STEEL INDUSTRY

HC Deb 14 January 1980 vol 976 cc1208-21

The Secretary of State for Industry (Sir Keith Joseph)

With permission, Mr. Speaker, I wish to make a statement about the steel strike and its background.

First, let me say a word about our objectives for the British Steel Corporation, since I believe that they are common to both sides of the House and common also to both management and trade unions. I quote the joint statement of January 1976 agreed between the British Steel Corporation and the TUC steel committee: Both the BSC and the unions concerned believe that the Corporation should be transformed into a profitable, high-wage, high-productivity industry, comparable with its major European competitors". Two things are needed for that. First, capital investment in new equipment is necessary, and, secondly, the proper use of that equipment. The equipment has been provided—at a cost of over £2¼ billion in the last five years. In 1979–80 the taxpayer is finding £700 million for steel. In 1980–81 we shall be providing £450 million of taxpayers' money to the BSC. The BSC is entering the 1980s with equipment as modern and as potentially efficient as any steel industry in the Western world. But that efficiency has still to be achieved. I quote again from the joint statement of January 1976 by the BSC and the unions: Changes will have to be made now to reach European levels of productivity". The unions acknowledged, in that agreement of almost exactly four years ago, the need for radical changes in manning and in working practices. But during the last four years the gap between our productivity and that of our European competitors has not narrowed; it has grown wider. We emphasise productivity, as did the previous Government. They said, in their White Paper of March 1978: Government will give full, sustained and public support to the BSC in their efforts, including the steps needed to achieve much-needed improved productivity in the Corporation.…Such improvement is vital if BSC is to win an assured future as a competitive large-scale steel producer". That is the policy against which we need to consider the present dispute, to which I now turn. As the House will know, the last round of negotiations between the BSC and the trade unions co-ordinating committee, representing all the unions concerned, took place last Monday, 7 January. The unions claimed a general increase of 8 per cent., with no strings. They also claimed a further 5 per cent. as an advance payment against the negotiation and implementation of lump sum bonus schemes on a divisional or works basis, and offered a number of national commitments to help achieve them. The BSC has acknowledged that those commitments would be helpful. However, the BSC also has regard to the fast that those commitments generally go no further than the commitments made by the unions in the joint statement of January 1976. So they are nothing new and they do not represent any real advance on the undertakings given four years ago. Regrettably, those undertakings were not fulfilled. Against that background, it is not surprising that the BSC is now looking for performance.

The BSC offered in return a general increase of 8 per cent. based on a national agreement, which would include agreement at national level to changes of the kind recognised by both sides in January 1976 as necessary to achieve improved productivity. The BSC is again willing to put its trust in the union leaders to deliver. The BSC offered at least another 4 per cent. from local lump sum bonus schemes when those should have been negotiated. The BSC offered an advance payment of that 4 per cent. in the January-March quarter. The total amounts to a guaranteed 12 per cent. for the whole of 1980, subject only to the national agreement and to the negotiation of local lump sum bonus schemes by 31 March 1980. The schemes will be tailored to the particular conditions in each region and linked to output and profitability. Thus, 12 per cent. is a minimum. Once the schemes are properly in operation, the BSC expects the average payments to be higher. Increases from productivity schemes of the traditional kind would also be available.

If the BSC were instead to offer money without such conditions the workers in all other industries would have to continue subsidising the workers in the steel industry. And not only that. Our steel would remain uncompetitive and all our user industries, and the workers in them, would be further handicapped. This year the average earnings of a steel worker are £110 a week—over £5,000 a year. The losses in 1979–80 by the BSC represent over £1,800 for each steel worker. So other workers, often lower paid, are having to provide, from the taxes that they pay, more than £1,800 of the average earnings of each worker in the BSC. The BSC estimates that its offer will bring the average earnings of a steel worker next year up to at least £124 a week. Is is fair that other workers should be asked to give the difference from their taxes, or is it right that the difference should be earned by the steel worker himself, from improved productivity?

I understand and sympathise with the workers in the industry, who face the prospect of unprecedented change arising from substantially reduced steel demand. Their difficulties have been heightened by the previous Administration's misguided interventions, which have aggravated the problems facing the industry today. But the future of the industry—and, in particular, its ability to grant wage increases—must be a matter of management and work force.

I very much regret this strike. I regret it for the harm that it is doing and will do to the steel workers and their industry. Even without the strike, they are faced with a painful contraction of the industry in order to bring production capacity more in line with demand and to become competitive. The strike will reduce that demand still further. More jobs will be at risk and the ability to pay better wages will suffer. I regret the strike too because of the damage that it is doing and will do to British industry and to those who work in it.

Mr. John Silkin

There is not a single word in the statement of the Secretary of State that shows that the Government are aware that they should be trying to settle the dispute. There is not one word about the responsibility of the Government for the present position in the industry because of their ultimatum to the British Steel Corporation to break even by March 1980. There is only an attempt—a bad attempt at that—by the Secretary of State to try to pretend that he is following the policy of my right hon. Friend the member for Chesterfield (Mr. Varley). It is a totally different policy. It is a policy of rigid ultimatum, not only of working together with the industry.

In the light of that, what assessment has the Secretary of State made of the effects on the economy of a prolonged strike? Is there no point at which the Government would intervene to bring the parties together? The whole of the right hon. Gentleman's statement is a reiteration of the case made by the BSC. The Secretary of State in no way shows that he is in the least aware of the views of the unions concerned, or of the fact that since 1975 productivity has risen by 16 per cent. in British Steel. [Interruption.] Today's NEDO report contains that information. Conservative Members should study it.

The Secretary of State is in no way aware of the influence of foreign subsidised coking coal upon the production of steel. He is in no way aware of the fact that this dispute can, unless it is corrected, bring the whole of British industry to a standstill. In the light of that, may I ask the Secretary of State how many discussions he has had with Sir Charles Villiers since 2 January, and how many discussions he has had with the unions concerned? Is he prepared simply to wait until the whole of our economy is brought to its knees, together with the local communities concerned?

Sir K. Joseph

I suspect that the right hon. Gentleman's phrase about the Government coming in to settle the dispute is a suggestion that the Government should find more taxpayers' money. It would have been more straightforward if he had said that.

Secondly, the whole of my statement was an attempt to explain that the previous Government believed, as does this one, that it is not in the interests of the steel industry, of the steel workers, or of the whole country, to defer yet again the pressure upon the industry to raise its productivity and to become competitive.

The right hon. Gentleman said that the fault was all mine for insisting that the industry should break even in the coming financial year and that I was quite wrong to suggest that that was the previous Government's policy. It was the previous Government's policy, as expressed, but they did not have the will power to stick to it. The result of that is that the industry is even less competitive than it was, with even more cuts still to be car- ried out before it can become competitive, earn its own keep and pay its workers anything like what European steel workers with higher productivity, are earning today.

Thirdly, the right hon. Gentleman asked me what will be the effects of a long strike. They will be intensely serious, for the steel industry in particular and for those who work in it, and for the whole country.

The right hon. Gentleman asked me whether I was aware of the views of the unions concerned. I am thoroughly aware of their views. I have already said, and I repeat, that I very much sympathise with the worries and anxieties of steel workers faced with a contraction that must occur to reflect falling demand for their products and that has been made worse by the previous Government's deferment of closures.

Mr. John Silkin

The right hon. Gentleman has not answered my question. How many discussions has he had with Sir Charles Villiers since 2 January, and how many has he had with the unions?

Sir K. Joseph

I have had two discussions, one in person and one on the telephone, with Sir Charles Villiers. I have had no direct discussion with Mr. Bill Sirs.

Mr. David Steel

Surely the Secretary of State cannot wash his hands of the consequences of the Government's entire economic policy. Is it not the case that in the absence of an incomes policy the British Steel Corporation was encouraged to believe that its 2 per cent. offer was sensible and was in line with the Government's restraints on funding of the corporation? Since most of our European competitors, to whom he referred in his statement, give various forms of State help to their industries in the light of the world steel recession, is it not strange that the Government have imposed a deadline on the break-even point for the corporation? Is not that itself a form of direct intervention?

Sir K. Joseph

The Government are very heavily involved by making available taxpayers' money on a huge scale. It is in the interests of the steel workers and the steel industry that they should become competitive. Without a break-even point, the steel industry will not find it necessary to become competitive and will become permanently dependent on the taxpayer. That way lies an even smaller steel industry. The steel industries of other countries behave in very different ways from our steel industry. Some leave it nearly all to the private sector; some, it is true, provide subsidies to a limited extent. By any comparison, successive Governments in this country, including this Government, have provided more financial help to the steel industry than any other Western country has provided to its steel industry.

I should have replied to the right hon. Gentleman's question about productivity. He is misquoting the report of the National Economic Development Council on iron and steel, which is in the Library. It was published today. The growth of productivity shown by that report is only from 1977 to 1978. It shows that four out of our five European rivals have increased their productivity in steel more or much more than we have.

Mr. Patrick McNair-Wilson

Does my right hon. Friend not agree that this is an ill-conceived and futile strike, which cannot succeed, and that there will be no victors at the end of the dispute except our foreign competitors? Does he further agree that it is ironic to find that the only part of the steel industry making profits today, and able to pay decent wages, is that part remaining in private hands?

Sir K. Joseph

I agree with every word of my hon. Friend. It is tragic that the strike will damage the very people who are involved in it—above all, the steel workers themselves.

Mr. Coleman

Is the Secretary of State aware that his statement to the House today confirms the complacency with which he and the Government have viewed this dispute in the steel industry, which is having such a serious effect upon British industry? Will he not now intervene in the strike to bring it to an end, so that factories such as the Metal Box factory in Neath cease to suffer from the difficulties already surrounding them? The right hon. Gentleman owes this to the steel workers, who are responsible men. Will he do his duty now, as the Secretary of State responsible for this industry?

Sir K. Joseph

It is not necessarily kind to the steel workers to ask for more money from the taxpayer on top of all that they have had and are having. The kindest thing for the steel workers is to persuade them that it is in their own interest to increase their productivity and to become competitive.

Mr. Anthony Grant

Will my right hon. Friend say anything more about the effect that secondary picketing is having on the strike? Has he received any offers from those unions in other industries that support the strike to reduce their own pay in order to find the money?

Sir K. Joseph

I do not have comprehensive knowledge about the range and effectiveness of secondary picketing. Questions on that matter are for my right hon. Friend the Secretary of State for Employment. I have no information on my hon. Friend's second point. My right hon. Friend the Secretary of State for Employment is very sorry that he could not be here today, but he has an overriding public duty.

Mr. Hooley

Is the Secretary of State aware that all kinds of vague and contradictory figures about productivity and comparisons with other countries are being bandied about by both sides? In the circumstances, would it not be sensible to follow a suggestion already made, that a special inquiry be instituted into this matter so that the up-to-date facts can be established, for the country to look at?

Sir K. Joseph

It so happens that there has been published today—a copy is in the Library—a NEDO progress report of the iron and steel sector working party, which includes information about productivity. The membership of the iron and steel SWP includes Mr. Bill Sirs and two other trade union leaders.

Mr. Grylls

Will my right hon. Friend tell the House something about imports of steel, and whether any blockading of ports by pickets is taking place? Will he assure the House that in future he will, if necessary, ensure that the Army is provided so that imports can get in through our ports?

Sir K. Joseph

I am aware, as the House is, of some stoppages in some ports, but I cannot give a comprehensive picture.

Mr. John Morris

Does the Minister not recognise the inconsistency of the Government's Pontius Pilate non-inter-ventionist role on pay, while intervening on the matter of the break-even point? For how long will he allow the industry to bleed away because of an unreasonable time scale on finances on the proposed rundown, and not allow the industry to negotiate and reach a settlement? He talks about the taxpayer's money, but are not the nation's interests at stake here?

Sir K. Joseph

The Government are involved in protection of the taxpayers' money, they are involved very heavily in the provision of the taxpayers' money, and, through the requirement of a break-even point by a set date, they are involved in limiting the amount of money required from the taxpayer.

Mr. John H. Osborn

Is my right hon. Friend aware that the line that he is taking is supported by the rest of the industry? Does he know that workers in the private sector of the steel industry have chosen not to become over-involved in this dispute? Can he give the House some information about the work of his reporting centres in terms of how they are able to co-ordinate activities in the various regions and report to him what is really happening?

Sir K. Joseph

I am grateful to my hon. Friend for what he said. As for information reaching my Department, we receive a certain amount, but that cannot be a comprehensive gathering together of all the reality of information, since it is changing so quickly.

Mr. Homewood

Is the Secretary of State aware that there are question marks not only against the productivity figures quoted by my hon. Friend but against the levels of subsidies amongst our competitors? There are also claims by the unions that the BSC management has wasted millions of pounds over the past few years. Is it right that the workers should suffer for this? Does not he agree that, as all these question marks are there, there should be an inquiry into the Indus- try and its management before it is destroyed?

Sir K. Joseph

I repeat that a sector working party on which three trade union leaders sat has just published a report containing what surely will be accepted information about international productivity. However, the hon. Gentleman is right in saying that behind the present condition of the industry there lies an overestimate made about 10 years ago of the demand for steel. It was an overestimate made honourably by the then Conservative Government, and it was outbid at the time by the then Labour Opposition, with whom at the time the trade unions agreed. We were not the only country that overestimated the demand for steel, and our demand for steel has now been reduced by the economic stagnation in this country over the last four or five years and by the decline, especially, of our car industry. These have all made the position worse, but it will be made worse still if, by the policy of the Opposition, we defer putting the matter right.

Mr. Michael Brown

Is my right hon. Friend aware that many of the steel workers in my constituency will agree with the overwhelming majority of his comments today? Does he accept that a possible way out of the dilemma confronting us all is for the British Steel Corporation to give the steel workers the opportunity to decide upon the offer that has been made, in view of the fact that Mr. Bill Sirs and his union have given their members no opportunity to decide whether they wish to commit what could in many circumstances be described as suicide?

Sir K. Joseph

That is a matter for the unions and their members to decide.

Mr. Roy Hughes

Does the right hon. Gentleman appreciate that steel workers cannot understand why this Government are so concerned about affairs in Afghanistan, Zimbabwe, and so on, when they are not prepared to lift a little finger to settle the first national steel dispute for 54 years, and that it seems to many of them that this Government are hell-bent on destroying this vital industry, with 53,000 more redundancies contemplated? Is this the way to settle a simple cost of living wage claim?

Sir K. Joseph

But, under successive Governments, the taxpayer has found and is finding £4,000 million for the steel industry. That is more than £200 per British family towards steel. Surely that is enough involvement.

Dr. Mawhinney

Is my right hon. Friend aware that at least one small firm, which supplied £30,000 worth of goods to the corporation before the strike started, has been told by the corporation that it is not paying any bills at the moment because there is a strike in progress? Does he know whether this is a widespread policy? Does it commend itself to him as a policy? If not, will he express his reservations about it in the appropriate place?

Sir K. Joseph

No; that is a matter for the corporation. No doubt my hon. Friend's constituent will consider what options are available to him.

Mr. Heffer

He can borrow it from a bank at 15 per cent.

Mr. Crowther

Is not it perfectly clear that it is the right hon. Gentleman's doctrinaire insistence on the BSC breaking even in a time of severe world recession, however strenuously he may defend it in this House, that is the root cause of this dispute? Is not it equally clear that the right hon. Gentleman deliberately selected the steel industry for this provocative action because he looked at the moderate record of these men and decided that they would stand for anything?

Sir K. Joseph

May I try to explain once again that if we were to find additional money from the taxpayer it would be very probable, knowing what has happened in the past and having some awareness of human nature, that there would be less likelihood of increased productivity in the British steel industry. If there is a delay in raising productivity in the steel industry even by a year, our rivals abroad will race even further ahead. The result of what was intended as kindness would be to involve even greater cuts in the British steel industry in a year's time. That is the lesson of the experience when the Opposition were in government.

Mr. Cormack

Will my right hon. Friend think again about his answer to my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) and ask Sir Charles Villiers, who has handled this matter with the finesse of an elephant, to emulate the example of Sir Michael Edwardes and ask the employees of the British Steel Corporation what they think?

Sir K. Joseph

I am not in charge of the management of the corporation. All such considerations are for Sir Charles Villiers and his board and for the union leaders and the union members.

Mr. Varley

Twice today and on numerous occasions in the past the right hon. Gentleman tried to give the impression that he was following the policy laid down by the last Government in the White Paper published in March 1978. The right hon. Gentleman must stop perpetuating that falsehood, because he knows that it is not true. Cannot he understand that there is a world of difference between giving the British Steel Corporation sustained and public support to overcome its undoubted difficulties and the rigid and doctrinaire target that he has now set the corporation, which he knows it has no chance of meeting, and that eventually he will have to intervene to change that target? Before he does that, how much of British industry is he prepared to see wrecked, and how many thousands of jobs is he prepared to see destroyed before sensible intervention is brought to bear so that an honourable settlement can be reached?

Sir K. Joseph

The right hon. Gentleman is seeking to create an alibi for his own failure in office It was a Select Committee of this House, composed of hon. Members of both parties—

Mr. Varley

Its report was rejected by the House.

Sir K. Joseph

—which time and again pointed out that the previous Government's deferment of necessary policies had made the problems worse and increased the penalty for the steel workers of deferring dealing with those problems.

Sir Anthony Meyer

Is not my right right hon. Friend appalled by the readiness of the Opposition, the TUC and, perhaps above all, that highly dubious body, the Welsh TUC, to encourage and extend a strike that must still further reduce job opportunities in the British steel industry and that is putting at risk the badly needed compensation money of those who are to lose their jobs anyway?

Sir K. Joseph

I think that the recommendations of those to whom my hon. Friend refers are not in the real interests of the steel workers.

Mr. Barry Jones

This brutal attitude will not help get men back to work. Is the right hon. Gentleman aware that there is still seething resentment amongst steel workers and their families about the irresponsible and foolish 2 per cent. "final" offer made at the beginning of these negotiations? Cannot we persuade the right hon. Gentleman to attempt to change his stance of industrial monomania for one of statesmanship?

Sir K. Joseph

But if it were not nationalised, the British Steel Corporation would be bankrupt. Surely it is quite wrong to suggest that there is any more money available except that it be either earned by the steel workers or provided in addition to all that the long-suffering taxpayer is already providing.

Several Hon. Members rose—

Mr. Speaker

Order. This matter will be debated on Thursday. I propose to call three more questions from either side.

Mr. Kenneth Lewis

Will my right hon. Friend confirm, as I think is reported, that ACAS is in touch with both sides of this dispute? In view of this fact and the fact that ACAS comes under the Department of Employment, can my right hon. Friend assure me that there is no restraint by the Government on the Secretary of State for Employment carrying out the traditional role in that office and conciliating where he can, when ACAS indicates that this is possible?

Sir K. Joseph

ACAS is an independent body—a totally independent body.

Mr. James Hamilton

Will the right hon. Gentleman accept from me, as an hon. Member with a steelworks in his constituency who visited the picket line and addressed the workers last Monday, that the men feel that he has shown bias in meeting Sir Charles Villiers but not meeting the union leaders? Will he also accept that the offer of 2 per cent., when the inflation rate is running at 17½ per cent., was provocation with a capital "P"? In these circumstances, the men were dragooned and stampeded into taking strike action. Will the right hon. Gentleman now be responsible and enter into this situation? It is of his making and of his Government's making. If he does not act quickly he will bring the whole country to a standstill.

Sir K. Joseph

The men are able to earn 12 per cent. or more, as a minimum, if they accept what is proposed and operate the productivity agreements that can be organised. There can be no guarantee that every group in this country can be protected against inflation. There is absolutely no way in which a Government can guarantee that. It is up to the people concerned.

Mr. Shersby

Will my right hon. Friend say whether he is satisfied with the present management of the British Steel Corporation and is sure that it consists of the people best qualified to give the leadership that is necessary to overcome the problems of productivity and over manning?

Sir K. Joseph

It is no easy task to be in charge of a nationalised industry. The British Steel Corporation, chairman and board, have inherited deep-seated and difficult problems. They are trying to cope with them in the interests of the country and the steel workers.

Dr. Bray

To be practical about ending the strike, will the Secretary of State consider further the question put by his hon. Friend the Member for Rutland and Stamford (Mr. Lewis)? Is he aware that the substantive content of his statement was a quotation from the documents of the ISTC and the British Steel Corporation respectively on the breakdown of negotiations? An objective reading of those documents, in full, suggests that there is plenty of room for arbitration and negotiation with some encouragement from the Secretary of State. Will he at least wish ACAS well in its efforts to find a settlement?

Sir K. Joseph

I wish everyone concerned well, but I do not wish to go in for mere empty words. Is the hon. Gentleman yet another of those who, behind easy phrases about settling the dispute, are really asking for the deferment of the industry's becoming competitive and for more money from the taxpayer?

Mr. Rost

What can the Government do to protect the rights of many thousands of steel workers, including many of my constituents at Stanton, who did not want to join the strike but were never consulted?

Sir K. Joseph

Surely, it is up to such people to make their views known through the channels that no doubt exist for them.

Mr. Anderson

Since the Government are establishing a norm of 14 per cent., for the public service, without any productivity, how can the Secretary of State seriously expect steel workers to accept less?

Sir K. Joseph

We are not establishing a norm.

Dr. John Cunningham

Since the Secretary of State is so convinced of the position that he has espoused and that enunciated by the British Steel Corporation, why is he so unwilling to meet the unions to try to convince them of its validity?

Sir K. Joseph

I am not involved in the negotiations. Moreover, the trade unions have not asked to see me.