech for me, and I am grateful also for his assurance of continuity of supply from Ravenscraig, which will, no doubt, be reassuring to the good workers at Shotton. But they will still want to be reassured on transport costs, and that reassurance, I think, is beyond the hon. Gentleman's power to give me now, for all his immense ability.
Even if we get watertight assurances from the British Steel Corporation that it can supply coil to Shotton at a cost that will enable the finishing lines to remain competitive, we shall need the further reassurance that there is to be established on Deeside a major user of the finished product from Shotton.
If we have the assurance of supply, and if we have the assurance of requirement for Shotton's finished product, this may go some way towards relieving the anxieties of those whose jobs at Shotton are, in theory, still safe. But in the question whether we get this big user or these big users into Deeside, much depnds on the regional industrial policy announced by my right hon. Friend the Secretary of State for Industry today. As I said earlier, I warmly welcome the much more selective nature of the aid that he proposes to give, and I believe that this will have a remarkable effect in 1351 concentrating investment in the areas where it is most needed.
The record of the Conservative Party in this matter is better than that of the Labour Party, and it is certainly far more honest. Nevertheless, I shall vote against my own Ministers at the conclusion of the debate. I shall do so not to condemn them for bowing to the inevitable, though I express sorrow that a Conservative Government could not find some way of rewarding hard work and devotion to duty. Still less shall I be voting to express approval of the Labour Party, now in opposition, which has never shown the slightest disposition to reward hard work or devotion to duty and which has used Shotton to buy votes at election time while shamefully neglecting it between elections.
I shall be voting to express my dismay at the wrong decisions taken by Governments of both parties and, above all, my dismay at the conduct of the management of the British Steel Corporation, which has so readily sacrificed a fine works and a magnificent body of workers to others who were greedier and more vocal.
§ 5.53 p.m.
§ Mr. Cyril Smith (Rochdale)
When the hon. Member for Flint, West (Sir A. Meyer) says that this decision has been a tragic mistake, I agree with him. It is a tragic mistake, and however slippery the Secretary of State for Industry may try to be on this matter, the decision will be seen for what it is. When the right hon. Gentleman was answering at the Dispatch Box today I got the impression that he was behaving rather like a slippery eel, saying that it was not really his decision, that it was the British Steel Corporation's decision, although, of course—this is what it came to—" I suppose that I could have stopped it, but I did not try to stop it; it is the Corporation's decision, not mine ", and so on.
However slippery the right hon. Gentleman may have attempted to be and thought he was at the Box today, I believe that the people of Flint will form their own view, whether it suits the right hon. Gentleman or not. They will see this as a decision taken as a consequence of Government policy, and there is nothing else for it. The right hon. 1352 Gentleman can blame the British Steel Corporation. Factually that may be true, but it is equally true in practice that if he had wanted to prevent this closure or, more important—I shall come back to this—delay the decision until other decisions had been taken, he could effectively have done that. He chose not to do so.
If I recall aright, the right hon. Gentleman said also—or perhaps it was one of his hon. Friends—that the taxpayer cannot continue to pay for surplus labour and surplus capacity. I submit that in practice the taxpayer pays for surplus capacity and for surplus labour. He may be paying for it out of another fund, or in some other way, but if in the area where the surplus arises there is no way of taking up that surplus by alternative industry, the taxpayer pays, even if he pays through such means as unemployment benefit, social security benefit, and so on.
The truth is that the taxpayer pays. That is the first point that I make. It is time that the present Government got the message that it is better to pay a man to work than it is to pay him not to work. They must recognise the consequences of developing unemployment through precipitate policies that are not thought out in the long term. They have been in office for only a few weeks, and they cannot at this stage have thought out their long-term strategy in this matter. If they create unemployment in the short term, before having worked out their long-term strategy, inevitably the taxpayer will pay. That is a serious reflection on the Government.
I visited Shotton steelworks some years ago. I agree entirely with the Secretary of State and others who have said that there is an excellent work force there. I pay tribute to the Shotton workers, but, with respect, it is not much good paying tribute to an excellent body of workers and saying, in effect, " You have all been great boys, you have not had any strikes, and you are really marvellous, but all the same you are sacked ".
We are told that it is not the Government's fault, that it is the British Steel Corporation's fault, that the Secretary of State has no power to intervene, and that that is the end of it—" You have all been great and, naturally, we shall arrange a system that gives you a large amount of 1353 compensation, adequately compensating you for the loss of your jobs ".
The Government must understand that financial compensation is no compensation for psychological deprivation. The Conservative Party apparently fails to understand the misery that mass unemployment brings to a community. We can compensate miners; we can compensate steel workers; we can compensate whoever we like with thousands of pounds per head, but unless we give a man's mind something to occupy it we in no way compensate that man for the loss of the opportunity to work.
I agree entirely with the strategic view that there is not a lot to be said in favour of bailing out lame-duck industries, but what matters is that we have to be satisfied that the lame duck cannot be made well again. I have never been satisfied that the situation at Shotton is such that the steelworks could not be made a competitive unit. I think that it was the hon. Member for Flint, West who said that the British Steel Corporation could not shut these works quickly enough.
I recall my limited experience and knowledge—I admit that it is limited—of the Shotton story. Over the years that I have come into contact with it I have always had the opinion that in the end the British Steel Corporation would ditch Shotton. I have never been confident that the Corporation really wanted to save it and make it a viable proposition. As I have never had that confidence, I cannot believe that real efforts have been made to invest in new machinery at Shotton, to ensure its competitiveness. If that investment had taken place, Shotton could have produced various types of steel and taken part in processes within the steel industry to ensure a continuity of work and a future as a profitable section of British industry in general and of the British Steel Corporation in particular.
§ The Under-Secretary of State for Industry (Mr. Michael Marshall)
I know that the hon. Gentleman is trying to be fair. Does he agree that a five-year delay, which took place under the previous Administration, is equally damaging in terms of loss of morale and loss of profitability by continuing to use antiquated open hearth furnaces?
§ Mr. Smith
I concede that there is something in what the Minister says but 1354 I do not concede his argument entirely. Much depends on what is done in five years. If closure is delayed for five years and nothing is done in the interim, so that closure becomes inevitable at the end of that period, that is disgraceful, shocking and indefensible. However, if in five years an attempt is made to ascertain whether the industry can be profitable, whether closure is inevitable, whether there is any other way of ensuring continuity, and, what is more important, if there is another way of preparing for closure so that when it takes place there is alternative employment for the thousands of men who are affected by it, delay is certainly defensible. Indeed, it is not merely defensible: it is an attractive proposition.
The Government's timing of the decision is indefensible. The announcement was made shortly before the drastic alteration of regional policies. Regional incentives have been removed. Incentives have been given to industry to encourage it to go to the South-East and to leave the North. Whatever the Government may say, I believe that that is the consequence of the policy that has been announced today. I believe that it is a deliberate policy. The lot who are now the Opposition had a policy of regional aid for all constituencies that were about to have a by-election. The Government are now introducing a policy of regional aid for all the regions that voted Conservative in the recent general election and those that are likely to do so at the next election.
The consequence of the Government's policy is disastrous for the North of England. It will do nothing to help areas of high unemployment. The announcement of the Government's policy is ill-timed because it has come when so many rumours, or threats, are circulating about what the Government will announce in the coming few days or few weeks. I accept that some of the rumours will be ill-founded. We do not know what the Government's programme will be for training and retraining in industry. We have learnt a little about their policy of attracting industry to certain areas but we do not know a great deal about their policies for the retention of industry and investment grants. We do not know what the [...]olicies will be for other major industries. We do not know how many 1355 thousands will be put on the dole or not put on the dole as a consequence of Government policy still to be announced.
A closure has been announced in isolation and thousands are to be put on the dole in isolation. We are not able to weigh the social consequences and balance them against all the other policies that are threatened but not yet announced. For that reason apart from any others I consider the decision to be extremely ill-timed. I compliment the hon. Member for Flint, East (Mr. Jones) on obtaining the debate and enabling these matters to be put to the Government.
The Shotton closure is a tragedy. It is ill-timed and ill-conceived. The closure lies at the feet of the Government. For all those reasons my colleagues and I will be voting against the Government.
§ 6.5 p.m.
§ Mr. Peter Fry (Wellingborough)
The Liberal spokesman, the hon. Member for Rochdale (Mr. Smith), displayed his party's usual quality by saying that it does not want lame ducks and in the next breath suggesting that many lame ducks should continue hopping almost indefinitely.
I accept that the timing has been unfortunate. It is true that closures, whether at Shotton or Corby, can hardly be a shattering surprise to the House or to the respective work forces. It ill behoves the Labour Party, if it genuinely wanted to be honest and to fight the general election with clean hands, to wait until after the election before expressing itself on the steel industry. It should have said before the election that the steelworks would not be closed, but it did not do so. It waited until after the election.
Nearly all the steel workers in Shotton and Corby knew that the sword of closure was over them and their jobs during the election campaign. One of the results was that the hon. Member for Kettering (Mr. Homewood) just about scraped home in a previously safe Labour seat. The steel workers knew that they would be deserted by a Labour Government even if one had been re-elected on [...] May. Let us have no hypocrisy on either side of the House.
I accept what the hon. Member for Rochdale said about social consequences. 1356 The consequences are immense when a one-industry town suffers a cutback. I hope that I shall not have a detrimental effect on your good temper. Mr. Deputy Speaker, if I try to draw an analogy from what must be happening in Shotton for what is happening in Northamptonshire.
We spend much of our time beating our breasts about how terrible are the consequences of closures and how more and more taxpayers' money must be used to maintain jobs. Far too little attention is being given to tackling the problems of towns that are wedded to one industry and face an appalling future.
Many of my constituents work or have businesses in Corby. It is not only the industry itself that collapses. Also involved are the many others who depend upon the industry and upon earning power within the town. They suffer as well. The House and the Government must consider the wider context. It is not enough to say that it is the decision of the British Steel Corporation, because it is a social tragedy of monumental proportions in a place such as Shotton or Corby. The consequences to the county ratepayers and the national taxpayers are considerable. I hope that the Government will take it on board that there are steps that they can take.
There are three specifics that may be related to the problem in North Wales. First, in many one-industry towns communications have tended not to keep pace with modern requirements. That is certainly true of Corby. If only successive Governments had realised that one of the requirements for industrial development is good communications and had gone ahead with building good approach roads, other industry might have been attracted.
§ Mr. Fry
I am grateful to the hon. Gentleman. My comments certainly apply to Corby. I accept that the answer to the problems of Shotton may lie in a different direction. My argument is valid in other areas where closures will be faced. Successive Governments have not 1357 set about improving communications. The issue as it affects Northamptonshire is still lying on the Minister's desk, as it remained on his predecessor's desk for many months.
Secondly, we have a competing set of development authorities. Nationalised industries and development corporations are in competition either to develop in one area or to attract jobs to an area in competition with other towns and areas. The Government cannot sit back and allow that wasteful competition. Peterborough, Milton Keynes and Northampton are all desperately competing to attract jobs and industry, and in the middle of the county there is a disaster area.
§ Mr. Heffer
On a point of order, Mr. Deputy Speaker. I agree that it is important that the problems of Corby are fully explained in the House. However, there are hon. Members on both sides of the Chamber who represent areas that surround Shotton and they have something to say about Shotton's problems. It seems that we have two debates taking place at the same time, one about Corby and the other about Shotton. I ask that those who are concerned about Shotton's problems be allowed to speak.
§ Mr. Fry
Subject to any further interruptions, I shall not delay the House much longer.
I was trying to say, for the benefit of the hon. Member for Liverpool, Walton (Mr. Heffer), that the solutions to these problems have not been properly exercised or investigated. The Government have a responsibility to see that in an area such as Shotton, or any other area to which jobs must be attracted, some kind of influence is brought to bear on the authorities. That is the Government's responsibility. I accept the point made by the hon. Member for Rochdale.
It is strange that we should be debating this matter on a day when we heard the Secretary of State's statement. If there ever was a case for special assistance, it is in an area such as this, where a large number of jobs will be lost, almost all in one fell swoop.
I ask the Government to look at the case of Shotton or any similar town in 1358 which one industry has been virtually the sole employer—that is, where special assistance is needed much more than over a wider region—so that greater opportunity can be provided.
I shall not delay the House any further but shall give way to other hon. Members, including Members of the Opposition, who may address themselves to Shotton more precisely than I have done.
§ 6.12 p.m.
§ Mr. Tom Ellis (Wrexham)
The history of the steel industry since the war has been a sorry and depressing tale, sometimes verging on the disastrous.
I was glad to hear the references made by hon. Members on both sides of the House to the equal culpability of both parties. We have a lot to answer for in respect of the present position of the British steel industry.
The essential problem that is reflected in the issue of Shotton is the question of interventionism—the skills that are required and are manifestly not present in this whole range of governmental intervention. I should like to talk about that problem and Shotton.
I shall start with some history from 1972 onwards. Reference was made to the Secretary of State in 1972—the right hon. Member for Worcester (Mr. Walker)—in relation to the problems of the British steel industry. They were well known. The Lope Donesch process had been invented previously. Technically other steel industries were way ahead of us. It was not a question that small was good or big is beautiful. The question was that with the LD technical set-up the 5 million tonner, the 10 million tonner or the 15 million tonner was the obvious suitable size for a steelworks. In our case, as we did not have large steelworks, the 5 million tonner was the correct one at which to aim.
The technical points were summed up in this way: in 1972 we knew that if the British steel industry produced flat out to its full capacity of 27 million tones we should have produced about 140 tonnes per man per year. We may haggle about the statistics, and whether we should include the work done by the lorry drivers. Many of our competitors were producing steel at 450 or 500 tonnes per man.
§ Mr. Donald Coleman (Neath)
Does my hon. Friend agree that had the private owners in the past been a little more diligent in putting new investment into Shotton we might not have been in the present difficulty?
§ Mr. Ellis
I tried to be equally generous to both sides of the House with my blame. I do not want to become involved in an ideological argument about private industry or nationalisation. That is a sterile argument. It is about 70 years old. It has nothing to do with the contemporary problems that face us.
In 1972 the British steel industry was not in a competitive position. At the time I asked what markets we should require for the steel that we would produce with the labour force that we had if we produced it at the same efficiency as the best of our competitors. The answer was about 90 million tonnes. We knew that there was not the faintest hope of having a market for 90 million tonnes. That was the position. The job of a politician is to be a realist. It is our responsibility to be realists. If we know what the facts are, it is our job to speak out about them. We knew that in 1972.
As a consequence of the technical situation, the then Secretary of State decided to make available £3,000 million to the BSC to put its house in order and for modernisation. We handed over the money to the professional men and said " Get on with the job ". The answer of the BSC was threefold: 40,000 jobs, over the whole of Britain, over 10 years. That was the nub of the problem. As politicians we should be ashamed of ourselves that we were unable to tackle a fairly simple technical and social problem. We did not do that. We dilly-dallied. A number of events occurred which were reflected in the history of steel since 1947—nationalisation, denationalisation, comings and goings and lack of continuity.
In this case there was an election. The capriciousness of political interventionism was apparent, as there was a general election. The Government said " Hold on. We do not trust the BSC. We shall put in our man to look into the whole matter." I did not think a great deal of the BSC management—I am referring not to Sir Monty Finniston or the present chairman but to the professional, established management. I did not think that they were 1360 the world's greatest men in terms of imaginative foresight, but they were the professional people involved.
I have had some experience as a professional engineer I managed a coal mine for 13 years. I do not claim that I was the greatest colliery manager in the world. However, my pit is the last one still working in Wrexham, when technically it should have been the first to close. However, I must not get carried away. If a Member of Parliament had told me how to run my pit I should have said " If you want to run this pit you can have the job ". I smile when I hear that Select Committees send for people from various industries to ask them what is happening. I nearly tabled an early-day motion when the Serjeant at Arms sent his clerk to fetch Sir Charles Villiers. I thought that the Serjeant at Arms should have gone clothed in pantaloons, with his sword, and marched Sir Charles up Piccadilly so that the whole world could see how the House of Commons conducted itself at the tail end of the twentieth century.
When a technical issue is to be solved it ill behoves politicians to come in like bulls in china shops, even allowing for a certain amount of lack of ability on the part of management. The CIGS told Winston Churchill in the war, when he was meddling in the Middle East, that he should either trust his general or sack him. That is basically the position in which we are. We have the British Steel Corporation. It is the best British Steel Corporation that we have got. We must put up with it and make do with it.
On the technical point, the matter was clear. The lobbyists came to the House from East Moors, Ebbw Vale and Shotton. One thousand of my constituents worked at Shotton. I told the 200 people involved that their best bet was to accept the steelworks closure and use their political clout to insist on having alternative industries to redeploy people. That took place in 1973. People disagreed with me. They were entitled to do so. They rejected my advice. I gave it sincerely. I do not claim that it was necessarily the wisest advice, although I think that it was. My advice was rejected and the decision was made to fight for the retention of the steel-making capacity at Shotton. That decision having been 1361 made, I did not try to put a spanner in the works but helped wherever I could.
I am saying all this, Mr. Deputy Speaker, for one reason—to make clear to the Secretary of State that I am not speaking from a soap box. I am not simply shouting cheap slogans, or trying to make smart party political points; I am trying to speak as a reasonably intelligent man concerned for his constituents who are involved in this steelworks, which has such a desperate problem on its hands. I am trying my best to put forward a fair-minded and balanced point of view. I am speaking not from a party ideological angle but from the point of view of doing the best that is possible for the people of Shotton.
I turn now to the nub of the problem of interventionism. We cannot adequately undertake from Whitehall or from Westminster the microeconomic steering of industry. I have seen many examples, in many nationalised industries, of complete hashes being made by interventions on the part of completely misguided politicians—very often for the most cynical of party political reasons.
§ Mr. Ogden
My hon. Friend says that we cannot undertake the microeconomic steering of industry from Westminster, but can we make a simple decision? Are we to close Shotton and set up an alternative industrial development estate, at a costs of umpteen million pounds, which will be in direct competition with the one that we already have on Merseyside? That is a practical issue, which we ought to be able to decide.
§ Mr. Ellis
I was coming to that point. I am sorry to have been so long in getting to it. I realise that we no longer live in the world of Adam Smith. Somewhere between the microeconomic and the macroeconomic aspects there is the need for Government intervention, and it is crucial to get the balance right.
I was a little upset by the questions and answers arising earlier today from the statement about regional aid. I should like to quote from a White Paper published in May 1975 on regional development incentives—Cmnd. 6058. It is pointed out thatHad Scotland, Wales and Northern England secured 42 per cent. (their share of Great Britain employment in 1960)"—1362 this is an interesting figure because we have just chopped down the figure from 42 per cent. to about 25 per cent.—of national employment growth during the 1960s, they would have experienced a growth of 270,000; in fact their employment fell by 100,000. Of the deficiency of 370,000, 180,000 was attributed to developments within the services sectors; 120,000 was attributable to the primary sector largely arising from the disproportionate dependence on coal mining; and only 70,000 to the manufacturing sector ".That loss of 370,000 jobs in those three regions was matched, during that decade, by an increase in jobs of almost exactly the same number in the South-East and the Midlands. That was in the 1960s, when we were in a boom period. The Western world was experiencing a boom such as it had never previously experienced, and yet that is what happened—we lost 370,000 jobs.
In the light of this, one might ask how seriously we can take the regional policies of Governments. As I see it, the whole issue at Shotton hinges on the sincerity and the good faith of Governments, and the will, the insistence and the resolution of Governments to do something in order to solve the technical problems involved in putting the steel industry on its feet.
I have to admit that the Secertary of State is honest about the matter—or reasonably honest. He pretends to be concerned about making regional policy more effective. But the crucial factor in regional policy is the IDC, which has been muted and stultified for about 10 years. Unemployment reached 6 per cent. in the West Midlands, so we had to do away with the IDC. That was why I was so concerned about having a Welsh Assembly. It would have done much more for Shotton than a Select Committee of 11 people from this House who, presumably, are to try to analyse the Welsh division of the British Steel Corporation, the water works, and all the rest of it.
The Secretary of State is lacking in credibility because of his ideological commitment to the Adam Smith philosophy—the free market philosophy. He will be in that unfortunate position when—as I hope he will—he goes to speak to the workers of Shotton. I hope that he will not leave it to Sir Charles Villiers. While the Secretary of State is not entitled to run the British Steel Corporation, he is entitled, along with the Secretary of State for Wales, to shoulder responsibility for 1363 some of the consequences of the actions of the BSC in East Flint. When the Secretary of State goes to see the people at Shotton he will carry the burden of knowing they will be aware that he is not seriously committed ideologically to the concept of the Government doing something.
The big issue, as we know, is between Shotton and Port Talbot. What has happened at Port Talbot? Ford was brought to Port Talbot, at a time when there was already a shortage of craftsmen there. If there was ever to be a quid pro quo, with a new factory coming in to replace a works being closed, there was the opportunity at Shotton.
These are the issues as I see them, Mr. Deputy Speaker, and I suggest that the way ahead for the Government is to say " We shall allow Shotton to be closed only when we can guarantee that every one of the people employed in the works will be employed on alternative work in that locality." Until the Government can give that assurance, they should not for one minute contemplate allowing the BSC to go ahead with its plan to close the works.
§ Mr. Deputy Speaker
May I make another appeal for brevity? If we have 18-minute speeches, very few hon. Members will be able to get into this important debate.
§ 6.29 p.m.
§ Mr. Barry Porter (Bebington and Ellesmere Port)
I represent a constituency which borders on North Wales. About 8 per cent. of the work force at Shotton resides in my constituency. I have a great interest in the problem, and I have been under great pressure, with telegrams and lobbies urging me to speak out for the workers of Shotton. I intend to do that, but not, perhaps, in the way that they would wish. I would not be true to myself, to my constituents or to the workers at Shotton if I pretended that there was any way in which I could support the long-term viability of Shotton as a steel-making plant. In that respect I agree entirely with what the hon. Member for Wrexham (Mr. Ellis) said—and I am glad that he said it as long ago as 1973. I think that it was true in 1973 and that it is equally true today.
1364 I listened with interest to what the hon. Member for Flint, East (Mr. Jones) said, because his reputation in the steel world is second to none. I am sorry to say that nothing that he said this afternoon will lead me to change my view. I listened hopefully to the deliberations of my hon. Friend the Member for Flint, West (Sir A. Meyer) and again I am sorry to say that I heard nothing new.
One matter that was lightly touched upon was the promise by Sir Charles Villiers in March 1977. Both Front Benches have been guilty this afternoon of brushing aside a promise made by the chairman of the British Steel Corporation. It has been pointed out by the Government that various promises were made in the past and disregarded. I am sorry to say that there seems to be a consensus between the two Front Benches that circumstances change, that economic circumstances are different, and so on. Sir Charles Villiers did not make his promise subject to anything. He said that the open hearth furnaces would be kept in prime condition and the Shotton option would remain open until 1982. That was not qualified. He did not say " subject to Government persuasion ", or " subject to economic circumstances ". I am somewhat old-fashioned. I believe that promises of that nature that are freely entered into should be kept.
What has changed since 1977?—
§ Mr. Butler
That was expected. I had thought better of the Labour Front Bench than to expect that sort of sedentary intervention.
We know that the previous Secretary of State said that there was a cash limit objective. The chairman of the BSC knew all about that. At that stage he did not indicate to anyone that he thought circumstances had changed and that those to whom he had made his promise had better look at the matter again. He did not say that at all.
§ Mr. Porter
I do not think much of the argument between the two Front Benches about whether a cash limit objective is significantly different from a cash limit that would be imposed. I should have thought that right hon. and hon. Members on both Front Benches would have 1365 thought more carefully before indulging in semantics. We are talking about people's jobs and livelihoods.
Apart from the cash limit, or cash objective, what has changed since 1977? It was known then that there was a gross over-capacity in the steel industry. It was known then that at least 25,000 jobs had been lost between 1973 and the end of 1977. It was known then that capacity in most regions was about 70 to 73 per cent. compared with 90 per cent. in 1973. In 1977 it was known that there was increasing competition from Third world countries with low costs. It was known in 1977 that in Europe as a whole cutbacks in production were necessary, that the employment position would deteriorate and that steel making was operating at a huge loss of about £2,000 million. All that was known in 1977.
I am surprised that no one has mentioned that against that background, and because of it, we had the Davignon proposals of October 1978. They were formulated to provide financial help for the modernisation of the steel industry and the assistance of redundant workers. Those proposals were approved, and rightly so, by the Council of Ministers in the following few months.
The British Steel Corporation knew all those things in 1977 when Sir Charles Villiers made his promise. I do not ask for a decision about Shotton to be put off. Discussion, argument, proposal and counter-proposal has gone on for far too long. Every nut and bolt has been examined and every alternative considered. The political and social consequences have been adequately and sensibly discussed.
It does not take a genius to see what is likely to happen not only in North Wales but in other areas such as Merseyside, the docks of Birkenhead and Wallasey and my constituency, because of the domino effect. All I ask for, having made it clear that I do not think that there is a viable future for Shotton as a steel-making plant, is that the time indicated by the BSC should at least be given. That was a pledge that should be honoured.
I believe, like the hon. Member for Wrexham, that the decision should have been taken years ago. I did not wish to make a speech of this nature this after- 1366 noon. It would have been easier, as a new Member, to have come here and asked for reconsideration of the position, more discussion, and so on. However, I believe that that would be dishonest. I am not, and never will be, prepared to back any proposal or move that will keep not only Shotton but any steel-producing plant in being if it is not viable in its own context or within the context of BSC as a whole. I do not think that, in the long run, that is in the interests of the people working in the steel industry.
The people whom we talk of this afternoon are not a drifting, transitory population. Most, if not all, have given the bulk of their working lives to this industry. Everything that I have heard from them during the course of the last few weeks indicates to me that they knew that the closure of Shotton was imminent. They are prepared to face it, provided that they are given some time.
This announcement is rather like an amputation without an anaesthetic. I ask my right hon. Friend to use the powers of persuasion which he concedes he has to attempt to persuade the British Steel Corporation to do us the honour of giving us a local anaesthetic so that we can re-adapt and improve, and think about what will happen. It is not just money, or a matter of redundancy payments; it is a question of changing the life of a community, and we need time for that.
§ 6.37 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
The speech of the hon. Member for Bebington and Ellesmere Port (Mr. Porter) was a good example of how, when hon. Members live close to a problem, they are very much affected by such a closure as this. Regrettably, I can speak with [...]ome authority on the subject of closures, because I seem to have made more speeches in the last few years on the subject than on any other. I have spoken on closures in one kind of industry or another throughout the whole of Merseyside.
The hon. Member for Bebington and Ellesmere Port said that if a decision had to be made, it would have been better had it been made earlier. Of course, that is always the argument when talking about any factory that apparently becomes non-viable. That could have 1367 been the argument in respect of Rolls-Royce. It could have been said that there was a cash flow problem, that money was required for research and development, and that the loss was so great that Rolls-Royce should be closed. However, the answer was not to close Rolls-Royce but to look at the problem closely and deal with it. That is what was done. Rolls-Royce was brought into public ownership by a Conservative Government. The legislation was carried through in less than one day, with the support of the Labour Party.
I want to talk about Shotton in personal, human terms. I know the workers at Shotton as personal friends. I know the consequences that such a closure will have on those workers, their families, and youngsters in that area, who will grow up to face a lack of alternative employment if Shotton is closed. They cannot go to work in Merseyside, because there are more than enough unemployed in Merseyside. Merseyside cannot offer employment to these people.
In fact, many of the workers at Shotton are from Merseyside. If one listens to them speak, one discovers that they have good Liverpool accents, because they had to go to Shotton in order to get employment. Incidentally, that also answers the nonsense about Merseyside workers not being good workers, because the workers at Shotton have hardly ever had a dispute. Industrial relations have been absolutely marvellous for many years.
We must look at the people who are concerned in this problem and also at the social consequences. This is the difference in attitude between Labour Members and Conservative Members. Every closure that took place during the period of the last Government was a closure that tore at the heartstrings of all Labour Members, whether they were Front Benchers or Back Benchers. When I was Minister of State at the Department of Industry, every closure made me feel sick in my stomach, and made me quite ill, when I thought of the workers who were being thrown out on to the streets.
When we decided in 1974 that we would have another look at the steel situation, we did so because we were 1368 concerned about the workers and the small towns that would be affected. We were concerned about the prospects for the youth of such families and the social consequences of such closures. That is the issue which the right hon. Gentleman, with his philosophy, has totally ignored.
I must tell the right hon. Gentleman—I said this to my own Government—that something that we in this House have never done is properly to get down to the question of alternative employment. That is one of the problems. Of course I accept that many old-fashioned industries that have outlived their usefulness must go, but any Government worth their salt should concern themselves not with leaving it to market forces but with intervening in order to create new employment opportunities for the work force and their families. That has been the argument between us.
In fact, when the question of steel was discussed, we set up groups to look into the problems of those areas to see what sort of alternative employment could be introduced. Ebbw Vale is a very good example of the type of activity that was carried out by the Labour Government. Is the right hon. Gentleman suggesting something of that kind? No. His attitude seems to be " Shotton must close. We cannot do anything about it. We must leave it to the BSC ". He may think that that is the end of the matter, but it is not and neither can it be.
The hon. Member for Bebington and Ellesmere Port rightly said that it is not only the workers of Shotton who are affected. The Bidston docks will go out of existence, and that will affect other workers on Merseyside. Other minor companies will also be affected. The ramifications of this closure will be disastrous for an area that already has high levels of unemployment.
§ Mr. James A. Dunn (Liverpool, Kirkdale)
It starts with the men who man ships that go into the docks and the provisions of the shore establishments that unload. This closure will have a domino effect, which will gather momentum, and at the end of the day it will double the redundancy situation in docks, with other consequential ripples throughout the whole of the county. It will not only lead to redundancy; it will go much further 1369 and deeper. It highlights a situation about which we must remind ourselves—that a pledge was given and that that pledge has been broken.
§ Mr. Heffer
My hon. Friend has put his argument very clearly, and has underlined the point that I was making.
What can we say in this situation? The only thing that we can do is to appeal to the Government to intervene and to ask the BSC to reconsider this closure and at the same time to begin working out alternative employment opportunities over a period of time. That is all that we can do.
§ Sir Keith Joseph
Both hon. Members forget that raising the money from the taxpayer to keep Shotton going would also have consequentials in lost jobs. They would not be identified jobs, but they would be lost jobs, which would also have a domino effect. What happens to Ravenscraig, and the employment that Scotland wants from Ravenscraig, if the heavy end of Shotton is kept going and there is less output from Ravenscraig? Neither hon. Member is taking into consideration all the implications of his argument.
§ Mr. Heffer
The right hon. Gentleman always introduces his basic philosophical point of view. One could spend an entire afternoon discussing it. I hope that one day he will give me the opportunity of doing so. On one occasion, we were to have had a public debate, but for some reason that fell through. I would love to have such a debate, but obviously this is not the occasion. I would not be looked upon kindly by my hon. Friends if I persisted in an argument along those lines.
I still think that the right hon. Gentleman should listen to his hon. Friends the Members for Flint, West (Sir A. Meyer), and Bebington and Ellesmere Port, as well as to my hon. Friends, particularly my hon. Friend the Member for Flint, East (Mr. Jones). In such a debate we cannot discuss all the ramifications for the steel industry. We are talking about one community, which has a very serious problem. I appeal to the right hon. Gentleman to think again. The hon. Member for Flint, West said that if only modernisation had taken place earlier these problems would not have arisen. I agree 1370 with him. Why did not the private enterprise people—Summers—during the 1960s carry out the modernisation that ought to have been undertaken? Had they done so, the situation today would have been different. I appeal to the right hon. Gentleman to think again because of the social consequences for the workers in that area as well as for the whole of Merseyside and Deeside.
§ 6.48 p.m.
§ Mr. John H. Osborn (Sheffield, Hallam)
I value the Secretary of State's intervention, because I should like to ask what would happen if Shotton were to stay. Who else would have to face the axe? Admittedly, I come from a different steel making area, but I have worked with Shotton and with the people that have been involved there.
I value the graphic description that we have had of blast furnaces, and steel furnaces, but, of course, open hearth furnaces are not necesarily the answer these days. I rather resent the use by the hon. Member for Flint, East (Mr. Jones) of the emotive words " class war ", because many of us recognise that Great Britain has a problem. Indeed, Western Europe has a problem. One example of that problem is what is happening at Shotton.
Of course, there has been an attack on Government policy—not only over two months but over many years—and of the consequences of it. Perhaps the inheritance of 15 years of nationalisation is partly to blame. There has been a suggestion that Summers did not invest sufficiently at the other end of the business. But some leading trade names were developed which compete with Sheffield, because they developed coated steel of various types which compete with the rustless and stainless steels.
However, throughout this period we have had the growth of a mixed economy, so mixed that the corporate State accounts for about 60 per cent. of the gross national product. Therefore, our decision making has been rather mixed, with this mixed economy approach.
I came to this debate thinking entirely of Shotton. Corby has been mentioned, and we could mention Stanton and Staveley and Bilston. But the hard fact is that least year the steel industry cost us £443 million in losses, and £309 million 1371 since then. That has to be paid for mainly by the taxpayer, if not by increased borrowing powers, and, of course, the capital investment programme takes place alongside it.
A year ago, almost to this weekend, I attended a debate in the European Parliament on the Davignon plan and its operation in connection with the steel works at Metz. Their problem, to an extent, was similar to that of Shotton, but more similar to that of Corby. A week before the Euro-elections a " Panorama " television programme run by Charles Wheeler commented on the severity of the distaste of the system in France, and the demonstrations that had taken place in Paris.
I met the steel workers from Metz and they said, " Why cannot we use our indigenous ores? " That is another problem. The iron ores in Metz, as in Northampton, are low in iron content. In Metz they are over 30 per cent. and in Northampton they are somewhat lower. With the rising cost of energy, the idea of using low grade ores becomes increasingly prohibitive because of the energy costs that go into steel making.
I have had the privilege of visiting steelworks in India, South Africa, and the Soviet Union and on the Ruhr. I visited a new steel works on the Orinoco 10 years ago, and I hope to have the chance to do so again. It used cheap electric power, coal, and rich iron ore which, by flotation methods, was concentrated up to 80 per cent. or 90 per cent. iron content. Ten years ago, those people could not make or melt steel. My guess is that the competence of that works will make it one of those competing with the old-established industries of Britain and Europe.
I visited the Nippon steelworks in Japan several years ago. That plant had a capacity of 10 million tonnes with three blast furnaces. Two steelworks of that type would virtually match the full production that we are able to produce and sell in Britain. Productivity then, as is no doubt the case now, was possibly 10 to 15 times that of Britain. Looking at our problems and those of Italy, Germany and France, we see that Europe faces an excess capacity of between 25 per cent. and 30 per cent., and that will 1372 hit us in Britain. The reaction at Shotton is the same type of reaction seen elsewhere in the Community.
I had hoped to attend tonight a parliamentary and scientific committee meeting being addressed by Mr. Michael Dowding, last year's president of the Metals Society. Last year he predicted that world demand for steel would rise to 1,500 million tonnes at the turn of the century against the 750 million tonnes of two years ago. Whether he will deal with that subject tonight I do not know.
We have to bear in mind the fact that iron ore, the raw material for our industries, comes from overseas. I suggested that the parliamentary and scientific committee should look at where the indigenous materials for our way of life come from, let alone considering the energy problem.
I welcome the fact that some hon. Members have asked " What do we do now? " They have pleaded that, if there is to be a closure—I welcome the fact that some hon. Members are willing to face up to the need for closure—it should be done slowly and new industry should be brought in.
What distresses me is that during the period when steel was being nationalised. I, with many other hon. Members, looked to the 1980s for outputs of 33 million tonnes to 38 million tonnes a year. The annual report of the BSC shows crude steel production at 17 million tonnes to 18 million tonnes a year.
We cannot castigate every chairman or managing director of the British Steel Corporation. The same is true of past chairmen, whether Lord Melchett or Sir Monty Finniston. The BSC has a responsibility to manage what we, the politicians, have given it. Goodness knows, I did not want any creation like the BSC. It is unmanageable, but until we decide to break it up or do something different with it we must wish the management godspeed and help them to face up to the problems.
I hope that when the Minister replies he will indicate the difficulties facing the management of BSC, and at the same time meet the plea, " If there are to be closures, what else will there be for those people?" Once communities have become used to one industry, sudden change 1373 is intolerable, but gradual change can be accepted.
§ 6.56 p.m.
§ Mr. Dafydd Wigley (Caernarvon)
I have a personal and constituency interest in the debate. My constituency interest is that, if Shotton closes, my area of North Wales, the county of Gwynedd, will find it devastatingly hard to attract new work. It will be that much harder because of the announcement made to-day that the travel-to-work areas in Gwynedd are being downgraded. Caernarvon is to be downgraded from special development area to development area, the Conwy employment office from development to intermediate, Pwllheli special development area down to development area, Blaenau Ffestiniog down, Llanrwst down, Llangollen down, Denbigh down. All those are in the catchment area trying to compete with the Shotton area to obtain work, and they are to be downgraded at the very time when massive construction projects are also coming to an end.
That is not my only interest. Having worked in two industries that use steel I know the good name that the Shotton steelworks has in manufacturing industry. It has a good name for the quality of its steel and, perhaps even more important, for the keeping of delivery dates. Those are vital matters in the steel industry at Shotton. They are so important that, even today when there is a central ordering system working in British Steel, customers stipulate that they want Shotton steel delivered to their works.
We have not been shown, today why, if there are to be closures in the steel industry, it is Shotton that should close. Over the past five or six years there have been a number of reports on the steel industry. In 1974 a report from Clwyd county council called " Steel—the ten year development strategy " showed that at that time, granted at higher levels of steel demand, Shotton was not only run at a profit but that its return on capital was consistently higher than that of any other steel mills in Britain. In 1976 another document, " The overwhelming case for the retention of steel making at Shotton " showed that the cost of closing Shotton was considerably more than the cost of modernising it and keeping it 1374 going. To end steel making at Shotton would have cost £88 million, with a further cost of £148 million to create alternative work, giving a total of £236 million.
I know that much of the plant at Shotton is old and needs replacing. That was the case 20 years ago when I first visited the plant. We should have had investment then under private enterprise. There should also have been investment in the intervening period since then under the British Steel Corporation. It is no good the Government saying that it is a question only for the BSC. What the man in the street and the people in Shotton and Clwyd are asking is, who controls British Steel if Parliament and the Government do not? To whom is the BSC answerable? That is a fair question for the whole plethora of nationalised bodies.
There is the danger of a domino theory here. When losses have been attributed and the management of BSC have decided that by taking the axe to this one plant, losses can be cut down, we may well find in a matter of months or years that those losses remain, and the axe will come out to another plant and yet another plant, and so the whole structure goes down. I know how that can be done with product costing in manufacturing industry. The ending of one product leads to another product being closed down, and so to the end of the entire factory. In the matter that we are discussing that would mean the end of the entire steel industry.
I grant that in a position of world over-capacity, and in an industry of massive capital investment, a high utilisation factor is needed to break even. That is clearly so. The question must be faced, perhaps regrettably, whether we can continue importing some of the steels that we are importing at present. There may be a case for strategic or other reasons for having a capacity to manufacture ourselves, and I believe that to be so.
If Shotton closes, there will be not only 6,000 jobs lost in the area but a danger to the railway line that brings in the coal. We do not know how long the coking plant will continue. Certain promises have been made but I doubt if it will continue indefinitely. We also do not know how long the railway line from Wrexham to Birkenhead will continue. There is 1375 also the question how long the other end of the plant will last. Certain guarantees have been given that the coating end will continue, but on the figure of 15,000 tonnes there is no chance of it making a profit. In all probability that will face the axe in due course. The irony is that Shotton is facing closure when one of its major steel users, Hotpoint, has just announced that it is expanding a new plant in the county of Clwyd. There may be greater demand still for steel from Shotton.
The Government have given an undertaking in response to recommendation 27 in the White Paper of April 1978 that social cost-benefit analysis will be undertaken in such decisions, but apart from that we must consider the pure economic situation. In the most recent document, that came out last year, the case was put for investment in tandem furnaces for Shotton. That has not been dealt with in the debate. Those furnaces have proved viable in other countries at a relatively low investment cost of perhaps £50 million, and the output is around 160 tonnes an hour. That possibility will cost less than the massive cost of closing Shotton when no other jobs are available.
I am making a plea not cap in hand on social grounds but in hard economic terms. We have one of the best steel plants in the United Kingdom. Its quality is magnificent, it meets order dates, it can be converted to modern technology at relatively low cost, and we are scrapping it. In its place we shall have to pay £320 per month for the average worker with two childern. That is £25 million per year just for the direct workers. The ecenomic case warrants the Government asking the British Steel Corporation to think again. They should go through the figures and see whether the money can be used in a better way.
§ 7.3 p.m.
§ Dr. John Cunningham (Whitehaven)
I congratulate my hon. Friend the Member for Flint, East (Mr. Jones) on a classic defence of his constituency interests. He has carried on that defence successfully for most of the time he has been in this House, as a member of the Government and in opposition. His speech was powerful and moving. His 1376 successful defence of his constituency interests in Shotton may yet prove to be extended.
I was about to refer to the Secretary of State for Industry as a right hon. Gentleman with amazing reticence, but perhaps with the name Joseph I should say with amazing technicolour reticence. It has been exceedingly difficult to get him into the House. Over the past few days we have had press leaks. My hon. Friend the Member for Flint, East was then told by people in the media about the decision, the matter was raised on Standing Order No. 9, there followed a private notice question and finally there is this debate. It has been extraordinarily difficult to persuade the Secretary of State to come to the House and discuss the matter.
The Evening News last night contained the headlineMaggie tells Joseph to face the musicI am pleased to see that the Secretary of State is now in the Chamber. It is strange that he has had to be persuaded almost against his will to come here. He did not volunteer a statement on the issue. He had to be told to come here to attend the first performance of his magnum opus—his lifetime's work on the market economy. I am sorry that in doing so he has taken the same view as in the election campaign, when we warned people in Shotton and elsewhere of the consequences of his becoming Secretary of State.
In spite of what he says, hon. Members on both sides of the House have made it clear that the Government have a choice in the matter. It is not good enough for him to say that it is a matter for the British Steel Corporation. The Government came to office saying that they were intent on redressing the balance between the House of Commons and the Executive, and they have made an extraordinarily bad start. In this and other matters they have damaged the credibility of Parliament in the eyes of workers outside and of hon. Members. It is doubly damaging that workers at Shotton and elsewhere have seen promises that have been reinforced in this House brutally swept aside. The right hon. Gentleman apparently sees nothing wrong in that. At a time of such difficulty, when workers in the steel industry and elsewhere are being asked to co-operate with the Government's policies, they cannot be expected 1377 to rely on anyone's word when they see such promises swept aside in a pitiless fashion.
There has been comment as to whether a commitment was given about Shotton. There is no doubt that it was given on 16 March by the chairman of the British Steel Corporation. He said in respect of his decision on Shotton:This decision will not be reviewed during BSC's current five-year plan beginning in 1977.I am in a large measure of agreement with the hon. Member for Bebington and Ellesmere Port (Mr. Porter) about that commitment. It was endorsed by my right hon. Friend the Member for Chesterfield (Mr. Varley). I find it strange that the hon. Member for Flint, West (Sir A. Meyer) who is renowned in the matter of Shotton for the way that he has changed his stance so many times, not only in this Chamber but in the Welsh Grand Committee, on the radio today and elsewhere, should challenge that. In the debate today he said he did not know whether the allegations that he made during the election were true. I quoted him from Hansard of 21 May 1979 the categorical denial by my right hon. Friend the Member for Chesterfield. The hon. Gentleman frankly seemed to be doubting the integrity of that statement, and I find his conduct in the matter wholly deplorable.
§ Sir A. Meyer
I do not challenge the integrity of the remark. I merely draw attention to the fact that no such denial was made before the result of the general election.
§ Dr. Cunningham
What is so sad about this episode is that people's livelihoods are at stake, and on the merest whim they are manipulated like yo-yos because the Secretary of State for Industry claims to have no responsibility in the matter. Apparently he attempts to prevent the elected representatives from being given the opportunity to raise the matter in this House. The Secretary of State does not come out of the episode with a great deal of credit. This can only lead to massive disaffection among people, cynicism about this House, about politics generally and about Governments, particularly this one. That is what is so reprehensible about the conduct of the whole matter.
1378 The closure of Shotton is not just a matter for the British Steel Corporation. If that were so, why is the Corporation reneging on the commitments given by its chairman? This contradicts what the Secretary of State for Industry has asserted. Of course the Government have a responsibility. Their industrial and economic policies have affected the decision. The Secretary of State himself is the architect of that policy and it is disingenuous of him to claim that he has no responsibility. These events would not have occurred had a Labour Government been in office today.
§ Mr. David Hunt (Wirral)
I am grateful to the Opposition spokesman for giving way. Will he explain why, during the five years they were in office, his Government failed to support the introduction of tandem furnaces which would have given Shotton the viability it deserved?
§ Dr. Cunningham
I am not in a position to go into that matter in the time that is available to me now. I recognise exactly the position that existed when the last Labour Government were in power but the point is that the position would have been reviewed in 1982. No one has attempted to deny that. I say that Shotton would not have been closed in the manner and on the timescale proposed by the Corporation.
Something else strange is happening in the Shotton area. The county council—the Tory colleagues of hon. Members opposite—is questioning the philosophy behind the closure. The council was happy to support all the calls for cuts in public expenditure provided that those cuts did not effect expenditure in its area. This market force policy will cause trouble within the Conservative Party itself and we may yet see a similar turnaround to the one that occurred in 1972.
We call upon the Secretary of State to look at this matter again. It is very important that people in the industry should be able to rely on the pledges given to them and the commitments made in this House and elsewhere. Just as important, the future of a whole community is at stake. The Secretary of State for Industry smiles. If he does not believe me, I shall give him an example in my constituency. In a town called Millom the ironworks closed in 1968. 1379 These ironworks were a private sector company owned by the Cranley Group. The works went into liquidation and more than 30 per cent. of the work force went on the dole in circumstances similar to those at Shotton. Even now, 11 years later, that community has not recovered from those events. It is likely that the same thing will happen at Shotton if this decision stands.
If the decision must stand, we plead with the Government to look again at the timescale. I agree with points made by hon. Members on both sides that the timescale is too short to enable anything realistic to be done. This is especially so against a background of IDC control and regional policy effectiveness as well as against a background of cuts in the money made available for training and retraining in the budget of the Manpower Services Commission. In the light of these circumstances, how can the Government be optimistic about the chances of providing alternative employment in Shotton? It is not reasonable to suppose that they can.
We would like to see the creation of a special task force to look at these problems within a longer timescale. For the people of Shotton the situation has now come full circle. In 1972 a Tory Government proposed closure. Now, in 1979, the same situation obtains.
The Secretary of State is sometimes referred to in the shipyard and steel towns as " the angel of death ". On the Clyde, Wear, Tyne and Tees and in South Wales as well, there are shivers of apprehension at the attitude that the Secretary of State is adopting to Shotton. He is setting about creating two nations industrially and economically. We find his policies unacceptable and we shall express our disgust with them in the Division Lobbies tonight.
§ 7.18 p.m.
§ The Minister of State, Department of Industry (Mr. Adam Butler)
Thanks to your giving way to a request by the hon. Member for Flint, East (Mr. Jones), Mr. Speaker, we have had an opportunity today for a three-hour debate on the important matter of the future of Shotton. Many anxieties have, understandably, been expressed by hon. Members, on both sides, who have a real interest in steel making in their constituencies.
1380 We thank you, Mr. Speaker, for your indulgence in allowing two contributions from hon. Members who feel strongly about the position of Corby. Corby has a relevance to our debate because what is happening to Shotton today is exactly what happened to Corby. In February the British Steel Corporation proposed consultations with the work force and the local management of Corby, but did we have a debate then? No, we did not. On 12 July a statement was put out by the BSC about Shotton, and the hon. Member for Flint, East suggested that that was done behind closed doors. That allegation does not stand up. A message was sent to local unions, proposing consultations about the future of Shotton—exactly the same procedure as that followed at Corby.
A debate of this sort produces colourful language, and we should excuse the hon. Member for Flint, East on that account because his anxieties are very deep. On the other hand, I am not sure whether a debate of this sort excuses the suggestion that the intention of the Government is, or that the likely outcome of their policies would be, the total rundown of steel making in this country. That is an unnecessary scare and does not contribute to a sensible discussion of the problems.
The history of the matter is well known. Over the past decade the British Steel Corporation has been bringing itself up to date with massive investment in new plant. The consequence of that investment, after a number of closures under the previous Labour Government, is that Shotton has become the last remaining open-hearth steelworks in Britain. Those steelworks have a limited life, and under the Labour Government BSC concluded that new steel-making investment at Shotton was not justified. It became a question not of whether closure would take place but when.
I do not accept what the hon. Member for Whitehaven (Dr. Cunningham) said, that the closure would not have taken place under the Labour Government. It was the imminence of an election that postponed the decision, and if that election had gone the other way I believe that the decision would have been the same.
§ Mr. Gerald Kaufman (Manchester, Ardwick)
I was the Minister responsible 1381 for the steel industry prior to the election, and I should inform the hon. Gentleman that BSC came to the Labour Government to propose the closure of Shotton. We told the Corporation that it had made a pledge to which we would hold it and from which we would not allow it to depart. Therefore, there was no possible prospect that Shotton would close under the Labour Government in the way that it is now being allowed to close under this Government.
§ Mr. Butler
That was not made clear before the election and it is not clear from the letter sent by the chairman of BSC to Mr. Bill Sirs, general secretary of the Iron and Steel Trades Confederation in January 1979. That letter was made public and a copy sent to the then Secretary of State, and it stated that if the recession continued in the steel industry and the commissioning of the new plant at Ravenscraig raised serious problems for the loading of the heavy end at ShottonClearly the British Steel Corporation will have to consider how this situation develops in future ".That is a clear indication of the thinking of the British Steel Corporation at that time.
§ Mr. Varley
During the period prior to the general election Sir Charles Villiers came and asked to proceed with the closure of Shotton. I told him categorically that he had made a pledge that the position would not be reviewed within the five-year period until 1982 and that the Labour Government expected him to hold to that pledge. Will the hon. Gentleman accept that fact?
§ Mr. Butler
That explanation conflicts with the remarks of the right hon. Member for Chesterfield (Mr. Varley) that have been quoted in the debate, when he said that the target for the British Steel Corporation was to break even during the current year. It is impossible to reconcile that, on the one hand, he had a target to which he wished to hold British Steel with, on the other, the fact that he was not prepared to authorise the action that might make that possible. We are left to conclude that the target was meaningless. That is typical of the financial management of the economy by the previous Administration.
1382 I should like to deal quickly with competitiveness. My right hon. Friend referred specifically to that in his closing remarks. If the steel industry does not become competitive, if it cannot make itself efficient, and it is not able to meet the requirements of industry in this country and overseas, jobs are at risk in the future.
The hon. Member for Flint, East referred to the flood of imports of cars. There may be many reasons why foreign cars are bought in this country but one factor is that the steel that is provided to British Leyland and other car manufacturers is not at the same price as that which is obtained overseas. I have visited several shipyards in the last few weeks, and I was told that steel can be bought at £20 per ton cheaper from overseas than from BSC. That is why it is essential that the industry should be able to compete.
My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) referred to the productivity of our industry compared with the Japanese steel industry. He quoted some alarming figures when he said that our productivity was a much as one-tenth or even one-fifteenth of Japan's. If the Commission is used as a source of information on these matters, we discover that our productivity is estimated to be about one-half of Germany's
These matters should be put right. In the downside end of Shotton there is what is described as the premier coatings complex in Europe. Investment to the tune of £44 million has been made. That complex must be served with its raw material, its steel, at the best price. That should come not from old plant at Shotton but, principally, from Ravenscraig and one or two other steel mills.
The question of who is responsible, the Government or BSC, has been discussed. The hon. Member for Wrexham (Mr. Ellis) mentioned "the capriciousness of political intervention, and we thought that he was on our side. He nearly was—political intervention is capricious. We are determined that the managements of the nationalised industries shall manage their industries. There has been too much interference, and that is why we repeat that the decision is for the management of whatever corporation it may be.
§ Mr. Ogden rose—1383
§ Mr. Butler
I have no time—I was given too little time to deal with the matter. Not only do Conservative Ministers agree with that proposal, but the Labour Government's proposal on the reports of the Select Committee on nationalised industries of 1977–78 in recommendation 7 was:The Secretary of State should take into account the need for the maximum productive efficiency in the Corporation when he comes to review the future of iron and steelmaking at Shotton.The Minister did not reply that he would deal with the matter, but he said:It will be for the Corporation to review the future of iron and steelmaking at Shotton.
§ Mr. Varley rose—
§ Mr. Speaker
Order. If the hon. Member who is addressing the House does not give way the right hon. Gentleman must sit down.
§ Mr. Varley
The hon. Gentleman is quoting directly from a statement that I made. It is the tradition of the House that when a Minister quotes an hon. Member he should give way. The Labour Government was asking the BSC to hold to its pledge—not a Government pledge, but a BSC pledge.
§ Mr. Butler
I find it difficult to do other than read the statement again. It was the considered judgment of the previous Government in regard to the future of BSC that:It will be for the Corporation to review the future of iron and steelmaking at Shotton.That is proof that the Labour Administration, whatever its representatives are saying now, believed that it was for the Corporation to make the commercial decisions about steel-making plants.
Anxieties have rightly been expressed about the social consequences of closure. More or less concurrently with the BSC statement on 12 July my noble Friend
§ the Minister of State put out a press release that the Government would actively consider what measures should be taken to help to create alternative employment in Shotton, if the closure went ahead. We have referred to the possibility of upgrading Shotton to a special development area. We shall examine that matter with care. We have referred to further factory building and a review of infrastructure priorities. We shall do all that we can to ease the consequences of closure, because the social responsibilities are those of the Government.
§ Reference has also been made to the special redundancy payments scheme. Of course money by itself is no recompense for the loss of jobs, but we believe that that scheme should be operated with its generous payments to try to help in the circumstances that exist. We differ from the Opposition in our approach to the creation of real jobs. Again and again the Labour Government showed that they were prepared to keep people in jobs which had become obsolete and to put taxpayers' money behind them.
§ As my right hon. Friend the Secretary of State for Industry said, that taxpayers' money must come from individual taxpayers or from other profitable industries. Every time that one puts money into an obsolete industry, an industry which otherwise would close, one is putting at risk jobs in profitable companies. That is what we have to understand. The present Government have already made their views—
§ Mr. John Evans (Newton) rose in his place and claimed to move, That the Question be now put.
§ Question, That the Question be now put, put and agreed to.
§ Question put accordingly, That this House do now adjourn:
§ The House divided: Ayes 261, Noes 315.