Commons Sitting of 16 December 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
MESSAGES FROM THE QUEEN

  ST. LUCIA (GIFT OF A CLOCK AND GAVEL SET)
  The Vice-Chamberlain of the Household The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
  I have recieved your Address praying that I will give directions that there be presented on behalf of your House a gift of a clock and gavel set to the Parliament of St. Lucia, and assuring me that your House will make good the expenses attending the same.
  It gave me great pleasure to learn that your House desires to make such a presentation and I will gladly give directions for carrying your proposal into effect.

  DOMINICA (GIFT OF A SPEAKER'S CHAIR)
  The Vice-Chamberlain of the Household The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that I will give directions that there be presented on behalf of your House a gift of a Speaker's Chair to the House of Assembly of Dominica and assuring me that your House will make good the expenses attending the same.
  It gives me great pleasure to learn that your House desires to make such a presentation and I will gladly give directions for carrying your proposal into effect.

  INCOME TAX
  The Vice-Chamberlain of the Household The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Addresses, as follows:
  I have received your Addresses praying that the Double Taxation Relief (Taxes on Income) (Netherlands) Order 1980, the Double Taxation Relief (Taxes on Income) (The Gambia) Order 1980, the Double Taxation Relief (Taxes on Income) (Norway) (No. 3) Order 1980, and the Double Taxation Relief (Taxes on Income) (Denmark) Order 1980 be made in the form of the drafts laid before your House.
  I will comply with your request.

Royal Assent
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
Anguilla Act 1980.

PRIVATE BUSINESS

  BRITISH RAILWAYS BILL (By Order)
  Order for consideration, as amended, read
  To be considered upon Thursday.

  BRITISH RAILWAYS BILL (By Order)

    BEARSDEN AND MILNGAVIE DISTRICT COUNCIL ORDER CONFIRMATION BILL.
    CUMNOCK AND DOON VALLEY DISTRICT COUNCIL ORDER CONFIRMATION BILL.
    DUNFERMLINE DISTRICT COUNCIL ORDER CONFIRMATION BILL.
    CHURCHES AND UNIVERSITIES (SCOTLAND) WIDOWS' AND ORPHANS' FUND (AMENDMENT) ORDER CONFIRMATION BILL.
    PETERHEAD HARBOURS ORDER CONFIRMATION BILL.
    Considered; to be read the Third time tomorrow.

Oral Answers to Questions
  Social Services

    Special Blind Allowance
    Sir David Priceasked the Secretary of State for Social Services what reply he has given to the representations which he has received that all registered blind persons should receive a special blind allowance comparable to non-contributory invalidity benefit.
    The Minister for Social Security (Mr. Reg Prentice): I have made it clear that, although the Government have the greatest sympathy for blind people and the problems they face, resources are not available at present to finance new benefits.
    Sir David Price: Would not my right hon. Friend agree that, whereas great progress has been made in the past 12 years in regard to financial help to the disabled, the blind have not done very well? Would he agree that the top priority for future progress is the blind? Is he aware, from the answers that he gave me yesterday, that it would cost less than half of 1 per cent. of his Department's expenditure on social security—which lies well within the margin of error in the Department's estimates—to give the NCIP to the registered blind?
    Mr. Prentice: Yes, although another way of interpreting the replies that I gave yesterday is that if the benefit were of the same order as mobility allowance it would cost nearly£100 million a year, and if it were equal to non-contributory invalid benefit it would be more than£100 million a year. In present circumstances, it is not possible to make progress towards an objective that we would all like to achieve.
    Mr. Dempsey: Why does the Minister state that he is unable to give a blind allowance? Could he not at least realise that optical charges are costly for blind persons? Would he not agree to relieve registered blind persons of such optical charges, thus encouraging them to believe that Government Departments and Parliament are interested in their welfare?
    Mr. Prentice: Again, there would be a public expenditure implication. As to optical charges, the hon. Gentleman will recognise that there is already help with charges for people on low incomes whether or not they are blind.
    Mr. Alfred Morris: Speaking recently in Eastbourne as Minister with responsibility for the disabled, the right hon. Gentleman said that if he had to apologise for anything it was for cutting too little and too late. How does he reconcile that statement with his right hon. Friend's sympathy for a blindness allowance, and how can it possibly be reconciled with the right hon. Gentleman's reported statement that there is now an unanswerable case for such an allowance?
    Mr. Prentice: The statement that I made in Eastbourne applied to public expenditure in general, and I stand by it. I recognise—I am sure that hon. Members on both sides of the House do—that there is a strong case for a blind allowance, because, apart from the handicap of blindness,
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    identifiable extra costs also arise from blindness. We would all like to provide such an allowance if the resources were available, but at present they simply are not.

    Retirement Pensions
    Mr. Canavanasked the Secretary of State for Social Services what representations he has received about his decision to stop index-linking of retirement pensions.
    The Secretary of State for Social Services (Mr. Patrick Jenkin): No such decision has been made.
    Mr. Canavan: Why, then, is the Secretary of State hell-bent on trying to make pensioners the scapegoats for the failure of Tory economic dogma, first by stealing two weeks' pension increase from them and, secondly, by reducing the real value of the retirement pension by refusing to keep it in line with the rate of inflation? Is the right hon. Gentleman proud to be cast in the role of a Tory bovver boy who specialises in mugging defenceless old men and women?
    Mr. Jenkin: The only bovver boys in this game are the people who consistently misrepresent the Government's policy.
    Mr. Paul Dean: Will my right hon. Friend confirm that the 16½per cent. pensions increase which came into effect on 24 November more than compensated for price rises, and that my right hon. Friend the Prime Minister said that the Government intend
    "to compensate fully for price increases over the lifetime of a Parliament"?—[Official Report, 25 November 1980; Vol. 994, c. 488.]
    If that is correct, should not the Opposition be ashamed of their blatant use of pensioners as political footballs?
    Mr. Jenkin: I entirely agree with what my hon. Friend has said.
    Mr. Buchan: Does not the Secretary of State agree that the decision to remove the indexing by cutting it by 1 per cent. below the level is just about the meanest and pettiest act of this mean and petty-minded Government? Is it really worth it to clobber the 8 million or 9 million old people in this country to save £60 million, which the Treasury could easily have achieved by a minor cut in the taxation handout to the rich?
    Mr. Jenkin: The hon. Gentleman will know that we gave an undertaking that pensions would remain in line with prices. As my hon. Friend the Member for Somerset, North (Mr. Dean) said, the Prime Minister confirmed that from the Dispatch Box only a few weeks ago. This year we have overshot, probably by about 1 per cent., but, of course, we shall not know that until the detailed figures are published. It is entirely consistent with the pledge which the Government have given that the adjustment should be made next year to take account of that.

    Health and Social Services
    Mr. Stephen Rossasked the Secretary of State for Social Services whether, having regard to the Northern Ireland experience, any consideration is being given to the merging of the health and social services in other parts of the United Kingdom.
    Mr. Patrick Jenkin: No, Sir.
    Mr. Ross: In a Department which, admittedly, is looking for savings, is not that an area in which some

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    savings might be achieved and also one in which a more efficient service might be provided? Is the right hon. Gentleman aware that there are parts of the country—I suggest that my constituency is one—which would benefit from a merger of these services?
    Mr. Jenkin: I am surprised that the hon. Gentleman does his constituents such a disservice. After all, it was only a month or two ago that I presented a prize to the chairman of the hon. Gentleman's area health authority for its admirable collaboration with the local authority in relation to social services. But perhaps the hon. Gentleman did not notice that.
    Mr. Wigley: Does the right hon. Gentleman accept that a reason against any merging would be that co-operation was working satisfactorily? Does he also accept that the actuality is different from area to area throughout Britain and that in many areas there is a failure to reach the objective that was set out in the Health Services Act of close co-operation between health and social services? Unless that is achieved, surely there will be a need to look at these matters again.
    Mr. Jenkin: The point made by the hon. Gentleman was well made by the Royal Commission when it said that successful collaboration between health and local authorities depended far more on the willingness to collaborate than on any institutional arrangements. I hope that all authorities will achieve the record of the best—of which the Isle of Wight is certainly one—in regard to effective collaboration for the benefit of patients and clients.
    Mrs. Dunwoody: Does not the Minister agree that the professionalism of members of the social services has demonstrated that they are capable of doing an extremely good job? What will be his attitude towards their belonging to trade union organisations, in view of the fact that he appears to be suggesting in personnel circulars that there may be some way in which health authorities can get round the Employment Protection Act? That is hardly a way to promote either professionalism or good standards in the social services or the NHS.
    Mr. Jenkin: I offer my congratulations to the hon. Lady on her appearance at the Dispatch Box as a health spokesman, and I hope that she will soon make the Shadow Cabinet as well.
    The hon. Lady's question seems to have strayed a little from the original question. All I am doing is taking the view that people in the Health Service who wish to be active trade unionists must decide whether they will take the lead as a chairman of a branch of COHSE or whether they will be managers if they hold senior management positions. I would have thought that the hon. Lady would agree that there is a conflict here which cannot be reconciled by a person doing both.

    Sickness Benefit
    Mr. Cookasked the Secretary of State for Social Services how many employee organisations or unions have welcomed the proposals in his Green Paper on sickness benefit.
    Mr. Prentice: Approximately 30 trade unions and other organisations representing employees have commented on the Green Paper "Income During Initial Sickness: A New Strategy". None has expressed support for the proposals.
    Mr. Cook: I am grateful to the Minister for that answer, which confirms that the overwhelming opinion among unions and other employee organisations is to condemn a proposal which will at the same time increase the burden on industry and cut the benefit to the sick. Will he confirm that the effect of the abolition of earnings-related supplement and the introduction of a flat-rate sickness benefit will be to cut in half the maximum benefit available to a married man with two children? Does he admit that if any private insurance company were to renege on its obligations to policyholders in the way that he is reneging on his obligations to national insurance contributors, it would end up before the courts?
    Mr. Prentice: The phasing out of earnings-related supplement is an entirely separate issue, which was part of an Act of Parliament that went through all its stages during the previous Session. The Green Paper proposes financial provision for people during the first eight weeks of sickness which, taking employees in this country as a whole, is equal in value to the existing provision under the national insurance scheme.
    Mr. McCrindle: Why should trade unions or anyone else oppose proposals when one of the aims is to treat income for taxation purposes equally whether it is earned in employment or during sickness? Could not that be said to be a basis of equality that should appeal to the trade unions?
    Mr. Prentice: When I met a deputation from the TUC about a fortnight ago to discuss these matters, I tried, with my usual tact and gentleness, to explain that I thought its attitude was a bit stick-in-the-mud. Trade unions have worked over many years to extend the rights of workers to receive sick pay from their employers. Between 80 per cent. and 90 per cent. of people at work in this country are covered by employers' sick pay arrangements. I would have thought that the TUC would welcome a statutory provision which ensures that remaining workers are covered. If it took an adventurous view of the future and was not so stick-in-the-mud, it would regard this as a basis for negotiating in better times more favourable arrangements than those laid down as the statutory minimum.
    Mr. Rooker: if none of the 30 employees' organisations with which the Minister has had meetings has agreed the proposals, what proportion of employers' organisations supports the proposals?
    Mr. Prentice: We received a great many representations from both employers' and employees' organisations. [HON. MEMBERS: "Answer the question."] I shall come to the main question. Because it was a consultative document, we have benefited from many detailed suggestions made by both trade unions and employers' organisations. The final shape of the scheme will take note of many of their points. In general, I agree that there is too much conservatism on the part of employers' organisations and trade unions.

    Kidney Donors
    Mr. Gwilym Robertsasked the Secretary of State for Social Services whether, in the light of the recent fall-off in the number of kidney donor cardholders, he will now provide the revised figures for the introduction of a computerised donor system; and if he will take steps to introduce such a system.
    The Minister for Health (Dr.Gerard Vaughan): No, Sir. A computer register would cost about £4·5 million initially and about£340,000 a year to run. We do not think that it would increase the number of kidneys donated. My hon. Friend the Under-Secretary of State put this in his letter to the hon. Gentleman on 29 September, and I shall circulate a full text in the Official Report.
    Mr. Roberts: Does not the hon. Gentleman agree that it is farcical to distribute kidney donor cards on what appears to be a haphazard basis when there is no return to any sort of central bank? Does he not agree that the figures which have been given for providing a computerised system seem to fall regularly, although provided by his right hon. Friend? They have gone down as time passes. Is he aware that computer systems experts believe that the cost would be only a fraction of the latest figure?
    Dr. Vaughan: I cannot accept that it would be an improvement on the present system. I remind the hon. Gentleman that it was a Conservative Government who introduced donor cards in 1972. Since then, 30 million cards have been issued, 16 million since May last year. That shows the way in which the Government have extended the range of contact between possible donors and kidney transplants.
    Mr. Michael McNair-Wilson: Has there been any recovery in the number of kidney donors coming forward?
    Dr. Vaughan: Yes. There has been a small recovery. I hope that this will continue.
    Mr. Ashley: I appreciate the Minister's personal concern with this problem. Is he aware that if he is not prepared to adopt a computerised system, which he ought to do, despite the cost, he should introduce the opting-out system, which is the only realistic way to ensure that enough kidney donors are brought forward?
    Dr. Vaughan: I am surprised that the right hon. Gentleman should raise that matter. He knows, like the Government, that the majority of people who have been asked about the matter would prefer not to have an opting-out system. They would prefer to continue the present system. We think that the present system should be extended.
    Mr. Farr: Will my hon. Friend say how the national multi-organ donor card system is progressing, on the lines of that pioneered so successfully by the south-west Leicester community health council?
    Dr. Vaughan: The take-up of multi-donor cards is increasing satisfactorily. A most important advance is that the Post Office, having previously refused, has now agreed to distribute cards. From January next year, the Post Office will be distributing 5 million cards, 2·5 million of them kidney donor cards and 2·5 million the new part-kidney, part multi-donor card. We shall also be introducing next year a multi-donor card—a green and white card—in its own right to replace the present cards.
    Several Hon. Members rose—
    Mr. Speaker: Order. This matter comes up again on Question 7.
    Dr. Vaughan: Following is the letter:
    "Dear Gwilym,
    I am now able to reply fully to your letter of 26 July to Patrick Jenkin on the question of cost estimates for a computerised system for kidney and other organ donation, with which you also enclosed the correspondence (attached) from S. P. Jones, Triad Computing Systems Limited. I am sorry for the delay in replying.
    The estimates for a kidney donor register previously quoted to you were made in 1978 and were based on an "opting-in" register of 21/25 million records and about three million subsequent amendments per annum. The costs were based on the procurement of a large computer, its accommodation, setting up the register and the maintenance of computer equipment, software and keeping the register up-to-date.
    As Mr. Jones mentions in his letter, due to changing technology a kidney donor register could now be held on a smaller computer with reduced equipment and maintenance costs. However, staff costs, which form a large part of the expense of setting up the register and keeping it up to date, have continued to increase.
    We estimate that the initial cost of such a register would still be about £4·5 million comprising: mini-computer £50,000, disc and tape equipment, £140,000, 30 visual display units £37,000 and setting up costs (@20p per record) £4·2 million. Running costs might, however, now be only £340,000 per annum.
    As regards the suggestion made by Mr. Jones for a Scrapbook System, we have no evidence that this would be the most appropriate system for a kidney donor register, but should it be decided sometime in the future to go ahead with such a register, then TRIAD would of course be free to respond to a competitive tender.
    Yours sincerely,
    Sir George Young."

    Geriatric and Psychogeriatric Provision
    Mr. Newensasked the Secretary of State for Social Services what steps he is taking to ensure that additional funds are made available to provide geriatric and psychogeriatric hospital beds in areas in which the numbers of elderly people are increasing at a significant rate.
    The Under-Secretary of State for Health and Social Security (Sir George Young): My right hon. and learned Friend the Chancellor of the Exchequer announced on 24 November our plans for increased spending on the NHS in 1981–82. These take account of population changes nationally, in particular the rising number of elderly people—factors which are also taken into account in allocating resources to health authorities. It is for regional and area authorities to decide how much to spend on individual services in accordance with local needs and priorities.
    Mr. Newens: Is the hon. Gentleman aware that the number of cases of old people in desperate need of a hospital bed who are now being refused admittance is growing steadily in many parts of the country? Is he further aware that the Harlow area needs immediately at least 60 more psychogeriatric beds and 80 more geriatric beds to meet the need? Is it not a disgrace if old, sick people are refused admittance to hospital and left at home to die?
    Sir George Young: I estimate that about 0·7 per cent. growth is required each year in the Health Service budget to cater for demographic changes, including the needs of the elderly. Next year we are planning to spend a 1¼per cent. increase. With regard to the specific problems in Harlow, I understand that a start is being made by the area health authority to tackle these needs and that at Honey Lane hospital, Waltham Abbey, work on upgrading a ward is nearly completed. The area health authority has

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    identified three other schemes which are required and which, if implemented, would make a start on tackling the needs which the hon. Gentleman describes.
    Sir David Price: Does my hon. Friend agree that there is clearly a growing problem with an ageing population? Does he agree that an important role is played by joint funding between the NHS and the local authority in ensuring that more people on the margin of hospitalisation remain in the community? It is important to make progress in this sphere.
    Sir George Young: I endorse what my hon. Friend says. That is why we have increased by 16 per cent. in real terms the budget for joint funding this year.
    Mr. Ennals: Does not the hon. Gentleman recognise that, as a result of the cuts in the social services and especially the domiciliary services and part III accommodation for elderly people, the pressure created by elderly people on the National Health Service will inevitably grow? Will he give some help, in terms of either additional funds or additional beds, to cope with this serious problem that concerns my constitutency and, I believe, every constituency?
    Sir George Young: I do not accept the premise from which the right hon. Gentleman started. All our information from local government indicates that expenditure on social services this year is higher than last year.
    Mr. Carter-Jones: Will the hon. Gentleman consider another aspect of the problem? Will he consider providing more resources for geriatric rehabilitation? Will he encourage doctors to take up this area of study and bring the elderly hack into the community to make better use of existing resources?
    Sir George Young: I hope that this is one of the subjects that might be mentioned in the White Paper on the elderly that we hope to publish early next year.

    Kidney Transplants
    Mr. Dalyellasked the Secretary of State for Social Services what figures he has for the number of kidney transplants performed for any convenient four-week period after the "Panorama" programme on 13 October, with any convenient period before 13 October.
    Dr. Vaughan: We know of 59 transplants in the four weeks immediately before the "Panorama" programme and of 44 in the four weeks following. This shows a small fall. I am glad to say, however, that there was some increase in the four weeks up to 8 December, with 56 transplants notified.
    Mr. Dalyell: I should like to put a question of which I have given notice to the Minister's office. What is his reply to Professor Roy Calne, who says that one-third of the organs expected are being received? What does he say to those who expect dialysis but cannot obtain it due to the limited facilities.
    Dr. Vaughan: I think that the "Panorama" programme was an absolute tragedy. I am personally very aware of the 1,800 people who are waiting and whose lives would be saved or transformed if a kidney was made available to them. It has always been our view that the BBC owes it
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    to the public to try to repair the damage. I am glad that the BBC announced yesterday that there will be a full studio debate in February on BBC1. This is to be welcomed.
    Mr. Paul Dean: Will my hon. Friend confirm that the BBC at long last intends to get off its high horse to try to repair some of the damage that it has done to critically ill patients who could benefit from transplants where donors are available?
    Dr. Vaughan: Yes. I am glad that the BBC has agreed on the programme and that there will be full medical co-operation. It has emerged that the programme was misleading and that there was no opportunity for the British medical profession to tell the public what went on. There will now be a possibility of that happening through the next programme.
    Mr. Terry Davis: I agree with the Minister about the tragic effects of the television programme in question. Will he tell the House whether the figures have been affected by the letter that he sent to the special kidney unit at the Dulwich hospital telling it that it should send bills to health authorities in the areas where their patients live? What is the cost of employing civil servants to send and receive these internal invoices? What happens if a health authority refuses to pay? Is the patient merely allowed to die?
    Dr. Vaughan: May I welcome the hon. Gentleman to his new position and hope that he will occupy it for many years to come?
    It was in special circumstances that the Dulwich unit ran out of the funds that had been made available to it. Negotiations are taking place to ascertain whether more funds can be made available. A part of the decision was to ask—not to insist—various authorities referring patients to contribute towards the cost of treating those patients.

    Retirement Pensioners (Supplementary Pension)
    Mr. Rookerasked the Secretary of State for Social Services what is his estimate of the number of retirement pensioners who have ceased to draw supplementary pension since the change in capital limits operative from 24 November.
    The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): Actual figures of the number of pensioners ceasing to draw supplementary pension on account of the new capital rule are not yet available, but on the basis of November 1979 information it is expected that 6,000 supplementary pensioners will have lost title to benefit.
    Mr. Rooker: Is the hon. Lady still happy that the capital limit now includes the surrender value of insurance policies? What action has been taken since the promise of 10 October to the Tory conference that this harsh and unfair rule would be investigated?
    Mrs. Chalker: Only beneficiaries with life policies with a surrender value of more than £2,000 will have to encash them. There are no statistical details yet available, but I understand that few beneficiaries have policies with surrender values exceeding £2,000. If people wish to spend their capital so as to obtain supplementary benefit, that must largely be a matter for them. I am guided by the resources regulations. The interpretation of the regulations is for the independent adjudicating authorities. I said in

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    October that the matter would be considered. It must be remembered that we are not changing anything. The former Supplementary Benefits Commission used a practice similar to that embodied in regulation 6(1)(c).
    Mr. Bowden: Does my hon. Friend agree that it is unsatisfactory that up to half a million pensioners who could receive a supplementary pension do not do so? Will she instigate yet a further campaign to try to bring in these people and ensure that they receive their rights?
    Mrs. Chalker: I sympathise fully with what my hon. Friend has said. When considering the future computerisation of the Department, we hope that it will be possible for those with an entitlement to supplementary benefit but who do not now claim it automatically to be brought in.
    Mr. Andrew F. Bennett: Will the hon. Lady confirm that if two elderly pensioners who are both in receipt of supplementary benefit and with savings of slightly more than £1,000 each get married, they will lose their entitlement to supplementary benefit because their savings when aggregated will be over £2,000?
    Mrs. Chalker: The hon. Gentleman is right to say that two persons married or living together, each with savings in excess of £1,000, would have those savings aggregated as an assessment unit in the calculation of the capital cut-off point. It has happened before that persons with savings slightly over the limit spend that money in the course of natural spending and quickly become entitled to supplementary benefit. That is reasonable, but it is important that people should not abuse the system. In trying to make the system simpler, we need to have a single cut-off point.

    Supplementary Benefit Regulations
    Mr. Tilleyasked the Secretary of State for Social Services whether he is satisfied with the operation of the new supplementary benefit regulations.
    Mr. Prentice: Bearing in mind that the regulations have been in force for less than a month, yes, Sir.
    Mr. Tilley: Is the right hon. Gentleman aware that many social security officers believe that if a single parent asks for help on the ground that the children do not have shoes in which to go to school, under the new regulations they have to say that no help is available and that the only advice that can be given is that the children should be kept at home? Do the officers have it right? Is that what the Minister intended?
    Mr. Prentice: Provision for normal clothing, including shoes, is covered by the scale rates. There are additional regulations that enable additional payments to be made for clothing in certain circumstances. The hon. Gentleman has mentioned one-parent families. He will be aware that families with children, including one-parent families, are among the main gainers in the changes that we introduced in November.
    Mr. Foster: Is the right hon. Gentleman aware that severe penalties are imposed upon school leavers who are eligible to leave school at Easter and who decide to return to take examinations? Are they not likely to lose as much as £10·50 a week? Is it not remarkable that the National Association of Head Teachers—not the most radical body—is now saying that the regulation may well be disastrous for those who decide to take examinations? Will he estimate the effect that this provision will have on examination results?
    Mr. Prentice: This issue was fully argued in an Adjournment debate last week. I do not think that I can add to what was said on that occasion.
    Mr. Buchan: Are we to take it from the Minister's answer that he has no intention of trying to deal with the problem? Is not this one of the many regulations that have been introduced over the past few months which, more and more, extend the ethics of the workhouse into our society? Is the Minister aware that the doubling effect of family unit assessment plus increasing unemployment and the clobbering of redundancy payments is making the bonds ever tighter around those caught in the developing poverty trap?
    Mr. Prentice: I think that the hon. Gentleman has it entirely wrong. One of the main differences between the old system and the new system is that the new system depends less upon discretion and more upon entitlement as a matter of law. Surely, that is getting further away from the atmosphere of the workhouse.

    Prescription Charges
    Mr. John Evansasked the Secretary of State for Social Services if he has any plans to increase prescription charges.
    Dr. Vaughan: The prescription charge was increased from 70 pence to £1 per item on 1 December 1980. My right hon. Friend has no plans at present for any further increases.
    Mr. Evans: I am grateful for the last part of the Minister's answer. Is he aware that a considerable number of items being prescribed cost less per article than the prescripton charge? Will he consider giving a directive to chemists that, when that occurs, they should inform the customer, who could pay the price of the article and save the £1 prescription charge?
    Dr. Vaughan: May I suggest that we wait a little while to judge the effect of the new £1 charge and the effect that it has on the take-up of prescriptions? There are already changes in the pattern of prescribing.
    Mr. Thompson: What is the proportion of those who are given prescriptions who pay the £1 charge?
    Dr. Vaughan: Those who are exempted from prescription charges amount to 64 per cent. of those receiving prescriptions. A further 5 per cent. are on season ticket arrangements.
    Mr. Park: Will the Minister confirm that the income from the sale of six-month and 12-month prepayment certificates was taken into account halfway through the financial year, resulting in a deduction of £10 million nationwide? Does he accept that that was not conveyed formally to area health authorities and that the authorities had to pick it up from an appendix to a financial report?
    Dr. Vaughan: I do not accept the hon. Gentleman's implied criticism. There is always a delay between a change in the charge and the recovery of charges. Overall, the new £1 charge will raise an extra £30 million, which can only be of benefit to the National Health Service.
    Mr. McCrindle: What is my hon. Friend's reaction to the provocative posters appearing in chemists' premises under the heading "Tax on Health"?
    Dr. Vaughan: I am glad that my hon. Friend raised that matter. I deplore the wording of the posters, which is misleading. The charge is not a tax. It is a reasonable contribution by a user, when he is able to afford it, to the cost of the National Health Sevice.
    Mrs. Dunwoody: Is it not true that pharmacists are reporting more and more cases of patients asking them to decide which items they do not need on a prescription? Is it not also true that there has been a disastrous and frightening drop in the number of prescriptions being issued—about 19 million down on the figure before the £1 increase? How does the Minister explain that?
    Dr. Vaughan: The hon. Lady is trying to put an alarmist side to the matter. Supposing that there is a small decrease in the number of prescriptions, we cannot have it both ways. We cannot ask people to take fewer drugs and then complain when they have fewer prescriptions.

    Maternity Allowance
    Mr. Madelasked the Secretary of State for Social Services whether he is satisfied with the present contribution conditions for the weekly maternity alllowance, in view of the length of time that elapses between the contribution year and the birth of the baby; and if he will make a statement.
    Mr. Prentice: The arrangement of contribution years and benefit years means that a particular tax year determines title to benefit for periods of interruption of employment commencing from nine months to 21 months after the tax year has ended.
    I would not claim this as the ideal relationship between tax year and benefit year for short-term benefits. It does, however, represent a compromise between, on the one hand, the desirability of relating title to a recent contribution record and, on the other, the demands of economic administration and the need to allow sufficient time for contribution information to be linked to individuals' records.
    Mr. Madel: Will my right hon. Friend consider making an alteration that would provide a fairer system whereby, provided that a woman has paid full contributions for two years before she stops work to have a baby, she should be able to receive full maternity allowance? Would that not be a fairer system and, in due course, easier to administer?
    Mr. Prentice: The present arrangements have stood the test of time since 1975. I shall consider my hon. Friend's point.
    Mr. Nicholas Winterton: In order to impress upon the House the Government's determination to see open government, will my right hon. Friend agree to consider sympathetically the recommendations of a Select Committee report that is likely to be published in the near
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    future? Will he urge the Secretary of State to bring forward a debate on this matter so that the issue, and the emotive issues that lie behind it, can be aired by the House and a favourable and fair position established?
    Mr. Prentice: As the Select Committee report has not yet been produced, it might be premature to comment. I shall give it full attention when it appears.

    Ambulance Services
    Mr. Moateasked the Secretary of State for Social Services when he expects to publish his final proposals for the structure of the ambulance services in the context of reorganisation of the Health Service.
    Sir George Young: We must await the recommendations of the Health Service working party on patient transport services, which, I understand, hopes to report early next summer.
    Mr. Moate: Is my hon. Friend aware of the rumours that the Government favour dividing the service between the emergency service and the social transport service? Will he confirm that the Government are open-minded about the matter? Will he, then, do the obviously right thing and keep a unified service, based essentially and generally on the new districts?
    Sir George Young: The rumours mentioned by my hon. Friend are unfounded. The Government are awaiting the report to which I referred. I recall my hon. Friend's spirited speech on the subject on 27 October. At this stage, we are not ruling out any solution to the problem.

    National Health Service (Insurance Payments)
    Mr. Kenneth Lewisasked the Secretary of State for Social Services when he expects to issue his Green Paper on possible changes in insurance payments for the National Health Service.
    Mr. Patrick Jenkin: We are examining the strengths and weaknesses of our present system of health care financing and those of other countries. It is too soon to say when and in what form consultative proposals will appear. In the meantime, I welcome debate on this important subject.
    Mr. Lewis: Is my right hon. Friend aware that the Health Service needs an increase in resources which it cannot, and should not, get from the Government? Does he agree that there is much to be said for amalgamating the private sector into the present Health Service so that they may work together? When my right hon. Friend publishes a White Paper, will he ensure that action arises from it as soon as possible?
    Mr. Jenkin: I must make it clear both to my hon. Friend and to the House that I do not think that a White Paper or a consultative document will appear in the near future. We have a great deal of work to do before we can put forward any proposals for consultation. On the question of collaboration with the private sector, I am glad that my hon. Friend supports the arrangements that we are trying to make in the Health Service to have much closer collaboration between it and the private sector for the benefit, above all, of National Health Service patients.
    Mr. Ennals: Quite apart from the principles at stake, about which most of us on the Labour side feel strongly,

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    is not the Secretary of State aware from all his studies that insurance-based health provision is much more expensive and bureaucratic than the present system under the National Health Service?
    Mr. Jenkin: I do not necessarily accept the right hon. Gentleman's remarks. The distinguishing feature of health services financed by insurance is that they do not have waiting lists anything like the size of ours. That seems to be a target worth shooting at.

    Prime Minister (Engagements)
    Ql. Mr. Gwilym Robertsasked the Prime Minister if she will list her official engagements for 16 December.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I held meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Roberts: During the course of her day, will the Prime Minister take a few minutes to consider the millions of people who will have a bleak Christmas because they are unemployed or on short-time working? Will she also consider the scores of elderly people who will die this winter from hypothermia or malnutrition directly as a result of her Government's policies, especially the public expenditure cuts? What will she do about it?
    The Prime Minister: On the hon. Gentleman's latter point, he will be the first to be aware that retirement pensions have recently risen by 16½per cent., which is in excess of price increases. He will know also that an extra fuel provision, costing £200 million, is directed towards those who most need the extra heat. The Government have already taken that action.
    Dr. Mawhinney: Is my right hon. Friend aware that people in Britain and the United States have noted that the Taoiseach has not unequivocally said in public that hunger strikers should not be given political status? Is she further aware that that statement was not included in the communiqué from Dublin? Will she say whether the Taoiseach told her that hunger strikers should not be given political status?
    The Prime Minister: I cannot answer specifically for the Taoiseach. I have not been requested to give the hunger strikers political status by anyone except the hunger strikers themselves. There is no question, either now or at all, of giving them political status.
    Mr. Faulds: Will the Prime Minister today give time to the consideration that, although I was approached—[HON. MEMBERS: "Reading".]
    Mr. Nicholas Winterton: Learn your lines.
    Mr. Speaker: Order. Most unusually, the House requires me to protect the hon. Member for Warley, East (Mr. Faulds).
    Mr. Faulds: As I do not wish to waste the time of the House, I shall sit down.
    Mr. Hordern: While reflecting on recent discussions with the Irish Prime Minister, will my right hon. Friend confirm that there is no question but that the people of Northern Ireland should remain a part of the United
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    Kingdom for as long as they wish? Does she agree that there is no reason why the obstacles that may stand between ourselves and the Republic of Ireland should not be carefully examined? Will she say whether any suggestion was made during the discussions that an Anglo-Irish council might be formed to consider the question more carefully?
    The Prime Minister: With regard to the future of the people of Northern Ireland, it remains as I have frequently said—they stay with the United Kingdom until they express the wish to do the contrary and that wish is confirmed by this House of Commons and the Upper House. With regard to an Anglo-Irish council, I am not quite certain what my hon. Friend means. We were not considering any specific constitutional measure. We were considering measures of closer consultation between the United Kingdom and the Republic of Ireland, but very much between the United Kingdom and the Republic of Ireland and not between Northern Ireland and the Republic of Ireland.
    Mr. Tilleyasked the Prime Minister if she will list her official engagements for Tuesday 16 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave a few moments ago.
    Mr. Tilley: Has the Prime Minister had the time to see the calculation that, if manufacturing output continues to decline by the annual amount announced yesterday, in about three years' time it will be about half of what it was in May 1979? Does the right hon. Lady intend to go into the next general election, assuming that she is still Leader of the Conservative Party, on a promise to squeeze production entirely out of the economy during the next five years?
    The Prime Minister: In this House very few of us go in for direct extrapolation of that kind, knowing full well that it is likely to be wholly wrong.
    Mr. Ian Lloyd: Has the Prime Minister yet had an opportunity to consider the exceptionally important speech made by the retiring president of the Royal Society, Lord Todd, in which he argued most persuasively for a more vigorous and direct representation of the interests of science and technology at the highest levels of Government?
    Mr. John Home Robertson: We have Tam Dalyell.
    Mr. Lloyd: In the light particularly of the OECD's recent revelations that the West as a whole has been spending much less on research and development throughout the system than it should be, does not my right hon. Friend consider that Lord Todd's representations are most important?
    The Prime Minister: I am always prepared to give very close consideration to Lord Todd's representations. As my hon. Friend knows, in this country we do have science and technology represented at the highest level of Government.
    Mr. Kenneth Carlisle: Does my right hon. Friend agree that the proposed recruitment of 1,000 extra workers by BL for extra production of the Mini Metro shows that jobs will be created if we use modern machinery as productively as possible to create and manufacture the goods that people want to buy?
    The Prime Minister: Yes. The Mini Metro production line is manned by far fewer people than the previous Mini line. It is, therefore, very much more efficient, which is one factor, together with the excellent design, which will contribute to higher sales. If more people are being taken on to produce those cars because the demand is there, I am delighted.
    Mr. Allan Roberts: Will the Prime Minister take time today to sack the Secretary of State for the Environment, if for no other reason than that of self-interest, since he is destroying the Conservative Party's interests in local government? Is the right hon. Lady aware that this afternoon he will destroy what is left of local democracy by his block grant allocations, that he has already destroyed Conservative councils' housing programmes and he has even turned the building industry, which has many contributors to the Tory Party and CABIN, against that party, so that its criticism is becoming as virulent as the CBI's?
    The Prime Minister: I can well understand why the hon. Gentleman would like me to dismiss my right hon. Friend the Secretary of State for the Environment. The simple reason is that he gives better than he gets from the Opposition.
    Mr. Foot: Would the right hon. Lady care to tell us what increase in unemployment she believes will be produced by the combined statements of the Secretary of State for the Environment and the Secretary of State for Wales? How much extra unemployment in those areas that are so badly hit is likely to be produced by the effects of her policy on local government?
    The Prime Minister: When the right hon. Gentleman was Secretary of State for Employment, he never gave forecasts for unemployment. They are wholly unreliable. I do not intend to give them either.
    Mr. Foot: Does the right hon. Lady mean to tell us that, when the Cabinet discusses the allocation of the amounts for local government and the services that will thereby be injured—and if she does not know that services will be injured, she must be the only person in the country who does not know—it does not discuss the effect on unemployment of cuts imposed on local authorities?
    The Prime Minister: The right hon. Gentleman is first advocating direct forecasting, which he never followed, and I shall follow his practice and not his preaching. Secondly, he is undoubtedly advocating that any economies in public spending—and, after all, the Government of which he was a member had to make far more severe economies than I have made—should come from current expenditure, so that there is plenty of expenditure for capital. Unfortunately, he has not followed that advice by supporting economies in current spending.
    Mr. Foot: Is the right hon. Lady aware that what I am advocating is that she should answer the questions that we put to her? Will she take into account that the whole country has a right to answers to those questions, particularly because 1980, under her direct supervision, has been the worst year in British history since 1945 for employment of our people, and almost every announcement made by her Ministers from the Dispatch Box adds to the figures? Is she further aware that that is what the country is concerned about, even if she is not?
    The Prime Minister: No. Announcements from this Dispatch Box do not add to the figures. Announcements from this Box are designed to try to release more resources for the private sector. The right hon. Gentleman is attempting to take away resources from the private sector, which will increase unemployment, as he did when he was Secretary of State for Employment, when unemployment rose by 100 per cent.
    Mr. Forman: Will my right hon. Friend also confirm that the facts show that the proportion of world trade that this country has is larger than it was a year ago? Will she further confirm to the House that, if we are to maintain that very satisfactory position, it is vitally important that we do not emulate last year's figures, when we paid ourselves 22 per cent. more for 3 per cent. less production?
    The Prime Minister: I am happy to confirm that, thanks to the success of British exporters, we now have a bigger share of world trade than we had at this time last year. Both management and work force deserve congratulation on that.
    Mr. Barry Jonesasked the Prime Minister what are her official engagements for 16 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some time ago.
    Mr. Jones: Does the right hon. Lady understand that yesterday's ministerial statement was very disappointing for the textile industry? Will she instruct her Ministers to take a much tougher line against subsidised American man-made fibre imports, which are taking away our home market? Has she noted the large loss of jobs in the Courtaulds group?
    The Prime Minister: I do not agree with the hon. Gentleman's summing up of the textile statement yesterday. As he is well aware, the interests of different parts of the textile industry vary, and it was necessary not to continue the limitations on imports for polyester yarn because we were under threat of retaliation being taken against Yorkshire worsted. That was a factor we had to take into account. The hon. Gentleman will be aware that my hon. Friend pointed out that the European Commission will take up vigorously with the United States the underpricing of oil and gas resources, which are directly in point with textiles based on chemicals.
    Mr. Body: If my right hon. Friend is considering economic statistics today, will she pay heed to the remarkable surplus in our current account and balance of payments and make a statement paying tribute to British industry—and to the policies that made this possible?
    The Prime Minister: Yes. I am delighted to respond to my hon. Friend's invitation. The volume of exports last month held up extremely well. It was more than 7 per cent. over the volume for the previous month at a time when oil exports were down. That is a very good record and shows that people who have the right design, marketing techniques and vigorous approach can sell abroad in the world at the present exchange rate.
    Mr. Heffer: If the right hon. Lady's Government are making resources available for private enterprise, why are all the small business people in Liverpool, particularly small building construction people, writing to tell me that they are going out of business?
    The Prime Minister: One of the reasons might well be that we have taken too high a proportion of resources for public spending. That is exactly what I am trying to bring down.
    Mr. Nicholas Winterton: Does my right hon. Friend agree that one of the reasons for our improvement in trade is the export of North Sea oil? Will she consider introducing some system under which the benefits of North Sea oil will be used not only for balancing the national economy but more positively for aiding British industry? As my right hon. Friend said, our manufacturing base can generate the genuine prosperity upon which the future success of the country depends.
    The Prime Minister: The income from North Sea oil into the Exchequer this financial year will be about £4 billion. The output from the Exchequer to nationalised industries alone will be 75 per cent. of that, and extra is already going to support industry in the regions. One could say that the proceeds of North Sea oil are already supporting British industry. However, unfortunately, nationalised industries do not provide as good a service to the British people as does the private sector.
    Later—
    Mr. Faulds: On a point of order, Mr. Speaker. You may have noticed my untypical and unusual—indeed, one might say practically unnatural—modesty in yielding my place at Prime Minister's Question Time. This is a serious matter. We now have increasing pressure at Prime Minister's Question Time because many more hon. Members want to get in in those two periods of 15 minutes a week. Today, we had 52 questions for Prime Minister's Question Time. I must make the point that the sort of mindless chiacking, the sort of gagging by decibel, that we had today not only wastes the time—those 15 minutes twice a week—but keeps additional Members from getting in on questions. I resumed my seat as a protest against such tactics.
    Mr. Speaker: I must say that I have some sympathy with the hon. Gentleman. I often think that the continued noise during Prime Minister's questions cuts out another hon. Member, if only the House realised that.

Rate Support Grant (England)
The Secretary of State for the Environment (Mr. Michael Heseltine): Local government is responsible for about one-quarter of public expenditure and employs more than 2·5 million people. Its financial decisions are an integral part of the national economy. The rate support grant settlement must reflect this.
The settlement is the first for England under the provisions of the Local Government, Planning and Land (No. 2) Act 1980 and I therefore thought it right, exceptionally, to make a statement to the House. Documents relevant to my statement to the Local Government Consultative Council are being placed in the Vote Office. I am also laying before the House this afternoon copies of the RSG reports and orders, which will be debated in the House in the normal way. My right hon. Friends will make separate statements about Wales today and about Scotland tomorrow.
As part of our policy on public expenditure, the volume of local government current expenditure for RSG purposes will be 3·1 per cent. below the figure for 1980–81. The cash limit on grant will provide for increases of 6 per cent. in earnings from annual pay settlements in this round after 1 November 1980 and provisionally for the next pay round beginning on 1 August 1980. It contains an allowance for price increases of an average of 11 per cent. between 1980–81 and 1981–82. The grant percentage for England and Wales will be reduced from 61 per cent. to 60 per cent. At 61 per cent., the effective grant for England is 60·1 per cent. The effective grant for England in 1981–82 will be 59·1 per cent.
The aggregate Exchequer grant for England will be £10,895 million at estimated outturn prices. Specific grants are estimated at £1,447 million. Transport supplementary grant will be £416·5 million. A copy of my right hon. Friend's statement to the consultative council is being placed in the Library.
National parks supplementary grant will be £4·5 million. The remaining amount available for the rate support grant is, therefore, £9,027 million.
There are two new features of the grant distribution this year. First, the new system is based on a new method of assessing the needs of authorities which relies on service-by-service appraisal of the factors which affect local authority expenditure. The system is fair, rational and open to scrutiny. The change leads to some significant alterations to the entitlements of some local authorities in the first year.
The second feature is the introduction of block grant, which will replace the old system, with its inbuilt bias towards authorities that increase their spending at the expense of more prudent authorities. These changes are both moderated by safety nets. Authorities retain exactly the same freedom to reach their own expenditure decisions as at present, but block grant ensures that a greater weight of the consequences of high spending is borne locally and not at the expense of other authorities. For the first time, there is a fair and consistent incentive not to overspend. In particular, the recent drift of grant to London at the expense of the provinces is reversed.
The House will remember that pending the introduction of the new system next year I took transitional powers, for this year only, to limit Government support to high spending authorities. Of the original 23 authorities liable
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to penalty, 14 have qualified under the waivers which I set out in my statement of 18 September. There remain only nine authorities liable to abatement of their grant. The House will shortly be invited to approve the appropriate order. Authorities have only a limited time, therefore, to make the necessary reductions in their expenditure if they are to qualify for exemption and thus avoid imposing this unnecessary extra burden on their ratepayers.
I have repeatedly stressed the essential part that local authority manpower levels have to play in meeting our public expenditure targets. The joint manpower watch figures for the year ending September are published today and announced to the House in a written answer to my hon. Friend the Member for Reading, North (Mr. Durant). These figures show a seasonally adjusted reduction over the last quarter of 15,446, making a total for the year of 36,500 on a full-time basis.
Local government manpower is now back to its lowest level since the manpower watch began in 1975. But, although the annual and quarterly reductions are the highest ever achieved, the fall is still only 2 per cent. from the all-time record level when we came to power. I reaffirm today that the volume of current expenditure, particularly manpower levels, must continue to drop.
I turn now to the question of rates. The local authority current expenditure volume target is 5·6 per cent. below the spending in 1978–79. If local authorities plan for that target and budget in line with the cash limit assumptions, increases for ratepayers should be contained within reasonable levels and be much lower than this year. I shall be talking to the associations shortly about action to secure that the expenditure targets are met.
The announcement that I have made this afternoon represents a significant contribution to the Government's public expenditure policies. It is a major challenge to distribute £9 billion to 413 authorities administering over 20 major national services. The new system that I have announced today achieves this through a system that is fairer, more visible and more comprehensible. This is particularly important when the lower volume of expenditure and the reduction in grant percentage will in any case present local government next year with a major challenge.
Mr. David Alton: On a point of order, Mr. Speaker. Is it in order for the Secretary of State for the Environment to make a statement in the House this afternoon before undertaking the consultation procedures with local government which are laid down in section 5 of the Local Government, Planning and Land (No. 2) Act 1980?
Mr. Speaker: Order. I can save the hon. Gentleman going further. The statement is in order. I called the Secretary of State to make it, and he has made it.
Mr. Gerald Kaufman: This is a black day for local government. [HON. MEMBERS: "Hear, hear."] The Secretary of State has made a cover-up statement, which will leave local authorities, ratepayers and borough treasurers in the dark about their rates for next year. No ratepayer, council or borough treasurer has any idea of the effect that this will have on the rates for next year. If the Secretary of State denies that, will he give examples of rates for next year as a result of his statement?
The Secretary of State said in his statement that local authorities retain exactly the same freedom to reach their

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own expenditure decisions as at present. Is he aware that grant is no longer assessed on the basis of past spending patterns but on arbitrary spending patterns for local authorities laid down by the Secretary of State, regardless of real life in the areas that are affected? The Secretary of State has constructed a theoretical model to which he expects local authorities to conform, regardless of their obligations and problems. He assumes that every child is white, healthy, well-housed and living with both parents and that both parents are in work. He assumes that pay and inflation will fit into his pattern, and so much the worse for local authorities if they do not.
Will the Secretary of State, who has built into his grant announcement a 6 per cent. pay increase and an 11 per cent. inflation forecast, compensate local authorities if the 6 per cent. pay increase and the 11 per cent. inflation forecast are not met? Is he aware that his statement attacks all cities that are suffering from deprivation? He said in his statement that the recent drift of grant to London will be reversed. Is he aware that by doing that he is striking at the heart of inner London, whose problems are worse than elsewhere and will now be made even worse? He has appointed himself as commissar of local government. His edict for local government is higher rates than ever and fewer jobs and worse services than ever. His statement today is a recipe for social injustice and urban decay.
Mr. Heseltine: I shall try to answer some of the questions put by the right hon. Member for Manchester, Ardwick (Mr. Kaufman). He asked me to give examples of the rates that will be set by individual authorities. As I have constantly pointed out to him, local authorities have to decide their individual expenditure levels. Until they have fixed those levels, I cannot know what rate levels they will fix to meet them. However, I can tell the House that from the documents that are published today and are available to local authorities throughout the country, they will be able to calculate what they will receive in grant, depending on the level of expenditure and the rates that they decide to achieve. They have a certainty as far as we in the Government are concerned. As a result of the documents that have been published today, they can make their calculations.
The second charge that the right hon. Gentleman made was that somehow or other the system and the concepts with which we are dealing in respect of the new arrangements are decided behind closed doors. When he has a chance to go to the Vote Office and to the Library, he will find there a detailed and comprehensive explanation of how we have achieved a service-by-service breakdown of the allocation of £9 billion in taxpayers' support. That contrasts markedly with the practice of the previous Government in reaching decisions behind closed doors, with an arbitrary selection of factors that had little to do with the real service provided by local government and much more to do with the political objectives of the party in power.
As to the question whether the 6 per cent. or the 11 per cent. components of the cash limits will be enhanced if there is an increase in those figures on the outturn, the answer is "No". If I were to say anything else, it would prejudice the ability of local government to calculate entitlements under the grant system. I am intrigued to listen to the right hon. Gentleman talk about the hardship
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that will arise in local government as a result of the changes that are taking place. I happened to look up the figures for local authority employment when the right hon. Gentleman served in the Department of the Environment. He will be pleased to hear that there are 16,000 more people in social services today than when he was in the Department. In recreation and parks there are 2,000 extra people; in housing there are 7,000 extra people, and in town and country planning there are 400 extra people. I do not see how he can describe that as a social disaster.
Mr. Kenneth Lewis: My right hon. Friend will appreciate that until we see the effect of this announcement on our individual councils we are not sure what the result will be. Will he, therefore, assure me that councils that have not overspent in the past but have taken full account of the need for economy will not be unduly hit? If some councils are hit, regardless of the fact that they have not been overspenders, will my right hon. Friend arrange for some of the obligations that have been placed on them by this Parliament to be relieved for some time in order to help them through the coming year?
Mr. Heseltine: I fully understand that all hon. Members will want to look at the precise effect on their constituencies and the authorities within them. That is why the rate support grant is not normally the subject of an oral statement, because right hon. and hon. Members want to see it before the traditional debate takes place.
I have tried to protect the worst effects of the conclusions underlying this year's grants with safety nets at two stages in the calculations. I have also introduced the most comprehensive attempts to measure the needs of individual authorities, and I have set out for the House and for local government at large the way in which that is being done. For many local authorities, this is the first time that any real attempt has been made to measure independently the realistic levels of spending that they should achieve. I believe that when the House considers the details it will find that this is a helpful advance.
Several hon. Members rose—
Mr. Speaker: Order. I remind the House that the main business of the day is Supply and that the subject for debate is steel. It was indicated clearly in exchanges last week that the Opposition lay great stress on this debate. There is another statement to follow this one. I therefore propose to allow questions on this statement to continue until 4.15 pm, which is a reasonable run. I cannot call every hon. Member who wishes to speak. Afterwards, we shall return to the Welsh statement.
Mr. Alton: Will the Secretary of State please explain how he intends to discharge the responsibilities that are laid upon him by the Local Government, Planning and Land (No. 2) Act to consult local authorities before making these orders and before making a statement on the block grant settlement? Further, will he tell hon. Members what advice he has for ratepayers in Liverpool who, as a result of this statement, will have a further £2 million reduction in their rate support grant settlement? Is he aware that it will mean more rate increases, more unemployment among local authority workers and bankruptcy for small firms, which will not be able to pay the massive increases in rates?
Mr. Heseltine: The hon. Gentleman might want to study the documents that are available. He will remember

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that a 1 per cent. reduction in the grant available means 2.6p for ratepayers at large. The hon. Gentleman will want to take that into account in relation to both his area and the country as a whole. It is demanded that I should have consultations with local authorities. Although controversial, there have been the widest consultations. I shall meet the local authority associations immediately after this debate. I have two difficult obligations: to consult the House and to consult local government. In these circumstances, it seemed appropriate to make a statement to the House first and to have a formal meeting with local government representatives immediately afterwards.
Mr. Kenneth Baker: Is my right hon. Friend aware that the Opposition spokesman for the environment is one of my constituents? Is my right hon. Friend further aware that as a resident of Westminster the right hon. Gentleman will not fare too badly as a result of this rate settlement? He is the resident of a borough which, despite considerable pockets of poverty, has conducted its affairs for the past few years both prudently and responsibly.
Mr. Heseltine: In some ways I sympathise with my hon. Friend. Apparently, we share the right hon. Gentleman. My hon. Friend will he aware that during the past few years there has been a significant shift of resources away from the urban and the rural provinces and towards London. In present circumstances, the broad effect is that about £300 million has been shifted to London. There is bound to be an effect when a system is introduced that depends on independent measurement rather than on the arbitrary decisions of politicians
Mr. Guy Barnett: Does not the right hon. Gentleman realise that previous Governments, both Labour and Conservative, have used the rate support grant mechanism as a means of compensating inner city areas for their massive social and environmental problems? Does not the right hon. Gentleman's statement demonstrate that he has thrown the White Paper entitled "Policy for the Inner Cities", which was issued by the Labour Government, straight into the dustbin?
Mr. Heseltine: I am glad to tell the hon. Gentleman that the total amount available for inner city policy under the urban development corporation and next year's urban programmes will be significantly higher than ever before. He will know that the programme has been significantly bent towards urban areas as a result of the housing investment programme allocation. He will also realise that the shift to London is not only towards inner London but on a significant scale towards outer London. I have had to consider whether one should take note of the result of measuring independent factors affecting the services provided by local government rather than the judgments made about where real need lies. The House will be able to judge for itself that once one starts to measure all the factors that underlie the specific services dealt with by local authorities one realises that a powerful argument can be made for distributing along those lines rather than in accordance with the judgments that the hon. Gentleman mentioned.
Mr. Peter Emery: Does not my right hon. Friend's statement mean that local authorities that have been economical will not have to see spendthrift councils receive a larger percentage grant than they were able to
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obtain? In addition, does not the statement mean that many of the county areas, which have been most unfairly treated during the past seven or eight years, will begin to see a balance between themeselves and the cities?
Mr. Heseltine: My hon. Friend is quite correct. As we examined the factors in detail, we realised the needs that county authorities often have to meet. It is important to proceed with the new system as a matter of urgency, because I have to cope with the fact that, as a result of their overspending patterns, a relatively small number of authorities persist in pre-empting an increasing share of the grant. In particular, this year I have had to claw back £200 million indiscriminately from the whole of local government in order to compensate for that overspending. I need new weapons to ensure that if there is an overspend next year I shall be able to allocate the penalties more specifically and not direct them at the whole of local government. Indeed, the bulk of local government tries to achieve the Government's objectives.
Mr. Ernest Armstrong: Does not the Secretary of State recognise that there is genuine concern throughout local government? Does he not accept that he is using his new weapons to transfer accountability away from the electorate and to his Department? That is where the decisions will be made. What advice can the right hon. Gentleman give areas such as Durham, where unemployment runs at 20 per cent. in some district council areas? Does he not realise that the district council has become the main employer? Are district councils to suffer further redundancies in order to meet his targets?
Mr. Heseltine: The right hon. Gentleman will want to consider the underlying assumptions for those areas. The House must realise that there is a relationship between the level of local authority consumption and the community's ability to provide the capital investment on which so many new jobs are bound to depend. Perhaps the most serious indictment of the Labour Party's record is that although it increased local government current expenditure by about £1 billion in constant money terms it reduced local government capital expenditure by half in the same period.
Mr. Tony Durant: Does my right hon. Friend accept that we welcome his statement despite the pained look of the hon. Member for Liverpool, Edge Hill (Mr. Alton)? It is right that the House should have a statement on this matter. Will my right hon. Friend bear in mind that industry feels that it has played its share and that it is time that local government considered its excessive payments and accepted some curbs on its expenditure?
Mr. Heseltine: My hon. Friend is absolutely right. This year particularly needed an oral statement to the House. However, hon. Members will realise that this is not the best subject for presentation in this form, because right hon. and hon. Members want to see the details before a debate. Local authority manpower has fallen by 2 per cent. since the Conservative Party came to power. The private sector, which has to pay the rates and taxes in order to finance local government, is suffering incomparably harder pressure as a result of our economic difficulties. There must be a balance in these things, and local authorities should recognise that.
Mr. Bruce Douglas-Mann (Mitcham and Morden): Do the calculations on which the right hon. Gentleman's

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statement is based have the backing of his Department, or are they like those contained in the White Paper reply to the report of the Select Committee on the environment, as alleged by this morning's issue of The Guardian? The Guardian alleges that the calculations about the effect of council house sales, repeated in the White Paper, are no longer accepted by the Department and that they had no adequate authority. Does the right hon. Gentleman accept that if the calculations on which Government statements are based no longer have the support of the relevant Department, the right hon. Gentleman's reputation in the House will decline even further?
Mr. Heseltine: The hon. Gentleman will be aware that I employ 47,000 people in the Department of the Environment. It is ridiculous to think that I can canvass the views of individuals in order to discover what a person thinks. My job is to take the advice provided by officials, to make a judgment on it and to account to the House. It is a most novel concept that the views of officials should be superior to those of Ministers.
Mr. Eldon Griffiths: Does my right hon. Friend agree that in addition to urban deprivation something called rural deprivation exists? Will he confirm that the new block grant formula will go some way towards redressing the balance? Rapidly expanding rural councils, whose authorities have sought to hold down expenditure, have been penalised because of excessive expenditure in urban areas that in some cases have had lesser needs?
Mr. Heseltine: My hon. Friend is correct, but he does not go as far as the realities of the case. Not only have those areas been penalised as a result of keeping down their expenditure; they have been penalised as a deliberate political act of the party in power. It is because our new system shows what the factors are, explains the route by which we allocate money and does so in public that it is a far greater protection for local government than anything that it has had before.
Mr. Kenneth Marks: Is it not true that the authorities likely to be hardest hit are the metropolitan districts, such as Tameside and Rochdale, which have the highest rate of increase of unemployment? Does the right hon. Gentleman agree that increasing unemployment means additional expenditure for councils, and has he used unemployment as one of his criteria?
Mr. Heseltine: Until we know the final allocation, which depends on the level of rates and expenditure chosen by local government, I do not want to give precise percentage figures. However, I take the hon. Gentleman's question as seriously as it deserves to be taken. The evidence is that, broadly, the distribution to the large towns and cities outside London will be in line with what it is today in percentage terms.
Sir William Elliott: Following the remarks of the right hon. Members for Manchester, Ardwick (Mr. Kaufman) and for Durham, North-West (Mr. Armstrong), does my right hon. Friend agree that in areas such as the North-East there are some authorities that have grossly overspent and some that have not? Will he confirm that his new criteria on heads of
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expenditure will apply equally and fairly over England as a whole, North and South, and to Conservative and Labour authorities?
Mr. Heseltine: I know how much my hon. Friend cares about and understands these problems. The methods that we have chosen and the factors, which are available to the House, are general rules, which will apply across the country and to all authorities. It will not be possible for a politician to change those factors without accounting in public for what he intends to do. My view is that there will be the widest and most profound debate about the scale and quality of services provided by local government that we have ever had. It will focus not on the assertions of individual authorities about how well they have done or about their need but on the facts of the services that they have to provide. That will be extremely helpful.
Mr. John Grant: Why does the right hon. Gentleman not admit that today's statement and the one that he made yesterday add up to the murder of inner city policy, particularly in respect of inner London? How does he equate that with the sort of statements that were made by Conservative Members in Opposition, particularly by the present Minister of Agriculture, Fisheries and Food? In addition, how does he equate it with the Prime Minister's statements about labour mobility? How will the right hon. Gentleman's statements help labour mobility?
Mr. Heseltine: I was interested to hear the questioning of my right hon. Friend the Prime Minister when I was waiting to make my statement. She explained the consequences of the economic policy that we inherited. I repeat that the Labour Government halved the level of capital expenditure by local government. That was a direct consequence of their incapacity to contain consumption. Until we get a better balance between consumption and investment, we shall go on with an ailing economy, which will never provide the wealth that alone can support the enhanced services that we want.
Sir David Price: Will my right hon. Friend accept that he has the unanimous support of the Government side of the House for his strategic aims but that many of us will have to remain agnostic until we see the details of what he calls his service-by-service appraisal? Will he ensure an opportunity for the House to discuss in detail the criteria upon which, it seems, everything will depend?
Mr. Heseltine: My hon. Friend is right to ask about the factors. They are available in the Vote Office and the library for consideration. I have always made it clear that in trying to move from the incomprehensible system that has hitherto governed the distribution of the rate support grant there were bound to be areas of controversy about the factors that we chose. My view is that we have made a considerable advance. In the course of the next 12 months, there will be a wide debate and we can see whether we have got each factor and each weighting right, in order to make such adjustments as seem appropriate next year.
Mr. David Watkins: What, if anything, does the Secretary of State propose to do to make good the loss of rate revenue caused to local authorities by massive industrial closures in, for example, County Durham?
Mr. Heseltine: I am aware of that problem. The Government are considering it and discussing it with, for example, the British Steel Corporation, although the difficulty is that, whereas there may be a particular concentrated problem of closures, it is an argument that spreads more widely when one faces industrial closures. We had that problem under the previous Government, just as we have it today. We are considering the matter. We do not think that the solution lies in the RSG system, but it is something that we want to look at.
Mr. David Mellor: My right hon. Friend will know that those of his hon. Friends who represent inner city areas appreciate the pressure on him to readjust Government support to local government, following years of partisan manipulation by the previous Government in favour of spendthrift Socialist authorities. However, can he reassure those of us from inner London that he has taken account of the problems facing local authorities such as Wandsworth, which was once run by profligate Socialist councillors but which for the past two years has been prudently and sensibly run and faces considerable financial problems in coming to terms with some of the announcements that have been made?
Mr. Heseltine: I sympathise with my hon. Friend. I realise that there is a 1 per cent. reduction in the grant and that I am adjusting backwards some of the massive shift to London that has taken place over recent years. That is hound to have certain consequences. I entirely agree with my hon. Friend that the fundamental assumption of so many inner city authorities that if they increase expenditure and rates they will improve the local environment does not stand up to examination. In fact, they drive more and more people and firms out of the area, thus aggravating the problems that they are trying to cure.
Mr. Jim Marshall: The Secretary of State said that the settlement announced today would permit rate increases of reasonable orders of magnitude. If that is the case, can he share with the House and local authorities his understanding of the words "reasonable rate increases"?
Mr. Heseltine: I considered the possibility of announcing an average figure and discussed it with local authorities, which are deeply concerned in the matter. The House will understand the problems. Last year, rate increases varied between 6 per cent. and 60 per cent. There is nothing gained in announcing an average figure between those two. All, that one does is sometimes to put some authorities with particular difficulties in an embarrassing situation, because they are likely to have to be above the average, and those which are minded to be below the average feel a pressure to trade up to it. It is more responsible to leave individual authorities to fix their own rate levels in the light of the judgments that I have announced. Of course, I must repeat what they have heard me say before, namely, that there is a direct connection between those rate levels and the overriding need to beat inflation.
Mr. Anthony Steen: Does my right hon. Friend agree that the Government side of the House is as deeply concerned about the plight of urban areas as are the Opposition? Does he agree that the real problem in our cities is no longer the inner areas but the middle and outer areas, where the people live?
Mr. Heseltine: My hon. Friend has made a study of these matters and I understand his concern on this issue. It is because we are trying to get away from the arbitrary allocation of money on the basis of expenditure and to move to an allocation on the basis of factors that can be measured that I believe that we are doing something that will be broadly acceptable to my hon. Friend.
Mr. Leslie Spriggs: Is the right hon. Gentleman aware that the St. Helens borough council area is having to meet increasing social and environmental needs coming in from other parts of the Merseyside area day by day? Why does he refuse to meet a deputation from the local authority, which wishes to discuss the matter with him?
Mr. Heseltine: I am sorry that I should appear to have overlooked the opportunity to meet the leaders of St. Helens for the third time since I took office. I have been to St. Helens to look and consider two questions—the Enterprise Trust, for which I have the greatest admiration, and the wish of the Countryside Commission to improve environmentally the outlying area. So I have had a very close relationship with the St. Helens authority and would have every wish, if possible, to maintain that.
Mr. Fred Silvester: Does my right hon. Friend agree that the new formula takes account of the special needs of urban areas? In particular, will he confirm that under the new system the city of Manchester will have the highest qualification for grant of any metropolitan district?
Mr. Heseltine: I think that my hon. Friend will want to look at the details, because it could be misleading for me to answer the question only in terms of the grant-related expenditure assessments that have been made. Related to that are the levels of expenditure, which may be significantly above the levels of the grant-related expenditure. Both sides of the coin have to be balanced before reaching a judgment about the performance of individual authorities.
Mr. Christopher Price: The right hon. Gentleman mentioned earlier the indiscriminate grant that has hitherto existed as between outer and inner London. Will he tell us of one thing in his statement that is calculated to benefit the very real inner urban needs of inner London? Will he further tell us whether his new arrangements for funding the Inner London Education Authority—which he might care to explain to the House—will mean a 14 per cent. cut in that authority's expenditure?
Mr. Heseltine: The precise implication of the education changes will be a matter for my right hon. and learned Friend the Secretary of State for Education and Science.
With regard to the hon. Gentleman's first and very relevant question about the needs of inner city authorities in London, I can think of nothing more likely to galvanise and change the prospects for those areas than an announcement by them that they intended to pursue a low rate increase policy. They would then attract back the jobs and people that they are losing in very substantial numbers.
Mr. John Farr: Although at the moment it is very difficult to assess the impact of what my right hon. Friend said, may I ask him to assure the House that

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he has respected the position of local authorities whose affairs have been economically and frugally conducted in the past, in the best interests of their ratepayers, and that they are not being disadvantaged by what he has told us today?
Mr. Heseltine: I think that my hon. Friend will want to look at the work that we have done. The difficulty with which we were faced in considering this task was that no one could make an objective assessment about the way in which individual authorities had been run, because there were no objective measurements for the needs of the individual authorities. This was particularly true at the shire district level. We have had to put forward for our own decision—and ultimately for the House to consider—a method of assessing the independent needs of each authority. The transitional period through which we are now going reflects the need to reconcile this independent measurement with the past levels of expenditure.
Mr. Stanley Cohen: During the course of his statement, the Minister indicated that a number of local authorities—if my recollection is correct, it was nine—are, because of their failure to comply with Government policy, likely to be subject to penalties. Will he extend to the House the courtesy of indicating which local authorities he had in mind?
Mr. Heseltine: I shall be very pleased to do that. They are Southwark, Haringey, Swansea, Newham, Manchester, Doncaster, Wandsworth and Merthyr Tydfil. Those were the original authorities—[Interruption.] May I give the answer to the question in my own way? Those were the authorities that were allowed out under the waiver about conforming to the—[Interruption.] I shall answer the whole question, if I may. Those were the authorities that qualified for the waiver that came from keeping their levels of expenditure more closely in line with the Government's budgets.
Islington, Newcastle-upon-Tyne, Hammersmith and Fulham, Afan and Sheffield then reduced the levels of their expenditure in order to qualify for the second waiver.
There are then nine authorities, the names of which I shall now give the House, which have so far not qualified for any waiver and thus are volunteering to pay the penalties provided by the legislation. Those authorities are
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Greenwich, Hounslow, Waltham Forest, Brent, Lewisham, Hackney, Lambeth, Tower Hamlets and Camden.
In case the House should have any doubts about what goes on in those authorities, I happen to have here a quotation from what was said by the local newspaper when the director of housing in Camden resigned. This is what it said as to why he and others were quitting:
"They have voiced blistering criticisms of council leaders and chief officers for running away from the need to cut Camden's overstaffed bureaucracy, whilst allowing services to decay."
Mr. Albert Booth: Will the Secretary of State accept that in view of the crisis facing very large areas of public transport it would have been much more appropriate if his right hon. Friend the Minister of Transport had made a separate statement to the House on the transport supplementary grant?
Is the Secretary of State aware that the figure that he gave for the transport supplementary grant contains within it a cut of 25 per cent. in the revenue support for South Yorkshire, and that this will be seen by many of us on the Labour Benches as a vicious, doctrinaire attack on the democratic right of that metropolitan authority to protect its own public transport services?
Does the Secretary of State realise that the figure that he has quoted also involves a cut of 10 per cent. in the revenue support grant for West Midlands, where passengers and public transport workers are already desperately worried about the prospective cuts in their services?
Finally, will the Secretary of State tell the House when we shall have an opportunity to debate both the rate support grant that he has announced today and the transport supplementay grant?
Mr. Heseltine: The right hon. Member knows full well that there is a debate on the orders. It will be arranged by my right hon. Friend the Leader of the House after Christmas, in the normal period. I imagine that if my right hon. Friend were to consult me I would suggest that there is a need to proceed quickly, so that local authorities have the certainty to which they are entitled. But there is a statutory provision about the number of days that have to elapse before these things can be dealt with in that way. I shall see that my right hon. Friend the Minister of Transport is made aware of the right hon. Member's views, but I remind him that I cannot remember a Minister responsible for transport in the last Government making a statement in the House on transport supplementary grants.

Rate Support Grant and Housing (Wales)
The Secretary of State for Wales (Mr. Nicholas Edwards): With permission, I wish to make a statement about the Welsh rate support grant settlement for next year and about housing finance.
This is the first time that there has been a separate RSG settlement for Wales. At the same time, this year's settlement sees the introduction of the new block grant system. My right hon. Friend the Secretary of State for the Environment and I have therefore thought it right exceptionally to announce to the House our decisions by way of oral statements on this occasion before I meet the Welsh Consultative Council later this afternoon.
The Government's decisions—in accordance with the policies already announced to the House by my right hon. and learned Friend the Chancellor of the Exchequer—have to take account of the essential economic requirements to reduce public spending, of which local government spending forms such a large part.
The most important factor in determining the total amount of Exchequer grant is the volume of local authority spending we are prepared to accept for grant purposes, which is termed relevant expenditure. Until now there has been no separate determination of the amounts of relevant expenditure and grant for England and Wales, and in the preparations leading up to this settlement we have had to establish separate relevant expenditure shares. This has involved a comprehensive review of expenditure programmes with other Government Departments, and I am satisfied that the results provide a fair basis for the start of the separate Welsh RSG system.
In deciding the amount of aggregate Exchequer grant for Wales, we have taken into account the average level of grant received by Welsh local authorities as a whole in recent years.
I announce first our decisions about housing rent subsidies and housing capital programmes. For rate support grant purposes, I am setting the increase in the local contribution for the purposes of housing subsidy at £2·95. In addition, local authorities have to meet housing costs which fall outside the subsidy system and on average these may require rent income of a further 30p per dwelling. The total resources available within my block for housing next year will be £158·6 million at 1980 survey prices—that is, in effect, November 1979 prices—of which £23 million will be available to the Housing Corporation and £87·4 million will be earmarked for local authorities. I am holding back from distribution £14 million to cover any possible overspend and to enable underspenders to have a further allocation when this year's final figures are known, provided that this year's cash limit is not breached. The reserve also covers pump priming for improvements for sales schemes. I am announcing today the housing capital allocations for individual local authorities at outturn prices, and the figures have been placed in the Library of the House.
Turning to the RSG settlement, I have decided to accept a total, at 1981–82 outturn prices, of £1,187 million for relevant expenditure. This figure is consistent with the level of expenditure set out in the last public expenditure White Paper as modified by the expenditure reductions announced by my right hon. and learned Friend the Chancellor of the Exchequer last month. It therefore
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provides for a volume of current expenditure which is broadly 3 per cent. below the level that local authorities were asked to achieve in 1980–81.
The second decision that I have to make is the grant percentage. As my right hon. Friend said earlier, the grant percentage, taking England and Wales together, is being reduced by 1 per cent. from the 61 per cent. level last year. In terms of grant for Wales next year, this works out at 73·4 per cent. The higher percentage of Government grant for Wales reflects the substantially lower rateable values in the Principality.
The aggregate Exchequer grant will therefore be £871 million at 1981–82 outturn prices. In calculating the cash limit within this figure, allowance has been made for a 6 per cent. increase in earnings on due settlement dates from 1 November 1980 and provisionally for the pay round starting in August next year. For non-pay items, allowance has been made for an increase of 11 per cent. between the average levels for 1980–81 and 1981–82. Within the aggregate Exchequer grant, specific grants are estimated at £85·14 million, the transport supplementary grant at £40 million and the national parks supplementary grant at £1·36 million. This leaves £744·5 million for the rate support grant itself, including the domestic rate relief grant.
For 1981–82, I have decided that for the first year of the new block grant system it would be sensible to maintain the domestic rate relief at its present level—36p in the pound.
I turn now to the amount of money to be distributed to local authorities in Wales through the block grant—£696·7 million. I do not propose to go into any great detail about the new block grant system itself since hon. Members are familiar with the basic principles involved and can study the details from the Welsh rate support grant report that I am laying today.
The principles underlying block grant are, of course, the same in both England and Wales, although there are some differences in the detailed arrangements for Wales to take account of our particular circumstances and of views expressed to me by the Welsh local authority associations. The new system will ensure that authorities that increase their expenditure do not just do so at the expense of others but that the consequences of the decisions are in large part borne locally.
There will be some substantial changes arising from the move to the new system based on a current assessment of need rather than on a system based on the past patterns of expenditure, and I have decided to moderate these by applying safety nets and a ceiling on grant gains to provide protection for individual authorities and ratepayers. I must make it clear, however, that the safety net will not provide protection against the expenditure decisions of individual authorities. Expenditure decisions remain the responsibility of individual local authorities, which, in setting their rates, must consider the effect on ratepayers at large, including, of course, industry and commerce.
I have confidence that local authorities will continue to respond to Government targets as they have in the past. The efforts already made by local authorities in Wales to reduce their manpower and expenditure are encouraging, as the Manpower Watch figures published today, showing an annual reduction for general services of 3·8 per cent. with a 1·5 per cent reduction in the last quarter, prove. Nevertheless, sustained efforts will continue to be required if expenditure is to be brought down to our targets. I urge

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every local authority, every councillor, to ensure that the Government's volume reductions are achieved and that rate increases are kept to the absolute minimum.
Mr. Alan Williams: Does the Secretary of State accept that those who represent Welsh constituencies feel cheated that he has chosen today to make three major devastating policy announcements in one statement—massive rate increases, enormous rent increases and crippling council house building cuts—when even the Secretary of State for the Environment, who has an unenviable record for seeking to evade the scrutiny of the House, had the decency to break them down into two separate statements? Is he aware that in confining Welsh Back Benchers to one supplementary question on these three major policy decisions he will be seen in Wales as running away from parliamentary scrutiny and criticism?
Does the right hon. Gentleman realise that his statement inevitably means brutal increases in council rents and rates and that the further £19 million cut on top of already vicious cuts in house building in Wales will mean less or even no hope for those on already extended council house waiting lists? Will he confirm that the £3·25 council house rent increase is purely rent and does not fully measure the increase that the council tenant will face, because he will have to face the rate increase in addition? Therefore, the council tenant is being singled out for double misery today.
Does the right hon. Gentleman admit that rebates to those on lower incomes will at best only partially ameliorate the impact of these increases and that part of the cost of these rate and rent rebates will add to the local rate increases that will be required?
Will the Secretary of State explain how it is realistic to ask tenants or house owners to accept the 6 per cent. pay rise to cover increased national insurance charges, increased rates by possibly up to 30 per cent. and the increase of £3·25 in council house rents, plus a full year's inflation?
Is there no limit to the humiliation and misery that the Secretary of State feels must be imposed on Wales in the name of Tory dogma? Is not the destruction of our industry enough for him? Why must we lose more Government money?
Will the right hon. Gentleman confirm that the 3 per cent. cut envisaged in the statement, when added to the revised 3 per cent. for this year, will mean a cut of about 6·8 per cent. in councils' programmes? What great Tory purpose is being served by cutting services to the elderly, the disabled and the young?
Will the right hon. Gentleman confirm that if Welsh authorities try to make up the cuts from Government grants they will need a 3 per cent. increase in the domestic rate for each 1 per cent. cut in Government grant and that that will therefore mean a 10 per cent. increase in domestic rates—higher than would be required in England?
Because of the extra costs imposed by the Government on social services departments by unemployment, on education by youngsters staying on for higher education and the rate and rent rebates, will not local authorities need an extra £30 million and not a cut? Will the right hon. Gentleman confirm that the 6 per cent. cash limit alone will mean the cutting of 1,000 teaching jobs in Wales?
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Will the right hon. Gentleman frankly admit that this whole package boils down to administering another twist in the monetarist deflation of an already collapsing Welsh economy? Finally, will he confirm that this can only mean more unemployment and that it therefore gives the lie to the Secretary of State for Employment, who, in an interview on radio today, blamed the fact that unemployment will continue to rise on everyone but the Government?
Mr. Edwards: It is a bit cool for the right hon. Gentleman to criticise me for making too few statements on this subject in the House when his Government never came to the House and made a statement about the RSG. As my right hon. Friend the Secretary of State for the Environmnet had to deal with three other major items in housing statements, I think that that explains why it was felt that an extra statement was needed.
The right hon. Gentleman talks about crippling cuts in house building. He knows about crippling cuts in house building programmes because the previous Government, in the four years that they were in power, cut capital programmes on housing in Wales by £110 million. The cuts in our first three years amount to £44 million. He is not one to talk about cuts in capital programmes.
The right hon. Gentleman talks about rent increases. We debated the issue of rent increases in full last week in the Welsh Grand Committee. I have no need to add to what I said then, except that it was the deliberate policy of the right hon. Gentleman's Government to switch resources into consumption and into subsiding rents, and to remove them from capital programmes and the maintenance of our derelict housing stock in Wales. That seems to me to be a totally false sense of priority, particularly when one takes account of the fact that 46 per cent. of local authority tenants in Wales will receive rent rebates of one kind or another, that about 25 per cent. will pay no increase at all and that almost as many will have some 60 per cent. of the increased burden carried for them.
I confirm that a percentage cut across the board has a higher poundage effect in Wales—5·5p as against 3p—for the obvious reason that Wales gets a very much higher level of grant support to meet its expenditure than does England.
The right hon. Gentleman's final point concerned the effect on unemployment and industry. I well understand that it is the policy of the Opposition Benches to seek to add to the burdens of industry by adding to public expenditure and by urging local authorities to increase rates. I hope that local authorities will have a greater sense of responsibility and will realise that the greatest contribution that they can make to industry in their areas is to cut their expenditure and to reduce their rate bills.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions on this statement to run until 10 minutes to five in order that we can get on to the main debate.
Mr. Geraint Howells: Today's statement is another setback to the Welsh economy. Will the Secretary of State clarify two matters? Will his statement affect the rural housing programme in any way? If those in the public sector will not accept a 6 per cent. pay rise, where will the excess money come from?
Mr. Edwards: As we have indicated, the housing programme is being reduced. That will affect housing

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programmes right across Wales. Individual local authorities will have to decide on the exact level of their programmes within the total allocations that I am making.
As to the 6 per cent. figure, we have made it clear that this is a cash limit. If any individual claim exceeds that limit, local authorities will have a choice between reducing the manning levels or services and increasing rates. I hope that if they consider the latter option they will realise the damaging effect that that has on industry. I hope that they will continue the encouraging progress to reducing the record manning levels which we inherited when we came into office and that they will concentrate on that rather than on reductions in services or increases in rates.
Sir Raymond Gower: Is it not a fact that the conclusions reached by the right hon. Member for Swansea, West (Mr. Williams) are not to be substantiated in advance of decisions to be reached after mature consideration of all the factors by local authority members and their officers? Therefore, is it not hasty to reach such conclusions at this early moment?
Secondly, in the context of an industrial-economic world which is in such terrible trouble, in which even the Communist countries are now facing economic crises of some magnitude, and in which the Arab States are now contemplating yet another very large increase in oil prices, is it not a fact that not only must our industry be much more effective and efficient, but that our local government must become much more efficient, too?
Mr. Edwards: My hon. Friend's point about efficiency will be well understood by most ratepayers and those who receive local authority services, because they all know perfectly well that there is room for substantial improvement in the efficiency of many local authorities. I confirm what my hon. Friend says—that the decisions about expenditure and about rating levels rest with the local authorities. Therefore, it is ludicrous to make general forecasts about rating levels until we have given them a chance to consider those decisions. But there is absolutely no reason to think that the general rise in rates will be up to last year's level.
Mr. D. E. Thomas: Will not the Secretary of State understand that those of us who represent Welsh constituencies, and certainly Welsh local authorities, are certain that the aggregate Exchequer grant which he has obtained for Wales is totally inadequate to meet the needs of Wales by any social indicators—housing, education, personal social services or the incidence of low income in Wales? Does not the right hon. Gentleman accept that it is intolerable for tenants of local authority housing in Wales to be subjected to exactly the same rent increase as those in England, when the level of personal wealth and the level of supplementary benefit and social security take-up in Wales is 20 per cent. higher and the level of income is that much lower?
Will the right hon. Gentleman confirm that his figures for the percentage of persons receiving rent and rates rebates in Wales who might qualify are potential take-up figures rather than actual take-up figures? Of those persons who would be eligible, how many qualify and take up these benefits? Will he understand that there is a substantial gap between those who are eligible for these
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benefits and those who take them up? Does he accept, therefore, that by placing emphasis on this matter he is increasing the deprivation of rentpayers in Wales?
As regards the housing allocation, will the Secretary of State admit that our debate on housing in the Welsh Grand Committee last Wednesday was a charade? He must have known these figures and that he would be coming to the House to ensure a cut to the lowest possible estimate, the lowest option, of the Housing Corporation grant, and he is also holding back £14 million—
Mr. Speaker: Order. The hon. Gentleman is continuing for so long that he has already cut out one other hon. Member. He might come to a conclusion.
Mr. Thomas: Will the Secretary of State accept that the £14 million which he is now holding back on Welsh housing will induce local authorities to underspend?
Mr. Edwards: I note what the hon. Gentleman says about the aggregate Exchequer grant, but I also note that the United Kingdom authorities are protesting to my right hon. Friend the Secretary of State for the Environment that the aggregate Exchequer grant given to Wales is excessive. I suspect that, if the attack comes from both sides, the Government may have got the balance about right. I am satisfied that on any criterion of past spending and, indeed, on the detailed reassessment of individual programmes that we have done, which takes account of recent factors and not just recent average receipts, we have dealt very fairly by Wales.
The hon. Gentleman talks about people on social security. As I have said, 46 per cent. of tenants in Wales will receive rent rebates of one kind or another, and, as I pointed out to the Welsh Grand Committee last week, the average industrial wage in Wales is £110. I do not believe that the rents about which we are talking are excessive for people at that level. If the hon. Gentleman says that not everyone is taking up the benefits to which people are entitled, clearly, if they are entitled to them, they have every right to take them up.
The reason why I am holding back the £14 million at present is that I wish the underspending authorities this year not to be penalised but to have the opportunity to spend this programme, which we are carrying over into the next year, so long as the cash limit is not broken. If and when I am satisfied that they are within the cash limit, and the total has been spent, I shall make the money available to the underspenders in Wales, and they will have every opportunity to spend it in the coming year.
Sir Anthony Meyer: Is my right hon. Friend aware that there will be gratitude in Wales for the way in which he has managed in the Cabinet to shield Wales from the worst consequences of the cuts that have necessarily been imposed on us by the economic situation? Is it not now clear that it is up to the local authorities to shield their ratepayers from the worst impact of the necessary economies by ensuring that they fall on administration and personnel rather than on services?
Mr. Edwards: I thank my hon. Friend for his remarks. My right hon. Friend the Secretary of State for the Environment said that the cut amounted to 3·1 per cent. in England. There is a smaller cut —2·6 per cent.—in Wales. That shows that we have taken special account of Welsh problems. The cut in Wales of total Government finance for housing has been less than that for England.

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My hon. Friend is right to urge the local authorities to improve their efficiency and prune their administration rather than cut services or increase rates.
Mr. Ioan Evans: Since Wales has suffered more than any other part of Britain from increasing unemployment, should not the right hon. Gentleman have argued to exempt it from cuts in local authority services and housing? Will he inform Wales that it is he who is responsible for those cuts, not the local councillors? What special regard will he have for the authorities which have lost in their areas factories and companies which have closed directly because of Government policies? What can he offer them to make up for the consequential loss of rateable value?
Mr. Edwards: As a result of the changes we have introduced, there will be a far quicker response to the changes in rateable values. Hitherto, local authorities have had to wait for up to two years for those changes to be taken into account. I am basing rateable values on the November period, which means that the adjustment will be made in the course of the financial year. The authorities will therefore receive grant and make their decisions on the basis of a current assessment of rateable value, taking account of the closing and opening of plants, not of a calculation that is many months out of date. I know that local authorities will welcome that change.
Mr. Keith Best: Is my hon. Friend aware that his maintenance of the domestic rate relief of 36p is to be welcomed? Will he make it clear that local authorities can substantially ameliorate their financial position by increased sales of council houses? We appreciate that one of the inequities of the previous rate support grant system was that wasteful authorities could use their expenditure as a base for future central Government grant. Is my right hon. Friend optimistic, however, that that will not be the case in the future? Will he make sure that never again will local authorities be able to criticise the Government for not listening closely enough to the needs of local government in taking account of individual factors in those local authority areas which are directly responsible for providing criteria for Government subsidy?
Mr. Edwards: I can confirm that all the factors have been arrived at after careful consultation with the local authority associations. It was right in this first year to maintain the 36p domestic relief. It is within the power of the local authorities to augment their receipts by the sale of council houses, and I hope that those which are doing so will continue to do so and that those which are not will begin. I also confirm that the old system meant that those that were wasteful or extravagant penalised the prudent. That can still happen during the transitional period while we are applying the safety nets. By protecting the high spenders against sharp changes, we clearly do not provide the same benefits to the prudent as we should in the absence of safety nets. However, as we move to a position in which there is not full protection, those prudent local authorities will be better provided for than they have been in the past.
Mr. Donald Coleman: Is it not clear from today's exchanges that the Conservatives are unaware of
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the dismay that will be felt in Wales by those who are affected by local government services at what the Secretary of State announced? That applies especially to housing and transport, particularly transport for those who live in the remoter parts. Will not the continuing attack on local authority housing mean that many people in Wales will be not only jobless but homeless?
Mr. Edwards: The hon. Gentleman speaks of dismay. I believe that there will be pleasure that we have taken a fair share of the total England and Wales division this year and that we have suffered a smaller cut than has been imposed on England. There will be pleasure that I have been able largely to protect the spending programme of, for example, the Housing Corporation and that I have been able to maintain the 36p domestic relief. All these points will be matters for congratulation, not condemnation.
Mr. Delwyn Williams: Does my right hon. Friend agree that the new block system will militate against rural areas just as much as the old system did? Will he give an assurance that he will liaise with the local authorities and revise this pernicious system as soon as possible?
Mr. Edwards: The detailed assessment of the factors of need which have been discussed with the local authorities has produced a result in my hon. Friend's part of Wales—in Powys—broadly similar to the old system. It has not produced any dramatic changes. That may go to show that the old system was not as far out as some people have argued. However, the local authorities feel that there may be room for further refinement to deal with the particular problems of Powys, and they have asked us to examine the whole matter again during the coming year. We shall be consulting the local authorities generally about Powys then.
Mr. James Callaghan: On the deteriorating housing situation, did the Secretary of State watch that tragic programme last Friday on BBC television introduced by Vincent Kane which showed the appalling housing conditions in Beresford Road and Moorland Road in Cardiff which have come about partly as a result of an ill-fated road widening scheme that was never proceeded with? Did he hear, and if he did not will he check, that the chairman of the housing committee, Councillor Herbert, said that he had £500,000 available for improving these conditions but that the Secretary of State for Wales was denying him permission to use it?
As that programme must have awakened the consciences of many people who did not know the circumstances in which these awful housing conditions were being perpetrated, will the right hon. Gentleman give immediate consent for the money to be spent and the plight of these miserable people improved?
Mr. Edwards: Of course, I shall look at the point made by the right hon. Gentleman and carefully examine his representations. If the conditions are generally as he describes them, one wonders why his Government cut £110 million off capital programmes over the four years and why they wasted so much money subsidising council tenants who did not require the subsidies instead of concentrating it on the real areas of need such as the right hon. Gentleman has just described.
Mr. James Callaghan: Does not the right hon. Gentleman realise that, although these party points can be

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made across the Floor of the House, the simple truth is that the chairman of the housing committee says that he has £500,000 available now? He is seekinng only the permission of the Secretary of State. We can have the party debate afterwards, but I ask the right hon. Gentleman please to get on and improve the houses.
Mr. Edwards: I have told the right hon. Gentleman that I shall look at the specific point that he has made. But, as he has given a vivid description, it is perfectly fair—and I do not apologise for it—for me to indicate that responsibility for the condition of the housing stock in Wales is shared with the previous Government.
Mr. Barry Jones: In the Minister's depressing statement today, are not the cuts in the council house building programmes and the large increases in rents and rates likely to put an even greater strain on the social fabric in Wales? Will they not make it more difficult to weather the storm of rising unemployment in Wales? Should not the right hon. Gentleman be ashamed of his statement?
Mr. Edwards: In order to ride the storm of rising unemployment, we must switch resources into productive industry and help to create jobs. By arguing for the maintenance of high spending on consumption, the hon. Gentleman is actually damaging the economic recovery for which he pleads.

Business of the House
Motion made and Question proposed,
That, at this day's sitting, if proceedings on the Motions in the name of Mr. Nigel Lawson relating to Civil and Defence Estimates have not been disposed of by Ten o'clock, Mr. Speaker shall proceed, notwithstanding the provisions of paragraph (2)(c) of Standing Order No. 18 (Business of Supply), to put forthwith any Questions necessary to dispose of the said Motions.—[Mr. Jopling.]
Mr. John Bruce-Gardyne: I understand, Mr. Speaker, that the motion is debatable.
Mr. Speaker: And I have proposed the Question. The Question is the business motion.
Mr. Bruce-Gardyne: I am most grateful, Mr. Speaker. I shall not delay the House for many minutes, probably not much longer than the right hon. Member for Swansea, West (Mr. Williams) with his supplementary question on the statement of my right hon. Friend the Secretary of State for Wales.
As I have said before, I believe that we should not take with great equanimity our procedure for voting these enormous Supplementary Estimates on the nod, which is the prospect that we face once again tonight. I hasten to say, Mr. Speaker, that there is not a word of criticism of the Chair in my remarks, because I realise perfectly well that you have no choice in these matters, but the House needs to look hard at this procedure. I understand that tonight, once again, we shall be asked to vote £2¼billion of winter Supplementaries which for the most part have never been debated or explained in any shape or form. I do not think that that is at all satisfactory.
Among other items in the Supplementaries is provision for yet another overspend on cash limits by the Ministry of Defence. That is a particularly large item. We were told the other day by my right hon. Friend the Secretary of State for Defence that cash limits were not an appropriate discipline for the Ministry of Defence. That may be true, but I submit to the House that, it would be much more satisfactory if, before we had to vote these massive sums of Supply, we had an opportunity to hear from my right hon. Friend the Secretary of State for Defence what alternative discipline on the housekeeping of the Ministry of Defence would be more suitable. It would be entirely germane to hear from the Ministry on the subject of the Supplementary Estimate that is before us tonight.
My right hon. Friend the Leader of the House responded most considerately to the pressures which I and other hon. Members have put with regard to the way in which we vote Supply by announcing his intention to establish a Procedure Committee to look into the way in which we handle Votes on Supply. That is eminently satisfactory, but I am bound to say that one would be interested to know what exactly has happened to it. We were promised that new Procedure Committee during the summer. We are now back to the winter Supplementary Estimates, and it has still not been set up.
I fear, therefore, that we face the prospect of being asked tonight to vote this enormous sum on the nod, and when the spring Supplementaries come round in three or four months it looks to me alarmingly as though we shall also be invited to vote them on the nod. That is not good enough.
From what my right hon. Friend the Leader of the House said last week—no doubt he will correct me if I am wrong—I formed the impression that it is the Opposition,

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who, God knows, have other problems on their hands, of which we are all aware, who have been so dilatory as to delay the establishment of the Committee. That is deplorable. We have lingered on with this procedure for far too long. The House does not subject these enormous sums of public expenditure to proper scrutiny. We need to set up the Committee right away so that it can work quickly. As the Leader of the Opposition is here, I am bound to say to him that he might be better employed in helping urgently to establish the Committee than in some of the rather ludicrous activities in which he is at present engaged in the manipulation of his Front Bench.
The House must come to a decision on these matters soon. I for one—and I should like to hope that others, too—am not prepared indefinitely to accept the proposition that we should agree to motions to allow this business to proceed without any scrutiny at all. Unless we have made progress by the time this issue next comes forward, I shall certainly seek to divide the House against the business motion.
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): I am grateful to my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) for raising this matter in his usual trenchant way. I congratulate him on his persistence in pursuing a matter which is of vital importance to the House of Commons. It was as a result of his activities and those of a number of other hon. Members that I announced that it was the Government's intention to appoint a Procedure Committee to consider this matter urgently and to make a report to the House so that we could act speedily, consider the proposals and see what could be done to improve our procedures.
I have been nagging—I think that that is the right word—Opposition Members to get the Committee appointed and names put forward. I fully realise that the Opposition have been in difficulties because of Shadow Cabinet elections and also because they have had to appoint other Front Bench spokesmen. Therefore, there has been some delay. But that election, for good or ill, has now been accomplished, and the second rank of "shadowy Ministers" has also been appointed. Therefore, there is no reason why we should not go ahead, and, provided that the usual channels act with even more than their usual expedition, I hope that we shall be able to put down a motion to appoint the Committee later this week.
Mr. Michael Foot: I am quite happy that the Committee should be appointed. We hope that it will proceed with its work with considerable speed. The hon. Member for Knutsford (Mr. Bruce-Gardyne) was fully entitled to raise this matter, just as many of my hon. Friends have raised it on previous occasions. I hope that the House will be able to secure a satisfactory settlement.
Question put and agreed to.
Ordered,
That, at this day's sitting, if proceedings on the Motions in the name of Mr. Nigel Lawson relating to Civil and Defence Estimates have not been disposed of by Ten o'clock, Mr. Speaker shall proceed, notwithstanding the provisions of paragraph (2)(c) of Standing Order No. 18 (Business of Supply), to put forthwith any Questions necessary to dispose of the said Motions.

Orders of the Day
  SUPPLY
  [2ND ALLOTTED DAY]—considered

Steel Industry
Mr. Deputy Speaker (Mr. Bernard Weatherill): I should inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
4.59 pm
Mr. Stanley Orme: I beg to move,
That this House, appalled by the indifference of Her Majesty's Government to the rapid decline in the United Kingdom's manufacturing base and aware that a strong national steel industry is essential to the United Kingdom's industrial recovery, calls upon Her Majesty's Government to provide the resources necessary for an expanded programme to stop an immediate heavy loss of jobs and a highly damaging reduction in capacity.
Once again, the House is debating the crucial issue of the British steel industry. The future of that industry and its survival and well-being are essential for the whole British economy. We shall want to look in more detail at the Government's general approach and their failure to tackle the dramatically reduced industrial base and increasing unemployment, all of which are based on theories which, when put into practice, have failed. We must ask—I put it to the Government—whether we want a viable steel industry. If the answer is "Yes"—and we say that it is—the monetarist and free market policies of the Government have not worked, are not working and will not work.
The corporate plan was presented to the Government by the British Steel Corporation last Friday. We make no apology for wanting to debate this issue at an early date before the Government come to any decisions and present the House with a fait accompli. Mr. MacGregor's corporate plan calls for
"A cut in the Corporation's manned liquid steelmaking capacity from 15 million tonnes to 14·4 million tonnes a year. A further reduction in personnel of at least 20,000."
Those proposals have been interpreted in some quarters as moderate and not as drastic as forecast. But what does 20,000 redundancies mean on top of the 47,000 jobs that have been lost in 1980? What does it mean to the areas that are earmarked for closure and rundown? An argument that the Secretary of State might understand is that the loss in financial terms alone arising out of 20,000 unemployed people will be nearly £100 million on the public sector borrowing requirement in one year, quite apart from the human misery which such umemployment creates.
What are we faced with in the corporate plan? Normanby Park will be closed. Appleby-Frodingham No. 1 rod mill will be closed. There will be more closures at Ebbw Vale and Templeborough. Coking capacity will be reduced by closing ovens at Shotton and Hartlepool. Many other cuts and closures are forecast in the corporate plan. Yet that corporate plan is only phase 1. There is no guarantee that further cuts will not take place. In fact, in the proposals that I have received—incidentally, not from the Secretary of State—there are other forecasts. Let me quote directly from the corporate plan itself. It says:
"Further closure options were considered, particularly in Strip. However, it was decided that they should not be implemented,

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at least for the time being, in an effort to determine whether planned costs and market objectives could be achieved with the co-operation of employees".
That is a direct threat that further closures will probably take place.
Is the corporate plan as proposed by the BSC the answer to the current crisis in the steel industry? A cutback to 14·4 million tonnes, will leave a gap in capacity of 7 million tonnes which will be needed when industry returns to normal production. What will fill that 7 million tonnes gap? It will be filled by imports.
The Secretary of State for Industry (Sir Keith Joseph): Will the right hon. Gentleman explain from where he got the figure of 22 million tonnes? I do not know whether I missed it in the earlier part of his speech.
Mr. Orme: The 7 million tonnes represents the gap between the 14·4 million tonnes, as forecast by the BSC, and the forecast of 21 to 22 million tonnes which will be needed when there is an upturn in the economy and we have full employment. That is the figure which I have been given, having discussed the matter with the industry. Perhaps the Secretary of State will comment on it further.
Several Hon. Members rose—
Mr. Orme: I must continue at this stage, but I may give way later.
The present situation in Britain must be seen against the current economic situation that is affecting many of our international competitors. No steel industry is having an easy time, but the situation is worse in Britain than it is in any other advanced country because of the Government's policies. That is the reality. We must also face the fact that some of our competitors are receiving substantial subsidies, be it in terms of transport, energy, coking coal or reconstruction support. It is worth noting that Germany subsidises coking coal to the tune of £135 million. As the corporate plan states, the loss to the corporation in energy charges, which puts it at a disadvantage in relation to other European competitors, is between £50 million and £70 million. Perhaps the Secretary of State will say something about the representations in that regard which Mr. MacGregor has made to him.
Therefore, the British steel industry must be protected. If we allow market forces to operate in isolation against this industry, we shall end up with no major British steel component and we shall be solely dependent upon imports.
I should like to quote from the letter which Mr. MacGregor this week sent to all BSC employees. He makes three crucial points. First:
"Reduce capital investment on essential items. This is not something we want to do or would do if the situation were not drastic, but we have no choice".
He adds:
"High interest charges on our heavy borrowings help to make our prices uncompetitive".
He also makes this point:
"There are more than 2 million unemployed in Britain, and as a result, the demand for our steel in our own home market is down because industries are not using as much steel. Some of our best customers—British Leyland and British Shipbuilders for example—are in serious trouble and needing much reduced tonnages of steel "
That is not the view of the Labour Party. It is Mr. MacGregor talking. In effect, he is condemning the Government's policies. The inference is that each industry
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in this country is being regarded separately by the Government. There is no industrial strategy. They do not regard the basic industries of coal, mining and railways as an entity, which they should do in the present economic circumstances.
The steel industry has already been dramatically slimmed. Out-of-date and unproductive areas have gone. It is a crime to make further cuts in areas where there is new plant and high productivity. What happened at Consett, in my opinion, should never have been allowed.
Mr. David Watkins: I appreciate the point that my right hon. Friend makes. I reiterate what I have said in many previous debates in the House. The act of shutting Consett was an act of industrial vandalism. It was not an old-fashioned and unproductive works. It was a works which, with the full co-operation of the work force, had been made profitable and highly productive. That work force was betrayed.
Mr. Orme: I thank my hon. Friend for underlining the point I was making.
We recognise that some slimming took place under a Labour Government, but no redundancies were created without consultation and without agreement and without the Labour Government having preparations already on the floor. That is true of Ebbw Vale and many other areas. What preparations is the Secretary of State making in the light of the 20,000 or 47,000 jobs that have gone this year?
I want to turn to the effect of the 13-week steel strike, which has some bearing on the proposals that Mr. MacGregor has made. The effects of that strike included a financial loss of over £200 million, increased imports to the value of £300 million, an export loss of £100 million in the first quarter of 1980, a loss of the United Kingdom market share, which fell from 54 per cent. to 48 per cent., and embittered industrial relations.
The result of that strike and the consequences lie firmly at the door of the Secretary of State for Industry and the Prime Minister. The Secretary of State must accept the major responsibility. As the Granada "World in Action" programme showed, he intervened directly with a proposal that there should be a zero increase. That came out in the "World in Action" programme. The right hon. Gentleman has not condemned it publicly. He told the House day after day that he was not intervening or interfering in the steel dispute. My hon. Friends representing the steel areas who are present in the Chamber today pressed the right hon. Gentleman and the Prime Minister week after week on this issue and never got a straight answer. In consequence, the Secretary of State must bear a heavy responsibility.
That situation cannot be divorced from the present position, the current wage claim and the threatened six-month freeze on salaries and wages. I put this question directly to the Secretary of State. What proposals are contained in the corporate plan, or what assessment has been made for wages in 1981? There must be an assessment. The corporation cannot come to any fiscal or economic judgment without taking into account the pressure that would come from a wage increase.
Is the Secretary of State aware that the proposed further redundancies, the proposed wage freeze and the Government's lack of confidence in the industry will have a disastrous effect on the morale of the workers within BSC? Is he aware that industrial relations are at their lowest ebb in the industry, which had not had a strike for

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53 years and which previously had good industrial relations? It is no good Mr. MacGregor saying in his statement:
"The Plan makes it clear that its success depends on critical factors: The co-operation and dedication of BSC's entire workforce including the management."
It is obvious that without the co-operation of workpeople at all levels the success needed cannot be achieved.
I can tell the Secretary of State that the unions are extremely angry at the manner in which they were informed of the BSC's proposals last week. It was supposed to be consultation but was nothing of the sort. The Iron and Steel Act 1975 contains an obligation to consult, not to tell, the trade unions. Before this corporate plan was presented to the Government, there should have been a full discussion involving the Government, BSC management and workers in the industry. There should have been an attempt to hear all views and not to submit a fait accompli and hope that the workers would co-operate.
The Secretary of State is probably aware that Mr. Bill Sirs' union is taking legal action against the corporation because of its failure to carry out the terms of the 1975 Act. It is not a very good indication of improving industrial relations when bad faith is created both by the Government and, in my opinion, in this case, by the management of the BSC.
I remind the Secretary of State that the trade unions in the basic industries have come together in the form of a trade union triple alliance. It is composed of the miners, the railwaymen and the steelworkers. It constitutes a positive and constructive proposal. An editorial in the Sunday Mirror this week stated:
"The three unions are combining their efforts and resources to press the case for a national plan to beat the dreadful plague of unemployment.
The Triple Alliance's main proposal is a major programme of re-equipping the railways."
That is long overdue in the current economic situation.
The editorial adds:
"The unions believe Britain should return instead to the wise ideas of John Maynard Keynes, the British economist who, 50 years ago, urged governments to intervene to prevent large-scale unemployment."
Here we have unions coming together—Conservative Members may not like it—to defend our basic industries and to ensure that they are not attacked and destroyed in the manner in which the Government are at present attacking them. The Secretary of State should listen closely to what they have to say.
The Government's currency and budgetary policies have contributed directly to the BSC's loss of markets. I say openly that it is essential to support and help the British steel industry with public money. The Secretary of State has already done a major U-turn on cash limits. The right hon. Gentleman will remember saying "Not a penny over £350 million." That has now been raised to over £700 million. The right hon. Gentleman has to listen again. I say to taxpayers and people living outside the steel areas that the prosperity of the nation in the ultimate depends on the base of our manufacturing sector. We cannot increase our prosperity or maintain our present standard of living unless we have a prosperous manufacturing base. Part of that base is the steel industry.
The Secretary of State stands back, wrings his hands and says "It is nothing to do with me. Let firms go to the
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wall." His policy is to let whole industries run down at a time when, in the opinion of the Opposition, they should be supported. We are talking of investment for the future. The future of people living in other parts of the country is tied to great State industries such as the British Steel Corporation. It is tied to the future of British Leyland, the shipbuilding industry and the mechanical engineering industry.
The Secretary of State should take the following steps. He should treat the British steel industry in the same way as this industry is treated in many other countries by giving specific support in energy costs, coking coal and transport.
Mr. Stan Crowther: And research and development.
Mr. Orme: I accept what my hon. Friend says. Conservative Members are laughing. We are talking about men's jobs. Surely, there is nothing more important than that. We are talking also about the survival of British industry as we understand it. For a large part of my life, I worked in manufacturing industry in the private sector. I know the importance of that industry. If the Government turn their back upon the manufacturing sector, Britain will be in trouble.
The Government should take further steps to reduce the interest rate. They should cut prices and take action to reduce the strength of the pound. It is interesting—this is stated in the corporate plan—that EEC prices have dropped by 20 per cent. since 1978–79 as a result of the strengthening of the pound. Mr. MacGregor wrote:
"Reduce BSC interest burden by converting debt to equity. (a) BSC interest cost per tonne is two or three times higher than that of U.S. or German producers because of a combination of high gearing and high interest rates."
We want an early and radical capital reconstruction. In the short term, we need to protect the industry. If necessary, we should use selective import controls. Last but not least, we need a genuine corporate plan that involves management, workers and the Government.
Last week I visited Jarrow in the North-East of England, a town that suffered bitterly at the hands of the economic crisis of the 1920s and 1930s. Steel played a part in that crisis. Jarrow suffered over 70 per cent. male unemployment. If we do not take action now, entire communities will be decimated by uncaring economic theories. There will be a minimum of 20,000 redundancies in areas that are already suffering high unemployment. That is a terrible price to pay for the failure of economic policies.
We are faced with a man-made crisis. It is not an act of God. The crisis can, and must, be resolved by man. It must be resolved by alternative policies. The Secretary of State bears a heavy responsibility, and it will be no good if years later he says, as he did after his term of office as Secretary of State for Social Services, "I was wrong and I made a mistake." If he says that, the damage that will have been done will take a generation for the industry and our industrial base to repair and recover from.
We are talking about investment for the future. The steel industry was brought under public ownership because it lacked investment. There was no money in the industry and it needed modernisation and regeneration. We know what the 1973 Government, of whom the right hon. Gentleman was a member, stated in their 10-year plan. We have moved on from those days.
Sir Anthony Meyer rose—
Mr. Orme: We must examine the industrial base in its entirety. That examination must be based upon the dependent industries—for example, the steel, mechanical engineering and shipbuilding industries. If public subsidy is needed, we must be prepared to advocate that funding. If public money is needed to save basic industries, we must ensure that that money is made available. We are debating a corporate plan that has not been presented properly. It has been rushed through. It will bring redundancies, further closures and no guarantee that additional closures will not take place in 1981. The Opposition are defending British industry, and they will continue to do so.
5.25 pm
The Secretary of State for Industry (Sir Keith Joseph): I beg to move, in line 1, to leave out from "That" to the end of the Question and to add instead thereof:
"this House believes that it is important to the United Kingdom's manufacturing industry to have available good quality steel at internationally competitive prices; notes that the British Steel Corporation has just adopted a corporate plan to enable the Corporation profitably to supply United Kingdom and overseas markets; and asks the Government to give the plan careful consideration."
My right hon. and hon. Friends welcome the right hon. Member for Salford, West (Mr. Orme) to the Opposition Front Bench in his new capacity. We expect to have many debates with him. I am sure that he and I will disagree on many subjects. However, I hope that we can find some common ground from time to time, at least in the prosperity and fuller employment that we both desire.
I must quarrel with one of the statements with which the right hon. Gentleman ended his speech. He said that we are debating the BSC plan. However, the Opposition have chosen legitimately to debate a plan that has not been published. We are debating a plan that has not been studied by the Government and on which the Government have made no decision. We are, in effect, debating a press release that was distributed by the corporation.
I make no complaint of that. However, it would be wrong to imagine that the Government have yet had time to study the plan, which they received only at the end of last week, or that they have come to any decision. The task of my colleagues and myself will be to listen to the debate—we shall do so carefully—and to take into account the arguments that are advanced, including those of right hon. Member for Salford, West, as we study the plan.
What I can do usefully and not necessarily at length—
Dr. Jeremy Bray: Does the right hon. Gentleman assert that the Government should reach a decision before hearing the view of the House?
Sir Keith Joseph: I said that I do not quarrel with the legitimacy of the debate. I was saying that the right hon. Gentleman spoke from time to time as if the Government had approved the plan and that the plan was, therefore, official Government policy. I am not in a position to defend the plan or to reject it. The plan has not been published. However, I am in a position to listen. I shall try to explain the background.
Mr. Orme: On a point of clarity. Is the right hon. Gentleman aware that I have seen more than the press statement detailing some of the items within the corporate plan? The right hon. Gentleman could have helped the House. Why should the document be secret? He could have published it before the debate.
Sir Keith Joseph: The right hon. Gentleman assumes that it could have been published. It is not the habit of either party when in Government to publish confidential material that is embodied in the plan of a nationalised industry or a company largely owned by the taxpayer—for example, British Leyland. That has not been the habit of Governments, and there is no precedent to which the right hon. Gentleman can appeal. The plan contains confidential information which it would not be sensible to publish.
The overwhelming fact that I shall develop in various ways is that the steel industries of the European Economic Community have, after allowing for exports at the rate at which they have been moving for the past five years, about 20 million tonnes to 25 million tonnes of over-capacity. The growth prospects for steel demand in the EEC, including the United Kingdom, are relatively poor. As the House knows, there is intensely increasing competition from outside the EEC, both for sales within the EEC—I shall come to that point later—and for markets within our potential export market. We live in an intensely competitive steel world. World demand for steel in 1979 was not much higher than it was in 1974. Since 1974 has been introduced a great deal of additional steel production capacity all over the world. There is certainly no prospect of any shortage of steel in the world during the next five years. There is great over-capacity both in Europe and in the world.
Opposition Members argue that in those circumstances there should be some restraint on imports into the EEC. There is restraint upon imports, which was introduced by the EEC and from which Britain's steel industry benefits to some extent. I ask the House, and especially the right hon. Member for Salford, West and his hon. Friends, to accept that there is no prospect in the immediate future of a return to the high, rapidly growing demand of the early 1970s, either in Britain or in Europe. The right hon. Gentleman spoke as if it were the fault of the Government that some of the main steel users in Britain are now demanding less steel. Sadly, they are demanding less. The prime users of British steel—the car industry, shipbuilding industry, construction industry, mechanical engineering industry and the machine tool industry—are taking very much less steel, alas, than they used to do.
Mr. Russell Kerr: The Government have run down those industries.
Sir Keith Joseph: The hon. Member for Feltham and Heston (Mr. Kerr), who interrupts from a sedentary position, was the Chairman of the Select Committee which four years ago, when the Labour Government were in office, pointed out precisely the same phenomenon—namely, that the steel-using industries in Britain were demanding far less steel. Even at that time, the demand from the car, shipbuilding and mechanical engineering industries was falling.
Mr. Russell Kerr: Does the Secretary of State admit that when we wrote that report we were not in contemplation of the lunatic monetarist views that are a characteristic of this Government?
Sir Keith Joseph: The hon. Gentleman may not have realised it, but he voted regularly for a monetarist Chancellor, who is now the Shadow Foreign Secretary. It is not ony that British steel users were demanding, and are

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demanding, less steel than in the past, but, alas, the quality, punctuality and price of BSC's steel has not always been such as to attract or hold customers. Some customers bought abroad because they could not get the quality, punctuality and competitive price that they wanted. With world over-capacity, Western European over-capacity and British over-capacity, the premium must be upon being competitive. After all, that is what successive Governments—and the right hon. Gentleman served in a Government who had the same purpose—have sought, against all the obstacles imposed by nationalisation, and by the assumption—which has now gone—that the customer does not matter. Against that background, the 13-week strike did desperate damage. It lost the market share. It taught large numbers of British steel users to look abroad. I am glad to say that some custom is now being recovered. It was a sad and tragic decision to strike.
I had not previously heard that I was accused of having intervened to propose or impose a 2 per cent. pay increase. The suggestion is preposterous and untrue. I reject it altogether. Now that I have heard it and contradicted it, I hope that the right hon. Gentleman will not repeat it.
Mr. Allen McKay: Is it not true that Sir Charles Villiers approached the Secretary of State months before the strike and told him that to give a new increase at a time of closures would lead to industrial action? That was related to the Secretary of State many months before the strike. Had he taken action at that time and not created the monetary policies and tight monetary control in the steel industry, the strike would not have occurred.
Sir Keith Joseph: Sir Charles Villiers may have talked about various options months before the strike, but he never expected any comment from me about what he and his board should propose in terms of pay. I would not have ventured to suggest any such thing to him. I both believe in and adhere to the philosophy that Ministers appoint chairmen to carry out the management function.
Immediately after the strike ended, it so happened that what had been a fairly stable high world demand for steel fell precipitously away. That happened about six, seven or eight months ago. It is against the background of intensely competitive steel over-capacity and the damage done by the strike that Mr. MacGregor was appointed. He has duly come forward with his plan, which the Government are studying and on which decisions will be made some time before the end of January.
From the press release and from the reports of the press conference associated with the plan, one thing has become clear. Mr. MacGregor, with the help of all concerned at British Steel, is dead set to try to win a larger share of the fallen and highly competitive steel market. He is dead set to try to achieve a profitable, larger market share. I am sure that the House will say "Good luck" to him. Mr. MacGregor's approach, as indicated in his press release and at his press conference—it is not my job to defend it as the Government have not yet had time to study, let alone make a decision about the plan—was to call for the most vigorous marketing, management and productive effort, associated with some closures and some reduction of manpower, and a great deal of reduction of the remaining restrictive labour practices, in order to become
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internationally competitive. He is placing all his hopes on winning back a larger share of the home market and on winning a substantial export market.
Almost since he arrived in Britain, Mr. MacGregor has said that British Steel would be enormously benefited by lower energy prices. He made that case to the Government. He was accompanied by the British Independent Steel Producers Association and a number of other industries. The Government are studying that case. It is not going by default. I take on board the point made by the right hon. Gentleman. It is true that Mr. MacGregor has said yearningly that it would be nice if British Steel did not have to pay so much in interest rates. The Government announced at the beginning of the year that there would be—we hoped, at a time when the BSC would not be making a loss—a capital reconstruction. There is likely to be a Bill before the House in due course which will propose such a capital reconstruction. [HON. MEMBERS: "When?"] I cannot say this year, only this Session. I hope from that that Mr. MacGregor may achieve some of his purpose under that head. That is the background against which we have to judge the plan.
The over-capacity with which British Steel has been plagued has to be blamed on both parties. Both parties when in Government approved a plan that in the circumstances proved too large. We were not competitive enough. One can blame management and the work force. The work force was stubbornly obstinate in protecting restrictive labour practices and overmanning, but management should have overridden even that obstinancy and managed to achieve the higher productivity that we still need.
The whole House has to remember that the object must be not only to catch up on our overseas competitors in productivity and efficiency in quality, services and price. We know their productivity and effectiveness this year, but, by the time that we have caught up next year or the year after, our competitors—wicked devils—will have improved their performance yet again. We are pursuing a moving target. I presume, as a layman, that the task of the BSC is possible, but it will call for superb management and superb co-operation by a comprehending work force, which now, I believe more than ever before, realises that competitiveness is desperately in its own interest. Salvation lies in increased competitiveness.
The right hon. Member for Salford, West in his speech, which was not particularly long or particularly short either, did not once mention the cost that British Steel Corporation has imposed on the taxpayers of this country. That cost cannot be ignored. It is levied in taxation or borrowing, which puts up interest rates, or in printing money, which puts up inflation. That cost, be it in taxation, higher interest rates than otherwise or inflation higher than otherwise, in turn spreads pervasively throughout the economy, destroying jobs.
It is true that jobs are not destroyed in as concentrated and dramatic a form as results in some cases from the closure of plants that have been the life of a particular town. We well understand that. But let not Opposition Members imagine that it is humane to use all the money that they take for granted to allow steel to continue being uncompetitive but not humane to try to save those other parts of the economy by reducing the money that steel demands and by insisting that steel becomes competitive so that it does not remain a burden on the taxpayer.

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I am sure that the average steel worker does not want to be a burden on the taxpayer but deeply wants to be internationally competitive and profitable. That way, at least, to put it at its lowest, his job is more likely to be secure. However, I am sure from such meetings as I have had with steel workers that they want to have the pride of being independent of Government decisions.
Of course, the right hon. Gentleman is right in asserting that steel is needed in this country, but it does not follow from that that anyone should assume that the production of steel must be for ever loss-making. Steel can pay its way.
Sir Anthony Meyer: Would my right hon. Friend care to reflect on the consequences of the delays in the proposed rundown at Shotton? Those delays were for the best possible motives, but the end result is that Shotton is closed down at a time when there is very little chance of bringing in other employment, whereas, had the phasing out gone ahead as originally planned, it would have been a great deal easier to get other employment into the area.
Sir Keith Joseph: I agree. I do not see how anyone can deny what my hon. Friend says. The Labour Government deferred a number of closures, which they ultimately and regretfully made. At a time when there was more employment available, they closed plants for the same reason as we have presided over the closure of plants under the previous chairman and will, no doubt, preside over the closure of plants under the present chairman.
I must make plain to the House that the chairman and board of British Steel do not need Government authority to reduce manpower or to close plants. No doubt they will make headway with the proposals embodied in the press release of their plan. The Government will be making decisions on the strategy involved in the plan as soon as we can—before the end of January, I hope—but some of the proposals embodied in the plan are within the corporation's power, and, no doubt, it will get on with them.
Mr. Leo Abse: If the Secretary of State is correct in his assumption that the sacrifice that the steel worker would make—a traumatic experience, as he emphasises, in particular areas—has to be in order to avoid trouble for the whole of the rest of the community, who otherwise will be suffering because of the problems and lack of productivity, why does he not take the point that that means that the whole community has to take the burden of the alternative work which has to become available in those regions? Why does he not accept the fact that, rather than the burden falling on Wales or another region, he has the responsibility so to organise affairs that there is public investment and money drawn from the wider community to the very areas which otherwise must endure those traumatic experiences?
Sir Keith Joseph: The hon. Gentleman, whom I have known for very many years, is admirable at making a rhetorical point. He knows very well that in a free society Governments cannot command jobs to come into existence. He supported a Government who presided over a doubling of unemployment and who would, had they had the power, have created jobs for every person thrown out of work. However, it just is not practical, so Governments, including this Government, come as near as we can to it.
We have, because we consider it right, allowed the BSC to spend a great deal of taxpayers' money in
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redundancy payments. We have put in large sums of money,particularly for Wales, to enable advance factories to be built and sites to be prepared. I am glad to say that, despite all the gloom, there is great interest in taking advance factories in Wales. However, despite the strong speech that we have heard and those that we shall hear this afternoon, there is a great deal of common ground.
Mr. Orme: In the period during which the right hon. Gentleman will consider the corporate plan, and bearing in mind the offhand manner in which the trade unions have been dealt with by the BSC, may I ask whether the right hon. Gentleman is prepared to discuss with the trade unions the Government's thinking and have proper consultation with the workers in the industry? He talks of the workers accepting responsibility. Is he aware that they are not being consulted properly and that it is about time they were?
Sir Keith Joseph: I should very much like to agree with propositions put to me by the right hon. Gentleman, but I cannot agree to that. It is for the management to have whatever discussions it considers fit. The law on that subject was introduced by a Labour Government. It is for the corporation to decide its performance under the law and to take such other action in relation to trade unions as it judges fit.
Mr. Michael Foot: I am sure that the Secretary of State appreciates that this is a matter of the utmost seriousness to many of the communities that will be hit, including my constituency. The British Steel Corporation's proposals will have a catastrophic effect on Ebbw Vale. They will set back all the efforts that we have made to rebuild our community. That also applies to other places. Even under the so-called moderate proposals, many areas will be hit hard.
If the Secretary of State intends to accept anything like the BSC proposals which involve a rundown on a massive scale, he must make proposals for Ebbw Vale, Swansea, Consett and Corby and other places at least equal in scale to those which the Labour Government made. He must match our proposals for helping industry with advance factories, rate support relief and in other ways. Will he examine what we did to try to meet the rundown? Will he guarantee that the Government, if they accept the BSC proposals, will come forward with comparable proposals of assistance?
Sir Keith Joseph: I can come near to accepting the right hon. Gentleman's intervention without going quite as far as he wants. In South Wales, North Wales, Corby and Consett, the Government have reacted to severe changes in the employment and economic situation as a result of steel closures. I can assure the House that we shall continue to do that.
Mr. Foot: These are important matters. Right hon. Members on the Government Benches might not worry about them, but our people do. We are determined to press the matter. That is why we forced the debate today. The Secretary of State's remarks are inadequate. He must understand that his Government's proposals to deal with the rundown at Llanwern and Port Talbot, for example, are inadequate. I am asking the right hon. Gentleman to examine in detail what we did in Ebbw Vale, for example. Will he guarantee that assistance will be given which is

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comparable in scale to that provided by the previous Government? I ask the same for every area affected by the proposed rundowns.
Sir Keith Joseph: I shall not ask the right hon. Gentleman to excuse me, because I perhaps should have briefed myself on the subject. I am not equipped today to compare that which we have done in the four places which I mentioned with that which the right hon. Gentleman's Government did in his time. I shall study the comparison and bear in mind his suggestion.
Mr. D. N. Campbell-Savours: Perhaps the Under-Secretary will deal with it in his reply.
Sir Keith Joseph: I do not undertake that, but I shall see whether it is possible.
I shall finish by trying to establish some common ground. We have been through this in part before. I accept that the Ebbw Vale steelworks must have been closed reluctantly. The right hon. Member for Ebbw Vale (Mr. Foot) deserves respect for taking a decision which must have been repugnant to him. However, I shall quote what he said because his words apply today. In the South Wales Argus in 1978, the right hon. Gentleman said:
"All of us had to face the fact that to keep steel-making at Ebbw Vale would cost the nation tens of millions of pounds more, to add to the hundreds of millions loss of the BSC in 1978. There was not a chance, not a cat in hell's chance, that the Cabinet or Parliament would agree with the proposition."
I rest my case. I hope that my right hon. and hon. Friends will reject the motion and accept the amendment.
5.56 pm
Mr. Frederick Mulley: I thank the Secretary of State for his courtesy to hon. Members from Sheffield and South Yorkshire when he received us this afternoon and listened to our deep concern about the future of the steel industry. However, listening to him today confirms my view that we did not make much of an impression on his philosophy in the short time that we spent with him. If necessary, we shall go to see him again.
I want to make a short speech, because many of my hon. Friends wish to take part in the debate. The right hon. Gentleman will find it difficult to justify to history, let alone to my right hon. and hon. Friends, that it was right for a Secretary of State to sit through a 13-week strike, believing that he had no responsibility for the damage that he knew was being done to the industry for which he was responsible. There are real philosophical differences between us, but I ask the Secretary of State to recognise the wider context of his responsibility for the industries for which he accounts to the House and to the nation.
The well-being of my constituency depends upon a prosperous steel industry. One cannot talk about steel without thinking of Sheffield. Certainly, Sheffield would not be the city that it is without the steel industry. Already the city has lost many jobs in both the public and private sectors. A number of firms have closed. Our intermediate area status has been removed. There is no doubt that the proposals for rate support grant will present the city with still further problems—although I have not studied them in detail. About 3,000 jobs in the Sheffield and Rotherham area will be lost as a result of plan. Probably still further jobs will be lost.
The fundamental question is that posed by my right hon. Friend the Member for Salford, West (Mr. Orme),
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whom I welcome on this his first appearance in his new capacity as spokesman for industry. In addition to common sense, he has a personal background that involves manufacturing industry. He asked "Are we to have a steel industry in the future?" Clearly, we shall not have a steel industry to take advantage of the upturn that we hope will come unless the State provides funds to keep the essential elements of the industry going. A viable steel industry is an essential element of our national infrastructure.
It is difficult to envisage the mothballing of manufacturing industry. The idea of mothballing essential parts of the steel industry is appalling. The skills and equipment, particualrly those involved in special steels in Sheffield, cannot be put aside for several years and picked up when circumstances permit a bigger production of steel. As a nation, we are in grave danger of losing our manufacturing industry.
The Secretary of State quoted my right hon. Friend the Member for Ebbw Vale (Mr. Foot). This week The Sunday Times, in the context of the railways, quoted the late Sir Winston Churchill, who said:
"Letting everything smash into bankruptcy and unemployment in order that reconstruction can be built upon the ruins is neither sound economics nor wise policy."
The Secretary of State should study that quotation, along with that by my right hon. Friend the Member for Ebbw Vale. The Sunday Times did not say so, but 50 years ago Sir Winston was speaking from personal experience as an orthodox monetarist, having taken us back to the gold standard too soon and at too high a parity.
The high value of the pound is one of the problems that besets the steel industry and manufacturing industry generally. There is talk about productivity in this country—the number of man hours it takes to produce a tonne of steel and so on—compared with that in other countries, but little account is taken of capital investment in the competing industries in other countries.
We are glad to learn that the Secretary of State is considering assisting our industry in the matter of energy costs. Gas, electricity and coking coal are provided to our competitors at a lower cost than they are here, and in a number of other countries there are favourable freight terms on the railways. That makes it extremely difficult to compare our industry with that of other countries, because we are not comparing like with like.
It seems clear from the OPEC conference that the price of oil is to be raised again, which, in the sense of revenues from North Sea oil, is advantageous. However, it will probably make the value of the pound rise still further, giving an additional handicap to companies seeking to export and favourable prices to our competitors for their goods. An additional problem will be posed by the seeming improvement in the value of our North Sea oil. Labour Members believe that our good fortune in having North Sea oil and gas should be used for the regeneration and preservation of our industry as an absolute priority, so that when the oil and gas supplies are exhausted we shall have a viable manufacturing base from which we can continue to prosper.
I hope that in his reply to the debate the Minister will deal with some of the questions that have arisen from the written answer that the Under-Secretary of State gave to the hon. Member for Bedford (Mr. Skeet). The Under-Secretary of State spoke about the
"considerable overlap between the operations of the British Steel Corporation and some private sector companies in billet, bar and rod".

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He added that his right hon. Friend had
"made it clear to BSC and to the private sector companies concerned in this area that the Government will consider urgently viable propositions for joint companies in which the private sector would have a majority holding ".—[Official Report, 11 December 1980; Vol. 996, c. 737.]
Obviously, we all wish to maximise the productive capacity in Sheffield and to maintain as many jobs as possible, but there is grave suspicion that that proposition is directed more to dismantling the BSC than to assisting with a short-run over-capacity in the special steel sector. I hope that the Minister will be able to give us some information about what is meant by the overlap, which private sector firms are overlapping with the BSC, and what form such arrangements will take.
The full co-operation of the trade unions is essential to secure the recovery of the industry that we all desire, but it will not take place in an atmosphere of grave suspicion that this is a political rather than an economic proposal. I should also like an assurance that the Secretary of State will receive members from the city of Sheffield to discuss these matters—I gather that he has only authorised the talks—and that there will be full consultation between the BSC, the private sector companies and their trade unions before any agreements are submitted for approval.
6.6 pm
Mr. Patrick McNair-Wilson: I declare an interest in the debate, in that I am involved with a company that manufactures graphite electrodes. I remind the House that the subject of my maiden speech in 1964 was the steel industry. I was then fresh from the Iron and Steel Trades Confederation. The right hon. Member for Salford, West (Mr. Orme) followed me on that occasion with his maiden speech, and he referred to the same subject. Some hon. Members have been discussing the future and the past of this industry for many years. Regrettably, in the years during which I have been a Member the arguments have depended to some extent upon which side of the House one was sitting. That is not good.
The tragedy of the industry is that it has been a political football since the end of the last war. That has not helped to improve its fortunes. The announcement that we are debating today means in a sense—now that the industry is in public hands—that this is probably one of the last chances that the industry will have to continue in anything like its present shape.
There are those—I am not one of them—who question the validity of bulk steelmaking in this country. They argue that all the main losses flow from that part of the corporation's activities. That is indisputable. There are also those who say that we should import and re-roll here. I reject that argument, for strategic as well as social reasons. To put ourselves into the hands of what would appear to be the cheapest suppliers would also be to put ourselves into the hands of what could be extremely unstable countries which, when the need arose, might let us down. I believe that it is in everyone's interest—I think that this is common ground across the House—to see that this industry becomes successful.
It is a tragedy that the plan that we are discussing today predicts a production capacity that is little more than half of what was produced in the year that I left the Iron and Steel Trades Confederation—14·4 million tonnes; but, regrettably, that figure is realistic in the present
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circumstances. How many hon. Members who have been discussing this subject for many years have looked to the day when the British steel industry would be equipped with modern efficient plants?
As a result of changes that have taken place over the years those plants exist, but if we are to get the most value out of those plants we must load them as near to capacity as possible. Regrettably, they were designed to break even at about 70 per cent. of capacity—an enormously high figure. None of them has ever worked at anything like those tolerances. That has led to the tragedy of Consett and of Ebbw Vale and to the situation in the constituency of the former Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan). Those were older plants that were ultimately being phased out to make room for the newer ones.
There is no alternative to that policy. As I have said before, the policy can succeed only if the industry buys back the jobs of those in the older plants. The fabric of the corporation would be weakened if steel were made in plants that were not competitive in the world context. To that extent, the plan put forward by the chairman of the BSC cannot be short-circuited.
The right hon. Member for Sheffield, Park (Mr. Mulley) made a most interesting speech and referred to the need to reduce the value of sterling if we wish to improve our sales performance. In recent years, the deutschemark and the yen have been dominant, but that has not altered the fact that goods from Germany and Japan have come flooding into the country.
Sir Frederick Burden: When sterling was at its lowest point, the yen rose by about 50 per cent. and Japanese production increased by 60 per cent. During that period our production increased by only 1 per cent.
Mr. McNair-Wilson: I am grateful to my hon. Friend for that observation. He has underscored the point that I was making—namely, that the low level of production is worrying. If we use the new plants—
Mr. Mulley: I think that the hon. Gentleman has misunderstood the observation that I made. I said that the strength of the pound was due to one factor—namely, North Sea oil. That does not apply to the deutschemark and the yen. I agree that if the strength of the currency were due to a flourishing and efficient industry, that would be another matter. However, the Government have done nothing to help industry to reach that end.
Mr. McNair-Wilson: I do not wish to cross swords with the right hon. Gentleman. He is an expert on such matters, and he will know that the Canadian dollar—which could be described as a petro-currency—does not enjoy such inbuilt strength. Although oil plays a part, we should not take chances with sterling. If the level of sterling were to fall, it would be virtually impossible to win the battle against inflation. Right hon. and hon. Members will no doubt recall that fact.
The steel industry is made up of two distinct groups: the public sector and the private sector. The private sector does not have the same opportunity as does the public sector to visit the Secretary of State and to argue its case for large extra tranches of taxpayers' money. It must survive on a more meagre diet. In recent years, the private sector has been through an extremely difficult time. Some people want the public sector to be greatly reduced. I

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should like the public sector to stand on its own feet. However, it must be borne in mind that the public sector is a frequent customer of the private sector. I am involved with a business that makes melting electrodes. If the BSC were to disappear, a substantial part of our business would disappear, too. The two sectors of the economy are interdependent, not independent.
Although I should like the steel industry to be prosperous and successful, it is important to recognise that if one part of the animal is killed the other part will die willy nilly. That would be damaging. Over the past 12 months, the BSC's performance has been very worrying. Predictions about the loss of business that would result from the stoppage earlier in the year and the other difficulties faced by the BSC have led to a fall in sales of approximately 30 per cent. That cannot go on.
Many of the BSC's European competitors enjoy energy advantages. I pointed out to the Minister that the melting electrode industry has a plant in Calais which makes an identical product to that made in Sheffield. However, there is a difference in electricity charges of about 30 per cent. I urge my right hon. Friend to fight for us when he talks to his right hon. Friend the Secretary of State for Energy. The Government have in their hands a card that could transform the future of businesses that use substantial quantities of energy. I urge my right hon. Friend to look sympathetically at the figures that have been presented.
What is the future? Morale in the industry is low, because one hammer blow is followed almost immediately by another. That is why I began my speech by saying that this was almost our last chance. I do not say that in a threatening way, but the industry's fibre is being undermined by its record of unhappiness and, some might say, failure.
We must recognise that the BSC will achieve viability and strength only if it pleases the customer. Over the past 12 months, customers have drifted away and there has been a 30 per cent. drop in sales, but British Steel must still offer a wonderful bargain to the British customer. It is a secure source of supply. When one takes into account the costs of freight and so on, it must be advantageous to buy from a British mill. We must capitalise on that, and the industry should hold the strongest sales drive that it has seen since nationalisation.
I cannot believe that a country that produced Bessemer and which, in a sense, invented steel can exist without a viable steel industry. Let us hope that the tide turns at its lowest point. I believe that it can turn, and I welcome the plan.
6.17 pm
Dr. Ifor Davies: In his opening remarks, the hon. Member for New Forest (Mr. McNair-Wilson) declared an interest. I, too, declare my interest as the parliamentary representative of 1,500 people who face possible redundancy as a result of the proposed plan.
The Secretary of State began his speech by stating that the House was debating a subject that the Government—and the right hon. Gentleman in particular—had not even considered. I welcome the right hon. Gentleman's remarks. That is the very reason for the debate. It will allow us to underline some important points beforehand. I hope that the hon. Member for New Forest will forgive me if I do not take up some of his remarks,
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but I wish to follow the example set by my right hon. Friend the Member for Sheffield, Park (Mr. Mulley) and to be as brief as possible.
I shall therefore concentrate my remarks on the Principality, my constituency and the tinplate industry of Velindre, which will be greatly affected. In recent years, the House has frequently debated industry. Throughout those debates we have emphasised the problems of Llanwern and Port Talbot. Those works are not affected by the proposed closures, and in that respect it is so far so good.
However, the proposals have introduced a new threat to the tinplate industry. Because the announcement concerning Velindre was totally unexpected—my right hon. Friend the Member for Salford, West (Mr. Orme) rightly said that there was no consultation with the trade uniions, and there was certainly no consultation with the work force—the proposal was all the more shattering. The Under-Secretary has visited the plant. It is threatened with the redundancy of about two-thirds of the work force—about 1,500 people.
When I met the works council at the weekend, I found that workers were not only angry and frustrated but stunned by a feeling of incredulity. That feeling was created because no suggestion had ever been made that such an act of industrial vandalism awaited them. It has been claimed that the tinplate proposals were drawn up by the local management team, but no discussions took place with the work force and there is now a strong demand that a full investigation must be made into the basis of the proposals.
It must be remembered that tinplate has been produced in Wales for more than 200 years. Wales is the home of the industry. Technological changes and new methods of making tinplate had a catastrophic effect on the old-type hand mills and resulted in a massive loss of jobs. The Secretary of State said how necessary it was to have co-operation from the work force, and no one can deny that throughout the years the work force in the tinplate industry has co-operated to the full with all the demands of technological changes.
In spite of the serious social upheaval that was created, the general feeling was that it had to be done to ensure the survival of the industry. "Survival" is not a new word in the vocabulary of Welsh tinplate workers. That attitude persisted throughout the years, but the present feeling is that the area has made its sacrifices and now deserves the support of the Government—I ask the Minister to underline that—to maintain its industry as one of the leading tinplate producers in the world. It is an industry of which we can be proud.
It is well understood that the industry faces fierce competition from overseas producers such as the Dutch, the Germans, the French, the Japanese and the Americans. In addition, other countries that were previous importers of tinplate produce at least part of their own needs. They include South Africa, Australia, Brazil and Spain. There are also alternative products, such as aluminium, glass, plastics and even cardboard competing for the tinplate market. It is fully realised that tinplate users are demanding better quality and closer tolerances and that the industry must meet those demands.
The Under-Secretary can confirm that Velindre is meeting such demands. At the very moment that I was meeting the works council, a fully automated mill, including speed and guage control, was being introduced.

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It establishes Velindre as one of the few works with automatic roll changes and one of the most up-to-date automatic mills in the industry.
The need for all the technological changes is well understood, but it is not understood and it makes no sense that our tinplate industry, which is recognised as one of the foremost in the world, should be placed in jeopardy because of a self-inflicted attack on our manufacturing base.
The dominant queston is: what possible grounds can there be on which the BSC arrived at the Velindre proposal? It cannot be because of poor industrial relations—they have been first-class. It cannot be because of inefficiency—production records have been outstanding. Above all, it cannot be because of financial losses—the plant has been operating with consistent surpluses for a lengthy period.
If the only other reason can be the state of the market, I must emphasise on behalf of my constituents that they have no desire to place one plant against another within the Welsh tinplate industry, but there is a strong and powerful desire that there should be equity of treatment within the industry and that an alternative strategy of work sharing, at least, should be considered when trade is at a low ebb.
That was the method adopted in earlier years by the old Welsh Tinplate Association when facing trade recessions. By that method, plants were kept at the ready and available to spring into production again when the upturn in trade took place. I am confident that such an upturn will occur again, and that is why the Opposition motion calls on the Government to provide the resources necessary for an expanding programme.
I accept what the Secretary of State said about the BSC's having authority without recourse to the Government to proceed with the proposals in its plan, but the Government have a responsibility to consider the social consequences of that plan, and I urge them, before they accept the BSC proposals affecting Velindra, to consider an alternative strategy of work sharing between existing plants in the tinplate industry. That would ensure the continuity of a modern tinplate industry and would avoid the serious social consequences of 1,500 redundancies.
I also ask the Government to ensure that we get all the financial benefits from the EEC regional fund for which we qualify in connection with the steel industry. On 18 November, the European Parliament recommended that further aid should be made available to help redundant steel workers. The Council of Ministers is meeting today to consider the matter, and I hope that the British Minister will be there to give his full support.
6.29 pm
Sir Anthony Meyer: The hon. Member for Gower (Dr. Davies) commands the respect, admiration and affection of both sides of the House, and when he pleads so movingly for his constituents he must command the respect of everyone who listens to him. While the hon. Gentleman was speaking, his hon. Friend the Member for Consett (Mr. Watkins) must have listened with a wry smile on his face because there, too, a plant with an admirable record of labour relations and with a good production record has none the less found itself swept away in the storm that threatens the steel industry, not only in this
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country but in the whole industrialised world. It serves no purpose to pretend that this storm is not blowing, and blowing with a terrifying fury.
As my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, party politics have ruined a great industry. Blame does not attach solely to one party. Uncertainty has lain like a black cloud over this industry at every critical point in its history, causing bad decisions to be taken and good decisions to be deferred.
The right hon. Member for Salford, West (Mr. Orme), who opened the debate from the Opposition Benches, has clearly not yet worked himself into his job, because it was difficult to detect any positive content in his speech or any contribution such as those we have already had and no doubt will have from the Back Benches containing constructive suggestions going well beyond the ding-dung of party warfare.
Mr. Ian MacGregor—whose appointment was bitterly criticised by almost all Opposition Members, and, I am bound to say, was received with some doubts on the Conservative Benches—has to my mind triumphantly vindicated his appointment.
Dr. John Cunningham: I do not want that comment to go on the record without challenge. It was not Mr. MacGregor who was criticised. No one made any judgments about Mr. MacGregor. It was the manner and circumstances of the appointment that were criticised.
Sir Anthony Meyer: Mr. MacGregor's appointment was criticised by Opposition Members. However, I shall not pursue that matter. I very much doubt whether there were many Opposition Members who spoke in support of a man whose accomplishments are already beginning to prove themselves. Above all, he has brought to this daunting task a sanguine and optimistic temperament. He is not prepared simply to preside over the steady liquidation of this great industry. Mr. MacGregor has produced a plan which, of course, includes proposals that will be very difficult for many Members of the House to swallow on constituency grounds.
The hon. Member for Gower is placed in an almost intolerable situation by the plan. My hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown), who may be present shortly, likewise finds himself placed in an extremely awkward position. The hon. Member for Flint, East (Mr. Jones) and I are also in a very uncomfortable position, because Shotton, which we thought had already had the worst, is now faced with a further 900 redundancies. As constituency Members, we are bound to complain bitterly about what has been done to our constituencies. None the less, there is a duty on each of us to try to see the industry as a whole and to recognise, in what has been proposed, a plan that could produce a viable and profitable steel industry in this country and build it up from there.
The outlook may not be quite as grim as we are sometimes liable to fear. Last February—admittedly that is now 10 months ago—the OECD held a symposium on the future of steel in the Western world. The symposium took a somewhat rosier view of the developments. It reckoned that the world's steel market would rise by an average of 3 per cent. a year from 1980 to 1985 and that part of that increase, 2½per cent., would be in OECD countries. If that is true, OECD steel producers might again be producing at 90 to 95 per cent. of effective

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capacity by the end of that period. Unfortunately, a lot of water has flowed under the bridge since February, and a good deal of water came gushing under the bridge only yesterday with the OPEC announcement of another savage increase in oil prices, so those forecasts may have to be corrected downwards.
It is, however, a mistake to look at the steel situation solely in terms of raw steel or even of finished steel. What matters is the uses to which the steel is put. The OECD report said that
"simple exports of steel bars, sections or plates are not the real story of steel trade. The trade that will count more and more will be in goods made of steel. Much steel goes round the world as small boxes known as cars, or big ones called ships".
In that connection, it is instructive to look at page 17 of today's issue of The Times, which has three interesting headlines. Column 1 is headed:
"Talks to start on plan for steel survival,"
and it gives a brief account of Mr. MacGregor's discussions with senior Ministers. The next two columns paint a very gloomy picture under the heading:
"Manufacturing output slumps to lowest level for 13 years"
—a story that no doubt the Labour Party will exploit to the full.
The next two columns tell a much more interesting story about British Leyland, which is
"to recruit 1,000 more Metro workers".
The 1,000 extra workers for the Metro and the increased production of that model necessarily involve more steel. That, surely, is a hopeful indication. It suggests that if Mr. MacGregor can make his plan stick there is a real possibility of a viable, profitable steel industry that has turned the corner and is already beginning to recover, on condition that success is the criterion and that the Government and the community back success and do not seek in vain to stem the tide. However socially desirable it may be to ensure jobs for people in areas threatened by closure, that is not the way to tackle the situation.
Much as I was attracted by what the hon. Member for Gower said about work sharing, I could not help reflecting that what he said was in direct conflict with what the steel unions set out to achieve when they embarked upon their strike. At that stage they made a deliberate choice. Work sharing necessarily involves lower wages and incomes. By deliberately setting out—at any rate, at the beginning of the strike—to demand a higher settlement from an industry that the steel unions knew to be already bankrupt, they were, in effect, giving the thumbs down to work sharing. Perhaps in the long-term interest of the industry they were right. It is better to have a smaller and better-paid work force. But the unions' choice was the exact opposite of the choice that the hon. Member for Gower suggested.
The plan has turned out to be much less catastrophic for Wales than many of us had feared. In particular, it offers the prospect of continued operation of the two great integrated steel works at Port Talbot and Llanwern. Everything depends now on what happens in the next six months. I make this appeal to the Government. Let us not suggest that steel workers are being threatened that if they go on strike they will forfeit the chance of saving their jobs. They are not being threatened at all. They can see the chance that now opens before them of securing their future. Provided that the Labour Party does not seek to stir up discontent, and provided that Conservative Members refrain from presenting this as a great triumph over the
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unions, I believe that there really is a chance of saving the steel industry in Wales and in the whole United Kingdom and of providing a decent, assured future for our steel workers.
6.39 pm
Mr. Stan Crowther: I am sure that no one will pretend that Mr. MacGregor and his board were faced with an easy task when they set about producing their plan or that there are any quick solutions to the problems of the industry, but I find it extremely difficult to follow the logic of what is now being proposed, especially in regard to the Rotherham works of the corporation.
I hope that I shall not appear to say too much that is the same as was said by my hon. Friend the Member for Gower (Dr. Davies), but the fact is that the stories appear to be rather similar. In Rotherham we have lost 11,000 jobs in the steel industry since the early 1960s. They have not come in large, dramatic closures of the sort that hit the headlines. We have not had the sudden closure of one big plant—as happened in Consett, Corby or Shotton—that hits the headlines, but we have lost these jobs nevertheless, and the damage to the social fabric has still happened. The sacrifice was accepted by the trade union movement and by the community because they understood this to be part of the price that had to be paid for making the Rotherham works a highly efficient and productive plant.
When the Secretary of State speaks—as he did earlier in the debate—about the need for a comprehending work force, I assure him that there has never been a more comprehending work force than that in the steel industry at Rotherham. It has adopted what it thought was a very responsible attitude and has negotiated its way through 11,000 job losses. It has done that to build an extremely productive and efficient plant, which has equalled and then beaten the performance of its competitors throughout the world.
My hon. Friend the Member for Rother Valley (Mr. Hardy)—who is not able to be present for the debate—and I have several times drawn the attention of the House to the production records set up at the Rotherham works, in department after department, including the Templeborough melting shop, which is now to be the scene of further cutbacks and, apparently, a loss of another 1,800 jobs. There are anger, frustration and deep disillusionment in my constituency.
Rotherham people are now saying, at the end of these 11,000 job losses, "Was it really all worth while? For what purpose was this sacrifice made? What more do we have to do to save Rotherham works and to save our jobs? Are world records not enough? What more is wanted?" That is what my people are asking, and these are the questions to which we are entitled to have some very good answers.
The Secretary of State says that he does not think that the average steel worker has any wish to be other than competitive. Of course, he is right, and the Rotherham steel workers have proved themselves over and over again to be competitive, but the reward for that is another 1,800 jobs down the drain.
Ironically, it was in the Templeborough melting shop in 1961 that the cutdown in manpower in the steel industry in Rotherham first began, in the days when it was part of United Steel Companies Limited. It was in that very shop that we lost our first 1,100 jobs, when 14 open hearth furnaces there, plus seven others, were replaced by six

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electric arc furnaces. That entailed the loss of the 1,100 jobs and created in the Templeborough melting shop the largest electric arc steel making plant in Europe, pioneering bulk special steel production. Some time ago, by internal reorganisation, those six arc furnaces were reduced to four, but now, according to press reports, that once great melting shop is to be reduced to a one-furnace operation, with possibly one other furnace which may he brought back into production at some time in the future, if we are lucky.
This in an absolute tragedy. The one furnace that will be left is the one that is to be linked to the continuous casting machine, which is to be commissioned in February and which would have been there years ago if the BSC had not dilly-dallied for so long about whether to go in for continuous casting. The corporation ought to have done that a long time back, not only in Rotherham but throughout the country.
There is deep despair in my constituency. Enormous damage is being done to the morale of the industry, as the hon. Member for New Forest (Mr. McNair-Wilson) said. He is right about that, not only because people are being put out of work, and not only because there is a terrible shortage of jobs for school leavers, but because people are conscious of the appalling waste of skill and experience that all these redundancies entail. Skill, one of the great assets of the country, is being poured down the drain.
I must say a word or two about the role of the Government in all this. I shall not say very much, because my right hon. Friend the Member for Salford, West (Mr. Orme), who opened the debate, covered the points extremely well in what seemed to me to be a splendid speech. We all know, of course, that there is a world recession, and we do not need to be told repeatedly from the Government Front Bench about steel industries throughout the world having too much capacity. We know all about that.
We are entitled to ask why, of all the developed nations, this country's industry is suffering most. The answer, of course, lies in the Government's dogmatic ideological refusal to do anything to support their own industry. Every other developed country in the world has a Government who are prepared to do something to support their industry, but that is not the case in Britain. That is why we are now in such appalling difficulty. Mr. MacGregor's ambition, apparently, is to restore the BSC's share of the home market to 54 per cent.—a modest ambition indeed, especially in a market that is fast contracting anyway.
I was very pleased to see that Mr. MacGregor intends to adopt a more aggressive attitude to exports, which his predecessor was not prepared to do, but I do not know what Mr. MacGregor has been saying to the Government about all the matters to which my right hon. Friend referred in his opening speech—the many ways in which the BSC's competitors are being assisted by their Governments, in Germany, Japan, Italy, America and all over the world. I wonder what Mr. MacGregor is saying about that.
I am well aware of the splendid document that the BSC and the British Independent Steel Producers Association jointly produced on energy prices. I was glad to hear that the Secretary of State was studying it. I hope that he does not keep on studying it while more and more damage is being done. What is needed now is some action. Many people think that it is crazy that industry, in a country that
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is essentially an island of coal, surrounded by oil and gas, should be paying more for energy than industry in other countries, which do not have these natural resources, is paying. I, too, think that that is crazy.
What Mr. MacGregor is saying to the Government about these things, or how strongly he is saying it, I am not sure, but he is in a stronger position to say it than is anybody else. He is in a much stronger position than is any other nationalised industry chairman, because the BSC dare not sack him, having paid £2 million for him. If I were in Mr. MacGregor's shoes, I should not be pleading with the Government or going to them cap in hand; I should be presenting demands. I hope that that is what Mr. MacGregor is doing, because unless the Government are prepared to take a more realistic attitude to British manufacturing industry and to do more to support it—not to give it subsidies, but at least to let it compete on equal terms, which is all it is asking—all the cutting and pruning in the world will not make the BSC competitive.
Mr. MacGregor may find himself, at the end of the day, in the position of the surgeon who said "The operation was a complete success, but, unfortunately, the patient died."
6.48 pm
Mr. Michael Brown: This is for me perhaps the most sombre debate in which I have spoken since I was elected to the House, because the burdens of the present cutbacks which are being proposed in the MacGregor plan fall upon my constituency, and particularly upon the Normanby Park steelworks.
Normanby Park is one of the older parts of the Scunthorpe complex. It is a steelworks employing 2,750 people, and along with the No. 1 rod mill and the slimming down which the MacGregor plan proposes there is a burden which my constituency is expected to bear, under the MacGregor proposals, to the tune of about 4,100 redundancies.
The Normanby Park steelworks originally was the core of steelmaking in Scunthorpe. It is part of the complex that forms the skyline that one first sees when going into that town. Thus, I appreciate with great sadness and understanding the feeling among the steel workers last Friday when the announcement was made that the BSC proposes, under the MacGregor plan, to close steelmaking there.
However, I have to ask myself and my constituents what is in the best long-term interest for the future of steelmaking in my constituency. I believe that every steel worker in Brigg and Scunthorpe has always recognised that the Normanby Park steelworks was at risk. We all held our breath in the days when, for a temporary period, reality dictated the actions of the right hon. Member for Chesterfield (Mr. Varley), the then Secretary of State for Industry. Last year, we again held our breath.
The Scunthorpe steelworks is similar in style to Consett. At a time of great excess capacity, one wondered for how long it could continue. There has been some investment in Normanby Park in recent years, but it is the smallest of the integrated works left in this country. For how long can we justify the retention of that steelworks when its retention may continue excess capacity to the extent that it jeopardises the security of modern works, such as Llanwern, Port Talbot and the Anchor steelworks in my constituency? [Interruption.] Does the hon. Member for Workington (Mr. Campbell-Savours) wish to intervene?

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Perhaps I should develop that point. Should I represent the interests of my constituency for the purposes of tonight's or tomorrow's headline, or should I be more concerned with the long-term interests of my constituency?
Against the background of my political philosophy, it would be easy to say that the country does not owe the British Steel Corporation a living. I have championed the policies of the Government, who, quite rightly, are seeking to reduce public spending and borrowing. But the real test of a Member's political beliefs lies in what happens when important decisions face his constituency. It would be easy for me at the end of this debate to say that we must keep Normanby Park steelworks open and to join the hon. Member for Workington and his colleagues in the Division Lobby tonight. Heaven knows, the Patronage Secretary knows that if I am not satisfied with the views of my Government I am not prepared to walk through the Lobby in support of them.
However, can I in all honesty say to my constituents that I have salved my conscience by joining the Opposition in the Division Lobby in defence of the Normanby Park steelworks when I do not believe that the proposals and sentiments expressed by the right hon. Member for Salford, West (Mr. Orme) will guarantee the future of steelmaking in this country?
If the Opposition could show me that fighting to keep open the Normanby Park steelworks, would guarantee the long-term future of the steel industry, it would be the easiest thing in the world to go through the Lobby with them. I might be able to get some cheap, short-term publicity in the local press, but I cannot deceive myself, and, in all honesty, I am not in the business of trying to deceive the steel workers whom I represent in Brigg and Scunthorpe.
My constituency is being asked to bear a considerable burden because of the MacGregor plan's effects upon the Normanby Park steelworks. However, I believe that there is no viable alternative to the MacGregor plan. It is the last chance for the British Steel Corporation. I must have regard for the long-term future of steelmaking in my constituency. The MacGregor plan recognises the massive investment that has been put into Scunthorpe, particularly in the Anchor project, by the Governments of both parties. The Anchor project has been left intact, and that is the way I want it to stay.
If the MacGregor plan does not go through with the necessary retrenchment that it proposes, we may find ourselves—as Mr. MacGregor said at his press conference last week—asking for how much longer we can continue to have steelmaking in big plants such as Port Talbot, Llanwern, Teesside, Ravenscraig and Scunthorpe.
Like my right hon. Friend the Secretary of State, I looked back at the history of steel closures when the Opposition were in power. My right hon. Friend quoted from the Leader of the Opposition, who, like me, represents a steelworks, Ebbw Vale, which was closed in 1978 with the loss of approximately 2,000 jobs. The words which my right hon. Friend read out, published in the South Wales Argus, can be applied to my constituency, but for "Ebbw Vale" read "Normanby Park", for "Michael Foot" read "Michael Brown" and for "1978" read "1980". The right hon. Gentleman is reported as having said:
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"All of us had to face the fact that to keep steel-making at Ebbw Vale would have cost the nation tens of millions of pounds more, to add to the hundreds of millions loss of the BSC in 1978. There was not a chance, not a cat in hell's chance, that the Cabinet or Parliament would agree with the proposition."
That was the Labour Cabinet and Government in those days. So much for the Labour Party being prepared at that time to defend the interests of steelmaking in Ebbw Vale. That fact ought to be taken into consideration.
The MacGregor plan is important because it gives the BSC this last chance. The Government and the unions have a responsibility to support that plan. It is worth paying tribute to the reaction of the unions to the plan. There has been a temptation to look back at the past. Let us be honest. I cannot forget that not my right hon. Friend but the ISTC closed down the steel industry earlier this year for three months. One cannot ignore the fact that that was bound to have a consequence.
Mr. Campbell-Savours: Having made his statement, will the hon. Gentleman clarify what he means? Is he saying that he supports the closure of a steel plant in his constituency? If so, let him say it categorically.
Mr. Brown: I thought that I had made that clear to the hon. Gentleman. I see no alternative for the security of steelmaking in Scunthorpe and of the Anchor project if we retain plants which I cannot justify to myself or to my constituents, or to the Opposition for that matter. At the end of the day, like every other hon. Member, I have to persuade the taxpayer that his investment—
Mr. Bill Homewood: I wish to make a point about the steel strike. Is the hon. Gentleman genuinely arguing that he believes that it was realistic for any employer to propose a 2 per cent. increase in earnings for a body of people at the time?
Mr. Brown: At the beginning of my speech, I said en passant that I did not want to cover old ground as regards the steel strike. However, the hon. Gentleman has tempted me.
The overwhelming majority of steel workers in my constituency knew at that time, as I warned them, that sooner or later that strike would result in steelmaking capacity in the steel industry being less rather than more. It has come sooner than some Opposition Members expected. If steel workers in Corby, Scunthorpe and elsewhere could have their time over again and could see what was to happen to the steel industry, they might have felt that the 2 per cent. increase that they were being offered was a small price to pay for the retrenchment proposed by the BSC.
I cannot continue to say that the rest of the country owes Scunthorpe or anywhere else a living. I derive no pleasure from representing a steel constituency which has to rely on the Oliver Twist begging bowl approach to the taxpayer. I consider my constituents to be the most important people in the United Kingdom. They are unique because they sent me to Westminster.
Mr. James Hamilton: They should send the hon. Gentleman back again.
Mr. Brown: It is for my constituents at the appropriate time to consider whether the points that I put to them are correct. They will decide in their own way.
It may be that in 1983–84, if the unions and the Government co-operate with the MacGregor plan, we shall have a secure future for steelmaking. However, I do not

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want to go to my constituents in 1984 on the basis that I tried to keep open marginal plants which were threatening the survival of the BSC in the long term. I should prefer to go to my constituents in 1984 and be able to say that at least I supported a proposal that was in my constituency's long-term interests rather than in my short-term electoral interests.
Mr. Roger Moate: I suggest that my hon. Friend's constituents are more likely to return him to the House when he makes courageous speeches of the kind that he is making rather than taking the easy option suggested by the hon. Member for Workington (Mr. Campbell-Savours). If the hon. Member for Workington insists on making the self-righteous and obviously partisan point that he was making—
Mr. Campbell-Savours: Not partisan.
Mr. Moate: —is he not condemning not only my hon. Friend but the Leader of the Opposition, the right hon. Member for Ebbw Vale (Mr. Foot), who, faced with the closure of steelmaking at Ebbw Vale, had to say to his constituents on behalf of the Labour Government that their steelmaking capacity had to close? If we are to achieve a secure future for the steel industry, should not Opposition Members such as the hon. Member for Workington accept and understand that point?
Mr. Brown: I agree entirely with my hon. Friend. The steel industry has suffered too often in the past 10 to 20 years from politicians who have meddled and deceived the steel workers in my constituency and elsewhere.
Dr. Bray: Will the hon. Gentleman give way?
Mr. Brown: I should like to proceed. In fairness to Opposition Members, I have a duty to bring my remarks to a conclusion, and I have other points to bring to the attention of my hon. Friend the Minister.
Dr. Bray rose—
Mr. Brown: I should like to continue.
Dr. Bray rose—
Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. The hon. Member for Brigg and Scunthorpe (Mr. Brown) has made it clear that he is not giving way. About eight hon. Members still wish to catch my eye. Each will get in if we do not have too many interventions.
Mr. Brown: As I said, my constituents are the most important people in the country. However, I cannot justify to the rest of the country that unending subsidies are the God-given right of the electors of Scunthorpe. I am sure that that goes for everywhere else:
I want our steel industry to defend itself on the ground of the MacGregor proposals by selling its steel in the market place. At long last, we have a chairman of the British Steel Corporation who is looking at the matter from the customer's point of view. I think that hon. Members should also consider it from the customer's point of view. At the end of the day, job security in the steel and car industries or anywhere else depends on the ability to supply a product which is in demand at the cheapest competitive price. Full utilisation of the modern capacity at the Anchor steelworks is the best guarantee of a competitive steel industry and, therefore, of Sconthorpe's future rather than the Oliver Twist begging bowl approach.
I am impressed by the attitude, understanding and realistic approach that many members of the Iron and Steel
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Trades Confederation appear to be adopting in my constituency. Obviously, one or two hotheads have a vested interest in the demise of the steel industry for their own political purposes. But, provided that there is good will on all sides, I believe that the steel unions and the Government recognise that co-operation with the MacGregor plan is the only hope for the long-term security of the steel industry. Mr. MacGregor means what he says. In my view, he has convinced the unions that there is no alternative. If the unions are honest with themselves and with their members, they will recognise that there is no alternative. They have a vested interest in the success of the plan.
It is not as though the survival plan will not cost money. Opposition Members, when chiding the MacGregor plan, may forget that together with that plan that is on my right hon. Friend's desk there may be a request for a substantial sum of money. The Opposition should bear in mind that the Government may yet go down in history as the Government who gave more public funds to support the steel industry than any of their predecessors.
The redundancies in my constituency come hard on the heels of the slimming-down proposals that were announced towards the end of last year, when about 2,800 jobs were lost. Over a three-year period, 9,000 people will have left the steel industry in Scunthorpe. But Scunthorpe will still, sadly, remain a one-industry town. I say "sadly" because a one-industry town is not a healthy town.
Before the Normanby Park closure I had discussions with my right hon. Friend about new industry, and he responded by granting my constituency development area status. But there is now a new and even grimmer situation. My right hon. Friends the Prime Minister and the Secretary of State have rightly repeated that areas affected by steel closures will be assisted. I think that further assistance will be required under the terms set by the Prime Minister and the Secretary of State earlier in the year. We are now looking to the Department of Industry for special development area status to help us in the short term so that we are on a par with Shotton and Port Talbot, which already have such status.
I understand that discussions may be taking place between the Department of Industry, the Department of the Environment and the Scunthorpe borough coouncil relating to an enterprise zone covering a site in the closure area in Scunthorpe. I hope that the Government will seriously consider that idea.
Both the Scunthorpe and Glanford borough councils have played a constructive role during the past few months. The Scunthorpe borough council is of a different political colour from mine. However, all of us in Scunthorpe have sat down together and considered the future. I hope that I can continue to work with those authorities in persuading the Government to let us take advantage of the assistance that they proposed earlier in the year.
The Scunthorpe borough council will lose about £250,000 from rates which it currently gets from Normanby Park. This is at a time when it wants to provide the infrastructure to attract private investment. Therefore, I hope that the Department of the Environment will consider the borough council's request for sanction to undertake this necessary work.
I apologise for speaking slightly longer than I intended, but I was interrupted on one or two occasions. The MacGregor plan bears considerably on my constituency.

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However, I welcome it wholeheartedly because I have to consider the long-term interests of my constituency. As I said earlier, one can try to deceive one's constituents only to a certain point. Those who entered the House with any kind of political conviction will recognise that they cannot deceive themselves, and I do not believe in deceiving my constituents.
The MacGregor plan is a corporate plan not for the death of the steel industry but for its survival. I shall support that plan because it is the last hope for the British Steel Corporation and for the survival of steelmaking in my constituency. I welcome it, and I hope that the Government will support it.
7.9 pm
Mr. David Penhaligon: We have heard a brave speech from the hon. Member for Brigg and Scunthorpe (Mr. Brown). Only time will tell whether his supposition about his constituency's future is right or wrong. I follow the boundary reviews rather closely. I note that there is, perhaps, a constituency to which the hon. Gentleman could move, which is not so desperately far away but which is just outside the area of the steel plant.
All I say to the hon. Gentleman is that I sometimes take the view that an MP's job here is to help his constituents, right or wrong. Perhaps not all the way, but he is the one whom his constituents have to put their views. There is a case for the hon. Gentleman to argue for his area just because it is his area. I leave that to him. Only the longer term will tell.
We are an industrial nation, as I have said on a number of occasions in the House. Steel is the lifeblood of an industrial nation. I cannot imagine how a country can call itself an industrial nation and have a substantial industrial sector without a considerable ability to manufacture the blood of that industry in its own community. Clearly, the blood of that industry is steel.
Whatever it may be, Britain's long-term economic future must revolve around manufacturing. Today we are discussing the kernel of that manufacturing ability—the ability of our nation to produce the raw material on which all other industries depend—whether it be in my part of the world, which must be further from steel manufacturing than any other part of Britain, or in the middle of Scunthorpe, Consett or wherever. If we are manufacturing, someone must be producing the steel.
The problem is not new. In the previous Parliament I occasionally listened to steel debates. I could not help but develop the feeling that the previous Government knew they had problems on their hands with the steel industry but were putting off some rather unpleasant decisions because they could not stand the political anguish that they would cause. That impression was gained by many who were neutral in that Parliament. The problems are not new.
There is no point in the present Government denying that the problems have been savagely increased during the last 12 to 18 months because of current economic problems. The main problem is the value of the pound. Instead of having all these debates on unemployment, industry, steel and so on, perhaps we ought to have a debate on the value of the pound. I cannot help but return to that as being central to all the problems we are discussing.
Sir Frederick Burden: Does the hon. Member recall that in 1976 the right hon. Member for Cardiff, South-West (Mr. Callaghan), who was Prime Minister until last year, stated that it was very difficult to manipulate the pound to the state that one wanted in exchanges and that if one attempted to do that it would lead to greater inflation and greater unemployment? The right hon. Member repeated that at great length in the House when he was Prime Minister in 1978.
Mr. Penhaligon: The House of Commons was not short of debates about economic issues in the previous Parliament. What I recollect—I draw the hon. Gentleman's attention to it strongly—is that during the period when the Liberal Party co-operated with the then Government the pound was very low in value. Whatever happened and whatever was intended, the pound was very low in value. That was the only period in the last eight years when there was an increase in output in our factories and a reduction of unemployment. The possibility was frittered away, particularly towards the end of 1978, when, clearly, the Government's pay policy did not have overwhelming support, and we were back on the silly old merry-go-round on which we have been for so long.
When the pound had that low value, there was a period during which our industry was very competitive and was doing quite well. From my own consituency I know that labour was being taken on, unemployment was beginning to fall off and there was some progress back towards sanity, even if it was not maintained for very long.
I continue on the subject of the pound. Only two reasons are ever offered for its holding its current value—either the current Government's interest rate policy or the fact that we are self-sufficient in oil. How much we allocate to those two sources the current value of the pound depends on whom one listens to. I believe that competitive interest rates have a substantial role to play in the international value of the pound, but the fact that we are the only major industrial country in the Western world that is self-sufficient in oil must also be of considerable influence.
If the cause of the pound's high value is only interest rates, it is within the Government's power to do something about that matter. They could introduce tomorrow a statutory prices and incomes policy, which the Liberal Bench would support. Given that, they would have more control over the money supply than they have now and, given that, they could halve interest rates the day after. If all that we are told is right, the pound would come down to a more sensible value within a very short period after that.
However, I suspect that it is as much, if not more, to do with the fact that we are self-sufficient in energy as it is to do with interest rates. The simple fact is that the world looks upon us as being immune from OPEC decisions because of our self-sufficiency in fuel. Given that, I do not understand why it is so widely accepted in the House, and in the media and all the so-called responsible organs of opinion that, if OPEC meetings decide that the international value of OPEC oil is to rise by 10, 15, or 25 per cent., automatically and immediately the energy costs to our industry must rise by the same amount at the same time.
We are in an extraordinarily fortunate position. The coal that we have is our coal. Our oil is our oil, and our gas is our gas. Why cannot we use the single thing that is

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running for us, as an industrial nation, to our singular advantage? No one complains about Third world countries using the fact that they have low labour costs to their advantage. That is something that they have going for them. Therefore, why cannot this House change its current attitudes towards energy and allow this great fortune that we have in energy to be used for our economic advantage? If I have a single criticism of the way in which we have run our steel industry during the last 18 months, it concerns the enormous energy costs that we have pushed on to it. That is the most ludicrous single folly of all.
I have tried to get a copy of the recent report, but I did not realise, until someone told me that he had had one given to him by someone in the know, that copies were not widely available. Perhaps that is why I could not get one. But, even if I had read it, I doubt whether my opinions as a politician would be of enormous value.
The idea that British Steel can be run by debates across the Floor of the House is one of the most ludicrous situations into which British politics has managed to get itself. The whole industry is too big. It should be run in smaller units. A tremendous attempt should be made to give people in their own plants responsibility for their own affairs, through a system of co-operatives and such like. That is a personal opinion, which may or may not apply to the British steel industry, but the idea that MPs can make vital decisions about plants in Scunthorpe, Ebbw Vale or anywhere else is farcically funny. Perhaps I can say that more easily than most because I do not have a steelworks within about 300 miles of my constituency.
If the report or something like it is implemented, what will the Government do for the areas that are so dramatically affected? I am told that unemplyment in Consett and Shotton will be 50 per cent. with full implementation of the current proposals. It is not good enough for the Government to hand out the redundancy pay and then wash their hands and disappear. Communities cannot be left like that. The last Labour Government closed the Falmouth docks overnight, with serious effects on the economy of my area. There were no crocodile tears then about keeping Britain's docks going. Falmouth still suffers from 30 per cent. male unemployment, and Parliament is not doing enough for the good people of Falmouth to enable them to recover from that economic death blow.
The reason why I feel so strongly on that issue is that, as a Cornishman, I am only too well aware of what happened in my county when its economic base—the mining indstry—was swept away overnight. In Cornwall 60 or 80 years ago, virtually everyone was unemployed and there was no economic alternative. The county has never recovered from that blow and its current economic problems still relate back to it.
If the report contains the correct solution—and I do not see why I as a Member of Parliament should be the judge of that—the Government must considerably increase their attempts to care for the communities that will be economically destroyed because of it. We cannot just wash our hands of areas that will be left with 30, 40 or. 50 per cent. unemployment. That is not good enough.
7.21 pm
Mr. Allan Stewart: I agree with some of the things that the hon. Member for Truro (Mr. Penhaligon) said, in particular his tribute to the courage of my hon. Friend the Member for Brigg and Scunthorpe
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(Mr. Brown) for his speech. Labour Members may disagree with him and may doubt his instinct for political survival, but no hon. Member could doubt his courage. I am sure that, as my hon. Friend said, political honesty gets its reward more often than we think.
The hon. Member for Truro went on at length about the exchange rate. I do not want to follow him down that path because, while it is an important issue, it is not central to the debate. The Government have limited powers to influence the exchange rate. When they try to influence the exchange rate, they generally get it wrong and, whatever the level of the exchange rate, somebody will complain. When it was low people were complaining about the effect of inflation and so forth.
There is a substantial surplus on current account and our trade has held up remarkably well despite the exchange rate. That is a tribute to the work forces and managements of many companies.
I wish to speak principally about the implications of the BSC proposals for Scotland not because steel is of historic importance to Scotland, but because of its importance for employment, because of the massive investment which has been poured into Ravenscraig and Hunterston and because of the links between steel and other industries in Scotland.
My right hon. Friend the Secretary of State was visited yesterday by a delegation of hon. Members, including myself, representing constituencies which contain or are near to factories of the Talbot company. Mr. MacGregor's decision to maintain Gartcosh is of the greatest importance to Talbot at Linwood, because without that plant the steel that is necessary for Linwood would have to come from further afield and that would add to the cost. The proposals for Scotland envisage the loss of 640 jobs. No one suggests that that will be easy, but the reaction in Scotland to the proposals will be constructive and positive. The Scottish work force realises that tough choices have to be made. I pay tribute to the constructive way that productivity has been improved in the Scottish steel industry.
We have had our bad patches, too. In the past two years, we have had Scotland's greatest shame, with the closure of the Hunterston ore terminal for six months due merely to an inter-union dispute. Generally, however, the record has been good.
It has been suggested that plants in Scotland have been maintained in the MacGregor plan as a result of political pressures and because the BSC recognises the problems and political sensitivities of the area. I hope that my hon. Friend the Under-Secretary will assure the House that that is not so. That is not because I do not want the plants, because I do want them. I want the steel industry in Scotland to be maintained because the BSC believes that it is viable, and has an economic future and not because it is scared of the effect on votes. That has been the problem all too often for nationalised industries in the past. They have been subjected to political pressures, with a hit of arm-twisting here and there. The result has been to delay essential decisions. That has never done anyone any good in the long run.
My right hon. Friend referred to the emphasis on marketing in the proposals. That is central, for we have to sell the steel. There has, to be a purchaser, and the Government can help. From some of the comments made by Opposition Members, one would imagine that the Government are not helping. Some of their speeches gave the impression that the BSC is somehow surviving on its own resources. The external financing limit this year is

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£1,000 million. The BSC is losing between £50 million and £100 million a month. We may argue about the scale, but let us not forget the immense cash drain that the BSC is facing and what the Government are doing and have done to keep going a corporation which, by any rational standard, is bankrupt but has a strategic value.
Last month, the BSC gained what I thought was an important order worth £5·8 million to supply 45 miles of 24-in. diameter pipeline for BP's West Sole gas field. That was important because many people have felt that the BSC took too long to get into the North Sea market. The order was a considerable breakthrough. I am sure that hon. Members on both sides will hope that that breakthrough is continued and that the BSC will be given the order for 340 miles of 36-in. pipeline for the proposed North Sea gas-gathering network. That order will help to establish the BSC as a natural supplier to the offshore industry in the North Sea and internationally.
A couple of years ago, the then Secretary of State for Industry, the right hon. Member for Chesterfield (Mr. Varley), said that the present world surplus of steel would last for many years. He said:
"the sales opportunities for BSC, both at home and overseas, on which the ten-year development strategy of February 1973 was based, are no longer realistic, even on the most optimistic assumptions. In present market conditions, the Corporation has substantial over-capacity …neither the Corporation nor the country can afford the cost of the mounting over-capacity that would result from unchanged policies."—[Official Report, 22 March 1978; Vol. 946, c. 1512.]
That was facing reality then as we have to face reality now. I hope that whoever replies for the Opposition will spell out precisely what they are saying about the capacity of the BSC. Either they are saying that they do not have the expertise to give a figure, which is a perfectly credible position to take—certainly, it is a position that I would take—or, as I understand the motion, they are saying that there is a specific increased level of capacity which is somehow desirable.
In opening the debate, the right hon. Member for Salford, West (Mr. Orme) mentioned a figure of 22 million tonnes. I did not quite understand what that figure was or whether he was suggesting that the capacity of the BSC should be increased to that figure at the present time.
Mr. Orme: I was referring to the gap between the BSC's forecast of 14·4 million tonnes and what would be needed if we returned to normal production. That would take the figure to just over 21 million tonnes. Obviously, some of that capacity would be met by imports. We are saying that that gap should be closed by BSC production and that we should not become increasingly dependent on the import penetration which is at present taking place.
Mr. Stewart: I am grateful to the right hon. Gentleman, and I apologise to him for not understanding that point the first time he made it.
If the Opposition are saying that the capacity of the BSC ought to be increased substantially, that seems to fly in the face of economic reality. It also flies in the face of the figures given by my right hon. Friend about over-capacity worldwide, in Europe and in the British market. The situation is grave and difficult. The MacGregor plan is imaginative. It faces reality and it gives BSC employees
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a chance. The BSC is living not only on borrowed money but on borrowed time. Let us hope that in the next few months that time will be used constructively.
7·33 pm
Mr. Roy Hughes: The crunch question which seems to be posed, both in the debate and outside, is whether Britain needs a steel industry at all. No so long ago, that would have been a ridiculous question. However, we know that today influential bodies and organisations would answer "No" to that question—in other words, we no longer need a steel industry.
In recent years, I have supported the British steel industry throughout its trials and tribulations. I am glad to note that we are now receiving the support of none other than Sir Terence Beckett, the director-general of the CBI, who recently described steel as a sector of the economy which should have further Government financial support. He is absolutely right, because steel is a basic industry, and without it we should have no future as a manufacturing industrial nation.
When the upturn in the economy comes—at times it seems like waiting for Godot—if our steel industry has been run down too far we will be held to ransom by foreign competitors in relation to both prices and delivery dates. We also know of the massive adverse effect which such large imports of steel will have on our balance of payments.
Once the principle that Britain needs a steel industry is accepted, it is the Government's job to encourage and sustain it. I appreciate that it is no good minimising the extent of the large financial losses that have been made by the BSC. One cannot turn a blind eye to those losses. But we must ask why the BSC is at present in such a parlous state.
As has already been said, part of the reason is the value of the pound. I know that there are counter-arguments, but that has a detrimental effect on British steel exports.
We also know that in certain sections of the home economy the demand for steel has collapsed. That has been due partly to the Government's policies and partly to high interest rates. We also know that imports are penetrating our market. Prices of British steel are alleged to be 10 per cent. higher than those of our foreign competitors. For a long time, I have been in favour of import controls. One would have thought that Government action was needed in regard to steel imports.
There seems to be common ground on both sides of the House about energy costs. Many hon. Members would agree that preferential treatment should be given to our industrial concerns. We have natural gas in abundance. Likewise, we have reserves of coal that will last for 300 years. The hon. Member for New Forest (Mr. McNair-Wilson) gave a graphic example of the firm with which he is connected, which has a similar establishment in Calais. He pointed out that energy prices in Calais were 30 per cent. less than those in the United Kingdom.
We in South Wales have often heard the argument about the price of coking coal to the steel industry. We know of the huge subsidy given by West Germany in that respect. I feel that the Government should do something about that aspect of energy costs, which have such a detrimental effect not only on British steel but on other sections of British industry. Such measures are surely better and more profitable than the millions of pounds that we at present pay out in social security benefits, let alone

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the loss in taxation from people who should be in work. Likewise, a tremendous amount of rateable value is lost to our local authorities.
This debate comes shortly after the publication of the MacGregor report. We know that the capacity of the industry is to be reduced from 15 million tonnes to 14·4 million tonnes and that 20,000 people are to be made redundant. It is worth pointing out that only 112,000 workers are left. In manpower terms, the British steel industry is becoming very small indeed. What particularly concerns me about those 20,000 people who are to be made redundant is the fact that 5,000 of them come from Wales. Our difficulties are now becoming on a par with the tragic circumstances of the 1930s.
I speak as one who comes from the Monmouthshire valleys. I cannot ignore the tragic plight of Ebbw Vale. I know all too well what a wonderful community it is. Ebbw Vale has great sporting and cultural traditions. Above all, it is bedded in those basic industries of coal and steel, with all the traditional skills that go with them. These basic industries, certainly in Ebbw Vale, have been drastically run down. This little beleaguered valley town needs Government help on an unprecedented scale if it is to survive. I believe that the Government should heed this call and come to its aid.
We in Newport were pleased about the outcome of the MacGregor report in relation to Llanwern. It is now being described as the miracle of the British steel industry. It has emerged successfully from the slimline operation. Its industrial relations are, and have been for some time, excellent. Its manning levels now compare with those of any of its competitors throughout Europe. Is it any wonder that Mr. MacGregor should describe it as one of the great integrated plant's of Europe? Llanwern is now outstripping its competitors. Optimism is in the ascendency. I notice that the works committee at Llanwern is calling for the relining of the major No. 37 blast furnace. It is also calling for further investment in the continuous casting plant. It says that a suitable site is availaable. The men believe that this would be a worthwhile investment. In view of the esteem in which Mr. MacGregor now holds the works, I feel that the project will receive his full backing.
British Steel can and must be saved. The ball is firmly in the Government's court. We recall the high drama of the debate in the House on the Queen's Speech and the intervention of two ex-Prime Ministers. The right hon. Member for Sidcup (Mr. Heath) was concerned about the policies of his own Govenment and that the Conservative Party should not once again be labelled as the party of unemployment. He urged a change of course on the Government.
The right hon. Gentleman's message was reinforced by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). He pointed to the social tensions that are developing in South Wales as a result of the heavy unemployment, which is now on a par with that of the 1930s. He called for massive public expenditure. I endorse that proposal. One thinks of the houses, schools, roads and hospitals that are needed in our community. Almost all the necessary materials are home-produced and the pound is riding high. Such investment could be used to stimulate the economy. This would lead to a dramatic drop in unemployment, which should be our highest priority. A way must be found to take our people out of the dole queues.
7·45 pm
Mr. Bill Homewood: I recall that about 12 months ago the House was discussing the closure of Corby. I warned the Secretary of State on that occasion that there would be no gain to the public sector borrowing requirement from the closure of the steelworks. It has been said that giving aid to steel areas is important. The unemployment level in Corby is now 19·8 per cent. Corby has been described by the Minister of State for Industry, the noble Lord in the other place, as having the highest unemployment rate in a travel-to-work area in this country. The town is showing the ravages of that situation. The noble Lord, when visiting the area last Friday, talked of the desirability of maintaining an image of the town that would attract new industry. What image of a town can be sustained that will attract new industry when the unemployment level is 19·8 per cent.?
When the Secretary of State talks about the aids that should be given to steel towns, it has to be pointed out that no community that has suffered the devastation that Corby, Consett and Shotton have suffered can realistically view recovery taking place in less than four to five years. By the end of January next year, 1,300 firm jobs will have been created in Corby. In that same period, owing to the recession, 800 jobs in small works will have disappeared.
I shall come to what I believe should be done about the steel industry. In passing, on behalf of my constituency I should say that I believe that it is nonsense that Corby has had its application for special development area status turned down.
Mr. Orme: Shame.
Mr. Homewood: I urge the Minister to reconsider that situation. If the Department of Health and Social Security wishes to carry out a realistic investigation of the link between social evils, social deprivation and unemployment, it can be found in Corby, though on the Government's record of steel closures Corby's record of having the highest unemployment record in a travel-to-work area will probably soon go to someone else. It could have been argued, I suppose, that Corby was running out of time as a steelworks, but, as some of my hon. Friends have said, we now have the situation that it is not only the old-fashioned steel plants that are going to the wall. Modern steel plants are also affected. Mention has been made of Templeborough furnace and Velindre tinplate mills going to the wall. Their productivity is probably comparable with that of anywhere in the world, as was Consett's. How can it be argued, therefore, that a rational policy is being devised by the current chairman? It has been mentioned on the Conservative Benches that there was a suspicion of Government interference in that plant.
I am not levelling that complaint. Indeed, I could not possibly support it. However, in the quest for viability there is no logic in 14,400,000 tonnes. That figure must have been plucked out of the air. It may have been urged on certain people in the BSC that it was undesirable to close down large plants in sensitive areas.
We do not have a devastating slump in demand for steel throughout the world. The United States, using the trigger, mechanism on prices, has some plants that are producing more steel than they were 12 months ago. Japan has definitely increased its production. Production in the EEC is down by about 5·3 per cent., yet in the United Kingdom there has been a reduction of about 48 per cent.

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I know that the steel strike could not possibly have helped the steel industry, despite my questioning of the hon. Member for Brigg and Scunthorpe (Mr. Brown). However, we must not kid ourselves that a fall in the share of the home market from 54 to 48 per cent. represents a reduction of 48 per cent. in the total output in Britain over 12 months. The figures do not add up, and, therefore, we must look for other reasons.
By the end of the year, under the new programme the BSC will have lost about 64,000 jobs in 16 months. There will have been a reduction from 166,000 jobs to 102,000. No other country has approached even 50 per cent. of those losses. The British iron and steel worker is the lowest-paid worker in that category throughout the industrialised Western world. Our workers receive 60 per cent. of the German workers' pay. There must be a substantial cost advantage. To my knowledge, no one has engaged in the exercise of establishing productivity on the basis of the cost of wages. British Steel must be competitive with the rest of the EEC's steel industries. If it is not, the BSC must be squandering what should be a natural advantage.
The corporation is not known for its aggressive selling, and the unions have been highly critical of that aspect of its activities. I do not believe that it is responsible to a large extent for the situation in which it finds itself. It is the victim of three main factors. Interest charges bear on the corporation to an inordinate degree. The credibility of the statistics that it publishes about its financial position is immediately undermined, in the minds of both politicians and the public, by that factor.
Energy costs have been mentioned almost ad infinitum throughout the debate. They must be given serious consideration. It is no good the Secretary of State saying that he will do that in the new Session. Ian MacGregor is promising to close the BSC if it is not viable within six months. The corporation cannot wait indefinitely for consideration of its energy problems or of its financial reconstruction in the new Session. Unless we can put matters right, nothing that the work force or the unions can do will do any good for the BSC.
The corporation plans to produce 14,400,000 tonnes on a competitive basis. It is now producing only 11 million tonnes. It will not sell the extra production. It will not be able to sell what it is producing now unless certain things are put right.
The third factor, which is more important, is domestic economic policy. I am pleased to note that it appears that Professor Friedman has been made redundant. Surely, he and his policies are more the reason for the corporation's present position than any other factor. We are in not a supply crisis but a demand crisis. If we were in a supply crisis, imports would be rising catastrophically for the balance of payments, because they are so much cheaper than our own products. However, demand is not present for goods in general, leaving aside import penetration in Britain.
Much of the fault for that lies in the Government's attitude to public expenditure. Demand must be created, and Conservatives have no recourse but to turn to Keynes. I love the way in which the Secretary of State for Employment brings Keynes down to one sentence. I love the expression "throwing money at unemployment". However, if we do not do that, how are we to overcome
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unemployment? It is the only long-term prospect for the steel industry. We can bandy about levels of production from now until kingdom come, but that has no relevance unless the Government are prepared to do a U-turn to bolster the durable consumer industries on which a modern economy depends and on which the steel industry depends.
7.58 pm
Sir Frederick Burden: I had no intention of intervening in the debate when I arrived in the House this afternoon. I have no steel interest in my constituency, but I feel impelled to intervene because in many instances we are in a rather unrealistic world. I hope that the hon. Member for Kettering (Mr. Homewood) will excuse me if I do not take up his remarks in any great degree.
The hon. Member for Kettering said that our steel workers are much less well paid than German steel workers. However, within a few minutes he also said that we should be facing a flood of cheap steel imports unless we erected barriers. Either British steel workers, who are less well paid than the Germans, are producing far less per man or else the German steel workers work harder and are far better equipped than ours and thus produce much more cheaply.
The hon. Member for Newport (Mr. Hughes) appealed for import controls. If we impose import controls on raw materials, we shall find that overseas customers will impose restrictions and controls on our finished goods. The hon. Gentleman said that the steel industry should be subsidised. What, other than subsidies, are the many million of pounds of taxpayers' money that have been poured into the steel industry for many years—a practice which this Government are continuing? If that is not subsidy, I do not know what is. The Government have been pouring millions of pounds into the steel industry. That is subsidy. When Opposition Members talk about additional subsidies, what on earth do they mean? What further subsidies—
Mr. Homewood: The hon. Gentleman should remember that most of the large sums that have been poured into the steel industry are to pay for redundancy payments. Much of the money that was poured in in the past was to pay for exorbitant interest charges on capital borrowing. The hon. Gentleman must address himself to the fact that other steel industries receive substantial subsidies in the form of energy, transport costs and so on.
Sir Frederick Burden: With respect to the hon. Gentleman, that is not the case. The subsidies were being paid long before the interest rate was at any height. The subsidies have been paid for many years under Labour Governments. The hon. Gentleman mentioned energy costs. Unless the Opposition can show that the energy costs are enormous in the countries that undercut us, such costs cannot have anything but a fractional effect on the ultimate price.
Subsidising coking coal so that British Steel could obtain it at a cheaper price has been mentioned. One of the unfortunate features of British Steel during recent years was that it was able to import coking coal from America and Australia at between £10 and £20 a tonne cheaper than it could buy it from Britain, where it lies in enormous quantities under the land. There is something seriously wrong with that.

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There is no doubt that as a result of the Industrial Revolution Britain became the steelmakers of the world. We also controlled a great deal of the world through our imperial powers. We created competitors in the steel markets. We installed machinery for them and we gave them our expertise. They are now competing with us and will continue to do so. In many instances they have improved on the machinery that we installed.
For example, let us consider Japan. Before and immediately after the war, we looked upon the Japanese and their production in a derisory fashion. We called them copyists. Japan is now one of the most powerful industrial countries in the world. I read only recently that it is producing a type of steel for its motor industy that we have not yet matched and which is highly thought of. The Japanese are as good as we are in terms of quality. I say that reluctantly, but we must face those facts.
We must accept that our steel must be competitive both in quality and in price, if for no other reason than that a considerable amount of the finished goods that we export are made of steel. Above all, I want to see an effective, competitive and long-standing steel industry. It must be the base of any industrial country. The falling off in our ability to compete in the world steel industry has not happened during the past 18 months. It has been happening for the past 13 years under Labour Governments. They talked blandly about rationialisation and said that the British steel industry needed changes. They did not face the fact that that would mean redundancies and drastic surgery. Surely any Government, with Ministers in close contact with the nationalised corporation, must have known the position: into which British Steel was drifting. Yet nothing urgent was done.
I deeply regret unemployment. I have lived long enough to see and to know the tragedy that unemployment can impose on people. Thank God, the effects today are not nearly as bad as they were in the 1930s. Nevertheless, unemployment destroys pride and ambition and often breaks up families. It imposes financial hardship upon them, even today. The mental reaction is often worse than the physical reaction because of the change in people's lives.
Neither recrimination nor exhortation or rhetoric will change the position in the British steel industry. Rather than trying to blame the Conservative Party for the present position, Opposition Members, and we on the Conservative side of the House, would do well to realise that the circumstances that have arisen were inescapable because the industry was left drifting for far too many years. The Oppposition accepted that rationalisation was necessary. What did they mean by "rationalisation" if they did not mean some closures and some cuts in the number of people employed? Are they now saying that the steel industry should have continued to produce steel, with everybody in all the steel mills fully employed producing steel that we could not sell? What could be done with that steel? It is the shortest way to bankruptcy for any industry to produce in great quantities goods that it cannot sell.
The difficulties of the British steel industry have been exaggerated by the failure of some of the users of steel in this country. I am talking about the car industry and British Shipbuilders, both bulk users of steel. It has not happened in the past 18 months. Those industries have mechanised, with considerable resistance from a great many of the unions. We have to go still further, and I hope that it will be with greater union appreciation and agreement than in
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the past. Robots will largely replace mechanisation as we know it today. We must lead in that sphere if we are to ensure that our steel and other industries can compete in world markets.
Let us not forget that for many years we in this little island controlled markets throughout the world. We could determine the conditions under which others competed with us in those countries. We could adjust the markets so that we always had preference. With the break-up of the Empire, those days have gone. We are now in the market place on similar terms with practically every other industrial country in the world. The only way to ensure our economic future is to make sure that our goods are competitive in every possible way and that our delivery and design and the type of goods manufactured are right. We still have the ingenuity and character to face our difficulties and once again take advantage of modern technology.
I believe that the real facts of the steel industry are shown by Mr. MacGregor saying that he hopes to get back only 54 per cent. of the home demand for steel next year. That indicates that we have not been competitive. We have not been able to hold our own markets—and we are the original steelmakers of the world—with factories that we say are up to date. That is an indictment of someone in Britain. Is it management or unions?
I have listened carefully today to Opposition Members who criticise and say that the unemployment in the industry is a tragedy. On almost every occasion, they oppose closures. Will they now come into the open and tell us exactly what they propose for the British steel industry? Do they propose to employ all the men who are now engaged in the steel industry and return to work in the steel industry those who have lost their jobs? What will they do with the steel if we cannot sell it? Will they still retain those men? How much more money do they propose should be poured into the steel industry if the MacGregor plan fails? It is easy for the Opposition to criticise when they have been out of Government for 18 months, but much of what is happening is a legacy of what they have left behind. It is now up to them to tell us what they would do in the circumstances.
8.14 pm
Mr. D. N. Campbell-Savours: The hon. Member for Brigg and Scunthorpe (Mr. Brown) made a powerful and courageous speech, but it was also a speech of grand and gross betrayal. Even had he accepted the recommendations in the MacGregor report, had he been truly representing his constituents, he should have asked the Secretary of State for Industry to evaluate the findings in the report and not state his unequivocal support for the recommendations.
Tired, despairing and shattered last weekend, I returned to my constituency. Exhausted, I opened my mail to find an announcement from the BSC that under the proposals in the corporate plan 430 people in my constituency were to lose their jobs. Those job losses are in addition to the 250 people who lost their jobs at Bekermit, in the constituency of my hon. Friend the Member for Whitehaven (Dr. Cunningham), the 500 redundancies announced on 1 March as demanning exercises and the 826 redundancies announced one and a half months ago in Workington. In total, 2,000 jobs have been lost in West Cumbria in the current recession. There is also short-time working at Ogden and Lawson and Cumbria Engineering

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and single-shift and short-time working on the pig iron section of the BSC plant in Moss Bay. In addition, there is recession in the rolling mill, which, although it manages to work full-time, desperately needs the contracts that stem from the investment in British Rail. Because of the starvation in Government expenditure, those orders are not being brought forward.
I have not yet referred to one sector of the steel industry in West Cumbria—the Distington foundry, which was refurbished at a cost of £10,769,000 only 38 weeks ago. had it not been for the industrial dispute, the Queen would have opened that plant in Workington on 1 March. It is capable of producing 146,100 tonnes of ingot moulds and bottom plates for the internal consumption of the BSC and consumers outside. The propaganda put out by the BSC when the foundry was opened in March is noteworthy:
"Distington foundry (a part of BSC Cumbria) is now one of the largest foundries in the world. It not only has the most modern melting facilities, it incorporates the most advanced foundry technology to date, maintaining a consistency of high-quality standard in metal composition, temperature control and dimensional accuracy of product."
That new complex, that Aladdin's cave of British technology, human resourcefulness and West Cumbrian skill, is to close under the recommendations of the corporate plan. The sense of anger that permeates Workington and the sense of betrayal of the steel workers who believed that their future was secure with the £10½million investment are indescribable. They are further incensed by the rumour that forges, foundries and engineering managers, forced to compete since reorganisation of the corporation with BSC Cumbria, have deliberately doctored statistics to destroy Distington. I hope that Mr. MacGregor will accept that, following the doctoring of the statistics, the British Steel Corporation is required to put back into the melting pot the whole question of the end to Distington's operations for further evaluation and reconsideration.
Why is the corporation set on a course for disaster? Why has it lurched from crisis to crisis? The Secretary of State for the Environment fronted for the then Opposition in 1976. During a debate on the Iron and Steel (Amendment) Bill, he said:
"It is a classic example of why the debate about industrial policy is so artificial. How can one expect to attract any sympathy from the men working on the shop floor in the steel industry, who are expected to bear the brunt of the social and human change, when they are not told the whole story?"—[Official Report, Standing Committee G, 26 April 1976; col. 48.]
That is at the heart of the BSC problem.
Over the years, industrial relations have been poor. Industrial relations are measured not only on the basis of the number of strike days lost or by industrial disputes; they are measured by gauging the relationship between people on the shop floor and management. In few industries are industrial relations so divisive. Nationalisation has been undermined by a new aspirant managerial class which is committed not to public ownership but to old-style managerial techniques. As a result, a deep and seething contempt for large numbers of people involved in management has developed amongst many members of the work force in the British Steel Corporation. People who are not committed to the industry
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should get out. They have caused what is happening today. Their lack of decision-making has led to the problem that confronts the industry.
Their position has been further consolidated by the apathy of the corporation and by the corporation's failure to set a clear objective for the social control of the industry. This whole shabby spectacle has been underpinned by two simple processes—the maintenance of differentials in access to information, and the creation of a social industrial order inside the corporation based on awards of concessions and privilege in working conditions. Each in its own nasty, petty little way has divided the steel communities.
The problem is not confined to the place of work. It transcends the perimeter of the workplace. It spills over into the local communities. It reinforces political and social sensitivity. The BSC will lurch from crisis to crisis until it is stopped.
I can refer to the social conflict only as the "maladie Anglaise". Yet the people who determine the original principles of public ownership never foresaw such a conflict. They saw public ownership as a partnership in industry between all people in industry. That was their objective. I have seen good men promoted. They have not changed. The industrial socio-managerial conflict in the industy is destroying them—promotion one day, rejection the next.
The problem was brought home to me most forcefully at a meeting four weeks ago, when I invited the trade unions in Workington to meet me to formulate our policy on objecting to and obstructing the corporation's policy on redundancies. The union representatives said that they had tried to gain information but had been refused. I also tried to get information from the BSC. I was never given the written statements necessary to ensure that trade unions and politicians have the information that they require to battle against and question the corporation's economic strategy. It seems that the remarks by the right hon. Member for Henley (Mr. Heseltine) in 1976 were correct.
That is why, when Mr. MacGregor was appointed chairman of the BSC, I did not attack the appointment. His record in America at Jones and Lockwood makes it clear that he brought trade unions into the corporation's management and turned the company into a profitable concern. I thought that he would be able to do that in Britain. That is the real challenge facing Mr. MacGregor. He must turn aside the socio-industrial influences of the past. That is the real corporate challenge. We await the corporate plan.
The BSC has two alternatives. It can pursue a policy of partnership, access to information by all the trade unions, an understanding of the people on the shop floor and their problems and an end to the industrial conflict. Alternatively, it can invite conflict, inefficiency, the retention of the few restrictive practices that remain, the retention of the conflict and the formation of increasing numbers of tripartite alliances such as that formed recently in South Wales between rail, steel and coal workers.
The solution also requires much consideration by the trade unions. It is wrong that the BSC should have to negotiate with a great number of unions in its annual negotiations. The time has come for the Iron and Steel Trades Confederation, the blastfurnacemen's union and the National Craft Co-ordinating Committee to gather round the table and take a clear decision. They must decide on a one-union industry. With such an industry, we could

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go forward with changes in line with those which I have outlined, and we could look forward to the construction of a real and meaningful corporation that could play its part in the commercial affairs of the economy.
8.27 pm
Mr. John H. Osborn: I wish to talk about the strategy that Mr. MacGregor, the Conservative Government and others who are interested in the future of steel and our basic industries must consider. Steel workers, managers, metallurgists, skilled rollers and melters live in my constituency. It might be churlish to say that I do not wish to speak about the destiny of the steel industry today or before Christmas. I cannot honestly say that I have yet had time to understand the detailed discussions that Mr. MacGregor has had with the BSC management. Detailed consultations are still to take place.
I do not claim to be another managing director of the British Steel Corporation. I am a Member of Parliament who will take the opportunity of looking after the interests of those who work in the steel industry, particularly the steel industry of Sheffield. Of course, I have had a communication from John Pennington, who has responsibility for British Steel's activities in Sheffield. Of course, Ian MacGregor attended a parliamentary Industry Committee a week ago, but he could not speak about his plan because his lips were sealed. He could do no more than outline the factors that he had to take into consideration.
The hon. Member for Workington (Mr. Campbell-Savours) spoke about Ian MacGregor's record in the United States, particularly with the AMAX corporation. I have heard his predecessors, Lord Melchett, Sir Monty Finniston and Sir Charles Villiers, outlining how they would tackle their respective plans for capital investment and expansion, but I have been impressed by Ian MacGregor's presentation to Parliament and on television. I hope that he has given confidence to those who work in the steel industry that he is a man who knows what he is talking about from a lifetime of real experience of finance and the detailed metallurgy and infrastructure of the steel industry.
In my constituency there are directors, managers and skilled worker; in the private sector of the steel industry, many of whom have grumbled about the tax levy on their activities. The levy has been raised by successive Governments, including the previous Conservative Government. In general, State industries are monopolies and they do riot respond rapidly to market forces and pressure. That is particularly so of British Steel, which after a series of huge subsidies or capital investment programmes—which we supported in this House—has perhaps at the end of the day squandered not only those interim subsidies but the capital investment, because the ground on which it has had to operate has changed.
I was mildly surprised that Mr. MacGregor's plans mean only a cutback from 15 million tonnes to 14½million tonnes. I recall that 15 years ago, when we first talked about the things that a wonderful nationalised steel industry would do—the right hon. Member for Sheffield, Park (Mr. Mulley) and I discussed the subject—after the Benson report, we were talking in terms of 33 million and 38 million tonnes of steel out of Britain. We talked of the wonders that our State enterprise would do. But what a catastrophe a Conservative Government now have to face. An analysis of the figures for the British Steel Corporation
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for the late 1970s shows the great losses on its current activities. Therefore, I am impressed by Ian MacGregor's realism, and I am impressed by the team around him in the BSC. I should like to give his proposals more thought, and I hope that my right hon. Friend the Secretary of State for Industry will also give them more thought.
Let us have no doubt that the situation in Sheffield, Scunthorpe, Wales and Normanby particularly is shocking for all those who thought that they were secure in the British Steel Corporation. The shock has caught on in steel and engineering throughout Great Britain and the world, and the private and State sectors in Sheffield have the same problem. We have spoken about Rotherham and Templeborough. I visited the open hearth furnaces in Templeborough as an undergraduate nearly 40 years ago, and I was impressed by the difficulty of the work there. Together with a number of Labour Members, I was instrumental in obtaining a presentation in Westminster Hall of Operation Spear in which the collaboration and exchange between management and shop floor in bringing in the electric arc furnaces, which were causing problems, went through smoothly.
There are two factors that I have been considering. Why did the steel industry come to Sheffield and Scunthorpe? About 33 years ago, I had occasion to visit the Forest of Dean and Coleford to find out how Mushet, who was associated with my family about a century ago, had acquired the specification for a cutting steel that would cut other steels. He had worked closely with Bessemer, as is well known within the Metals Society now, and the Iron and Steel Institute at the time, but perhaps the fact that Bessemer had found the solution to blowing steel in a converter by using manganese oxide, and that Mushet provided the answer without a patent, was the reason for his secrecy later. The Forest of Dean had coal, and iron was always nearby. Just over a century ago Sheffield had water power, it was known that there was iron ore nearby, it had coal, and nearby there was fluorspar and limestone. It was the availability of materials that brought steel to Sheffield and Scunthorpe and Corby developed the iron ore fields of Great Britain, but by international standards the iron content is low. In a high-cost energy era, a low iron content makes smelting expensive.
In the early 1960s, the Duke of Edinburgh study conference on human relations within industry in the Commonwealth went to Canada. In 1956 I attended the first conference. Management and trade unions were appalled when they visited a mining area in Canada. They found that men had had to leave their homes because there were no other opportunities once the mineral reserves had been exploited. Recently, I have seen Ballarat and other such areas. The key factor is that wealth is where wealth is.
Another factor is productivity. It can be increased by manual skills and the right equipment. However, on a larger scale the Japanese have tankers with a capacity of 150,000 tonnes for coal and iron ore. Other than at Hunterston on the Clyde, Britain cannot use such ships. Productivity goes with scale. Some years ago I visited the Nippon steelworks. Mr. MacGregor has reminded us of his recent visits to Japan. In Japan, one or two steelworks can produce the equivalent to all the steel that we produce in our steelworks. Mr. MacGregor faces an immense challenge in terms of productivity. This country must be honest and recognise that challenge.

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Those who have the raw materials are at an advantage. About 25 to 30 years ago, I was making speeches about the fact that wealth is where wealth is. I little realised how relevant that would be to the 1980s. The operation of electric arc furnaces depends on the cost of electricity. Because we believe in having secure electricity, the industry is 60 to 70 per cent. dependent on British coal. By international standards, it is high-cost coal.
In coal debates, Labour Members have argued that the prosperous pits of Yorkshire, Derbyshire and Nottinghamshire should support the more costly pits of Wales and Scotland. They did so when the Labour Party was in power and have done so with the Conservative Party in power. That policy has been supported by both sides. However, the steel industry has had to pay the price. It has been buying its coal at one of the most expensive rates in the world.
Why did we have a fuel oil surcharge? We did so to protect our coal industry. In a steel debate, will Labour Members advocate that we should import coal? Will they change their minds again as soon as the House has a coal debate? The country faces a dilemma.
This Session, I have been absent from the House because I have been in Australia with the Commonwealth Parliamentary Association. I spoke to India's new Minister for Energy. He told me about the huge potential of the Himalayas for producing cheap hydroelectricity for Indian steelworks and other factories. In Australia, I visited my old friends Broken Hill Proprietary. That company started with iron ore in one place and coal in another, and exchanged ship loads between Wyala, Newcastle and Port Kembla. Although the company made heavy losses on steel, it recouped its losses on gas, oil and petrochemical activities.
This House will deal with a constitutional crisis in Canada. I went to British Columbia and learnt not only of its huge coalfields and cheap coal—similar to that found in Queensland—but that Alberta objects to federal control of oil pricing. Alberta oil and gas, and, to a certain extent, British Columbia gas, are exported to the United States at a fairly high price. The United States is not now buying those products in the quantities that it ought, but the high export price means that gas and oil can be sold cheaply in Canada. The producers want bigger returns and perhaps they could go into shale oil. Other nations also have problems with energy for their basic industries, including steel. Of course, Canada also has hydroelectricity.
Britain has the energy. We have the coal, but, alas, it is costly. We have oil and gas, but they have to be extracted in perhaps 300 ft., 500 ft. or 1,000 ft. of water, and long gathering pipelines are required. The cost of extraction is about 10 times the normal cost in the Middle East. Britain has no hydroelectricity. France has that and nuclear electricity. I am glad that our Select Committee is looking at the complaints of the CBI and the difficulties facing our steel industry.
A Social Democrat in the Western European Union, Mr. Flamig, with whom I have worked on the EEC energy and research committee, pointed out recently the importance of security of energy supplies. Italy, Austria and Switzerland obtain gas and oil through pipelines across the Mediterranean and from the East. Germany gets 17 per cent.—it could become 30 per cent.—of its gas
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from Warsaw Pact countries. At what price? What advantage do those countries have that we do not have—and at the expense of security of supply?
There are many difficulties facing the steel industry, of which energy is one. The House has to look at the matter coldly and coolly. It is important that industry improves its productivity and that we move our industrial energies into informatics, communications and perhaps the pharmaceutical chemical industries, where our skills can be used and where there are markets for our products.
The House must deal with steel in the light of other factors. I hope that the House will forgive me for having aired some of my thoughts, but I have done so in the hope that my hon. Friend the Minister will find them helpful.
8.42 pm
Dr. Jeremy Bray: No one can doubt the commitment of the hon. Member for Sheffield, Hallam (Mr. Osborn) to the steel industry. He speaks with knowledge of the industry, and believes in its future. He wants a changed steel industry, certainly, but I wish that he could convince the Secretary of State of the importance of the industry's future.
There have been announcements of plant closures and demanning, but the general reaction has been that the steps were not as severe as had been generally expected. We certainly had our fears in Scotland. Like hon. Members from other parts of the country, Scottish Members have met Ministers and the chairman of the BSC to make the case for the continuation of what is left as a hard core of the Scottish steel industry.
Mr. MacGregor said that if anything happened to Ravenscraig the next step would be the liquidation of the BSC. That is a modernised plant, but it is not viable on its own. To have a viable steelmaking plant, one needs viable finishing mills. If anything had happened to Gartcosh, there would have been a threat not only to British Leyland at Bathgate, to Talbot at Linwood and to Hoover but to the possibility of attracting many new firms that we need in the Scottish engineering industry to replace the jobs that we have lost.
If we did not maintain both the Dalziel and Clydebridge plate works, the BSC would not be able to supply the new markets that it is tackling. Mention has been made of the BP Sole order. That is an important order, but it is only a start. We have to get the order for the North Sea gas-gathering pipeline, which must be made of X65 steel, which the BSC said previously it was not able to make. It says now that with the new plant available at Ravenscraig it can supply such steel. It can get the quality of steel from the plate mills and the 44-in. pipe from the mill at West Hartlepool.
The Craigneuk works has a medium steel foundry and is totally modernised, manned to international standards and highly competitive. The bar mill is suitable for meeting small orders for products that the Dryburgh mill is not able to supply economically.
At Clydesdale we have another works that is vital for the North Sea oil industry, with its supply of tubes for oil wells. At Glengarnock the steel industry owes a debt of honour to maintain the small mills remaining in that devastated area.
We entirely accept within Scotland the need to continue to raise efficiency. We have lost many thousands of jobs—4,000 in my own constituency. The corporation lost 52,000 jobs last year. We are losing a further 650 jobs at

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Ravenscraig and Gartcosh alone as a result of the corporate plan. These are jobs spread right across the work force; they are not just production jobs but craft and staff jobs as well.
I was glad to learn this morning in the Financial Times that the Llanwern plant, according to the BSC, has achieved some of the tightest manning levels in Europe. Bully for Llanwern. I am sure that it has.
At Ravenscraig, on the ore terminal at Hunterston, in the stock handling yard, in the sinter plant and in the BOS vessels we have levels of manning which, from the very start of those new plants, have been fully competitive with international manning standards. They started up only on that understanding.
Ian MacGregor said the other day, after a visit to Japan, that one could fire a gun through the middle of a steelworks there and the chances of hitting anyone would be virtually nil. We are not in the habit of firing guns at Ravenscraig, but there are vast areas of the works where one can stand with machinery all round one and not a man in sight, never mind shooting one with a random shot from a gun. The same is true at Hunterston and in the stock yards, the sinter plant and so on.
With these developments that have taken place, I really cannot recognise the industry that some hon. Members have described, with no rationalisation and so on. We have completely got rid of all the open hearth furnaces. We have international standards in new plants. We have a kind of steel worker who did not exist before in the running of highly automated plants. It is a different industry.
But against that background there is certainly a need to maintain continuing pressure in order to achieve more competitive costs. Mr. Jake Stewart, the managing director of the strip products division, told us this week that Port Talbot and Llanwern have highly competitive costs. I am glad to hear it. I am sure that they have. Our standard costs in Scotland are lower and progress towards meeting those costs has been substantial in the past year. It is continuing and needs to continue further.
We can meet these international standards of competitiveness, measured by any technical standards—blast furnace efficiencies and so on. These are measured in fractions of 1 per cent. The cycle times on BOS vessels are watched avidly by the steel workers involved. Maybe they need to be better integrated into payment schemes. Maybe there is a need to spread the incentive payments up higher into the management levels, so that not only the steel workers but the plant managers and the technicians get the production bonuses. Maybe those incentive levels need to spread right up to the very top levels elsewhere in the corporation—not to the chairman, because he seems already to have taken ample care of that aspect himself.
We shall not achieve that unified commitment to maintaining output in an industry which constantly depends on people being quick and accurate in their reactions if we maintain the semi-feudal structure that still remains in the industry. My hon. Friend the Member for Workington (Mr. Campbell-Savours) was entirely right to point to the need for an integrated, unified staff grade structure within the industry. On the pattern of union representation, he made a courageous point. It is widely agreed in the industry that there is a need for rationalisation of negotiating procedures.
The Secretary of State was on a wholly legitimate point when he reminded us of the cost of the British Steel
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Corporation to the taxpayer. But the first representative of the taxpayer is the House of Commons. The right hon. Gentleman is wrong if he thinks that the House of Commons will allow him to get away without accounting not only for the BSC's recommendations in the corporate plan but for the assumptions about the economic future of this country that the corporation had to snatch out of the air because the Department of Industry refused to provide it with a single figure as to what would happen.
I am puzzled by the figures, such as we have been given. I do not think that the hon. Member for Hallam grasped the point. The BSC is talking about manned capacity in the industry—14·4 million tonnes—not the technical capacity of the works but the number of shifts and the level of output that can be achieved in each shift. Taking the October figure, the manned capacity seems to be about 11·4 million tonnes for the whole of the United Kingdom. Of course, one has to take the private sector off that. If that is 64 per cent., the 90 per cent. capacity that the BSC wants to reach in 1982 is 18·75 million tonnes.
No one that I know supposes that by 1982 output will have recovered anywhere near to a 90 per cent. level in manufacturing industry as a whole. Will the steel industry achieve 90 per cent. output when manufacturing industry is still far below its established capacity? Does that mean that we shall have the same old story—that as soon as manufacturing industry begins to get going we shall have shortages of capacity, lengthening delivery dates and increased imports? We shall then get into the cycle of remanning, lack of skills, complaints about there being no trained craftsmen and insufficient apprentices coming from the training schools. Is all that neglected by the BSC?
What is the Department doing about the economic assumptions that Mr. MacGregor has had to make? I know that the Under-Secretary of State takes the industry seriously. Has the Department of Industry provided any assumption about the future of the economy as a basis for the corporate plan? My information, from the highest levels in the BSC, is that it has not. Will the hon. Gentleman deny or confirm that?
The industry has had enough abuse in the House and in the press about its prospects. Its level of efficiency is as great as that not only of manufacturing and service industries but of the City of London, Fleet Street and the Press Gallery. If we go on attacking the steel industry, the workers or management, as some Conservative Members have done, we shall deserve the miserable performance that the Government are giving, spread across the economy. But we shall not get it, because they will not last long. The Government will be out before the worst damage can be wrought in the steel industry. I am clear that the steel industry is serving Britain well and that it will continue to do so.
8.54 pm
Mr. Roger Moate: I am sorry that the hon. Member for Workington (Mr. Campbell-Savours) has left the Chamber, because I wished specifically to refer to his speech. It was in direct contrast to the speech that we have just heard from the hon. Member for Motherwell and Wishaw (Dr. Bray). If the hon. Member for Motherwell and Wishaw thinks back, he will recall that the only person who has directly and violently attacked the BSC management is his hon. Friend the Member for Workington, and I thought that he did so in destructive and very unhelpful terms.

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Every hon. Member understands the anger, despair and frustration that are felt when one has major closures of works of any kind in one's constituency. But in conveying that anger to the House the hon. Member for Workington made a speech that reflected the worst aspect of this debate, whereas the speech of the hon. Member for Motherwell and Wishaw was typically challenging, constructive and probing. One does not accept all that the hon. Member put forward, but he got more to the point than did his hon. Friend. I objected particularly to the speech of the hon. Member for Workington because of his quite unwarranted attack on the courageous speech made by my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown).
The reason why I emphasise that is that it seems to me that the whole essence and overwhelming impression of this debate to any objective observer must be how extremely difficult it is for this nation to carry through any major industrial reform, no matter how much fundamental agreement there is about the necessity for that reform and the objectives. I suspect that virtually every hon. Member and every responsible trade union leader knows fairly well in his own mind what sort of steel industry we need for the future.
This is not something that has suddenly been invented by a Conservative Government or by Mr. MacGregor, because the Labour Government were carrying through broadly the same strategy. One has only to look back at statements by the previous Secretary of State for Industry and by many Government spokesmen of the time to find them asserting the need for a viable industry, the end of subsidies and a reduced capacity and, of course, supporting a whole range of closures throughout their period of office. That was not easy for them, but they were carrying through that strategy. The present Government are endeavouring to do the same.
Underlying all the party argument, which I am not decrying, one senses that there is a broad understanding that we are all aimimg for an unsubsidised industry, one that can stand on its own two feet, one which is rather smaller than it has been in the past—certainly much smaller than was ever dreamt of in the early 1970s—and one that is very competitive indeed and, therefore, requires a streamlined work force even smaller than it has today. But how difficult it is to overcome the enormous political obstacles that are put in the way of change of this kind.
The classic example is the objection that comes from every one of us in our constituencies when we see the threat to jobs and factories in them. That is fully understandable. I do not attack any hon. Member for trying to prevent closures in his own area. But I say to my hon. Friend the Member for Brigg and Scunthorpe that it is surely right to look, as he has done, to the long-term security of the jobs rather than to the immediate short-term popularity of defending every job, no matter how easy that might seem at the time. There is, surely, broad agreement in the House that we want to see the long-term survival of an efficient steel industry. That has been the objective of successive Governments. That is surely more important than the rather partisan speeches that we have heard from Opposition Members tonight.
I shall not use terms such as "hypocrisy", because it is fully understandable that Opposition Members in their present position should attack the Government for steel
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closures. But it is only 18 months since they were the Government and were pursuing almost exactly the same strategy. Surely, there is much more of a consistent theme underlying successive policies.
The Opposition have constantly been attacking the present Government for in some way failing the steel industry. The essence of the Opposition's complaint seems to be twofold: first, that the Government are not supporting the steel industry financially; and, secondly, that in some way it is the Conservative Government who have destroyed the demand for steel, undermined the market and made the position of the BSC even worse.
On the first point, even had we had—perish the thought—a Labour Government today, I cannot imagine that they would have been supporting the BSC to a greater extent than the support that is being given by my right hon. Friend the Secretary of State for Industry. A sum of £1 billion of taxpayers' money is going in to support the British Steel Corporatiom this year. It is extremely odd for the Opposition to say that more and more should be put in. Perhaps they will spell out precisely what they mean.
I shall deal next with the more serious charge by the Opposition that in the past 18 months Conservative policies have so transformed the situation as to undermine the position of steel and other industries. I am one of those who do not believe that Governments have that much effect on economies within that time scale. Had we had the misfortune of the election of a Labour Government in 1979, the situation today would not look terribly different.
Mrs. Elaine Kellett-Bowman: It would. It would be much worse.
Mr. Moate: I was being charitable. Unemployment would be roughly at the same level. Interest rates would be as high, if not higher, because the one thing that would be greater would be the borrowing requirement. There would be a higher level of public expenditure. However, very little more money would be going into supporting the nationalised industries.
The one point to which the Opposition persist in returning is the strength of sterling. They seem bemused by the idea that by a reduction in interest rates the value of the pound would fall and everything would be much easier for British industry. It is not really important to convince the Opposition otherwise just for the sake of some superficial economic debate.
It is important that British industry should not be led to believe that somehow, when interest rates fall, as they will, it will be much easier for British industry to succeed. Sterling is high largely because of North Sea oil, not because of interest rates. People must not believe otherwise. Interest rates are not the sole determining factor. As interest rates fall and we get inflation even more under control, sterling will become stronger. If one wants evidence that interest rates are not the most important factor in currency levels, one has only to consider the Swiss example. At one time the Swiss introduced even negative interest rates for overseas depositors in order to deter them, yet their currency remained as high as ever.
The whole country must understand that we are the only manufacturing nation of any size that has to live by exporting its goods while becoming a petro-currency economy. I do not think that any other nation has had to grope with that problem in a short time scale. We deceive ourselves, as the Opposition will deceive the country, with

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the argument that lower interest rates will reduce the value of sterling and make life easier for British industry generally or for the British Steel Corporation. It will not be like that. North Sea oil is an immense asset, but it makes the challenge of productivity and competitiveness even greater.
I was particularly anxious to speak in the debate to correct a misapprehension, which is that we in the South-East of England have very little connection with the steel industry. There are two facts about my constituency that may surprise hon. Members who may regard the South-East as a Conservative paradise. First, unemployment in a large part of it is running at 14 per cent. Secondly, it has a private steel mill that is producing, on current figures, about 5 per cent. of our total national output of steel.
I do not refer to it in any way to make invidious comparisions. Its circumstances are different from those of the BSC. One can create a new green field enterprise that will encounter problems that beset the BSC. The private mill was established only a few years ago. Many of the managers and workers are former BSC employees. It exports over 50 per cent. of its production, mostly to areas outside the EEC. Surely, that demonstrates that, given the right opportunity, good management and the right investment, British steel workers can beat the world.
They can succeed, they are succeeding and they will continue to succeed, given half a chance. This demonstrates the point that if one can have smaller units—I do not wish to deal with the question of ownership—marketing competitively in the world, whether it be the BSC or private steel operators, we can win through to that viable, unsubsidised, self-supporting, highly competitive steel industry which I hope and believe is the one that Mr. Ian MacGregor is portraying and putting forward in his new corporate plan. I say "I hope" because I have not read it. I have only read what the newspapers say.
One point concerns me. I feel sure that within the BSC there are viable and profitable units that can compete without subsidy, just as some—a limited and diminishing number, I am afraid—private steel mills can. There is talk of rationalisation between certain areas of the private sector and the BSC. That is fine. What we must not allow to happen is that the subsidies at present going to the BSC are simply allowed to apply to the private sector as well. The important thing is to segregate those highly profitable units, whether privately or publicly owned, allow them to compete in the market, because that is the only long-term guarantee of job security for their work force, and cut them off from subsidy. I hope that the plan does not mean the creation of new centres that will allow large amounts of subsidy to go through to the private sector, which admittedly is in great difficulties at present.
Our objective must be to get out of the recession and to end up with a profitable, competitive, unsubsidised industry. I do not think that anyone, even on the Labour Benches, would quarrel with that as an objective. The important thing is to plan how we are to get out of the recession and subsidies and to ensure that the structure is absolutely right in that respect.
I wish to deal with one point in the context of the whole European scene. If one thing is clear, it is that we are in a world recession. That is the major determining factor. Virtually every other European country has unemployment figures as high as ours and faces similar problems with
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regard to steel. We now have the Davignon proposals, which are forcing quota cuts right across the steel industry in Europe.
I wonder why so much has been made of those proposals when they are due to expire next June. That is a very short time in the lifetime of the steel industry, and I gather that there is little prospect of their being renewed thereafter. I therefore ask my right hon. Friend what is the point of that. Secondly, will he continue to use his endeavours to ensure that those quotas are not applied to export production from some of our mills? It seems to me to be the height of folly deliberately to cut back on British steel being manufactured here and sold even outside the Community and outside Europe. I hope that my right hon. Friend will continue to use his endeavours to ensure that if the quota system is to be retained for any length of time it will be modified and applied in a sensible fashion.
I conclude by reasserting my belief that the Government are doing everything that any Government could do to help to secure the viable industry which, I believe, is the united objective of both sides of the House.
9.9 pm
Dr. John Cunningham: I should begin by declaring that I am sponsored as a Member of Parliament by the General and Municipal Workers Union, which represents a number of employees in the British steel industry. Like many of my right hon. and hon. Friends and, indeed, many Conservative Members, I have sat through a very well-informed debate. We are discussing a major national asset. I was very pleased that towards the end of the debate my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) made that point. One of the pleasant surprises to the Opposition has been the almost total absence of any denigration of the steel industry from the Government Back Benches. Indeed, in the main we have heard a number of restrained and moderate speeches almost totally in support of the proposals contained in the British Steel corporate plan. I assume, like almost every other hon. Member who has spoken, that both sides of the House want to secure a viable, efficient British steel industry of which the BSC is an integral and major part.
The Shadow Cabinet's decision to hold this debate has been justified by the importance of the plan, not only to the industry but to the thousands of workers in it, their families and the communities in which they live. It has also been justified by the large national interest which is vested in a successful steel industry.
The Government must now be in something of a dilemma. They have not left themselves an alternative. There has been wholehearted support from Conservative Members—not from Labour Members, I should emphasise—for what Mr. MacGregor and his colleagues have proposed. As it was the Secretary of State who appointed Mr. MacGregor in conditions of some disbelief, he will be greatly exercised to reject the proposals which Mr. MacGregor has now put to the Cabinet. Mr. MacGregor comes with a formidable reputation and track record. We acknowledge that, but that is not to say that we accept his proposals.
The Government face a conflict. It is well known and acknowledged on all sides that the recession is likely to continue. However, the Government are now faced with a corporate set of proposals for the steel industry which, in essence, will virtually maintain all the existing modern

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capacity. It will be difficult for the Government to make those two things add up. At present, capacity is under-utilised. Capacity utilisation at a greater level means a bigger share in the existing markets both at home and abroad or greater demand at home, or both together. Certainly, the Opposition would urge Mr. MacGregor, first, to go for a bigger share of the existing markets and, secondly, to impress upon the Government the need to stimulate demand in the British market for BSC products.
The steel industry is not half as had as many Conservative Members in previous debates have tried to lead the country to believe. There is no doubt—particularly now, with the modern capacity that remains—that by international comparisons British Steel is beginning to do very well. My hon. Friends the Members for Motherwell and Wishaw and for Kettering (Mr. Homewood) both made that point, and I endorse what they said
Indeed, the large losses which the Secretary of State refers to so frequently are relatively recent in the history of the industry. As recently as 1977, the corporation was the fourth or fifth largest exporter in Britain. It had an excellent export record until comparatively recently—3 million tonnes as recently as 1978–79, which was worth about £650 million to the British economy. Those figures come from the corporation's own annual report. What of the proposals contained in Mr. MacGregor's plan? They talk about further closures and reductions in capacity. We reject that aspect of the proposals. They talk about the need to increase capacity utilisation. They talk about the need to increase exports. We would agree with both those points. They talk about the overriding need to have the wholehearted support of the work force in the industry. They also raise questions about energy costs to the industry—an issue on which views are widely shared these days by manufacturing industrialists in the private sector even more than in the public sector.
In respect of the proposed reductions in capacity and closure, there is no guarantee that cutting labour costs, although it reduces the total costs to the industry, will necessarily have an advantageous impact on unit costs of production. On the other hand, reducing capacity even further at present will bring the corporation back to a small number of very large, albeit modern plants. This will reduce its flexibility in some circumstances and possibly reduce its range of products and risk even the existing share of the market which the corporation enjoys. I think that all hon. Members are agreed that the share of the market is too small.
We are bound also to make the point that the unions, Opposition Members like my hon Friend the Member for Gower (Dr. Davies) and, indeed, the hon. Member for Brigg and Scunthorpe (Mr. Brown) have said that they will accept that some reductions should take place if a closure will save the rest of the corporation. Now, for the second time, and in some cases the third time, communities like Ebbw Vale, Workington, Shotton and Scunthorpe are being asked again to make the same sacrifice, given that the previous guarantees have been literally not worth the paper they were written on. That is the reality of the requests now being made. The case that more closures will save the corporation, that this is its last chance and that the closures will ensure viability is at best not proven and at worst discredited by the experience of the last two or three
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years in the view of these communities and their unions. We shall take a great deal of convincing that we should accept the proposed closures in Mr. MacGregor's plan.
We are told that the situation is serious and continues to deteriorate. That is not borne out by the world figures for steel production last year. These went up again in 1979 over 1978. Someone somewhere is buying this steel. It is true that British Steel's share of the market has slipped. We want to reverse that situation. It is not true to say that there has been any dramatic collapse in steel utilisation worldwide. That is not true. The figures show it not to be true.
The Minister of State, Department of Industry (Mr. Adam Butler): There is a manifest crisis in the European steel industry.
Dr. Cunningham: There is manifest crisis in the Community, as the Minister of State says. I will come to that point in a moment.
The real problem which we face is mainly imports from steel produced in other EEC member countries. That is the reality of the problem. This may be due to reasons of productivity and price. It is not for any reason of dramatic collapse in the market for steel products.
We have to take into account—we are told that Mr. MacGregor is seeing the Secretary of State about at least some of these matters—that that steel is coming from countries such as the Federal Republic of Germany, where there is massive support for coking coal and massive support for transport schemes to aid coal and steel industries as well as significant support for energy costs in other areas. Apart from those factors, interest costs do not bear heavily on the price of their products.
One of the worst aspects of Mr. MacGregor's proposals for the Secretary of State is that all the key indicators in the economy lead us to conclude that the situation is likely to deteriorate for British Steel. Output has been contracting in the economy since the beginning of the year. The Treasury forecast a 3 per cent. fall for the year as a whole, the largest fall in output in one year in Britain since 1939. Already industrial production has slumped by 9 per cent., with manufacturing output down by 11 per cent. in the past year. Half a million jobs have been lost in manufacturing industry since the Government came to power.
The Government estimate a fall of £2,650 million in stocks over the past year. There is a serious rundown of stock that makes the situation even worse. There is no recovery in sight. If the position is to be improved, the catastrophic indicators must be changed. The CBI, the National Federation of Self Employed and Small Businesses Ltd., the Chemical Industries Association, the Offshore Operators' Association, construction industry employers and the Engineering Employers' Federation have all criticised in some measure the economic and industrial policies that have led us to the present situation.
Against that background, how can it be that Mr. MacGregor will secure the improvements in capacity, utilisation and productivity that he seeks? I shall quote from the report of the iron and steel sector working party that was published earlier this year. It draws attention to the productivity improvement in British Steel since 1978. It improved again in 1979. It states that the
"United Kingdom has a higher capacity utilisation than its EEC competitors. This is certainly true in steel making but it is below average in blast furnace operations."

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How is the greater utilisation of capacity envisaged in the plan to be made effective against that background?
We are told that in the past few months there has been a 64 per cent. capacity utilisation in the corporation. If that is to be increased to between 80 per cent. and 90 per cent. as is proposed, where will the steel that is produced go? That is the question that the Government must answer. They can answer that only by changing the underlying economic situation and producing the demand in motor manufacture. It is rather ironic for Sir Terence Beckett of the CBI to chastise the Government for not giving enough support to British industry when the Ford Motor Company has the worst record of all of using British steel to make its products in Britain.
We want to see a change in attitude to shipbuilding. We have recently seen about £200 million worth of orders for shipbuilding and offshore rigs—a massive utilisation of steel—going to the Far East. The Government stood idly by and did little or nothing about that.
A crisis faces British Rail. People in London and the South-East are desperate about the cuts in rail services and the ramshackle rolling stock in which they are expected to ride. Why cannot more public investment be made available? That would give a large boost to the market for steel. We are in no doubt that that measure is essential if our steel industry is to make the necessary improvements.
The most up-to-date figures that I have were produced by the British Independent Steel Producers Association. It says that British steel production in 1980 amounted to about 9 million tonnes in the first 10 months and will be less than 11 million tonnes for the year as a whole. [HON. MEMBERS: "What about the dispute?"] There was a dispute for which the Government were largely responsible. BISPA claims that British consumption for 1980 will be about 17 per cent. below the 1979 level that is—about 17·3 million tonnes. That means that we shall have to import 6·5 million tonnes of steel simply to satisfy home demand. That will be a rise of 50 per cent. on the previous highest import tonnage of steel into the British economy. How can Conservative Members say that they are interested in sustaining the steel industry when, at the same time, they support policies that result in that position? Where will the imports come from?
In response to an intervention from the Minister, I said that the problem was largely European. Steel imports increased by 32 per cent. between 1969 and 1979. Imports from the EEC increased by 132 per cent. in the same period, rising from 36 per cent. to 62 per cent. of total imports. There is no doubt where the problem of penetration of our steel market lies. Of that increase, the Federal Republic of Germany's share increased fourfold. The Government should devote a great deal of attention to that problem.
The Minister referred to the state of manifest crisis declared by the EEC. I understand that one of the first results of any action in that area is supposed to be to do with the exports of member States. If we are to see a reduction in the appalling figures for steel exports from Europe into the British economy, that should provide a big opportunity for the BSC to increase its market share.
We are aware of the Government's proposed capital reconstruction for British Steel. We welcome that proposal. Indeed, we have pressed such an idea on the Secretary of State. I am sorry to see that he has fallen asleep. Perhaps the problems of the steel industry bore
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him. It may be that my speech bores him. Perhaps he does not want to hear the painful truth about the impact of his policies.
However, whether or not there is unanimity on the Government Benches about the proposed capital reconstruction, the Secretary of State should grasp the opportunity to write off the corporation's debts as part of a new start. He is fond of telling us that the BSC should be liquidated, as though that is an easy way out for the Government and the taxpayer. That would cost, on conservative estimates, about £1,000 million. It is no cheap and easy option for the British taxpayer or for anyone.
Mr. MacGregor wants action on energy costs. So do we. It is nonsense, as several of my right hon. and hon. Friends have said, for us, the only Western industrial nation self-sufficient in energy, to have converted that into a problem and not an asset in our industrial development.
Perhaps our biggest difference with Mr. MacGregor is when he seeks the co-operation and dedication of the entire work force. He has got off to a very bad start indeed. He is addressing communities in Wales, Scotland and the North of England. What is their recent history in relation to the industry? At Shotton, promises have been swept aside. The commitment at Consett—that if the works could get itself into the black it would be saved—has been swept aside, The commitments at Ebbw Vale after the first rundown have been betrayed in the recent proposals. As my hon. Friend the Member for Rotherham (Mr. Crowther) reminded us, the same has happened in South Yorkshire. People were assured that if they accepted redundancies their future employment prospects would he secure. Mr. MacGregor has an uphill battle.
In Wales unemployment already stands at about 124,000, in Scotland it is more than ¼ million and in the Northern region of England it is 168,000. In West Cumbria, where my constituency is situated, more than 80 men are chasing every vacancy. Will those communities easily accept proposals for further major job losses? Of course not, particularly when approached in such a ham-handed fashion. Only yesterday, The Guardian stated that 1980 has been the blackest year on record in British history, with 800,000 jobs lost. That is a measure of what has happened under this Government.
It is intolerable for the Secretary of State and his friends to suggest that we on the Labour Benches or any of the unions in the steel industry should easily accept further major lay-offs of around 20,000 as my right hon. Friend the Member for Salford, West (Mr. Orme) said.
The hon. Member for Brigg and Scunthorpe, by common consent, made a brave speech. He said that he would accept the judgment of the electors. That judgment in his area will be based not only on his speech but on the fact that unemployment in the area in November reached 10·2 per cent.—an increase of almost 100 per cent.—under the Government that he supports. That is before there are any more closures.
Mr. Michael Brown: I fully understand the point that the hon. Gentleman is seeking to make, but I would point out that unemployment also went up by 100 per cent. under the previous Government.
Dr. Cunningham: We hear much about unemployment under the Labour Government, but during the whole of the Labour Government, although unemployment rose

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considerably—by 729,000—only 45,000 resulted from people being thrown out of work. That is the difference. Government Members laugh. Of course, the Labour Government did not keep pace with the numbers coming on to the job market, but they did not willy-nilly throw 800,000 people out of work in 18 months.
The unions have not been properly consulted in the last 10 years about the British Steel Corporation Section 5(2) of the Iron and Steel Act 1975 states:
"Before reaching conclusions in consequence of a review undertaken in pursuance of subsection (1) above the Corporation shall seek consultation with organisations appearing to them to represent substantial proportions of the persons employed by the Corporation or the publicly-owned companies or of any class of such persons."
Mr. MacGregor cannot claim to have done any such thing. Since 1979 the unions have been insulted and ignored. I have mentioned Consett, Shotton, Corby and the rest. When Consett closed, we were told that the work would go to Normanby Park in Scunthorpe. Before the orders are given, that plant is to be closed.
In a speech to the Press Gallery Mr. MacGregor said, without consulting the unions "No, we are not going to consult you. We shall not involve you. I am your man. Although you are not involved in the decisions, survival is up to you."
There is no case for further closures. The industrial position is so bad that it moves leader writers in The Times to write:
"The recent history of Britain's industrial policy is a shambles so side-splitting for our competitors that pantomime writers might usefully contact Sir Keith Joseph for ideas."
That is what many people think about the Government and their performance. We have no confidence in their policies or in their approach to the steel industry. That is why we shall oppose the MacGregor plan.
9.38 pm
The Under-Secretary of State for Industry (Mr. Michael Marshall): The debate has been fascinating. I welcome the right hon. Member for Salford, West (Mr. Orme) to the Opposition Front Bench to speak on this subject. His speech was a slightly sketchy exercise. However, I sympathise with him in transferring to this subject. No doubt we shall challenge each other in detail in future weeks. I also welcome the hon. Member for Whitehaven (Dr. Cunningham).
Between the speeches of the right hon. Member for Salford, West and that of the hon. Member for Whitehaven, only the hon. Member for Workington (Mr. Campbell-Savours) attacked the BSC management. Only then did we hear a definitive rejection of much that is suggested in the BSC corporate plan. I shall make the Government's position plain. We must consider the corporate plan with the greatest care. I regret that the hon. Member for Whitehaven takes a shoot-from-the-hip attitude.
Let us look at a number of the points that have been raised in a very constructive debate. Many of the speakers whom we have heard today fall into the steel club that many hon. Members have known for a few years. Their speeches fall into two categories. First, there were speeches by hon. Members whose constituencies have been or would be affected by the proposals in the plan. The speeches of the hon. Members for Gower (Dr. Davies), for
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Rotherham (Mr. Crowther) and for Workington and the speech of my hon. Friend the Member for Flint, West (Sir A. Meyer) reflected natural constituency concern. On the other hand, we heard a number of speeches which reflected a concern for the general welfare and the serious, long-term interests of the steel industry that many hon. Members share. The speeches by my hon. Friends the Members for New Forest (Mr. McNair-Wilson), Renfrewshire, East (Mr. Stewart) and Sheffield, Hallam (Mr. Osborn) can be fairly said by any dispassionate observer who reads reports of this debate—as I hope many people will—to fall into that category.
The speech of my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) was, by common consent, a brave speech which took a long-term view, despite the immediate impact on and the problems for his constituency. That was the common view of all those who heard it, and I respect Labour Members who were good enough to pay tribute to my hon. Friend. I shall seek to answer a number of points that were raised by Labour Members, but it must be understood that with the corporate plan the greatest care must be taken in looking at the Goverment's response.
One basic theme came through in this debate again and again. There is widespread support for the notion that closures are a social and industrial tragedy and that they are justified only by the degree to which they are assumed to be part of a need to achieve a viable industry and the degree to which successive Governments have sought to assist with remedial action. They have to be part of the changes that we see all around us in our industry. I accept the view of the right hon. Member for Salford, West in that regard.
The question of energy prices was raised by many hon. Members, including the hon. Member for Truro (Mr. Penhaligon), my hon. Friend the Member for New Forest and others. We received a number of reports on energy prices, including the joint submission from the British Steel Corporation and BISPA, and, more recently, a submission from the Confederation of British Industry. Those reports are being studied with care, and there will be a full debate in the NEDC next month following the publication of the CBI study. My right hon. Friend the Secretary of State for Energy has been talking to the electricity supply industry about its bulk tariff charges for large users of electricity, and I am sure that steel businesses will follow up that approach.
One aspect of the corporate plan on which I am sure all hon. Members will agree is that Mr. MacGregor rightly has been looking for energy conservation as part of the way in which the corporation can put its house in order. The hon. Member for Motherwell and Wishaw (Dr. Bray) asked whether the Department of Industry provided any basis for BSC forecasts. There were discussions between my Department and BSC staff in those areas. The economic assumptions in the plan—for example, the forecast drop in gross domestic product of 1½per cent. in 1981—are part of the assumptions in the plan. In the longer term, the broad recovery that follows thereafter is implicit.
Dr. Bray: That is all published information. Were any information assumptions offered beyond those that have been published?
Mr. Marshall: The hon. Gentleman is tempting me to go too far down the road. I am sure that he will wish to

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pursue these matters separately. As he will appreciate, the matter has been discussed and I have sought to give him information on the basis of those conversations.
The right hon. Member for Salford, West raised a number of points of substance. His speech covered the subject rather sketchily because he largely ignored the market and the question of demand. However, that point was picked up later, and perhaps that is how the Labour Party planned to deal with this. One cannot debate the future of BSC, the viability of plants and possible opportunities without considering the market. The right hon. Gentleman covered the ground very lightly.
The right hon. Gentleman concentrated on a range of suggestions for further help. He moved quickly away from his old Government hat and did not attempt to give any idea of the cost involved. One cannot deny that the corporate plan will have a substantial price tag. The Government must take that into account. However, every suggestion that the right hon. Gentleman put forward, such as that of matching the Germans, would give rise to further increases in public expenditure. He argues that there should be import controls. He must realise that if the plan is accepted one of the key elements will be a very high export strategy. The interrelationship of the import-export trade, particularly within the Community, cannot be talked about lightly.
Mention was made of capital reconstruction. The Government are committed to legislating during this Session to provide for capital reconstruction of the corporation. The right hon. Gentleman seems to sweep aside the fact that that also has its price tag. The writing off of the substantial funds that have been injected into the BSC and non-remunerated public dividend capital are part of the price to be considered. Such matters cannot be considered in a light-hearted fashion.
Assistance given to the industry lies at the heart of the matter. My hon. Friend the Member for Faversham (Mr. Moate) made an impressive speech. He put this issue in a broad historical perspective. It is the height of folly for anyone to argue seriously that the BSC's problems can be put at the Government's door. Serious students of the British steel industry—there are many on both sides of the House—know that the decline of the BSC has always been closely related to the market. Any study will show that. The actions of successive Governments show that, in order to help the industry to become viable, massive public funds have been injected into the BSC.
I am not in the business of making extravagant claims about who has done most to help the corporation. I simply note that successive Governments have felt that the industry was of key importance to the economy. The figures bear that out. In five years under the previous Labour Government, £2,750 million was put into the corporation. The Conservative Government, since they took office 18 months ago, have advanced nearly £2,000 million.
Despite his constituency concerns, my hon. Friend the Member for Brigg and Scunthorpe was quick to remind me that we are moving at a staggering rate and on a larger scale than that of the previous Administration. Hon. Members should feel concerned about the rate of subsidy. Our concern is shared by Mr. MacGregor. I am sure that all hon. Members will have access to yesterday's issue of Steel News. Mr. MacGregor said that at the present rate the BSC was moving at a loss rate of well over £800 million per annum. He spoke of losing £30 every second of every
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hour of every day. He went on to say that no steel company in the world gets subsidies that would take care of such a loss. He said that we would not be able to find anyone to subsidise us to that extent. He said that neither the British Government nor the taxpayers would support it.
When the hon. Member for Whitehaven urges the case for additional subsidies beyond the substantial sums of which I have spoken, he must recognise the scale of the problem. In his experience of health and social service matters, he must have had to argue his corner time and again on how our national resources were to be allocated. I cannot believe that he is seriously advocating widespread expenditure in addition to the funds that I have spoken of without thinking of all the other socially desirable expenditure that any Government would wish to consider.
We have discussed the way in which the remedial measures will be brought into effect. Naturally, the Government will seek to help wherever they can. Whatever the outcome of our consideration of the plan, we shall look at the matter with the greatest care. I cannot give the blanket assurances that the Leader of the Opposition called for, but he will recognise that the Government have recently taken action to the tune of £48 million in Wales. I understand that the Opposition, like any Opposition, will cry "Not enough", but we have to look at the circumstances facing us, and any dispassionate observer of the figures that I have quoted would accept that the Government are committed not only to doing what they can to help the industry but, progressively, to looking at ways in which that sort of funding can be slimmed down, as it must be if we are to have any hope of the whole economy thriving as the country wishes.
A number of important matters in a wider context have been raised. The hon. Member for Whitehaven spent considerable time talking about the market. As my hon. Friend the Minister of State, who has just returned hot foot from defending our interests in Brussels, was quick to point out, in a state of manifest crisis the hon. Member must recognise that there is massive over-capacity in the European Coal and Steel Community. The figures that I have show that the effective steel capacity in the EEC has exceeded production by 40 million to 50 million tonnes since 1975 compared with an excess of 20 million tonnes in the previous five years. That excess capacity is not an idle concept. It represents social problems for many other countries. Serious students will note the way in which those countries have had to face many of the difficulties that we face.
In talking about productivity, the hon. Member for Whitehaven quoted the NEDC report of January. His use of selective statistics should not go unnoticed. Productivity improved in the two years that he quoted, but much remains to be done. The agreed NEDC report, involving all sections of the industry, including trade unions, shows that in the last full year for which information is available our productivity was about half the rate of that of the other EEC countries that are quoted in the report.
As usual, the hon. Member for Whitehaven made an interesting speech, and he gave us his usual economic knockabout. It would have been helpful if, when discussing imports, he had asked why the companies that he cited were importing foreign steel. He mentioned Ford and he could have mentioned British Leyland. Many hon. Members on both sides of the House who have been involved in discussions on these matters will know that for many years both Ford and British Leyland have sought to

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increase their offtake of BSC steel sheet. Alas, they have been unable to do so on the grounds of quality or delivery, or both.
The corporate plan shows clearly that there is a genuine opportunity to bridge a domestic demand. I join the hon. Gentleman if he is seeking to bridge the gap, but simply to ascribe all the problems to foreigners, as the hon. Gentleman did in a rather bland way, does not get to the heart of the matter. A number of general points were raised in assessing the BSC proposals, and the right hon. Gentleman was a little confused about the levels of output that we were discussing. I shall clarify the matter so that we have an agreed set of numbers. The figures he mentioned, in addition to the 14·4 million tonnes, had to include the private sector plus exports. Just to make the point absolutely clear, I think that the right hon. Gentleman did not mention the private sector.
Thus, there is an important interrelationship, touched on by the right hon. Member for Sheffield, Park (Mr. Mulley), between the public and private sectors. I cannot give a definitive view tonight. The right hon. Gentleman, who follows these matters closely, will know that serious and important conversations are taking place between the public and private sectors, between the British Steel Corporation and a number of private steelmakers.
Surely, the time has come for the House, if it is to be taken seriously in these matters, to weigh up what is best in terms of the numbers of jobs and the real prospects of any joint venture that emerges. That should be the acid test. It must get away from any discussion of whether the private or the public sector predominates. If we wish to argue the case for a private sector controlling interest, that is in part through the PSBR argument, but in the broader sense we should consider carefully the points I raised earlier.
In some ways, the debate has been an acid test of the Labour Party. The right hon. Member for Salford, West has come new to his task today. Many constructive views have been advanced from both sides of the House. It was noticeable that there was a real determination to look carefully at these matters, in an unhurried way, and not to respond in an immediate way. In that sense, we have had a quite remarkable debate. I think that hon. Gentlemen feel that the debate will have to be continued.
I do not object, nor does any hon. Member, to the knockabout of an Opposition motion, but this is a serious matter. The hon. Member for Truro was right when he said that over many years the people who work in the steel industry have resented deeply some of the idle badinage that goes on in the name of political discussion about this great industry.
I conclude on a somewhat personal note. I spent 20 years of my life working in the industry. During that time I resented the kind of nonsense that I heard from time to time in this place, and when I came here it was in the hope of trying to influence the House to move a little further towards realism. The hon. Member, whom I know well from earlier days, has from time to time played his part in this dialogue. Sometimes he covers up his good sense when he speaks in this Chamber, but I have seen him elsewhere when he has done a pretty solid job.
No one can tell me that I do not understand the problems. The hon. Member for Workington made a passionate speech, which I criticised earlier, but I
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understand what he said. I had the opportunity and privilege to provide jobs for people in his constituency and to see Distington ingot moulds go all round the world. It is a matter of deep regret to me if it has to disappear from the scene. But the judgment has to be made about what will be in the long-term interests of the industry and what will be the viable industry here.
In the list of the closures proposed in the plan, there are wide areas which are of great significance and importance to many hon. Members. But we have to make a judgment on the future of the industry. When Opposition Members seek to argue that all the ills of the industry—an industry which they, when in Government, had an opportunity to influence in eight out of the last 13 years—have arisen in the past 18 months, they debase the political coinage and the whole value and manner in which we discuss the industry. Moreover, they have a great responsibility to bear. They brought the industry together, comprising the 13 largest companies, without any conceptual basis. They have consistently dodged vital decisions or postponed them. Now, they want us to pull all the eggs out of the basket for them, and they criticise us when we try to do it.
We reject the motion, and I urge my hon. Friends to support the amendment.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 247, Noes 323.

Division No. 34]

[10 pm

AYES

Abse, Leo

Cunningham, G. (Islington S)

Adams, Allen

Cunningham, Dr J. (W'h'n)

Allaun, Frank

Dalyell, Tam

Anderson, Donald

Davidson, Arthur

Archer, Rt Hon Peter

Davis, Rt Hon Denzil (L'lli)

Armstrong, Rt Hon Ernest

Davies, Ifor (Gower)

Ashley, Rt Hon Jack

Davis, Clinton (Hackney C)

Ashton, Joe

Davis, T. (B'ham, Stechf'd)

Atkinson, N. (H'gey,)

Deakins, Eric

Bagier, Gordon A.T.

Dean, Joseph (Leeds West)

Barnett, Guy (Greenwich)

Dempsey, James

Barnett, Rt Hon Joel (H'wd)

Dewar, Donald

Benn, Rt Hon A. Wedgwood

Dixon, Donald

Bennett, Andrew (St'kp't N)

Dobson, Frank

Bidwell, Sydney

Dormand, Jack

Booth, Rt Hon Albert

Douglas, Dick

Boothroyd, Miss Betty

Douglas-Mann, Bruce

Bottomley, Rt Hon A. (M'b'ro)

Dubs, Alford

Bray, Dr Jeremy

Duffy, A. E. P.

Brown, Hugh D. (Provan)

Dunnett, Jack

Brown, R. C. (N'castle W)

Dunwoody, Hon Mrs. G.

Brown, Ron (E'burgh, Leith)

Eadie, Alex

Brown, Ronald W. (H'ckn'y S)

Eastham, Ken

Buchan, Norman

Ellis, R. (NE D'bysh're)

Callaghan, Rt Hon J.

Ellis, Tom (Wrexham)

Callaghan, Jim (Midd't'n & P)

English, Michale

Campbell, Ian

Eannals, Rt Hon David

Campell-Savours, Dale

Evans, Ioan (Aberdare)

Canavan, Dennis

Evans, John (Newton)

Cant, R. B.

Ewing, Harry

Carmichael, Neil

Faulds, Andrew

Carter-Jones, Lewis

Field, Frank

Cartwright, John

Fitch, Alan

Cocks, Rt Hon M. (B'stol S)

Flannery, Martin

Cohen, Stanley

Fletcher, Ted (Darlington)

Concannon, Rt Hon J. D.

Foot, Rt Hon Michael

Conlan, Bernard

Ford, Ben

Cook, Robin F.

Forrester, John

Cowans, Harry

Foster, Derek

Craigen, J. M.

Fraser, J. (Lamb'th, N'w'd)

Crowther, J. S.

Freeson, Rt Hon Reginald

Cryer, Bob

Garrett, John (Norwich S)

Cunliffe, Lawrence

Garrett, W. E. (Wallsend)

George, Bruce

Mulley, Rt Hon Frederick

Gilbert, Rt Hon Dr John

Newens, Stanley

Ginsburg, David

Oakes, Rt Hon Gordon

Golding, John

Ogden, Eric

Graham, Ted

O'Neill, Martin

Grant, George (Motpeth)

Orme, Rt Hon Stanley

Grant, John (Islington C)

Owen, Rt Hon Dr David

Greenway, Harry

Palmer, Arthur

Hamilton, W. W. (C'tral Fife)

Park, George

Harrison, Rt Hon Walter

Parry, Robert

Hart, Rt Hon Dame Judith

Pendry, Tom

Hattersley, Rt Hon Roy

Powell, Raymond (Ogmore)

Haynes, Frank

Prescott, John

Healey, Rt Hon Denis

Price, C. (Lewisham W)

Heffer, Eric S.

Race, Reg

Hogg, N. (E Dunb't'nshire)

Radice, Giles

Holland, S. (L'b'th, Vauxh'll)

Rees, Rt Hon M (Leeds S)

Home Robertson, John

Richardson, Jo

Homewood, William

Roberts, Albert (Normanton)

Hooley, Frank

Roberts, Allan (Bootle)

Horam, John

Roberts, Roberts, Ernest (Hackney N)

Howell, Rt Hon D. (G'Idf'd)

Roberts, Gwilym (Cannock)

Huckfield, Les

Roberts, Gwilym (Cannock)

Hudson Davies, Gwilym E.

Robinson, G. (Coventry NW)

Hughes, Mark (Durham)

Rodgers, Rt Hon William

Hughes, Robert (Aberdeen N)

Rooker, J. W.

Hughes, Roy (Newport)

Roper, John

Janner, Hon Greville

Ross, Ernest (Dundee West)

Jay, Rt Hon Douglas

Rowlands, Ted

John, Brynmor

Ryman, John

Johnson, James (Hull West)

Sandelson, Neville

Johnson, Walter (Derby S)

Sever, John

Jones, Barry (East Flint)

Sheldon, Rt Hon R.

Jones, Dan (Burnley)

Short, Mrs Renée

Kaufman, Rt Hon Gerald

Silkin, Rt Hon J. (Deptford)

Kerr, Russell

Silkin, Rt Hon S. C. (Dulwich)

Kilroy-Silk, Robert

Silverman, Julius

Lambie, David

Smith, Rt Hon J. (N Lanark)

Lamborn, Harry

Snape, Peter

Leadbitter, Ted

Soley, Clive

Leighton, Ronald

Spearing, Nigel

Lestor, Miss Joan

Spriggs, Leslie

Lewis, Arthur (N'harn NW)

Stallard, A. W.

Lewis, Ron (Carlisle)

Stewart, Rt Hon D. (W Isles)

Litherland, Robert

Stoddart, David

Lofthouse, Geoffrey

Stott, Roger

Lyon, Alexander (York)

Strang, Gavin

Lyons, Edward (Bradf'd W)

Straw, Jack

Mabon, Rt Hon Dr J. Dickson

Summerskill, Hon Dr Shirley

McCartney, Hugh

Taylor, Mrs Ann (Bolton W)

McDonald, Dr Oonagh

Thomas, Dafydd (Merioneth)

McElhone, Frank

Thomas, Jeffrey (Abertillery)

McKay, Allen (Penistone)

Thomas, Mike (Newcastle E)

McKelvey, William

Thomas, Dr. R. (Carmarthen)

MacKenzie, Rt Hon Gregor

Thorne, Stan (Preston South)

Maclennan, Robert

Tilley, John

McNally, Thomas

Tinn, James

McTaggart, Robert

Torney, Tom

McWilliam, John

Varley, Rt Hon Eric G.

Magee, Bryan

Wainwright, E. (Dearne V)

Marks, Kenneth

Walker, Rt Hon H.(D'caster)

Marshall, D (G'gow S'ton)

Watkins, David

Marshall, Dr Edmund (Goole)

Weetch, Ken

Marshall, Jim (Leicester S)

Welsh, Michael

Martin, M (G'gow S'burn)

White, Frank R.

Mason, Rt Hon Roy

White, J. (G'gow Pollok)

Maxton, John

Whitehead, Phillip

Maynard, Miss Joan

Whitlock, William

Meacher, Michael

Wigley, Dafydd

Mellish, Rt Hon Robert

Willey, Rt Hon Frederick

Mikardo, Ian

Williams, Rt Hon A. (S'sea W)

Millen, Rt Hon Bruce

Williams, Sir T. (W'ton)

Miller, Dr M. S. (E Kilhride)

Wilson, Gordon (Dundee E)

Mitchell, R. C. (Soton Itchen)

Wilson, Rt Hon Sir H. (H'ton)

Morris, Rt Hon A. (W'shawe)

Wilson, William (C'try SE)

Morris, Rt Hon C. (O'shaw)

Winnick, David

Morris, Rt Hon J. (Aberavon)

Woodall, Alec

Morton, George

Woolmer, Kenneth

Moyle, Rt Hon Roland

Wrigglesworth, Ian

230

Young, David (Bolton E)

Mr. James Hamilton and

Mr. Donald Coleman.

Tellers for the Ayes:

NOES

Adley, Robert

Durant, Tony

Aitken, Jonathan

Dykes, Hugh

Alexander, Richard

Eden, Rt Hon Sir John

Alison, Michael

Edwards, Rt Hon N. (P'broke)

Amery, Rt Hon Julian

Eggar, Tim

Ancram, Michael

Elliott, Sir William

Arnold, Tom

Emery, Peter

Aspinwall, Jack

Eyre, Reginald

Atkins, Robert(Preston N)

Fairbairn, Nicholas

Baker, Kenneth(St.M'bone)

Fairgrieve, Russell

Baker, Nicholas (N Dorset)

Faith, Mrs Sheila

Banks, Robert

Farr, John

Beaumont-Dark, Anthony

Fell, Anthony

Beith, A. J.

Fenner, Mrs Peggy

Bell. Sir Ronald

Finsberg, Geoffrey

Bendall, Vivian

Fisher, Sir Nigel

Benyon, Thomas (A'don)

Fletcher, A. (Ed'nb'gh N)

Ben yon, W. (Buckingham)

Fletcher-Cooke, Sir Charles

Best, Keith

Fookes, Miss Janet

Bevan, David Gilroy

Forman, Nigel

Biffen, Rt Hon John

Fowler, Rt Hon Norman

Biggs-Davison, John

Fox, Marcus

Blackburn, John

Fraser, Rt Hon Sir Hugh

Blaker, Peter

Fraser, Peter (South Angus)

Body, Richard

Freud, Clement

Bonsor, Sir Nicholas

Fry, Peter

Boscawen, Hon Robert

Galbraith, Hon T. G. D.

Bottomley, Peter (W'wich W)

Gardiner, George (Reigate)

Bowden, Andrew

Gardner, Edward (S Fylde)

Boyson, Dr Rhodes

Garel-Jones, Tristan

Braine, Sir Bernard

Glyn, Dr Alan

Bright, Graham

Goodhart, Phillip

Brinson, Tim

Goodhew, Victor

Britten, Leon

Goodlad, Alastair

Brocklebank-Fowler, C.

Gorst, John

Brooke, Hon Peter

Gow, Ian

Brotherton, Michael

Gower, Sir Raymond

Brown, M.(Brigg and Scun)

Grant, Anthony (Harrow C)

Browne, John (Winchester)

Gray, Hamish

Bruce-Gardyne, John

Greenway, Harry

Bryan, Sir Paul

Grieve, Percy

Buck, Antony

Griffiths, E.(B'y St. Edm'ds)

Budgen, Nick

Griffiths, Peter Portsm'th N)

Bulmer, Esmond

Grimond, Rt Hon J.

Burden, Sir Frederick

Grist, Ian

Butcher, John

Grylls, Michael

Butler, Hon Adam

Gummer, John Selwyn

Cadbury, Jocelyn

Hamilton, Hon A.

Carlisle, John (Luton West)

Hamilton, Michael (Salisbury)

Carlisle, Kenneth (Lincoln)

Hampson, Dr Keith

Carlisle, Rt Hon M. (R'c'n)

Hannam, John

Chalker, Mrs. Lynda

Haselhurst, Alan

Channon, Rt. Hon. Paul

Hastings, Stephen

Chapman, Sydney

Havers, Rt Hon Sir Michael

Churchill, W. S.

Hawksley, Warren

Clark, Hon A. (Plym'th, S'n)

Hayhoe, Barney

Clark, Sir W. (Croydon S)

Heath, Rt Hon Edward

Clarke, Kenneth (Rushcliffe)

Heddle, John

Clegg, Sir Walter

Henderson, Barry

Cockeram, Eric

Heseltine, Rt Hon Michael

Colvin, Michael

Hicks, Robert

Cope, John

Higgins, Rt Hon Terence L.

Cormack, Patrick

Hill, James

Corrie, John

Hogg, Hon Douglas (Gr'th'm)

Costain, Sir Albert

Holland, Phillip (Carlton)

Cranborne, Viscount

Hooson, Tom

Critchley, Julian

Hordern, Peter

Crouch, David

Howe, Rt Hon Sir Geoffrey

Dean, Paul (North Somerset)

Howell, Rt Hon D. (G'ld'd)

Dickens, Geoffrey

Howell, Ralph (N Norfolk)

Dorrell, Stephen

Howells, Geraint

Douglas-Hamilton, Lord J.

Hunt, David (Wirral)

Dover, Denshore

Hunt, John (Ravensbourne)

du Cann, Rt Hon Edward

Hurd, Hon Douglas

Dunn, Robert (Dartford)

Irving, Charles (Cheltenham)

Jenkin, Rt Hon Patrick

Penhaligon, David

Johnson Smith, Geoffrey

Peyton, Rt Hon John

Jopling, Rt Hon Michael

Pink, R. Bonner

Joseph, Rt Hon Sir Keith

Pollock, Alexander

Kaberry, Sir Donald

Porter, Barry

Kellett-Bowman, Mrs Elaine

Powell, Rt Hon J.E. (S Down)

Kershaw, Anthony

Prentice, Rt Hon Reg

Kilfedder, James A.

Price, Sir David (Eastleigh)

Kimball, Marcus

Prior, Rt Hon James

King, Rt Hon Tom

Proctor, K. Harvey

Kitson, Sir Timothy

Pym, Rt Hon Francis

Knight, Mrs Jill

Raison, Timothy

Lamont, Norman

Rathbone, Tim

Lang, Ian

Ress, Peter (Dover and Deal)

Langford-Holt, Sir John

Ress-Davies, W. R.

Latham, Michael

Renton, Tim

Lawrence, Ivan

Rhodes James, Robert

Lawson, Rt Hon Nigel

Rhys Williams, Sir Brandon

Lee, John

Ridley, Hon Nicholas

Lennox-Boyd, Hon Mark

Ridsdale, Julian

Lester Jim (Beeston)

Rifkind, Malcolm

Lewis, Kenneth (Rutland)

Roberts, M. (Cardiff NW)

Lloyd, Ian (Havant&W'loo)

Roberts, Wyn (Conway)

Lloyd, Peter (Fareham)

Ross, Stephen (Isle of Wight)

Loveridge, John

Ross, Wm. (Londonderry)

Luce, Richard

Rost, Peter

Lyell, Nicholas

Royle, Sir Anthony

McCrindle, Robert

Sainsbury, Hon Timothy

Macfarlane, Neil

St. John-Stevas, Rt Hon N.

MacGregor, John

Scott, Nicholas

MacKay, John (Argyll)

Shaw, Michael (Scarborough)

Macmillan, Rt Hon M.

Shelton, William (Streatham)

M. McNair-Wilson, M. (N'bury)

Shepherd, Colin (Hereford)

McNair-Wilson, P. (New F'st)

Shepherd, Richard

McQuarrie, Albert

Shersby, Michael

Madel, David

Silvester, Fred

Major, John

Sims, Roger

Marland, Paul

Skeet, T. H. H.

Marshall Michael (Arundel)

Smith, Dudley

Marten, Neil (Banbury)

Speller, Tony

Mates, Michael

Spence, John

Maude, Rt Hon Sir Angus

Spicer, Michael (S Worcs)

Mawby, Ray

Sproat, Ian

Mawhinney, Dr Brian

Squire, Robin

Maxwell-Hyslop, Robin

Seanbrook, Ivor

Mayhew, Patrick

Stanley, John

Mellor, David

Stell, Rt Hon David

Meyer, Sir Anthony

Steen, Anthony

Miller, Hal (B'grove)

Stevens, Martin

Mills, lain (Meriden)

Stewart, Ian (Hitchin)

Mills, Peter (West Devon)

Stewart, A. (E Renfrewshire)

Miscampbell, Noman

Stokes, John

Mitchell, David (Basingstoke)

Stradling Thomas, J.

Moate, Roger

Tapsell, Peter

Molyneaux, James

Taylor, Robert (Croydon NW)

Monro, Hector

Taylor, Teddy (S'end E)

Montgomery, Fergus

Tebbit, Norman

Moore, John

Temple-Morris, Peter

Morris, M. (N'hampton S)

Thatcher, Rt Hon Mrs M.

Morrison, Hon C. (Devizes)

Thomas, Rt Hon Peter

Mudd, David

Thompson, Donald

Murphy, Christopher

Thorne, Neil (Ilford South)

Myles, David

Thornton, Malcolm

Neale, Gerrard

Townend, John (Bridlington)

Needham, Richard

Townsend, Cyril D, (B'heath)

Nelson, Antony

Trippier, David

Neubert, Michael

Trotter, Neville

Newton, Tony

van Straubenzee, W. R.

Normanton, Tom

Vaughan, Dr Gerard

Nott, Rt Hon John

Viggers, Peter

Onslow, Cranley

Waddington, David

Oppenheim, Rt Hon Mrs S.

Wakeham, John

Osborn, John

Waldegrave, Hon William

Page, Rt Hon Sir G. (Crosby)

Walker, B. (Perth)

Page, Richard (SW Herts)

Walker-Smith, Rt Hon Sir D.

Parris, Matthew

Wall, Patrick

Patten, Christopher (Bath)

Waller, Gary

Patten, John (Oxford)

Walters, Dennis

Pattie, Geoffrey

Ward, John

Pawsey, James

Warren, Kenneth

Watson, John

Williams, D.(Montgomery)

Wells, John (Maidstone)

Winterton, Nicholas

Wells, Bowen

Wolfson, Mark

Wheeler, John

Younger, Rt Hon George

Whitelaw, Rt Hon William

Wickenden, Keith

Tellers for the Noes:

Wiggin, Jerry

Mr. Carol Mather and

Wilkinson, John

Mr. Anthony Berry.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to the Standing Order No. 32 (Questions on amendments) and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to, pursuant to Standing Order No. 32 (Questions on amendments).
Resolved,
That this House believes that it is important to the United Kingdom's manufacturing industry to have available good quality steel at internationally competitive prices; notes that the British Steel Corporation has just adopted a corporate plan to enable the Corporation profitably to supply United Kingdom and overseas markets; and asks the Government to give the plan careful consideration.
It being after Ten o'clock, MR. SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Questions necessary to dispose of proceedings on the motions relating to Civil and Defence Estimates.

DEFENCE ESTIMATES, 1981–82 (VOTE ON ACCOUNT)
Question,
That a sum, not exceeding £4,982,695,000, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Defence Services for the year ending on 31 March 1982, as set out in House of Commons Paper No. 9.
put and agreed to.

CIVIL ESTIMATES, 1981–82 (VOTE ON ACCOUNT)
Question,
That a sum not exceeding £24,777,893,700, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Civil Services for the year ending on 31 March 1982, as set out in House of Commons Paper No. 10.
put and agreed to.

CIVIL ESTIMATES, (CLASS XIIIA) 1981–82 (VOTE ON ACCOUNT)
Question,
That a sum, not exceeding £5,055,000, be granted to tier Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for House of Commons: Administration for the year ending on 31 March 1982, as set out in House of Commons Paper No. 11.
put and agreed to.

DEFENCE SUPPLEMENTARY ESTIMATES, 1980–81
Question put,
That a supplementary sum, not exceeding £277,501,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges for Defence Services which will come in course of payment during the year ending on 31 March 1981, as set out in House of Commons Paper No. 7.
The House proceeded to a Division—
Mr. Mather and Mr. Berry were appointed Tellers for the Ayes, but no Member being willing to Act as Teller for the Noes, MR. SPEAKER declared that the Ayes had it.
Question accordingly agreed to.

CIVIL SUPPLEMENTARY ESTIMATES, 1980–81
Question,
That a further supplementary sum, not exceeding £1,950,143,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges for Civil Services which will come in course of payment during the year ending on 31 March 1981, as set out in House of Commons Paper No. 8.
Put and agreed to.
Bill ordered to be brought in upon the foregoing Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. John Biffen, Mr. Nigel Lawson and Mr. Peter Rees.

CONSOLIDATED FUND
Mr. Nigel Lawson accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31 March 1981 and 1982: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 16.]

European Community (Newsprint Quota)
10.18 pm
The Under-Secretary of State for Trade (Mr. Norman Tebbit): I beg to move,
That this House takes note of the draft proposal by the Commission of the European Communities for a Council Regulation opening, allocating and providing for the administration of a Community tariff quota for newsprint falling within the subheading 48.01A of the Common Customs Tariff (1981) and extending this quota to include certain other types of paper, as set out in the Department of Trade's unnumbered Explanatory Memoranda dated 28 November 1980 and 11 December 1980.
The second and fourth reports of the House of Commons Select Committee on European Legislation &c. recommended that the proposed regulation should be further considered by the House in view of the sensitivity of the question of paper imports and their effect on production capacity.
The proposed tariff quota for newsprint is a well-established arrangement which raises no new policy implications, and the House will note from the Select Committee's fourth report that it is not being opposed by representatives of the United Kingdom newsprint producers. But I fully understand the concern which led the Committee to recommend the matter for further consideration, and am pleased that time has been found for this debate.
Hon. Members will note that the proposal would, among other things, extend the quota to certain types of paper other than newsprint falling under the heading of 48.01A of the common customs tariff. I should not wish there to be any misunderstanding on this point; the other types of paper concerned are grades of newsprint without a watermark which, for technical and historical reasons, are classified elsewhere in the tariff. The proposal therefore relates exclusively to newsprint and has no direct effect on other parts of the paper and board industry.
The effect of the proposal would be to provide relief from customs duties on Community imports of newsprint within a quota of 2·5 million tonnes, from which the United Kingdom would receive an initial allocation of 946,580 tonnes. Duty relief on imports of newsprint is by no means a new development. At least as far back as 1932,
234
the Government of the day recognised newsprint as a key raw material for the country's press and exempted it from the 10 per cent. general ad valorem import duty introduced under the Import Duties Act 1932. This policy has been observed by successive Governments since then.
Up to the point at which we joined the European Community, imports of newsprint from our main suppliers remained free of customs duties under the Commonwealth preference system and free trade arrangements with our EFTA partners. This was not the case in the original six member States of the Community, but in the negotiations leading up to our accession certain modifications to the existing Community tariff regime for newsprint were secured and these are now enshrined in protocol 13 annexed to our Act of Accession. This provides for newspaper publishers to import newsprint duty-free when it has been established that all possibility of Community supply will be exhausted.
The duty-free import of this balance from third countries is now provided for by an annual Community duty-free quota. This has two elements. First, under agreements made when the Community was enlarged, there is an annual quota of 1·5 million tonnes bound in the GATT. On top of this, there is a further autonomous quota calculated each year to take account of the levels of production in member States and their estimated demand.
It is a point of fact that since the early 1970 production of newsprint in the United Kingdom has been sufficient to meet little more than one-quarter of the needs of the newspaper publishing industry. On latest estimates, it will meet about 12 per cent. of those needs in 1981. There is, therefore, a genuine need to import substantial quantities of newsprint, and it would be unrealistic to require the publishing industry, which is itself in financial difficulty, to pay customs duty on imports of such a key raw material in so far as it cannot be obtained from domestic sources. The tariff regime envisaged in protocol 13 does, however, have a protective element which is intended to ensure that the availability of supplies from Community producers is fully taken into account in determining the size of the tariff quota. The United Kingdom's share of the quota is determined on this basis, following consultations with representatives of the United Kingdom producers and users.
For 1981, the situation is somewhat uncertain. The Bowater newsprint mill at Ellesmere Port closed on 21 November and the closure of a newsprint machine at the Reed paper and board mill at Aylesford has been announced. Moreover, the publishers agree that it is difficult to make accurate estimates of demand for 1981. In these circumstances, it has been impractical to reach firm conclusions on the United Kingdom's import requirements for 1981.
On current estimates, it seems that the publishing industry could require up to 1·3 million tonnes of newsprint, of which 150,000 tonnes would be obtained from domestic producers. This would leave an import requirement of 1·15 million tonnes, but because of the uncertainties the Government feel that it would be prudent to seek a United Kingdom quota share somewhat below that level. It would then be necessary to review the figures with producers and users when the situation is clearer and, if necessary, to seek the agreement of other member States to a supplementary quota early in the new year.
Against this background, the initial quota allocation of 946,580 tonnes proposed for the United Kingdom would

235
be a satisfactory interim measure. It is likely that member States other than the United Kingdom will seek a slight increase in their quota shares, but it is generally accepted that the tariff quota should be established initially at a cautious level. All member States are expected to agree in any event that a supplementery quota should be introduced in the first half of 1981 if updated estimates show that the quota currently proposed would be insufficient to meet the import needs of the publishers. This would certainly be a prerequisite of the United Kingdom's acceptance of the proposal as it stands.
I very much sympathise with our newsprint producers, who face a particularly difficult combination of economic circumstances at present. I particularly regret that Bowater has closed its mill at Ellesmere Port with consequent redundancies, in spite of strenuous efforts by the Government, the Ellesmere Port borough council, the trade unions and certain hon. Members to find a means of averting the closure. This was ultimately a commercial decision for the company. I do not consider that withholding duty relief on imports of newsprint that cannot be obtained from domestic sources would begin to solve the problems of the United Kingdom newsprint industry. It would only serve to exacerbate the current severe difficulties of the newspaper publishers, and who would benefit from that?
Mr. Tony Marlow: Is there any significant degree of intra-Community trade in newsprint? If there is not, is there any reason why we should go through this rigmarole whereby we have to go back to Brussels for a supplementary quota? Would it not be easier if we dealt with it here?
Mr. Tebbit: As my hon. Friend knows, these matters were provided for in the Treaty of Accession. The import of such newsprint duty-free—that is, free of the duties which are agreed within the whole Community—is bound to be a matter that is conducted through the Community.
I shall take careful note of the views of hon. Members on the newsprint tariff quota. I am sure that the House will bear in mind that the proposals I have outlined tonight have been put to representatives of the consumers and producers, who have indicated their acceptance.
A number of hon. Members will want to say something about the problems of the newsprint industry generally. I shall do my best to deal with any points that are raised. I recommend that the House takes note of the draft proposal.
10.28 pm
Mr. John Smith: The House will be grateful to the Select Committee for having recommended that this instrument should be subject to debate in the House. It has issued two relevant reports. The second report indicated that it wished to take further evidence from the industry, and the fourth report says some interesting things about the present state of the newsprint production industry in this country.
The Under-Secretary of State, in introducing the motion, confined himself to a description of the instrument and said that he would answer questions at the end of the debate on the state of the industry. I imagine that many hon. Members, particularly those speaking for the newsprint industry and perhaps the paper and board industry more generally, will wish to address some
236
questions on Government policy towards the newsprint production industry. That is certainly my intention in my short contribution.
The fourth report of the Select Committee refers to recent developments in the newsprint production industry. The most significant figure in the report is that production recently of 385,000 tonnes of newsprint in this country has been reduced to 150,000 tonnes. The reasons are not hard to find, and the Under-Secretary of State referred to them. There has been the total closure of the Bowater plant at Ellesmere Port and the partial closure of the Reed Paper Group plant at Aylesford in Kent, which have meant a savage reduction in the newsprint production industry.
In its evidence to the Select Committee, the industry indicated that it did not wish to oppose the instrument. That is the view of the Opposition. However, the situation in the industry must give rise to grave concern. There has been a massive reduction in the production of newsprint. The paper and board industry is going through a crisis. Perhaps the most acute part of that crisis exists in the sector that we are discussing. The loss of jobs has been serious. Most dramatic of all has been the many jobs lost at the Bowater plant at Ellesmere Port.
The problems that the industry faces have been highlighted in a number of recent publications, one of which the Select Committee referred to in its fourth report—namely, the pamphlet produced by the Society of Graphical and Allied Trades entitled "Action Now". It highlighted the crisis over a wide area of the paper and board industry and concentrated in one of its sections on the newsprint industry. It was a highly researched and relevant document, of which the society should be proud. However, I am sure that it is not happy that it has had to describe such a serious situation in the industry in which its members work.
Some aspects of these issues have been discussed and set out in the sector working party report of the National Economic Development Council on energy and the paper and board industry. That is almost required reading for hon. Members who interest themselves in these matters. The Select Committee referred to some of the relevant issues.
The problem that the newsprint industry faces is simply and starkly one of rapid contraction. Perhaps a year from now the Government will be coming forward with a proposition different from the present one. We face the possible extinction of the newsprint production industry. I hope that the Minister will address himself to these matters when he replies. What will be the situation a year from now if the same factors as have led to a reduction from 385,000 tonnes to 150,000 tonnes continue to operate? It has been an annual exercise to agree the quotas.
I do not want to detain the House with details of the problems that the industry faces, with which hon. Members who have constituency interests are particularly acquainted. The problems are not dissimilar from those that a number of other industries face. The Government have no industrial policy. However, they have an economic policy of high interest rates and a high exchange rate, which they apply without regard to the industrial consequences that follow in its train. That applies to many industries but, I suspect, to few more acutely than the newsprint production industry.
One facet of Government policy is the tolerance of a high exchange rate, which affects the newsprint industry in a way that affects many other industries.
Mr. Marlow: What has this got to do with the debate?
Mr. Smith: If the hon. Gentleman will listen, he will understand.
Mr. Marlow: I shall be rather surprised.
Mr. Smith: I shall be surprised, too, if he understands it, but I think that the hon. Gentleman—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member for Northampton, North (Mr. Marlow) is well aware that he is not entitled to make sedentary observations.
Mr. Smith: I am well accustomed, Mr. Deputy Speaker, to post-dinner interruptions in debates of this sort. If the hon. Gentleman listens to what I have to say, he will learn a little. I do not put too high a bet on his capacity to appreciate my argument, but I hope that he will listen.
The fact that we have such a high exchange rate means that imports of Finnish paper and board products are at an advantage in Britain vis-a-vis domestic products. There is a particular feature of the industry that means that a high exchange rate bears especially heavily upon it—namely, the system of maintaining the price in sterling of supplies of imported pulp to the United Kingdom industry. The agreement that was reached when the relationship between the pound and the dollar was different from what it is now means that foreign competitors have an advantage over the domestic industry in Britain.
Perhaps the most serious aspect of the present problems faced by the industry is that of energy pricing. All British industry is suffering from the high cost of energy. Figures in the sector working party report of the National Economic Development Council indicate rather starkly the nature of the problem. In an appendix to the report, it indicates the price of fuel oil in Britain compared with that of some of our competitors. Heavy fuel oil in Canada, the United States, Sweden, Holland and West Germany is cheaper than it is in Britain. That complaint comes from many sectors of British industry. It especially affects the paper and board industry as a whole, of which the newsprint industry is only a part, because it is the sixth largest user of energy in Britain.
Gas prices are affected by the Government's financing policy towards the nationalised industries, which is causing another problem. The Government have turned the concept of market economies on its head. They are raising prices when demand is falling. That will mean lower profits for the industries and an even heavier requirement on the public sector borrowing requirement. The position with regard to oil is ironic. Britain is the only country in Western Europe, apart from Norway, that is self-sufficient in oil. It appears odd that we are charging our domestic industry more for oil than are the countries that are dependent on supplies from OPEC.
Mr. D. N. Campbell-Savours: Is my right hon. Friend aware that the Government are rejecting the argument about energy prices on the basis that there is a divergence of opinion among a number of organisations about the level of prices internationally? One senses that the Government are sowing the seed of confusion in establishing energy prices. Perhaps my right hon. Friend could indicate how we could establish an acceptable analysis for the Government on energy prices.
Mr. Smith: I am grateful to my hon. Friend for drawing attention to that point. For many months, industry has complained to the Government that our prices for oil are higher than those charged in many other countries in Western Europe which have to import their oil and do not have the benefit of North Sea oil.
Sir Anthony Meyer: In view of the right hon. Gentleman's speech, will it be in order for anyone speaking from the Back Benches to make a speech on any subject that he chooses to raise but which has nothing whatsoever to do with the motion?
Mr. Deputy Speaker: We are debating the question of newsprint. Provided that a point is relevant to newsprint, it is in order.
Mr. Smith: I am puzzled why Conservative Members do not wish to discuss the factors that are highly relevant to the preservation of the newsprint production industry in Britain. If Conservative Members understood what the industry was saying in its communications to hon. Members on both sides of the House, they would understand the relevance of my speech.
Mr. Marlow: Has the right hon. Gentleman read the document?
Mr. Smith: The hon. Member, who is making a fuss, has only a limited knowledge of the newsprint industry and the paper and board industry. I notice that some of his hon. Friends are nodding in agreement. I hope that he will take that as a suitable rebuke from them, even if he will not take it from me. Members with constituency interests will understand how crucial the price of energy is to the paper and board industry. It is right at the heart of the problems faced by the industry. Unless it receives some relief from the Government, it may face virtual extinction.
My hon. Friend the member for Workington (Mr. Campbell-Savours) asked what the Government would do. He was right to say that the Government's response to the energy problem was that they did not know the figures. They say that they are not persuaded that British industry pays higher prices than its European competitors. The Government should have established that on their own account. They should not have to wait for industry to prove it. When a problem like this arises, the Government, with their vast statistical services and international lines of communication, should be able to establish that for themselves.
What has happened? In the National Economic Development Council, when the matter was raised by the trade unions and by representatives of the Confederation of British Industry, it was eventually agreed that the CBI would set up an industrial energy consumers group that would seek to establish the facts. I understand that it has not yet reported. It was set up on 6 August. We are trove well into December. It does not appear to be a statistical exercise of enormous complexity. The facts could have been obtained, if the Government had wished, and put before both sides of industry and the House for consideration. The truth is that the Government are not prepared to face the fact that we in this country are charging higher energy prices than our competitors to such industries as the newsprint industry, and we are, therefore, at an industrial disadvantage.
Mr. K. Harvey Proctor: Perhaps one difficulty with the CBI's energy policy committee and the

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reason why it is not so persuasive on the issue is that it is stacked with nationalised industry energy concerns as well as private enterprise.
Mr. Deputy Speaker: Order. Perhaps the right hon. Gentleman will come back to the question of duty-free quotas and newsprint.
Mr. Smith: One reason why the subject was recommended for debate by the Select Committee was the general interest created by the situation in the newsprint industry.
Mr. Deputy Speaker: We are bound by the motion that is before the House.
Mr. Nigel Spearing: On a point of order, Mr. Deputy Speaker. Is it not true that the degree of protection that is or is not afforded by EEC regulations has great influence on the prosperity and perhaps even the existence of any industry in this country, and the paper and board industry is a case in point? The factors that my right hon. Friend is outlining are germane to that point.
Mr. Deputy Speaker: As long as we are talking about newsprint, the right hon. Gentleman is in order.
Mr. Smith: I was speaking of little else but newsprint and the effect that energy pricing has on the newsprint production industry in this country. If the newsprint industry in this country is not able to survive because of the high energy costs imposed on it relative to its competitors, it will cease to exist. That is what concerns most people who have concern for the future of the industry.
What should the Government do to assist the newsprint production industry over energy costs?
Mr. Marlow: What about quotas?
Mr. Smith: Behind the problem of quotas lies the survival of the industry. If the industry goes down, there will be a higher quota next year and the year after, and we may reach a situation where the whole matter becomes academic because there is no newsprint production industry in this country.
One matter that the Government should consider carefully is the excise duty on heavy fuel oil of £8 per tonne. We should examine the cost of oil in this country and the cost for some of our competitors. It is ironic that we should be oil producers yet charge our newsprint industry more than our competitors, who have to import their oil.
The importance of the debate is not only in the narrow question of quotas, which is the subject of the motion, but in the future health of the industry. We feel obliged to ask the Minister some questions about the future of the industry. Indeed, he invited us to do so in his closing remarks.
First, what is the Government's policy towards the newsprint production industry? Do they want such an industry to exist, or do they believe that we should allow it to die and import all the newsprint that we require from Scandinavia or North America? If so, they should say so so that the industry knows that it has no support from the Government in its very difficult battle to maintain economic existence.
Secondly, if the Government reach the view that there should be a newsprint production industry in this
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country—and I hope that they do, otherwise those who use newsprint will be subject to price rise exercises as soon as the domesic industry ceases to exist and will be at the mercy of those who supply us—what will they do to support it? What will they do about energy prices?
Mr. Roger Moate: What would the right hon. Gentleman do?
Mr. Smith: I have already suggested that the Government should revise the excise duty on heavy fuel oil.
Mr. Moate: What did the previous Government do? They did nothing. The trend has continued progressively under successive Govenments for many years.
Mr. Smith: The industry has been under pressure for many years. The acceleration is particularly acute this year. As the Select Committee said, a reduction from 385,000 tonnes to 150,000 tonnes is acute. In this year, when we are self-sufficient in oil production and are the beneficiaries to the tune of £4 billion a year from North Sea oil revenues, we should be able to take a more relaxed view of the excise duty on fuel oil. That is my short answer to the hon. Member for Faversham (Mr. Moate).
If the Government's policy is to preserve newsprint production, how will they do it? Some important questions must be asked about the exchange rate, but I should be out of order if I referred to that. The most important and acute problem faced by the industry is energy pricing. I hope that the Government will say something useful and helpful about energy pricing policy.
Unless there is a change of policy, the industry may disappear and thousands of jobs will be lost. Britain will lose yet another manufacturing capability. We seem to lose them month by month. The process must stop some time. I hope that the Government decide to take a determined stand to preserve newsprint production in Britain.
10.47 pm
Mr. Roger Moate: We are indebted to the Select Committee for recommending this subject for debate and for the manner in which it recommended it. The report states that the Committee
"nevertheless take the view that the whole question of paper imports and their effect on production capacity in the United Kingdom is currently of such sensitivity that the instrument should be further considered by the House."
That offers the House scope for a more helpful and wide-ranging debate than one might expect on such a document.
I have an interest in the newsprint industry. It is not financial but is based on my constituency. I suspect that the remaining 150,000 tonnes of newsprint is now produced in Kent and that more than half is produced in my constituency. I say with sadness that we are reduced to such pathetic amounts of newsprint production. It is a tragedy that the motion is before us.
However, the tragedy has not happened suddenly. Even the reduction from about 385,000 tonnes to 150,000 tonnes is no more precipitate a drop than that which has occurred in recent years. I do not have the precise figures, but not many years ago we produced between 600,000 and 700,000 tonnes of newsprint. As a proportion of our consumption of 1·3 million tonnes, our production has dropped dramatically. It is extraordinary that Britain, one of the largest consumers of newsprint, should be almost a total importer of newsprint.

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The point is made graphically by the closure at Ellesmere Port. We shall now export timber to Scandinavia, which will then manufacture newsprint from our timber and export it back to us. I always thought that one of the Scandinavian strengths was its resource of raw materials, but our raw materials will be used to produce our newsprint. It is a tragedy, but it has happened over a decade or more. That is why I do not blame my right hon. Friends.
The closure of Ellesmere Port is the direct reason for the quota proposal of a reduction to 150,000 tonnes. The right hon. Member for Lanarkshire, North (Mr. Smith) said that the Government have no industrial strategy. I should have thought that the efforts that were made by my right hon. Friends to try to avert that closure went far beyond anything that the previous Government did for any other industry. The fact that it was unsuccessful is a tragedy. As my hon. Friend the Under-Secretary of State said, that is a commercial decision for the industry. I am sure that the right hon. Gentleman has seen the figures. The offers of grants and loans were very impressive. My right hon. and hon. Friends made immense efforts to try to produce a package that would save Ellesmere Port, and I am deeply sorry that they failed. The cash flow situation was grave, and the losses in the interim period before we could get a new mill on stream were such that any industry would have had to think twice.
Mr. Barry Porter: As the hon. Member representing Ellesmere Port, perhaps I should explain what the Government offered. In terms of capital grant, they offered £14 million against a required capital investment of £36 million, with the balance to come from the European Investment Bank at "soft" interest rates. But, even though those grants were available, the Government were prepared to make, through various means such as the Forestry Commission, the National Coal Board and the Central Electricity Generating Board, not grants but subsidies towards the revenue commitments of Bowater of about £2½million on the Bowater figures, and possibly £3½to £4 million on the Government figures. No one appears to have appreciated that—
Mr. Deputy Speaker: Order. The hon. Gentleman is making an intervention in another hon. Member's speech. If he should decide to make a speech, he knows what to do.
Mr. Porter: I appreciate that, Mr. Deputy Speaker, and this is one of my shorter interventions. I shall do my best. The point is that Bowater is making so much money in North America for various reasons—I shall not go into them, because I am not making a speech—that it was in its commercial interest to close the Ellesmere Port plant. I regret that.
Mr. Moate: That was a long intervention, but it was effective and demonstrates the point. There are two matters that I should like to take up in that connection.
First, most of the grants that were offered were regional grants, and here I should like to put on record a tribute to my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter), who worked tirelessly for weeks and months to try to avert the closure. As I said earlier, the current newsprint production is in Kent, and there is no scope for regional assistance there. That limits the
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opportunity for the Government to assist in the way that they were willing to assist in the case of Ellesmere Port. Secondly, part of that package was the encouragement by the Government to the Forestry Commission and to the National Coal Board to reduce the costs of the raw materials, energy and coal that they were supplying to Bowater.
The National Coal Board and the Forestry Commission should be as interested in the survival of other paper mills, and they should be actively encouraged by the Government to try to see whether it is in their commercial interests to reduce costs further. The answers that I have had so far from the Government suggest that that is a commercial matter for the National Coal Board and the Forestry Commission. But the Government have considerable influence with those bodies, and they can talk to them and encourage them to try to reduce costs as far as is humanly possible. I urge them to do that, otherwise we shall be back in a year's time with a nil production figure for British newsprint.
Mr. Campbell-Savours: Have the Government repudiated the insistence of the British Paper and Board Manufacturers Federation that the Forestry Commission's assets nationally were sold off?
Mr. Moate: That has nothing to do with it. It is still standing timber, whether it is publicly or privately owned, which will be sold for paper or other production. I hope that it will encourage forestry and ultimately reduce the cost of paper to the timber industry.
The manufacturers' federation has made clear that it raises no objection to the Commission's quota proposals, and, therefore, it would be foolish of us to oppose the plan, even though we may deeply regret that it has come forward in this form. The Select Committee document says:
"The Newspaper Raw Materials Committee"—
that is basically Fleet Street—
"for its part would feel very strongly about paying duty on imported newsprint at the best of times, let alone in a situation when newspapers are experiencing serious financial difficulties."
I have little sympathy for the newspapers. If they had taken a longer-term view, been more consistent purchasers of British newsprint and struck up longer-term relationships with the British paper industry, they could have kept in being a larger proportion of British newsprint production. That would have been in their long-term interests.
One reason why the newsprint industry is happy with the proposal is that it will allow slightly higher prices for our remaining newsprint production. If that goes, exporters to this country will get even higher prices. If we produce no newsprint—and we are not far off that position—the Scandinavians and Canadians will be able to name their own price and our newspapers will pay dearly for their shortsightedness.
The right hon. Member for Lanarkshire, North endeavoured to make his case on the strength of sterling penalising the paper industry. That has undoubtedly been the key factor, but the level of sterling is something with which the nation has to live. It is not an artificial level created by high interest rates. It is a fact of life, in many ways an advantageous fact. It results from North Sea oil and not from interest rates. Somehow we have to contend with it. There is no easy way out.
The right hon. Gentleman spelt out the problem. It is a tragedy that the newsprint industry is in such a predicament, but the previous Government did not

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produce the answer and I am not sure that we know the answer now. I agree with the right hon. Gentleman that we have a tragic document before us, and I wish that we could put together a formula to give a more assured future for our vital paper industry.
10.58 pm
Mr. D. N. Campbell-Savours: We should be grateful to the Select Committee for giving us an opportunity to discuss this issue. I sometimes think that when the Committee recommends matters for discussion on the Floor of the House it gives some hon. Members an opportunity to air their anti-EEC views on issues that would otherwise not be raised in the House.
When Conservative Members were making sedentary interventions earlier, they seemed to fail to understand a central problem of the industry. In all the recommendations made by lobbies from the paper industry, the subject that starts on top of the agenda and is never removed from the agenda is energy prices. Costings of the national paper and board and newsprint industries show that energy costs form 15 to 20 per cent. of total budgets. One can understand why my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) raised the subject. He was right to do so.
I wish to speak specifically to the motion. I shall therefore be much more in order than I usually am in such debates. The regulation raises the ceiling from 1·5 million tonnes to 2·5 million tonnes as regards newsprint imports into the EEC. As has been said, it follows the closure of Bowater. It will reduce the industry's capacity to 150,000 tonnes. That must be put alongside the decline from an 800,000 tonnes capacity only 10 years ago to a 340,000 tonnes capacity in the middle of this year.
The explanatory memorandum, available in the Vote Office, says that there are no new policy implications. There are. By increasing the ceiling for triggering duties, the Government are accepting a supply of imports on to the market. They are saying that they will not pursue the expansion of domestic production. There are further policy implications. The Government accept that there will be a downward trend. This measure only reinforces the present downward trend in newsprint manufacture in Britain. They are rejecting the argument that was put forward by Bowater when that company was being closed down as a result of the Government's policies. Bowater argued that it was not a lame duck. It was right.
Mr. Tebbit: Perhaps I can prevent the hon. Gentleman from going off on the wrong tack and failing to use well the short time available. The memorandum says that there are no new policy implications. There are always policy implications. There is nothing new about the fact that the Government have taken a view about how much paper will be supplied by the home industry and consider that the remainder should be let in duty-free. It has been going on for years.
Mr. Campbell-Savours: If there are no new policy implications, the Conservative Party must have had a prior commitment to run down the British newsprint industry. The Government faced two options. They could have pursued the expansion and retention of the industry or they could have allowed it to run down. The Government have a deliberate policy. They take certain sectors of British
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industry, and when those sectors reel and keel and cannot compete due to international pressures and due to the Government's failure they have to go to the wall. That is unacceptable.
Mr. Douglas Hogg: It is silly.
Mr. Campbell-Savours: The hon. Gentleman may say that, but he should consult his hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter). He will tell him what happened in Ellesmere Port. Both he and the hon. Member for Basildon (Mr. Proctor) know the truth. The Government have systematically destroyed the British newsprint industry. As a result, only 10 per cent. remains When the Conservative Party took office, British newsprint producers were providing 30 per cent. of the market.
In the explanatory memorandum, the Minister says that United Kingdom newsprint producers have been consulted about the proposals and have raised no objections. It would be interesting to know whether Bowater was consulted. I have a copy of a document that was produced by Ellesmere Port and Neston borough council. It concerns action taken to avert the closure of the Bowater newsprint mill in Ellesmere Port. The document is important. One section of it is entitled:
"Solution based on EEC tariff quota".
It refers to the Ellesmere Port and Neston borough subcommittee and states:
"The Sub-Committee began by seeking to secure increases in the price of UK newsprint by using the mechanism of the EEC tariff quota ststem. Under the EEC tariff regime, imports of newsprint are subject to quotas, and in theory, to duty on imports above the agreed quotas. Moreover, Protocol 13 of the UK treaty of accession was designed to protect the home-based newsprint industry, but it is clearly ineffective. In theory Protocol 13 requires that before deciding on the size of the duty-free import quota, the EEC have to be satisfied that home production in the member States has been taken up and that demand cannot be met from home production."
Obviously, that is what the document is about.
"In theory, too, imports above the quota fixed by the EEC should be subject to duty at a current rate of 6 per cent. for Scandinavian newsprint and 11·6 per cent. for Canadian supplies. The Sub-Committee, therefore, sought a solution based on strict compliance with Protocaol 13; a reduction in the size of the duty-free quota, and, if necessary, the imposition of duty on imports above the quota, unless guarantees were given by the UK newsprint users that they would take up all UK newsprint at agreed prices. This proposal was discussed by the Chief Executive"—
I assume that the Minister will know the chief executive—
"at a meeting in London on September 10, attended by Mr. Andrew Pearce, EMP, a senior EEC official from Brussels, and representatives of Bowaters. The proposal was recognised as being soundly based in law but it was recognised that there would be strong opposition to it by the newspaper users who would strongly object to the use of import controls to increase the cost of home-produced newsprint."
When I was trying to find out what happened at that meeting, it was clear that Bowater at that time recognised that this was a way of preventing the demise or the destruction of the industry. It is incumbent on the Minister tonight to give us an answer on behalf of the Government and to put on record why the Government at the time in question did not respond in this area. Had they done so, there would have been an argument going on within the EEC and we would not have been confronted by the document tonight. The only reason why the Minister can come forward with it tonight is that Bowater is closed, and

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the domestic capacity that Bowater provided originally is no longer available to provide for the domestic market. That is why the Government are failing.
The report continues:
"Councillors Chrimes and Venables and the Chief Executive put the proposal to the Minister of State at the Department of Trade at a meeting in London on September 11, 1980, which was also attended by Mr. Barry Porter, MP"—
I assume that Bebington and Ellesmere Port is a constituency nearby—
"Mr. Andrew Pearce, EMP, and members of the Bowater Action Group. After a lengthy discussion the Minister undertook to examine the Council's proposals very carefully, and as a matter of urgency. On September 25 Councillor Venables and the Chief Executive met a senior official of the Department of Industry, who explained that the proposal had been carefully examined but that the Government were not prepared to press the EEC for a restriction of the newsprint quota or the imposition of duty notwithstanding the fact that mechanism existed for doing so. The Government were reluctant to pursue a scheme which sought to compel the UK publishers to bear increased costs."
The Minister can say that the Government have tried to do something for the British newsprint industry, but here in black and white is a report—with no political input—by officers of a local authority saying that the Government refused to intervene.
Mr. Spearing: Has my hon. Friend any information as to the price differential that the newspaper users would require as a percentage comparable to either the Scandinavian tariff or the one for North America? That would appear to be a germane and important point in the matter of the judgment which Her Majesty's Government have just taken.
Mr. Campbell-Savours: I cannot give my hon. Friend figures for the United Kingdom. I do not want to prolong the debate unnecessarily. In the debate on the Consolidated Fund Bill tomorrow night, I shall hope to show the differentials in Europe, where Governments have arranged for voluntary agreements to be sponsored between newsprint consumers and newsprint manufacturers, to ensure the retention of a domestic manufacturing newsprint industry in those countries.
Mr. Spearing: Is my hon. Friend telling the House that the sort of arrangement that was asked for from the Bebington Bowater committee—if I may call it that—is operated inside some of our partner member States in the EEC but that the Government are refusing to operate that sort of agreement in the United Kingdom?
Mr. Campbell-Savours: Not in that particular area. But a number of recommendations made by that committee apply within the European Community—if not that one, certainly others. Again. I shall be drawing the attention of the House to those matters tomorrow night.
I turn now to the level of the quota. I understand that the idea is to raise the ceiling from 1½million to 2½million tonnes. That is done under our GAIT obligations. It is also to supplement the domestic production deficiency. In other words, the gap between what we can produce and what we need is to be made up by imports which would not carry tariff.
According to the "Proposal for Council Regulation", in page 3, the United Kingdom is to take 40·28 per cent. of the new quota. I understand that that is 946,580 tonnes, if my calculator is correct, plus 60,000 tonnes in reserve, making a total of 1,006,580 tonnes that we can take duty-free under the quota. Before the introduction of this
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document, we had taken 39·43 per cent. of the 1·5 million tonnes EEC across-the-board quota—a total of 591,450 tonnes. Therefore, the increase in duty-free imports under the quota, if we take it up, is 415,550 tonnes.
What is the duty loss? That question needs to be answered. The explanatory memorandum, in the final sentence, which is in parentheses, states:
"The duty relief on the proposed UK share is estimated to be of the order of £23 million."
Assuming that £23 million is the relief on 1,007,000 tonnes, which includes the reserve, I estimate that the average duty per tonne must he £22.84. That means that the 415,550 tonnes represents a total loss to the Treasury of £9,491,162. I think that Opposition Members will ask: what could that loss of £9½million do for the industry?
The hon. Member for Bebington and Ellesmere Port made a crucial intervention. Indeed, I was worried, Mr. Deputy Speaker, that you might tell him that he had to sit down, because the more he spoke the more the drew attention to the truth—that the Government's offer was the wrong offer. That was how I understood the hon. Gentleman's intervention. Money was being asked for to help the cash flow, the general turnover, problems of the company. Some £3½million per year was being asked for.
Mr. Porter: It got it.
Mr. Campbell-Savours: If the hon. Gentleman says "No", I can refer him to the document produced by his district authority.
Mr. Porter: Too late.
Mr. Campbell-Savours: No, it is not. I assure the hon. Gentleman that from what I have heard in my discussions with his local authority—and I have informed him of this matter—there was no political input in the document. In conjunction with representatives and executives from Bowater, who could hardly be regarded as bastions of Labour support, the local authority produced an apolitical document in support of its case. Under "Aid sought by Bowaters", this is said:
"The Company in their discussions with the Government have asked for:-

(a)short term direct aid;

(b)minimum to long term volume/price protection;

(c)a reduction in the energy and timber costs so that these can be made comparable with the costs paid by foreign competitors;

(d)long term capital investment aid to achieve profitability so that the need for the above measures can be reduced."

Mr. Porter: It got it.
Mr. Campbell-Savours: As will be known, if it got it, the only one that it got on offer was the last one, and it was the wrong one, because without the other three it could not make a package. That is what happened.
The same authority produced another document in which attention was drawn to the findings of a group of economists at Cambridge university who estimated the loss to the nation of revenue that stems from paying unemployment benefit to those who lost jobs in Ellesmere Port—£19 million.
The more that one goes into the sordid affair of what has happened to the British newsprint industry, the more one has to realise that large amounts of money are circulating and that the Government have found themselves as yet quite unable to channel this money into the newsprint and paper and board industry nationally. If they had done so, and done it long ago, we would have

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much of the industry left intact today instead of having 14 mills close since 1 January this year, 51 machines closed down and 9,500 people losing their jobs due to the inaction and incompetence of that lot on the Conservative Benches.
11.15 pm
Mr. Barry Porter: Perhaps I may make a speech instead of interventions.
I am obliged to the hon. Member for Workington (Mr. Campbell-Savours) for his courtesy in indicating that he would be mentioning Ellesmere Port.He said "mention"; he devoted his whole speech to the place. I am fascinated that he got his information from where I know not. I should like to take his speech point by point.
Certainly, energy prices was one of the matters that Bowater mentioned. I concede at this stage—it is always better to concede bad points at the beginning of a speech—that I am not at all convinced either way about the energy price situation of British industry generally, or what the energy price situation of the British newsprint industry was, and certainly about that of Bowater when it decided to close.
One read in The Daily Telegraph a couple of weeks ago an apologia by my right hon. Friend the Minister in charge of these matters which was so complicated that I failed to understand it. Having listened to debates in the House on energy prices, I doubt whether any hon. Member really understands these matters and is prepared to say that our energy prices are worse than, better than or equal to those of our competitors. I do not know one way or the other. It seems to me that it is marginal either way, but I leave that to my hon. Friend the Minister to explain to the House. But whichever way it was, that was not a significant feature in the closure of Bowater in Ellesmere Port.
In my intervention, I have already indicated that it was my view that it was North American profits that caused Bowater to decide to close at Ellesmere Port. Those North American profits are related to the relative strength of the pound to the dollar. It was a very complicated matter. The whole thing was negotiated with the Newspaper Publishers Association some time ago, when, under the previous Administration, the pound was through the floor. Everyone thought that it was absolutely splendid at the time. This has all gone very well since, and there has been investment in North America and Bowater is doing extraordinarly well there.
As the hon. Member for Workington has said, this is not something that has happened over the last year or so. My hon. Friend the Member for Faversham (Mr. Moate), who has equal interest in the paper industry, has said the same thing. This has been going on since 1964. If my memory serves me right, at that time we were producing about 800,000 tonnes of newsprint and we were down, before the Bowater closure, to 350,000 tonnes. Therefore, this is not something that the present Government have created. If that is so, it cannot, in all conscience, be anything to do with the strength of the pound in relation to the dollar.
One might think of rivers and trees and where they are and how energy is produced, but I shall not weary the House with all that. We do not have a large number of trees or rivers. We are not capable of producing energy at the price at which some others can produce it, as it turns out.
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The House should be able to consider, without the sniggering that we hear from the Opposition Front Bench these days, the long-term future of newsprint. I exclude, of course, my hon. Friend the Member for Grantham (Mr. Hogg), who sniggers at most things. In the discussions I had during the Summer Recess with the managers of Bowater and others, only one significant remark was made. I asked about the strategic importance of newsprint in the future. One gentleman—it would be wrong of me to mention his name—said "What strategic importance?"
What long-term future is there for a high volume of newsprint? Earlier this week, we discussed the electronics industry and the way in which the equipment it produces will disseminate information. I urge hon. Members to think on that, to think on the number of provincial newspapers that are closing and on the probability of a number of daily newspapers closing. How much newsprint shall we need? That was the question that Bowater asked and upon which it took its decision.
It is not by accident that the number of customers for newsprint has fallen over the past 15 years. If one considers what will happen with television and the indications for electronic equipment, one can see where the future lies. Any retailer in the electronics trade will confirm that in spite of the recession people are buying video recorders. That is the type of equipment that will disseminate information. Items will not appear just once. People will be able to record them and see them again. The House should consider the future of the newsprint industry in that light.
My ever-vociferous friend from Workington referred to Bowater as a lame duck.
Mr. Campbell-Savours: I did not.
Mr. Porter: In that case I withdraw the remark. Someone described it thus, however. It was not a lame duck, given the appropriate investment. The hon. Member for Workington was mistaken in suggesting that the Government had not made the appropriate revenue commitment to the Bowater corporation. They made it a capital offer. But, equally, they made a £3·5 million revenue commitment via the Forestry Commission, the National Coal Board and the Central Electricity Generating Board which would have met Bowater's requirements.
I do not apologise for my next remark, which was made at a relatively private meeting. At the beginning of this affair, a senior person in Bowater told me "If we were losing only a million or two we would stand it." The Government offered it revenue support that would have left it losing "a million or two". The Government certainly would not offer it a straight subsidy for the £7 million it was losing in any one year.
Mr. Campbell-Savours: I shall send Bowater a copy of the hon. Member's speech tomorrow.
Mr. Porter: The hon. Gentleman may indeed. I do not think that it will like it much, and it is highly unlikely that I should be appointed parliamentary consultant to the Bowater corporation. The gentleman who said that to me knew that he said it and that he said it to me.
Mr. Douglas Hogg: Presumably in confidence.
Mr. Porter: Not at all. He never said so. But if Bowater could have stood losses of a million or two, it had that offer. I believe that it was totally surprised that the Government ever went as far as that, but they did.
I turn next to the suggestions by the Ellesmere Port and Neston borough council, which has been dominated by the Socialist Party for many years. The suggestion of the chief executive of the council about protocol 13 was put to the Minister. It was answered properly and sensibly, and the local authority accepted the explanation given. However, I ask my hon. Friend not so much about what is happening about protocol 13 but what happened to the other suggestion which came from the borough council that the Newspaper Publishers Association should take certain quotas of British-produced newsprint, which would not, so far as we could see, affect the cost to the association.
That suggestion was put in detail to the Department. I gather that it was probably turned down by the association rather than by the Government. I saw the details, and it seemed to me a sensible approach. It could well have done something to save our Ellesmere Port mill at that time. But the mill has gone, and in some way I feel that I am following a funeral. Hon. Members on both sides of the House made every effort they could to save the mill. We thought that it could have been saved. I felt, and still feel, that the Government had made almost every effort to save it, for very good reasons.
The one difficulty that I had, the one trouble that is still with me, is whether more pressure could have been put on the Newspaper Publishers Association in connection with that suggestion from the borough council—and here I pay tribute to the author of the suggestion, the chief executive of the council. I wish that there were more chief executives like him, especially in the borough of Workington.
It may be that the Minister does not have all the details. I have no doubt that the pincer movement from North America and Scandinavia will squeeze out not only British newsprint but, in the end, European newsprint as well. Whilst I, with some of my hon. Friends, may have failed to save the Ellesmere Port mill, there may well be a necessity for British newsprint to be saved, and, if not that, certainly the European newsprint has to be saved, because, whatever the diminution in the need for newsprint, some base for newsprint in Europe must be saved. I doubt whether we are going about it in the right way.
11.28 pm
Mr. Tebbit: As I suspected would happen, the debate has ranged reasonably wide, although I do not think wrongfully wide. To imply as much would question your judgment, Mr. Deputy Speaker, so I should not say so even if I thought it. But I think it only right that the various points raised should have been raised, and I shall do my best to deal with them.
My hon. Friend the Member for Faversham (Mr. Moate) put his finger on one of the most important points about this whole matter. There has been a decline in this industry over 10 years. The hon. Member for Workington (Mr. Campbell-Savours) was well aware of that. He made a point of it. Yet at times he seemed extraordinarily surprised by the fact that the industry was declining today. I find it hard to believe that everything can be explained by sterling changes or energy prices. After all, during those 10 years sterling has fluctuated wildly. I am sure that the hon. Member remembered the sterling crisis which forced the right hon. Member for Leeds, East (Mr. Healey)
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back from London airport when he was Chancellor of the Exchequer. That was when sterling was in a trough. It had its peaks. There have been variable parities for sterling, so it cannot be said that the fault is that of sterling.
Energy prices have varied widely over the 10 years. It cannot be that recent energy prices account for the problem. We have had Governments of different political complexions, so it cannot be that the fault is due to one Government. I suggest that it would be wiser to look for a common thread throughout those years which applies not only to the newsprint industry but to many other industries, including Fleet Street. That is perhaps one of the finest examples of this common thread.
The common and constant thread has been that labour costs have gone up far faster than those of our rivals while our productivity has gone up far more slowly than that of our rivals. It is sad that the efforts to which my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) referred—and he played a great part in bringing those concerned to see the Government to make their case—were not made until the fate of Bowater's mill at Ellesmere Port was virtually sealed, not by the events of a couple of months but by the events of years beforehand. Those efforts could have been made at any time in the last 10 years. It is superficial, glib and inadequate to suggest to the contrary. It may be that, apart from that, the mills of North America and Scandinavia have natural advantatges which we lack. They have the timber and in some cases they have ideal siting and fewer planning constraints—all sorts of things which make a great difference.
I say to my hon. Friend the Member for Faversham that I am not at all sure, if it came about that we had only a derisory newprint industry, that the North American and Scandinavian industries would be in a position artificially to push up prices. After all, they have had 75 per cent. of the market for some time. When people have that sort of share, they are in a position to push up prices pretty easily, particularly when they know that their competitor is owned by one of their number and is in a soft position over holding down prices.
The hon. Member for Workington made a characteristic speech. He suggested that the document had new policy implications when we had all agreed—except the hon. Gentleman—that it was merely a continuation of similar documents dealing with similar matters. He had some odd figures. He seemed to have the idea that there was some enormous change in the total quota for Europe. I can tell him that the tariff quota for 1980 was 2.8 million tonnes, of which the United Kingdom received an allocation of 910,000 tonnes. The proposal for 1981 is not wildly different. It does not increase the quota from 1.5 million tonnes to 2·5 million tonnes. I am afraid that the hon. Gentleman has got it wrong. He has got wrong a point of detail and a point of philosophy, too.
Clearly, what the hon. Gentleman wants, and it was to some extent implicit in what the right hon. Member for Lanarkshire, North (Mr. Smith) said, is to place what is, in effect, a tax upon newspapers. It is not a novel idea. It has been suggested by many people in the past, but it has' not received much support. The right hon. Gentleman wants to tax newspapers to protect the makers of newsprint. His bright suggestion for that was that we should increase the tariff. "Let us have a bigger and better tariff; let us have more of a tariff', he said. There is only one technical snag—the tariff would not come to the

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British Exchequer but would go to the European Community. It would not be a very effective ploy in any case. I do not think that the right hon. Gentleman got very far there.
My hon. Friend the Member for Bebington and Ellesmere Port asked: what is the future of demand for newsprint? That is a difficult question to answer, but when one looks at the closures of newspapers that have taken place in Britain, and when one looks at the problems of The Times—I understand that a mere £15 million or so has gone down the drain there in a very short time, yet the right hon. Gentleman wants to put a tax on The Times, just to increase the chances of the men in Fleet Street being put out of work—one realises that the newspaper industry in Britain is not in that good a shape to take extra taxes and to absorb more newsprint in the future. I am sure that my hon. Friend is right when he says that, for structural reasons, the industry is in decline. As I said, nobobdy could have done more than my hon. Friend has done to avoid the closure of that mill, but he himself raised questions about the long-term future of the industry.
My hon. Friend asked about the suggested quota by the NPA and whether the newspapers should have volunteered to buy newsprint at a higher price than they might otherwise have done. I can only say to my hon. Friend that these matters were put to the newspaper industry and that, not surprisingly, in view of the look of the balance sheets of most of Fleet Street, it felt that it could not volunteer to put up its costs beyond what it had been accustomed to paying in the past.
The other matter that came through almost everything that was said this evening was energy pricing. I think that this is one of the most interesting points that has been raised in the debate, and it could not have been raised on a better evening, in view of the business that is to follow. I say that because the right hon. Gentleman and others suggested "Let us get rid of the tax on heavy oil. That is a good idea. Let us perhaps reduce the price of gas." That was the implication of what he said. I ask the right hon. Gentleman to consider, with his hon. Friend the Member for Midlothian (Mr. Eadie), what would be the effect on the coal industry in this country if the other energy producers started to undercut it. What good would that do for the jobs of miners in the coal industry? I see that the hon. Member for Midlothian is eager to answer. I hope that he has a good answer.
Mr. Alex Eadie: The hon. Gentleman's history is not accurate. The reason for the introduction of the tax on oil had nothing to do with the miners. It was introduced by Selwyn Lloyd as a means of raising revenue for the Exchequer. Times change, and I know that the Chancellor of the Exchequer will not divulge what will be in his Budget, but perhaps circumstances will change. I hope that the hon. Gentleman is paying attention to the high productivity of the miners at this time. We have nothing to fear. The hon. Gentleman is raising a white elephant.
Mr. Tebbit: The hon. Gentleman says that he has nothing to fear, but does he want a price war to break out between oil, gas and coal? Does he want them to try to undercut? I am delighted, as the hon. Gentleman is, with the levels of productivity that are being reached, but I should be even more delighted if the price of coal were
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falling rather than increasing. It would be very dangerous to start price-cutting in the other energy areas for the benefit of the coal industry.
Mr. Eadie: The hon. Gentleman should talk to somebody who knows the facts.
Mr. Tebbit: Yes, and I am sticking to this, because I know it very well indeed, and so does the hon. Gentleman. He is very loyal to come to the aid of his friends, but it will not go down all that well in the coal mining districts that the Labour Party wants to start a price war to undercut coal. I know, as the hon. Member for Midlothian and his hon. Friends on the Labour Back Benches know, that if oil and gas become cheaper than coal there will be a flight away from coal. There could be nothing more stupid than to do that. I am astonished that it was even suggested.
Mr. Edwin Wainwright: Does not the Minister realise that other Governments are subsidising energy in their countries to ensure that energy-using industries produce cheaper manufactured goods of all types? When they are in competition with us, we are at a loss. Does the Minister have an answer to that?
Mr. Tebbit: The hon. Gentleman should have gone to Bali this week to have a chat with the OPEC Ministers. He should have told them that the British Labour Party has another new policy. To suggest that we should embark on a programme of subsidising all energy prices in a world that is desperately short of energy is nothing short of madness. The Americans have an economy that is in serious trouble, not least because they have failed to grapple with their problem of properly pricing energy. I am glad to be able to tell the House that my hon. Friend the Minister of State, Department of Trade in Brussels today has been raising support from other members of the Community for a concerted approach to the Americans on their policy of subsidised energy prices. It is bad for trade, for industries in Europe and for the world economy in the long run.
Mr. Frank R. White: Will the Minister assure the House that his hon. Friend will report to the House on the decisions that have been taken at Brussels, which will be of major importance to all sections of British industry?
Mr. Tebbit: My hon. Friend the Minister of State is happy to talk to the House about these matters whenever it is possible for him to do so. It does not depend on me to determine the allocation of time in this place. I shall bring what the hon. Gentleman has said to the notice of my right hon. Friend the Leader of the House and my hon. Friend the Minister of State.
Mr. Moate: If we had gone to Bali—many of us would have liked to do so—we might have stood a greater chance of getting some clearer facts than we are getting currently from many of our Ministers on the costs of energy to industry. We do not want energy to be subsidised for newsprint and other industries, but we want to be sure that we are not paying more than our European competitors.
Mr. Tebbit: I agree with my hon. Friend. The problem is that it is not easy to get at the facts. The paper and board sector working party formed a working group on energy prices. I understand that it hopes to report to the sector working party in January. That will be an interesting report. The CBI initiative does not seem to be producing any very clear facts.
Mr. Campbell-Savours rose—
Mr. Tebbit: There will be an NEDC meeting early next year. I think that it will sit on 7 January. The CBI survey is expected to form the basis of the discussion. Some agreed facts may emerge from that. I can assure the hon. Gentleman that there is no unwillingness to try to find the facts. However, to compare like with like in these matters is extremely difficult.
Mr. Campbell-Savours rose—
Mr. Tebbit: It is not too difficult to ascertain what is paid in Britain, but it is extremely difficult to ascertain what is paid abroad.
Mr. John Smith: Does not the hon. Gentleman agree that it is unsatisfactory in a matter of such importance to British industry that it is left to a working party organised by the CBI and by various interest groups to try to establish facts when the Department of Energy and the whole of Her Majesty's Government and their commercial and diplomatic services overseas should be able quickly to establish the facts? Why are not the Government, with all the power at their disposal, taking effective action to settle the argument once and for all?
Mr. Tebbit: The Government think that it is settled. Our industry is not paying excessive prices in comparison with most of its competitors. On the other hand, we are happy to accept evidence, if the CBI or others can bring it forward, to show whether our information is wrong. We are not arrogant about the matter. We are willing to consider the evidence if and when it is produced.
Mr. Campbell-Savours: Will the Minister acknowledge the comments of his hon. Friend the Member for New Forest (Mr. McNair-Wilson), who, in a debate on the steel industry today, informed the House that a company directly related to a company in Britain, with premises in Calais, is buying electricity as an industrial consumer at 30 per cent. less than it is paying in Britain? There is the example for which the hon. Gentleman asked. Will he follow up that example? If he wishes, I will table a parliamentary question asking how his investigations are progressing.
Mr. Tebbit: If the hon. Gentleman tables a question, I shall no doubt transfer it to the relevant Department. I can give him two pointers. First, one has to look more closely than the unit cost. One has to look at a number of terms—for example, the period of contract and many other matters. Secondly, I understand that the French are now producing 52 per cent. nuclear electricity. Perhaps the hon. Gentleman would tell some of his hon. Friends, and some of my hon. Friends, about the implications of that.
When asked about the Government's plans towards the industry, the answer is that we want to see a British newsprint industry that is competitive and able to meet the requirements of its customers. We cannot afford a newsprint industry that requires subsidisation or a tax on newspapers—that is what the suggestions about import duties amount to—in order to protect the industry.
We have ranged fairly widely in the debate. I hope that I have dealt with most of the matters that were raised, even if not to the entire satisfaction of the whole House.
Question put and agreed to.
Resolved,
That this House takes note of the draft proposal by the Commission of the European Communities for a Council Regulation opening, allocating and providing for the administration of a Community tariff quota for newsprint falling within the subheading 48.01 A of the Common Customs Tariff (1981) and extending this quota to include certain other types of paper, as set out in the Department of Trade's unnumbered Explanatory Memoranda dated 28th November 1980 and 11 th December 1980.

Coal Industry (Redundant Mineworkers and Concessionary Coal)
11.48 pm
The Under-Secretary of State for Energy (Mr. John Moore): I beg to move,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment No. 3) Order 1980, which was laid before this House on 5 December, be approved.
The order gives effect to the provisions of section 7 of the Coal Industry Act 1980, which the House considered last summer. Its main provision is to extend the redundant mineworkers payments scheme to comparable grades of employee at cokeworks. The National Coal Board has, since 1978, been providing redundant cokeworkers with benefits equivalent to RMPS benefits, and the present order allows the Government to take over those obligations. As my right hon. Friend the Secretary of State told the House on Second Reading of the Coal Industry Act 1980, we think it right to do this in the present circumstances, where a contraction in the demand for coke may necessitate a reduction in the scale of cokeworks operations during the next few years.
Cokeworkers employed by the NCB who are made redundant at age 55 and over get about two-thirds of their previous pay for three years and then a weekly sum equivalent to unemployment benefit plus premature pension until they are 65. Those aged under 55 receive lump sum payments on the same basis as mineworkers. Under the order, the Government will meet the cost of these payments. The order also makes a small change in the Amendment No. 2 Order which came into effect in June; it changes the date laid down in that order by reference to which a man's weekly pay is calculated for the purpose of determining his entitlement to a lump sum. The date used will now normally be the date when notice of redundancy is given rather than the date of redundancy itself. The change will have negligible impact on the overall level of payments. The earlier procedure turned out to be very difficult to operate in practice.
The order also allows the Government to reimburse the costs of concessionary coal provided to redundant cokeworkers in the same way as to redundant mineworkers.
The NCB cannot insulate itself from the problem of declining markets for coke, but it is right for the Government to give every reasonable assistance in compensating the workers affected and assisting their redeployment.
The order also extends the period during which redundant mineworkers and cokeworkers may qualify for benefits for a further three years, to the end of the board's financial year 1983–84. This is in accord with the Coal Industry Act 1980, section 7, but in no way does it imply that the RMPS will end then. Indeed, as I made clear during the Committee stage of the Bill, we envisage bringing forward in 1983 further primary legislation to permit a further extension.
As the House will be aware, the redundant mineworkers payments scheme was first introduced by the Coal Industry Act 1967. At that time, it was for mineworkers made redundant in the period to March 1971. Since then, successive Administrations have in successive pieces of
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primary and secondary legislation extended the duration of the scheme and the benefits available; for example, the 1973 Coal Industry Act enabled some of the board's expenditure on concessionary coal to be reimbursed. The 1980 Act and order are simply the latest in this series.
I ask that the House approves the order so that expenditure on payments to cokeworkers can be reimbursed as of next Monday, the date of coming into operation. Provision for the payments is being made in the Supplementary Estimates, which were approved earlier this evening.
I commend the order to the House
11.52 pm
Mr. Alex Eadie: We welcome the extension of the redundant mineworkers payments scheme to cover redundant cokeworkers.
The House will be aware of the history of the schemes. The mineworkers scheme was introduced after the approval of Parliament, which the Minister hinted at, in July 1968. The cokeworkers scheme became effective on 1 January 1978 and offered comparable benefits. However, the 1978 scheme was entirely funded by National Smokeless Fuels Limited, which is a wholly owned subsidiary of the NCB, rather than the Government. As the Minister said, that is where some financial change is involved.
It is appropriate to comment on the NCB's external financial limits and the need for greater flexibility in its operation. The financial limits are usually fixed the autumn before the start of the financial year to which they relate. In the case of the NCB, that is the beginning of April.
The financial needs of industry can change suddenly through external and unforeseen events. Because of recession, sales of coal in 1980–81 will be about 6 million tonnes less than last year. In order to absorb the immediate impact of that abrupt change in the industry's markets, the NCB is putting about 5 million tonnes into stock and increasing its exports at prices somewhat below what the coal would have fetched if sold within the United Kingdom. In such circumstances, there should be a relaxation in the external finance limits. The alternatives are a cut in the industry's essential investment programme, on which its long-term future depends, or further price increases, which would result in a loss of business and miners' jobs. A direct consequence would be a larger and more expensive mineworkers' redundancy payments scheme.
We are told that about 500 persons at Evenwood, Bedwas and Monkton will be covered by the introduction of the payments scheme in the event of redundancy. Workers at Phurnacite and by-product plants will not be covered but they will be covered by the RCPS.
There is a proposal that Manvers cokeworks should close in February 1981 and that about 100 people will be covered by the redundant mineworkers payments scheme if the effective date is 26 December 1980. That leads to the question of Government grants to aid the coking coal industry. European Coal and Steel Community rules permit member Governments to pay grants towards the cost of coking coal production and towards the cost of stoking coke. The purpose is to provide financial support against third country coking coal in the medium term.

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During 1979–80, the National Coal Board was paid £8·5 million in grants for coking coal production and £12·9 million in coke stoking aid.
Earlier this year, the British Steel Corporation announced its intention to import all coking coal needs. After prolonged negotiations, the NCB and the BSC reached an agreement which will retain about 4·2 million tonnes for the British coal industry next year. That involves the NCB aligning its prices to world coking coal prices, in return for which it will get a reduction in the price of some of the steel that it buys. Nevertheless, there was a heavy cost to the National Coal Board in holding on to the business and the mineworkers' jobs that it represents.
The board argued the case with the Department of Energy and the Government for a considerable increase in coking coal production subsidy, which would have been permitted within ECSC rules. The board said that the claim was based on the tonnage which it would produce for blast furnace coke production. The Minister mentioned the contraction of the coke industry. However, the Department has refused the claim and has fixed the level at a figure which is much lower than the Community rules permit, although no extra Government expenditure is involved, since the deficit grant would be reduced by the sum involved.
We indict the Government for their senseless attitude. We accuse the Government of seeking to present the coal industry's financial results in an unfavourable light for senseless, doctrinaire reasons. If the Minister denies that, he has a responsibility to explain why his Department has shut its eyes to Community rules. We often hear about how he and his hon. Friends go to Europe to demand the maximum return from our entry into the Common Market. They say that they discuss with their European partners how we should benefit.
We indict the Government for not approaching the European problems vigorously, for not examining the rules and, to some extent, for hamstringing and misrepresenting the coal industry's financial position. As a result, the coal industry does not receive the assistance that it would receive if the Government stood their ground and applied the rules.
No retrospection is proposed in the order. There could be an explanation for that, and the Government should state it. I and my hon. Friends think that an administrative aspect is involved. The Minister shakes his head, but I leave that as a query. Although the order is important, a number of questions need to be answered. That is one, and the other questions that I have raised should also be answered by the Government. We seek an explanation from the Minister about the order and about the present position of the coal industry.
12.1 am
Mr. George Grant: The order will be welcomed by the National Coal Board, the National Union of Mineworkers and, most of all, the cokework operatives. While the order is welcome, the cokeworkers do not want redundancy payments. They want Job security. The policy of the NUM is to look upon any closures of cokeworks in the same light as it looks upon any colliery closures. We ask the Minister and the Government to consider, in the interest of the nation, the proposition that the United Kingdom Government are doing less towards coking
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production than any other country in the EEC. I repeat that the policy of the NUM is to look upon any coke plant closure in the same light as a colliery closure.
12.3 am
Mr. Edwin Wainwright: I simply wish to say a few words about the Manvers coking plant. In South Yorkshire we were disturbed that the Manvers coking plant was closed. The Government should have aided and kept the plant open so that there would have been no claim for redundancy payments. They should have kept it open at least until a new coking plant took its place. Some of the batteries could have been used for several years, and during that period a new coking plant could and should have been built. Governments have promised that in the past. But, of course, because of the recession and the reduced demand for steel, resulting in a reduced demand for coke, we were greatly affected. The Manvers coking plant episode is over. The men decided to accept redundancy payments.
There is a feeling that the order will not cover some workers because of the date of the agreed closure of the plant. The Minister has indicated that the order is merely a transfer, but I want an assurance put on the record for my hon. Friends and for the coking plant employees who could be affected. It is essential that they should he guaranteed that the redundancy payments provisions will be a continuation of the existing agreement.
I should be happy if we could get an increase in the redundancy payments. The district is in a disastrous state. There is already 16·2 per cent. unemployment, and those made redundant from the coking plant will have to sign on as unemployed. The resulting effects will be a terrible calamity for Mexborough, Wath-upon-Dearne and the surrounding districts.
Mr. Alec Woodall: And Bolton on Dearne.
Mr. Wainwright: My hon. Friend is correct. Many of those employed at the coking plant come from the Thurnscoe, Goldthorpe and Bolton area. The unemployment record in that area is also high, though the coking plants employees are included in the Mexborough employment exchange area and, therefore, in the 16·2 per cent. unemployment.
I understand that the NUM and the NCB are happy with the order. We want a debate on the mining industry in general. We are disturbed about its future, which should be bright, because the demand for coal is bound to increase as supplies of oil and gas eventually reduce. If I can have an assurance from the Minister that the coking plant employees who have been made redundant will be safeguarded regardless of the date in the order, I shall be happy.
12.8 am
Mr. Michael Welsh: It is vital that the date in the order is not strictly adhered to. It was stressed during the Committee stage of the Coal Industry Bill 1980 that we must help the coke industry.
If 22 December must be adhered to and no retrospection can he allowed, it will be embarrassing to a number of employees in the coke industry. May we have an assurance that the date is not a firm date and that, as we were promised in discussions on the Coal Industry Bill, retrospection will be possible?
12.9 am
Mr. Frank Haynes: Like my hon. Friends, I welcome these proposals. I compliment the Minister, because he has not had the close association with the mining industry that some of my hon. Friends have had for many years. The Minister is doing his best to go round the industry and look at the situation. The hon. Gentleman is trying to help in any way that he can. However, he is a Minister in a Government who support a reduction in public expenditure.
The proposals will increase public expenditure. It is in the Minister's interests to retain our coking plants. In the final analysis, if those coking plants are not retained there will be further pit closures. That would be unacceptable to those of us who represent mining communities and who have an association with the National Union of Mineworkers.
Together with my hon. Friends, I shall fight to the death for the industry. The further closure of coking plants will have a serious effect on the mining industry. There will be one hell of a fight both in this House and outside to stop such policies. I hope that the Minister means what he says in our private talks about the work that should be done in the interests of the mining industry, those who work in it and the nation's economy.
12.11 am
Mr. Allen McKay: I shall not go over ground that has already been covered. Today there was a steel debate. We heard about the closure of certain steelworks. Such closures affect the mining industry. A colliery close to me supplies a steelworks in Rotherham that is about to close.
I welcome the measure because it is long overdue. The people involved have been treated differently from others in the mining industry. The order will bring them into line. However, I should like the Minister to consider some other people—namely, those who work in the central workshops that are not attached to coking works or to collieries. The closure of such workshops must be attached to the closure of a colliery. If that is not so, they will not come under the same scheme. This is an anomaly, because they alone will be left out of the scheme.
The Minister said that the date involved would be that of giving notice and not the date of termination. Does that create a precendent for the redundancy payments scheme? It is important to know. In addition, we must know whether there is to be any alteration. Although I welcome the measure, I cannot welcome the closure of coking works when we are importing coking coal from abroad. It is a sorry indictment of the Government and of the system that we should close coal works when we are importing coking coal. There is something seriously wrong with a system that allows that to happen.
A person with £2,000 in the bank will be debarred from claiming supplementary benefit. That is sad. A person receiving redundancy pay will fight to keep less than £2,000 in the bank when he should be investing money for the future. According to Government policy, a pound for every pound is docked from unemployment pay if a person receives £35—plus in superannuation pay. That is contrary to the meaning of the redundancy scheme. It is a traumatic experience to be made redundant. A man should not be kicked in the teeth as well.
I have not received any answer to a question that I asked on the phasing out of the earnings-related supplement.
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Who will pay the earnings-related supplement? Will the men lose it, will the Government pay it, or are both to pay? I have not yet had an answer on this point, and it is very important for the finance of the board that we should get this straight.
12.15 am
Mr. John Moore: With the leave of the House, Mr. Deputy Speaker. I shall try to cover as many of the points as possible, within the ambit of the order, as briefly as I can at this time of night.
I would not wish, having been only briefly associated with coal, to see anything other than passion used in describing this great industry, so I in no way question or query the legitimate passion of the hon. Member for Midlothian (Mr. Eadie), who had a lot to do with the beginning of many of these benefits and has a legitimate reason to be proud of the kind of benefit structure that he helped to create when he was in the position that I now have the privilege to hold.
At the same time, I know that the hon. Member and I—and all those who are as interested as I am in coal—would like to have the opportunity for longer, fuller and more detailed debates on what most of us regard as our prime energy asset in Britain. The hon. Gentlemen touched on the external financing limit, the coal industry stocks and the position of coking coal grants through the European Coal and Steel Community arrangements. Those are areas that I would love to be able to go into tonight, but clearly they are not within the ambit of the legislation. But I take the points that the hon. Gentleman made and will draw the attention of my right hon. Friend the Leader of the House to the need for all of us, as soon as we come back after the Christmas Recess, to pursue these matters in a longer coal debate.
The hon. Member for Midlothian asked one specific question, which came up again later in the debate, concerning the dates in question, which are obviously of great importance to the industry. There is a little confusion here. It came first out of the question whether we could have retrospectivity. Let me make clear that all that the order is doing is effectively to allow the Government to pick up the benefit payments that are currently being paid by the board. To the extent that the board is currently paying the benefits, no change occurs in any way, whether the men are at Manvers cokeworks or anywhere else or whether they are tragically touched by redundancy. There is no change, effectively, to the men. The only change, effectively, is that the Government have a modest degree of flexibility to enable them to acquire that area of responsibility. That is what I thought we had agreed in discussions in Committee. To that extent, there is no real relevance to the discussion of the application of the order. It happens that we could have attached a retrospective character to the payments if within the Act we had established a retrospective feature. We did not do that, and we were not, until the Estimates were passed today, able to pay the board. The board clearly wants it as soon as possible. That is the effective background to Monday's date, no more and no less.
But there are points related to the nature and the timing of the redundancy payments—which come within the order and which are a second feature of the date in question—where there are clearly areas for further discussion and debate beyond this Chamber. It might, however, help if I put something on the record to indicate

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the reason within the order for the specific change in redundancy timing, because it is of administrative assistance to the board and to the men.
The Amendment No. 2 Order, which we passed in June, related to the lump sums given to the pre-redundancy weekly pay of redundants. To calculate this, reference is made to the average pay for the 12 weeks up to redundancy. The Employment Protection Act lump sum is calculated by using the average pay for the 12 weeks up to the time that notice is given. To have two different bases for calculation and to be uncertain right up to the date of redundancy as to what a man's lump sum will be is confusing and creates uncertainty for the man involved. The present order thus makes the change. There should be no effective difference to the men. There are only minimal changes, but these will make it administratively much better for both the men and the board to organise.
Other points were raised specifically by the hon. Member for Penistone (Mr. McKay), who referred to the central workshops. Workshops, stores and plant pool depots ancillary to either coal mines or coal works are already covered by the redundancy arrangements of the board, but not by the arrangements that we are discussing of the Government taking up the additional RMPS.
The hon. Members for Morpeth (Mr. Grant) and Dearne Valley (Mr. Wainwright) and other hon. Members welcomed the help but deplored the need. Indeed, all of us do so. Nobody would wish to see redundancies in any industry, certainly not in the cokeworking industry, let alone in coalmining. I accept and share the sentiments behind the comments that were made. At the same time, all that we are seeking to do within the ambit of this modest order is to absorb a little of the cost away from the board into the State to offset the difficulties through which the industry is going. To that extent, this is of modest assistance. I commend the order to the House.
Question put and agreed to.
Resolved,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment No. 3) Order 1980, which was laid before this House on 5 December, be approved.

Railway Services (London)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
12.21 am
Mr. Fergus Montgomery: I am grateful for the opportunity to raise this matter on the Adjournment. I declare my interest, having recently been appointed as the parliamentary consultant to the Society of West End Theatre Managers..
Although the debate has beeen correctly recorded as being concerned with cuts in British Rail services, my purpose in raising the matter is to draw attention to the effect that the cuts will have in the West End of London, not only on theatres but on cinemas, bars, restaurants and all the other activities that go to make up the West End of London.
I understand that this morning there was a broadcast of an interview which I did last night in which it was said that I was attacking British Rail. That is not strictly true. My purpose in raising this subject is to try to persuade the railway authorities, especially in the Southern region, to draw back from their foolhardy and dangerous proposals. They should be asked to give more serious consideration to the inevitable effects of these cutbacks and to find alternatives to effect the savings that they need to make.
I do not necessarily feel that it is always right to increase fares or to cut back on services. British Rail should use a little imagination to bring back customers to the railways, to try to effect the economies that it wants to make. It could do that during off-peak times, about which it is particularly concerned.
I do not want to go into the nature of the cutbacks that have recently been announced by British Rail, because they have been fully documented in the press. However, they involve the early closure of certain stations in London and the suburbs, the closure of many of these stations on Sundays and the curtailment of many evening services from the stations which are to be left open.
I was recently given a lengthy memorandum by the Southern region in which details of the cuts were outlined. I was appalled at the naivety and what I can only describe as the typically bureaucratic blandness of the comments expressed in that document. It seems to express surprise over what is described as the
"rapid decline in economic activity and consumer spending which has been reflected in lower ticket sales."
The answer is that if railway fares go up too much, fewer people will use the railways.
I see some of my hon. Friends representing what I might call commuter areas which are experiencing tremendous difficulties at this time. I am sure that they are under great pressure from their constituents. I have to admit that British Rail is being cunning. Its aim is to cause as much distress as possible to the commuter in the hope that he will pass his aggravation on to his Member of Parliament, who in turn will put pressure on the Government to increase British Rail's subsidy. It is only fair that people should be aware of that aspect.
There are many reasons why consumer spending has declined. One of the points that should be considered by British Rail is that the service that it offers is often very poor. Commuter trains are frequently cancelled, causing enormous aggravation to the traveller. Catering facilities on long-distance trains are a joke. There is a monopoly.

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One has no option but to eat whatever is provided. One finds that trains are either virtually empty or so overcrowded that one cannot get a seat. The balance never seems to be right. The list is endless.
We have the strange situation that, by British Rail's very actions or failure to remedy many obvious faults, it suffers a decline in business and uses this inevitable decline as justification for making its services even worse. It is not for me to advise British Rail what it should do to make itself more effective, but we are entitled to remind the railway authorities that they should provide the country with a public service. All too often one detects in the public service an arrogance which would be totally untenable in the private sector.
The scream from British Rail is that it needs more and more money from the Government to put right its financial situation. Whilst I am in London, I live in a flat near Victoria station. Recently I have had some correspondence from British Rail through an organisation called Terra Survey by Catterall Sutcliffe Associates. The first letter I received was addressed to "Miss William F. Montgomery". I find this very strange, because it said that "Miss William F. Montgomery" is the main lessee of my flat. The second letter I received by recorded delivery, which must have cost British Rail or whoever does the survey for it a good deal of money. It was addressed to "Mrs. William F. Montgomery". I want to tell British Rail that I am a married man and not an unmarried lady. I am very curious about how much money British Rail has spent on this particular service when it is screaming out, on the other hand, for more and more money from the Government to be paid into its coffers.
Because British Rail is a monopoly, we get a take-it-or-leave-it attitude. To some extent this is inevitable with a monopoly, because we have no choice. We have to take it or leave it. By its own evidence, it is clear that British Rail's customers are leaving the service and turning to other means of transport. In most businesses, if there is a fall-off every effort is made to try to win back the customer.
The contrast between British Rail and the West End theatre managers could not be more stark. Earlier this year it became clear that the West End theatres were going through a very difficult time, partly because of their own failure to market themselves effectively but mainly due to circumstances beyond their control, because of the rapid decline in the number of tourists coming to this country. The British hotel business has priced itself out of the market, and many American tourists, who were the mainstay of the West End theatre, decided to avoid Britain because the costs of accommodation in our hotels had risen very substantially.
Instead of just saying "This is the end of the world" and closing the theatre doors, the Society of West End Theatre Managers decided that it must try to do something about it. It started its own marketing operation. Less than two weeks ago, we had the first of the marketing schemes to win back audiences. My right hon. Friend the Minister for the Arts opened the half-price ticket bureau in Leicester Square in London. I am delighted to say that this scheme has already proved a substantial success, because by the end of this week—in other words, in less than two weeks since the start of the scheme—more than 10,000 people have used the booth to buy tickets to go to West End
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theatres. Many of these are people who would admit that they would not have gone to the theatre had it not been for the booth offering tickets at a cut-price rate. Some of these people, who have never been to the theatre before, have been attracted by this imaginative scheme. We hope that they will continue to go to the theatre. The secret is that, once attracted to the West End theatre by half-price tickets, people become sufficiently interested to continue to go.
If the theatre had followed British Rail's example, it would have closed theatres, introduced shorter plays, closed the bars and taken all sorts of measures to cut back on the service rather than try to win back the paying customer. Instead, the theatre managers are trying to improve their service, to meet public demand. While the railway authorities are proposing to close stations on Sundays, which is scandalous because people often visit relatives or come into the West End on those days, the theatre managements are having discussions with the unions with a view to their opening on Sundays, an experiment that has been a great success on Broadway.
I have no doubt that in defending its attitude British Rail will argue that it has already tried all sorts of schemes. It will cite special summer fares, Saturday prices, the senior citizens £1 offer, the special special Christmas reductions" and the specially reduced rates for children. I contend, however, that British Rail has not tried hard enough. The senior citizens £1 scheme, which is a marvellous idea—it is great if elderly people are able to travel anywhere for £1—was one of British Rail's best-kept secrets. Apart from a few press releases, the only time one saw anything about it was if one happened to visit a railway station. Those not inclined to travel on trains are unlikely to visit a railway station. Therefore, old-age pensioners who did not visit stations knew nothing about that marvellous offer. It is not much use to pensioners if the message is not put across.
My right hon. Friend the Minister of Transport said during Question Time last week that British Rail's advertising budget is about £9·5 million. I begin to wonder whether, at that price, we taxpayers are getting value for money. British Rail must realise that to increase traffic on the trains it must expand the schemes that it is now operating in what I can only describe as a half-hearted way.
Why limit the senior citizens scheme to November? Why limit it to old-age pensioners? Why not introduce a flat-rate fare for anyone using the trains after 6 pm—after the peak period? Most of the trains moving into or out of London at that time are half empty anyway. Sir Freddie Laker operates a scheme of standby fares. It has been very popular. It is better to sell tickets at half price than to sell no tickets. That theme has been embraced by the West End theatres with great success. I do not see why British Rail could not do the same.
It would be a great pity if the Society of West End Theatre Managers were being thwarted in its attempts to revive the theatre in London by the backward thinking of British Rail. In developing their marketing strategy, the West End theatre managers have defined as the primary market target people who live within the Greater London area. British Rail admits that those who live within 20 miles of the centre of London will be most affected by the cutbacks that it is proposing.
Of course, people living in the Greater London area have alternatives—buses and tubes. But criticism of

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British Rail does not necessarily absolve London Transport from the same treatment. The sad fact is that public transport services for Londoners have declined to the point where they are close to total breakdown. Students to whom I have lectured this year and last have told me that their prime criticism is of the cost of transport in central London—the level of tube fares. They felt that what we pay for transport is far in excess of anything they pay, for example, in the United States.
What concerns me most is that with the closure of stations and the curtailment of so many services the traveller is being effectively denied any choice and thus becomes even more captive to the take-it-or-leave-it attitude which seems to be so prevalent at British Rail.
It is not easy to quantify the effect of these cuts on theatre-going. A pilot survey was conducted at the Prince of Wales theatre in the West End a year ago, and only 11 per cent. of those surveyed stated that they had come to the theatre by train. I feel that that figure was rather low. On Monday this week, the Society of West End Theatre Managers distributed a questionnaire to all the people in the queue at the Leicester Square ticket booth. This produced a figure of 60 per cent. who had travelled into London that day by train; 65 per cent. said that they usually used the train, and 75 per cent. of these said that they would be affected by the cutbacks. These figures seem rather high. It could well be that the accurate figure is somewhere between 11 per cent. and 65 per cent.
Whatever the exact figure may be, there is no doubt that theatre-going in the West End and other forms of entertainment will be seriously affected if British Rail goes ahead with these proposed cuts. The West End theatre has shown signs that it is able and willing to fight and win back its audience, and British Rail should not be allowed to undermine those efforts. We should be using all our energies to stress to the railway authorities that they have a duty, not only to the public but to the industries which depend on the railways for their customers, to provide a decent, efficient and reliable service and that such a service should not be limited to the peak hours but should fulfil all the needs of those wishing to travel for business or pleasure. I hope that my hon. and learned Friend the Parliamentary Secretary will be able to give us some hope that British Rail is at least thinking again before going ahead with the plans it has announced.
12.37 am
The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): The constituency of my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) is quite a long way from London and the South-East, but, of course, I know that he has always been closely interested in the London theatre. I quite accept his case that theatre-goers and theatre management in London must be among those most concerned by recent newspaper reports about the closure of some stations in and around London.
The other Members in the Chamber are, more predictably, London Members, with an obvious interest in the subject. My hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and Chipping Barnet (Mr. Chapman) must have constituents who are affected, and I see my hon. Friend the Member for Chislehurst (Mr. Sims) in his place, as I am sure he will be again on Friday, when, I understand, he intends to raise a similar matter.
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I can understand the concern of theatre management. I was interested to hear the latest results of the survey that the Society of West End Theatre Managers carried out to find out how heavily customers of the West End theatre depend upon rail travel. The theatre managers have been carrying out such surveys for some time, and obviously an appreciable number of their customers are using the trains.
The cuts are a British Rail management responsibility. The recent cuts were not a decision of the Government. Nevertheless, I should say, in explanation of what British Rail is doing, that the cuts are by no means as severe or as draconian as come of the early press reports indicated. Some of the apparently well-informed leaks proved to be inaccurate.
I suggest that the effective reduction of services is not particularly severe. A 7.30 pm closure of 14 stations is proposed for weekdays—not including Blackfriars, which it was confidently predicted would be on the list. That is 14 stations only, out of 566 on Southern region as a whole. It is true that the list includes two London terminals—Cannon Street and Holborn Viaduct. At present they close at 10 pm. But they are very lightly used after 7.30 pm. I am told, for instance, that at Cannon Street there are only 14 departures after 7.30 pm, and on average there are only 10 passengers on each train. That station is 10 minutes' walk from London Bridge station, which will remain open as at present.
A similar pattern is repeated at Holborn Viaduct, which is about seven minutes' walking distance from Blackfriars station, which will remain open in the evenings. No doubt it is convenient to the limited number of passengers who travel out of Cannon Street and Holborn Viaduct that these stations should remain open, but they are small in number. I shall return in a moment to the point that someone has to pay for the cost of those trains late at night out of Holborn Viaduct and Cannon Street—and it is not the few passengers travelling upon them.
Those are the closures and restrictions proposed. What they amount to is that Charing Cross, London Bridge and Blackfriars will remain open as usual and the weekday and Saturday arrangements for most of Southern region and the London terminals will remain unchanged. I begin by trying to reassure the House that the proposed closures are not as drastic as might have been first supposed from the comments made.
The reason for these reductions being made at all is that British Rail, like any other business, has to attempt to match the supply of its trains and services to the level of passenger demand. There has been a fall in patronage this last year and there are a number of services in and around London which are very lightly used. In so far as British Rail fails to match supply to demand, it incurs unneccessary costs which it must pass on to other passengers or to the taxpayers. Recently we invited the Monopolies and Mergers Commission to investigate the standard of services provided by British Rail to London and the South-East to see what could be done to improve efficiency, reduce costs and improve performance for the majority of passengers. A very valuable report was produced, which made a large number of recommendations, which British Rail assures me it proposes to act upon and which, I hope, will lead to some improvement in the present rather inadequate level of service to commuter passengers.

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One of the recommendations of the Monopolies and Mergers Commission was that British Rail should do something about the fact that in London and the South-East it was operating excess capacity in a wasteful way in services around but outside the peak. I believe that some adaptation of the level of services to the genuine level of passenger need and demand is in the interests of all passengers who use this service during the day.
If British Rail runs empty or half-empty trains and incurs unnecessary costs, it has to hand those costs on, and we all know that there are already difficulties involved with higher fares and high subsidies to London and the South-Eastern commuter services. The closure of lightly used stations and ceasing to run empty or near-empty trains release resources which we hope can be used to try to improve matters for the passengers who have to use the trains at busy times of the day.
I trust—and British Rail will confirm this—that British Rail not only wishes to cut services to match demand and therefore avoid wasteful expenditure but makes the attempt to win additional traffic, which is the other side of the coin, if it is to make better use of presently under-used facilities.
My hon. Friend criticised the ability of British Rail to market its operations and win fresh traffic. I am sure that it will note what he has said with concern and interest. I certainly agree that it is spending enough money on publicity and ought to be getting some value out of it.
It has to be said that British Rail has introduced a wide range of concessionary cards of one sort or another and is making efforts to market them. For instance, I am told that the £1 Awayday ticket available to holders of senior citizens railcards, offered in November, led to the sale of about 70,000 additional railcards of that type to customers who, I assume, British Railways hopes will be won to rail travel at other times of the year. Theatregoers are obviously a category of people who ought to be won to the train, if that can be done, and who ought to have some facilities offered to them. They can already use Awayday returns, which give travel at little more than half price, and they can also take advantage of any railcard scheme for which their age, family or any other distinctive feature of their lives makes them eligible.
I am told that in some parts of the country British Rail runs local promotions for particular theatre shows, and I am sure that it would be interested in taking up some of the suggestions made by my hon. Friend and in exploring any schemes put to it which might have the eventual effect of increasing its net revenue.
Having given that explanation of what British Rail is doing now, and having touched on matters that it might resort to in order to increase traffic on its services in London and the South-East, I have to confirm again that these proposals are not ones over which Ministers have any power. Ministers do not determine the timetabling of trains. We do not have any involvement in the day-to-day management of the railways, and we have to stand behind and support the judgment of the railways when they make management decisions that are aimed at improving their present somewhat unfortunate financial predicament.
I should make it clear, therefore, that British Rail has taken these steps to reduce costs, which is in line with the Government's direction to British Rail, and I understand that similar proposals for other regions will be forthcoming
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from British Rail in due course. All over the country, if steps are taken to match resources to genuine passenger need and to maximise the utilisation of resources at times of peak demand, when most people want to make use of the trains, I think that that will be to the benefit of the travelling public as a whole.
I should like now to touch on a matter to which my hon. Friend referred—although he supported the Government on this—which is the suggestion that has appeared in connection with these cuts that the problem could be solved if the Government were more generous with taxpayers' money and gave more finance to British Rail. It cannot be repeated too often that we have reached the stage where that can no longer be the simple answer to all the problems of British Rail. Management steps have to be taken. There has to be a response from the work force in British Rail to get better value for the money that is being given and to improve the efficiency and performance of the system.
When one looks at the financial position of British Rail, one sees that the Government have been comparatively generous to this industry in helping it to cope with the present financial pressures upon it. When one looks at the general economic state of the country and considers the financial background against which the Government have had to take decisions about public expenditure, one sees that British Rail has come out reasonably well. The main restraint upon British Rail is the external finance limit, within which British Rail is having difficulty in living. Last year there was a wage settlement of 20 per cent., with some productivity elements, which, obviously, British Rail hoped could be accommodated within its EFL for that year. In the event, the performance of the business did not enable British Rail to afford that wage settlement and it had to come to the Government to seek an enlargement of the EFL.
To some extent, the difficulties of British Rail have been caused by the recession and the falling traffic in steel and coal. The Government took the view that it would be wrong for passengers in London and the South-East, Cheshire or anywhere else to pay the cost of these difficulties in the freight business, caused by the recession. Therefore, we have shown flexibility and we have increased the EFL of British Rail by £40 million to £790 million in the present year and to £920 million for the next financial year. It is a difficult target for British Rail but not an impossible one, and it is not an insubstantial amount of money, most of it, in effect, being paid for by the taxpayer.
A sum of £2 million a day is to be expended by the taxpayer on the railways next year. That is £15 per head for every man, woman and child in the country, more or less, and that, I suggest, is not an insubstantial EFL. It is not good enough to challenge it by making comparisons with European countries, many of which regard the level of support that they give the railways as something akin to a national disgrace. Our railways are slightly more successful in earning some resources from revenue, but other countries with stronger economies might be able to afford more. We are affording a great deal.
So far as the passenger service is concerned, we finance that through what is known as the passenger service obligation, and again we have responded to the needs of the passengers, and, therefore, to British Rail. Only last week the PSO was raised by £23 million, to a total of £678 million for 1981. That recognises the difficult trading

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conditions. It is remarkable that the Government have been able to increase that amount, admittedly with no overall increase in resources available to British Rail, at a time of financial stringency.
Investment is often mentioned in connection with services in London and the South-East. We have not cut the investment ceiling of British Rail" despite the present financial cirumstances. It has been maintained at its real value as set by the last Government. Each year £325 million, at current prices, is available for British Rail to invest, and it is investing heavily. There is no bias against investment in London and South-Eastern services, and the Monopolies and Mergers Commission found that 25 per cent. of investment in British Rail was taking place in London and the South-East.
I could give the House a list of improvements taking place in the commuter service within the investment ceiling. The list includes the London Bridge resignalling, the electrification of the Great Northern suburban services, the electrification of the Bedford—St. Pancras services, the Victoria resignalling and track modernisation, the
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resignalling and track modernisation of the London-Brighton line, a rolling programme for the construction of 220 new electric multiple units each year and a programme for refurbishing the existing EMU fleet by the mid–1990s.
All that is being invested by British Rail within the constraints of the investment ceiling that we are operating. We would like to do better, but the railways are not starved of money now. They need to put their own house in order and respond by improving their efficiency and productivity and meeting the needs of their customers in London, the South-East and elsewhere.
I appreciate the concern of everyone in London, not least theatregoers and theatre management, which is struggling with its financial problems. As my hon. Friend said about the proposals for London and the South-Eastern services—
The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at ten minutes to One o'clock.