HC Deb 06 April 1981 vol 2 cc668-9
2. Mr. Chapman

asked the Secretary of State for Industry what total amount of public subsidy was received by the British Steel Corporation from April 1971 to April 1981; and what is his latest estimate for the next financial year.

The Minister of State, Department of Industry (Mr. Norman Tebbit)

Over the 10 years to the end of March 1981, the Government have provided or guaranteed finance to BSC amounting to about £5,700 million to finance its capital investment programme, working capital requirements, redundancy costs and revenue deficits. The latest estimate for 1981–82 is about £750 million.

Mr. Chapman

Is my hon. Friend aware that on average over the past 10 years every man, woman and child in this country has subsidised BSC to the tune of over £90 each? Is that not a considerable sum? More money is called for. Although the House should not be concerned with the day-to-day administration of the corporation, have we not a right to ensure that that money is used for sound capital investment? Will my hon. Friend undertake to survey BSC spending continually?

Mr. Tebbit

I am painfully aware of the expenditure involved. My hon. Friend will be interested to know that, following the appointment of Mr. Ian MacGregor and the improved practices that he has instituted for managing the corporation, the Department has far better monitoring practices. Although it is not possible to say that money can be used only for capital investment, we believe that we are getting better value than before from the money invested in BSC. My hon. Friend may have noticed an article that appeared in today's edition of the Financial Times on the remarkable increases in productivity that parts of the corporation are achieving.

Mr. Campbell-Savours

Of that £5,700 million, was not £10.5 million spent on the Distington foundry, which is supposed to be closing? As the closure decision has been referred to the Select Committee on Industry and Trade, which has asked Mr. MacGregor to produce a report to substantiate the need for it, would it not be better if BSC suspended the closure decision pending the publication of the report and any recommendations that may be made?

Mr. Tebbit

I would sooner trust Mr. MacGregor to manage the British Steel Corporation than the hon. Gentleman, the Select Committee or even my Department.

Mr. Michael Brown

Will my hon. Friend confirm that the amount of public funding given by this Administration far exceeds any public assistance given by the Labour Administration? Would he also care to speculate on when the British Steel Corporation will move into profit?

Mr. Tebbit

We have put a substantial amount of money into the corporation. Much of that was necessary because previous investment was wasted because of political interference and reluctance to adopt more efficient management and working practices. I cannot predict when the corporation will move into profit. That is dependent not least on when the European market in steel is restored to a level where even the most efficient steel manufacturers can cover their costs.

Mr. Roy Hughes

Are the Government taking into consideration the lessons learnt the hard way by previous Governments? For instance, we closed many coal mines because we thought that we could bank on a continuous supply of oil from the Middle East. The same now applies to steel. If we rely on overseas suppliers and close down our works, when the upturn comes they may not be able to guarantee supplies.

Mr. Tebbit

The hon. Gentleman must be very optimistic to believe that 14 million tonnes of steel capacity from the British Steel Corporation will leave us short in the near future. There is capacity to increase steel making beyond that again, if necessary.

Mr. Hal Miller

In the light of the funds that have been made available to the British Steel Corporation to increase its competitiveness and activities, what advice would my hon. Friend give to people in the private sector who are considering whether to invest to renew plant?

Mr. Tebbit

The private sector's future, like that of the public sector, depends more critically upon the level of prices in Europe as a whole than on anything else. Therefore, it must look with the same anxiety as I do to the meetings between European steel manufacturers to see whether an improvement in prices can be achieved by reductions in excess capacity. Equally, it must also look to the meetings of the Council of Ministers, which I have been attending—I shall be attending another tomorrow—which aim to remove public subsidy to the steel industry in the reasonably foreseeable future.

Dr. John Cunningham

Is the Minister aware that in the Select Committee hearing recently Mr. MacGregor pointed out that no company of any consequence was making any profits in the steel industry worldwide? Does it not come ill from Government Members to criticise investment in our manufacturing industries, particularly when the Government are committed to the modernisation and greater efficiency of industry? Even in the present world climate, have not the Japanese just announced further large tranches of investment in their steel industry? How could we hope to compete without this level of investment in a basic and strategic industry?

Mr. Tebbit

I am inclined to agree with the hon. Gentleman. We need investment to make the steel industry profitable and effective. That is what we are giving it. My hon. Friends are criticising not investment in the steel industry, but the subsidisation of steel production in the public sector, because that leaves the private sector, which faces similar problems but without such a long purse of taxpayers' aid, in an extremely difficult position.

Several Hon. Members

rose—

Mr. Speaker

Order. We have taken nearly eight minutes on this question. We shall have to move much quicker on the rest.