HC Deb 16 December 1980 vol 996 cc168-232
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 (Salford, West)

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, 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


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 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 (Consett)

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 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 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 (Rotherham)

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 (Flint, West)


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 (Motherwell and Wishaw)

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 (Feltham and Heston)

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 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 (Penistone)

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 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.

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 (Pontypool)

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 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 (Ebbw Vale)

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 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 (Workington)

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 (Sheffield, Park)

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), 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". 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 (New Forest)

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 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 (Gillingham)

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 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 (Gower)

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, 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. 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 (Flint, West)

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 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 (Whitehaven)

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 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 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 (Rotherham)

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 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 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 (Brigg and Scunthorpe)

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?

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: 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 (Kettering)

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 (Bothwell)

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 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 (Faversham)

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


Mr. Brown

I should like to continue.

Dr. Bray


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 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. 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 (Truro)

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 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 (Renfrewshire, East)

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 (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 £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 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 (Newport)

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 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 (Kettering)

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


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.

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 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 (Gillingham)

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.

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 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 (Workington)

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 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 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 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 (Sheffield, Hallam)

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 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.

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 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 (Motherwell and Wishaw)

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 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 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 (Faversham)

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.

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 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 (Lancaster)

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 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 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 (Whitehaven)

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 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 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. 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 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 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 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 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 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 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 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
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
Young, David (Bolton E) Mr. James Hamilton and
Mr. Donald Coleman.
Tellers for the Ayes:
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.

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