HC Deb 01 December 1982 vol 33 cc273-313

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]

3.43 pm
The Minister of State, Department of Industry (Mr. Norman Lamont)

As the House well knows, the steel industry throughout the world and in the United Kingdom currently faces appalling difficulties, and extremely difficult decisions are required. The purpose of this debate is to enable the House to express its views before the Government make their decisions on the matter.

I want to cover three aspects: first, the international and market situation as it affects steel; secondly, the European Community regime; thirdly, the position of the British steel industry, particularly the British Steel Corporation. I shall bring the House up to date on the latest developments.

First, I shall deal with the international and market situation. I make no apology for discussing this subject in some detail, because it is extremely important that the House should realise the hostile reality that confronts the industry. It is important to realise that the crisis facing the country is not confined to the United Kingdom. In the United States, the industry has lost 180,000 jobs, and about 40 per cent. of the jobs have gone since 1979. Output in 1982 is expected to be about 38 per cent. below that of 1981. In the EC, production this year is expected to be the lowest for 30 years. Even in Japan, production is expected to be the lowest since 1972.

We face an international problem, and the reasons for it are complicated. It is due in part to the world recession, the worst for 50 years, and in part it is due to the fact that we face technical change and the substitution for steel by other materials such as plastics and ceramics. In the motor car industry, for example, to cut fuel consumption, motor manufacturers throughout the world are seeking to reduce the weight of cars, and that means reducing the amount of steel used. I read in the Financial Times only a few days ago that the share of aluminium in the beverage can market, in the space of only three years, has shot up from about 12 per cent. to 50 per cent. of the market. That has serious implications for the tinplate market.

Moreover, there is the fast growth in capacity of steel making countries. In 1950, 32 countries produced steel. Today, 76 countries produce steel. That both reduces our exports and increases the pressures on us from imports, a subject that I shall return to later.

It would be a mistake to think that the development of capacity has been confined to the developing countries. It has increased considerably in the recent past in the industrialised world, and especially in the 1970s in Europe and the United Kingdom. World-wide capacity in the steel industry is now about 1,000 million tonnes, while world demand this year will fall below 700 million tonnes.

In Europe, there is an installed capacity of 200 million tonnes, and yet production has fallen from 156 million tonnes in 1974 to 128 million tonnes in 1980, and the current forecast is that by 1985 it will be only 121 million tonnes. It is important for us all to face the implications of that situation. We cannot isolate ourselves from those trends or avoid their consequences, however distasteful or alarming we find them. We cannot simply spend large sums of money on increasing or maintaining capacity in the hope that what is now a world glut will mysteriously change in a few years to world shortage.

I shall say a word now about the European Community steel policy and the action that is being taken there.

Mr. Dennis Skinner (Bolsover)

Before the Minister leaves that argument, saying that the situation is due mainly to world recession, will he bear in mind that one of the reasons why the steel industry has lost much of its demand in this country is the 30,000 company failures and liquidations that have occurred in this country since his Government came to office? If the Minister wants to help the steel industry, he should look at its interdependence on all the other industries that it supplies. Will he therefore give a guarantee that there will be no further pit closures, because pits use a lot of steel? That would be good news for the pits, good news for jobs, and good news for the steel industry.

Mr. Lamont

I cannot comment on pit closures, and nor should the hon. Gentleman expect me to. I am not seeking to put the blame on the world recession. If the hon. Gentleman had listened to me, he would have realised that my remarks were not simply about the world recession but about structural changes, with which all hon. Members should come to grips.

Faced with the vast over capacity of steel, to which I have just referred, and with prices being driven down to uneconomic levels, the Community has introduced mandatory production quotas and action for phased price increases since 1980.

If anybody had told me a few years ago that, as a Minister in a Conservative Government, I should have to preside over a cartel arrangement, I would not have believed him and I certainly would not have been flattered. I cannot pretend that I find the arrangement comfortable. However, I must tell the House that these short-term measures have given the industry a breathing space—an interval in which steel makers and Governments in Europe can tackle the problems of over capacity. In the long-term the policy will make sense only if that problem is solved.

In the short-term, the measures have had the strong support of the British steel industry. Severe as the problems that we face are, without these measures they would have been undoubtedly worse. That is why we have had the industry's backing. Until the spring of this year those arrangements helped to bring some much needed stability to the market. However, in March and April the steel market was hit by the deepening recession and the regime in Europe began to be increasingly less effective.

The Government have been to the fore in pressing for further action. My right hon. Friend the Secretary of State told the House on 22 November how the informal meeting of Community Ministers in Elsinore had laid the foundations for a whole series of measures to tighten up the quota and price rules. These include the improved policing of the Community's price rules, the stopping of investment aid or national Government aid to companies which infringe the pricing provisions, and provisions to prevent companies delaying the payment of fines by appealing to the European court. Hon. Members have expressed some scepticism about those measures, but I emphasise that when agreement has been reached it is intended that they will be implemented with effect from 1 January. In addition, from the end of this year, in common with other member States, the British Government will take over responsibility for policing the rules on pricing practices by steel stockholders and dealers in Britain. Legislation giving the Government power to enforce the rules came into operation today. I have today answered a written question setting out the detailed rules that will apply to the stockholders. This is a measure of some significance because 40 per cent. of all United Kingdom deliveries go through steel stockholders.

The short-term measures will not solve the crisis overnight.

Sir Peter Emery (Honiton)

Many people have described the mandatory production targets as the mandatory reduction of production targets. Will my hon. Friend assure the House that the British steel industry's capacity, compared with that in the European steel industry, particularly in Belgium and Italy, will not be further reduced at the expense of our industry simply to protect Italy or Belgium?

Mr. Lamont

I can give my hon. Friend the assurance that he is seeking. I shall deal with that aspect in a few minutes because I know that it is of great concern to hon. Members.

The short-term measures cannot solve the problem by themselves and they are no substitution for restructuring. However, in the short-term they will help to restore discipline to the market and solve another problem of great concern to hon. Members—the level of steel imports into Britain.

I understand and share the anxiety about imports. However, in deciding what action needs to be taken we must deal in facts and not with some of the myths that have been widespread. Even with the recent rise in imports from all sources, they still account for under 27 per cent. of the United Kingdom's steel market this year. In France the figure is 43 per cent. and in Germany imports take 35 per cent. of the market. Britain has a lower proportion of its market taken by imports than other European countries.

Our problem is not so much imports as exports. We import much less than France or Germany, but we also export much less. That is why we have an adverse balance of trade in steel with those countries.

Mr. Roger Moate (Faversham)

Does my hon. Friend agree that those averages can be misleading? In some specific areas imports have risen dramatically. For example, if my hon. Friend looks at the figures in recent months for reinforcing bar imports, he will see that they have risen from a fairly low percentage to over half the United Kingdom's production. There is a need for urgent action there. Many companies cannot simply wait to see whether Continental producers will respond to the mandatory quotas. If my hon. Friend has found it possible to swallow cartelistic production quotas, would it not be possible for him and other EEC Ministers to swallow voluntary import quotas between member States?

Mr. Lamont

My hon. Friend must not expect me to swallow too much at one go. What he says is right. The figures I have quoted are for steel imports as a whole. There are areas in which import penetration is much greater than the figures that I have quoted. However, that is not nècessarily evidence that other people are cheating by infringing the rules. Nevertheless, I agree with my hon. Friend's point about the need to see that production quotas are rigorously enforced. That is the best way to deal with those areas where penetration of imports is above average.

Mr. Stanley Orme (Salford, West)


Mr. Lamont

I shall give way to the right hon. Gentleman, although I have given way three times already.

Mr. Orme

The Minister is drawing a red herring across European imports. Historically, their situation is entirely different from ours. The tremendous increase in imports in the United Kingdom has no comparison in France and Germany.

Mr. Lamont

The chairman of BSC, Mr. MacGregor, outght to know, and he said recently: Imports are an exaggerated factor. By far the biggest problem is the decline in world demand and the collapse in the market.

Let me deal with the right hon. Gentleman's point. I shall deal first with imports from outside the EEC and then move to imports from within the EEC.

Imports from countries outside the EEC have taken 8.8 per cent. of the United Kingdom market this year. That is little higher than the level of recent years. I emphasise that to shut those out would only invite retaliation. We should not forget that in many of the Third world markets we are net steel exporters. We could end up by being the net loser. We have the advantage of the Community's voluntary restraint arrangements, which, in the Government's opinion, are working reasonably well. Where they do not, firm action has been taken. Anti-dumping duties have been imposed on steel imports from Spain and Brazil. Quotas have been set up against steel imports from Czechoslovakia and Bulgaria. Last month anti-dumping investigations were opened against imports of coil from Brazil, Canada, Argentina and Venezuela.

For the future, the Community has recently agreed measures that will tighten the voluntary restraint agreements in 1983. The aim is to reduce the amount that is imported into the Community to 12½ per cent. below the 1980 level. That tightening of the voluntary agreements should have a considerable impact.

EEC imports account for 17.7 per cent. of the United Kingdom market. Last year they accounted for 17.;6 per cent. It was 12 to 14 per cent. before 1980, which was the year of the strike. The strike cost BSC a considerable loss in market share and led many customers to double source from Europe. Since the strike, we have lost a significant slice of the market to imports from Europe.

Apart from becoming more competitive, the solution to the problem is to restore price stability and to ensure that the price and quota rules are observed throughout the Community. That is why the steps that I have described are being taken. I re-emphasise that these measures cannot be a substitute for fundamental restructuring to bring supply into line with demand. The Community's steel aid decision is essential to achieve the necessary capacity cuts and the gradual phasing out of the plethora of State subsidies to the steel industies of Europe.

The United Kingdom has made a considerable contribution to reductions in capacity in Europe. We look now to our partners to bear comparable cuts in capacity to those that we have made. I assure the House that any further cuts in capacity in the United Kingdom will come only from an analysis of our own position and only if we judge them to be necessary. No further cuts in capacity will come at the behest of the European Commission or of any other member State.

I talked about the need to distinguish facts from myths when talking about imports. It is also important to be clear when comparing cuts in capacity in the United Kingdom with those made by other member States. It may seem that the United Kingdom has made all the sacrifices since 1979 while others have done nothing. However, the picture looks different if we measure it from 1974. From that date the percentage fall in United Kingdom production is similar to that in the Community as a whole. France, West Germany, Belgium, Luxembourg and ourselves have all sustained losses of about a half in this period. In France and West Germany it has fallen by slightly less than in the United Kingdom, but in Belgium and Luxembourg it has fallen by slightly more.

Mr. Stan Crowther (Rotherham)


Mr. Lamont

Labour Members prefer not to make the comparison from 1974. They like to imagine that the problem arose only in 1979. The tragedy is the way in which the Labour Administration, between 1974 and 1979, under the Beswick review, delayed closures that were inevitable and necessary. When the closures came after 1979 they were greater and more severe than they need have been if the Labour Administration had had the guts to act when they had responsibility.

Mr. Crowther


Mr. Lamont

There is one other fact about closures which needs to be made clear. Closures in the United Kingdom since 1979 have arisen not because of the Community but because of a lack of competitiveness. For example, in 1979 the United Kingdom had a work force that was 20,000 greater than in France but it produced significantly less. Again in 1979, West Germany had a work force about 50 per cent. greater than ours and it managed to produce well over twice as much steel as we did. These figures drive home the point that the previous Administration's failure to act led to overmanning and a lack of competitiveness which did grave damage to the steel industry and the prospects of those who worked in it.

Mr. Crowther


Dr. Jeremy Bray (Motherwell and Wishaw)

The Minister of State has referred to competitiveness—

Mr. Crowther


Mr. Speaker

Order. I think that there has been a misunderstanding.

Mr. Crowther

May I seek your guidance, Mr. Speaker? I should like to know to which Labour Member the Minister intended to give way.

Mr. Speaker

I, too, am in a state of uncertainty. I also seek guidance.

Mr. Lamont

I give way to the hon. Member for Rotherham (Mr. Crowther).

Mr. Crowther

Does the Minister agree that since 1974 the British steel industry has shed more manpower than the steel industries of France, West Germany and Italy put together? Does he dispute that?

Mr. Lamont

Not since 1974, no. I was talking about the reduction in capacity since 1979. The reduction in capacity since 1974 has been much in line with that in other member States. Since 1979 the reduction in labour has been greater in the United Kingdom than elsewhere for the reasons that I have outlined.

Dr. Bray

The Minister referred to competitiveness. A component that he has not mentioned is the exchange rate. I have received from the senior management of BSC a copy of the corporation's economic and industrial outlook and its current assumptions on closures and redundancies. I refer to a document which I understand the Scottish Office has not yet received. It assumes that There will be no significant change in the level of sterling", that Imports of steel will continue to take an increased share of domestic demand", and that there will be increased import penetration in vehicles". It contains a catalogue of grossly pessimistic assumptions. These are the assumptions that BSC is now using for the closures that the Government have left to its discretion. Will the Government allow BSC to continue to make these assumptions and will these assumptions be applied to the big five?

Mr. Lamont

I shall deal with the BSC review and the considerations that are being taken into account. I do not know to which document the hon. Gentleman is referring, but the BSC's projections for steel demand and for the future development of the economy are not markedly different from those made by other forecasters, and not very different in terms of steel demand from those made by the Iron and Steel Trades Confederation and the TUC. The hon. Gentleman wishes to make them entirely different assumptions, but they are not forecasts that are wildly different from those made by many other commentators.

There is one other—

Dr. Bray


Mr. Lamont

—myth on which comment is necessary. It is that the United Kingdom will be better off settling its own problems outside the European straitjacket.

Dr. Bray


Mr. Lamont

It is perpetuated by those who have not learnt the lesson arising from the recent dispute with the United States over steel imports. The legal actions by United States steel makers put £50 million of United Kingdom exports at immediate risk and could have affected at least as much again. Worse still, partial closure of the United States market would have left even more spare steel washing around in Europe and world markets. This would have put even more pressure on price and market stability in the Community. It was the Community's combined strength which enabled us to secure a deal which, beyond any doubt, was far better for our steel industry and for United Kingdom jobs than anything we could conceivably have obtained by acting alone.

The private sector faces very much the same problems as those faced by the British Steel Corporation. For that reason, the measures that we have taken and the measures that we are taking at a European level have its support because they stand to help it too. We are pressing for alterations to that regime which, we hope, will be of specific help to it if they are achieved. We want to see the regime extended to special steels and we have pressed hard for that. We have received a constructive response from the Commission.

As part of the answer to the overall problem of excess capacity and the need to eliminate it, we have been encouraging the steel corporation, in conjunction with the private sector, to form 50-50 companies—the so-called Phoenix companies. We have made some progress in that respect and we hope to make more.

Because of our concern for the private sector, we have increased the amount of money that was originally allocated to the private sector steel scheme from £22 million to more than £34 million. I hope to be able to make some announcements to the House soon about aid to different sectors within the private sector and also some announcements about Government support for self-help levy schemes within the private sector.

The tragedy of the deterioration of the position within the British Steel Corporation is that it comes after a period of real improvement. I have already defended the demanning which has occurred at BSC, because it was necessary. That demanning was beginning to bear its fruit. The targets set for 1981–82, which were described at the time by Mr. MacGregor as optimistic, were by and large met. There were improvements in market share, in export sales, efficiency, costs and productivity. Despite the uncertainties on the horizon, the results for the first few months of this year were encouraging and showed that further progress was possible.

The British Steel Corporation's half-yearly results are being announced today and they spell out all too clearly the deterioration in the corporation's position. Losses after interest for this half year amount to £154 million, which is better than the £208 million loss last year but is way off the target before interest of break-even for 1982–83, which for this year is obviously no longer an attainable target.

Neither the Government nor the corporation can tolerate this haemorrhage and loss-making on this scale. Urgent cost-saving measures are being taken by the corporation to stem the losses. Further slimming is taking place and, as the House and hon. Members have learnt, there have been closures of some smaller plants. Those decisions are within the responsibility of the management of BSC and do not require the Government's authorisation.

However, the Government, together with the corporation, are undertaking a review of the British Steel Corporation's five major steel making works. I emphasise that no decisions have been made. Obviously we are taking into account—I know that this is a matter of concern to the hon. Member for Motherwell and Wishaw (Dr. Bray)—matters such as costs, competitiveness, trends in the market, trend in the steel-making industries and implications for other industries. We are examining the matter not on the basis of short-term factors but on the basis of longer-term trends.

Mr. Barry Jones (Flint, East)

When the Minister examines the future of individual works, will he take into account the enormous social consequences of major closures? Will he examine, for example, the impact of closure on North-East Wales and take that into account in any decisions he may make?

Mr. Lamont

We shall be examining the impact on regional economies.

The House should also know that the corporation is currently producing steel at the rate of 10 million tonnes of liquid steel a year, which compares with a total plant capacity of about 21 million tonnes. There is obviously a large margin of spare capacity. I must also tell the House the chilling fact that it requires 1½ to 2 per cent. growth in industrial production merely for steel production to remain constant. That is the effect of the structural change that we have seen.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)


Mr. Lamont

The Leader of the Opposition has committed the Labour Party to maintaining a BSC capacity of up to 25 million tonnes. That would be a charge of the economic light brigade. It would be dazzling, admirable in its way, wonderful to watch but doomed to disaster.

Mr. Duffy


Mr. Lamont

If anybody should know that, it should be the right hon. Member for Ebbw Vale (Mr. Foot), who has had to explain certain economic realities to his constituents.

I conclude by assuring the House—

Mr. Duffy


Mr. Lamont

—that the Government will take great care over these decisions which affect a major industry and many others. It is indeed disappointing that after all the—

Mr. Duffy


Mr. Lamont

—sacrifices, after all the adjustment—

Mr. Duffy


Mr. Lamont

I shall not give way.

It is, indeed, disappointing that after all the sacrifices, after all the adjustment, and after all the demanning and pain, BSC should still face enormous problems, but the fact that that is disappointing is no reason for us not to face up to the realities. They will face us with their unpleasant consequences whether we like it or not. The fact that it is disappointing is no reason for us to be any less determined to tackle the problems. Viability was the target for BSC, viability must remain the target for BSC, and I believe it is still attainable.

4.15 pm
Mr. Stanley Orme (Salford, West)

The Minister has not brought much hope to the steel industry and the British economy this afternoon.

The debate is taking place against the background of a crisis in the steel industry. We are concerned not only with the big five but with what is happening around us daily in the steel centres of the United Kingdom. What the Minister said about our competitors and world recession does not explain why the British economy is in a worse condition than that of any of our competitors. The Government must answer that point.

It is not a pleasant task, but I wish to spell out the major redundancies that have taken place, not over the past three years, but over the past few months up to and including this week. The figures are as follows: on 12 August, at Tipton, Ravenscraig and Hartlepool, 1,122; on 1 November at Sheffield, 1,100; on 4 November at Corby, 600; on 18 November at Round Oak, Dudley, 1,286; on 19 November at Craigneuk in Scotland, 427; on 30 November. only this week, at Sheffield, 1,709. Are those the small plants to which the Minister referred? I am talking about thousands of jobs. The total this month is 5,222.

Mr. Duffy

Half of those were in Sheffield.

Mr. Orme

The city of Sheffield is being decimated by what is happening. The people of Sheffield have a right to be worried about what is happening and to make their views known. In recent years Sheffield alone has lost about 20,000 jobs in the private and public sectors.

Mr. Duffy

Under the present Government.

Mr. Orme

Rotherham has lost 794 jobs, Stockbridge and Tinsley Park have lost 815 jobs, and 100 jobs have been lost from the central services. That is the scale of the problem.

I was going to say something about the big five, but, if we are not careful, because of the reductions that are taking place—we had the forecast of a previous chairman of the British Steel Corporation—the British steel industry, if it is not helped, will no longer be viable and will cease to exist. The Government have been too complacent on this issue.

The problem stems from the lack of demand in the economy because of the monetarist policies being pursued by the Government and because of imports. My hon. Friend the Member for Bolsover (Mr. Skinner) referred to the lack of demand and to the need for growth in our economy. The Minister gave the figures for what is needed to stand still, but his Government are responsible for the fact that we are not even meeting the 1.5 per cent. growth rate.

From June 1981 to June 1982 there was an increase of one-third in total import tonnage. There was a doubling of the tonnage from non-EC countries. People often think that non-EC countries are necessarily Third world countries, but that is not so. I draw attention to countries such as Sweden, Bulgaria, Rumania, Canada, Japan, South Korea and South Africa. We do not export 1 tonne of steel to South Africa, yet steel flows into Britain from that country.

Imports flood in from the countries that I have listed, but most imports come from the EC. The EC provides 2 out of every 3 tonnes of steel imported into the United Kingdom. The Minister talks about myths. The figures that I have given for imports are not myths. They reflect what is happening to the steel industry. The Minister says that imports account for 27 per cent., of British steel consumption, but the trade unions think that the figure is 35 or 36 per cent. Whether the figure is 27 per cent. or 36 per cent., it is still far too high.

The United States of America put up a tariff barrier against the whole of Europe because it was exporting about 3 to 4 per cent. of American consumption. What a comparison! Because of the serious situation we make no apology for calling for an across-the-board freeze on imports while urgent negotiations are held to arrange new controls. We have a right—certainly under article 19 of GATT—to protect ourselves from third countries and to say to our EC partners "Enough is enough." They have exploited the situation.

Let us compare the number of jobs lost in the United Kingdom with the number lost in the EC in the past three or four years. As the Minister acknowledged, we have lost more than 100,000 jobs. Germany has lost 33,000 jobs, France 53,000 and Belgium 11,000 while Italy has lost only 200 jobs. We are at the top of the league. The Secretary of State came back from Elsinore and said that he had told those Ministers that we would not take an unfair share of any future cuts. He had been back in the country for only a few hours when the EC said that in any future cuts Britain would have to carry its full share. We are talking about reducing steel production within the EC by 50 million tonnes by 1985 from the present level of 170 million tonnes. That is a reduction of nearly one third. We might as well close every steel plant in Britain if we are to bear that proportion of the cuts.

The percentage rate of change for manpower reductions in 1981–82 is interesting. The rate for the United Kingdom is minus 14.1 per cent.; for West Germany, minus 5.1 per cent.; for France, minus 2.8 per cent. and Italy stands at minus 2.6 per cent. Indeed, Italy has increased its steel production while other countries have been making cuts. Our industry is being ravaged.

Sir Anthony Meyer (Flint, West)

The right hon. Gentleman is going on about the sacrifices made in terms of jobs, and of course we all deplore that, but is he aware that the two South Wales producers have shed thousands of jobs to make themselves competitive? They are now competitive. When they were fully manned, they were not at all competitive.

Mr. Orme

The Government will receive proposals from the BSC that could forecast the closure of one or two of the five existing plants. If the number of our plants is reduced to three, we shall have nothing left with which to be competitive. We shall be dependent upon imports.

The Secretary of State told the House that he and the Government would be responsible for any major closures. I have already referred to Sheffield, Rotherham and other areas. Messages of concern have flooded in today from Sheffield. However, what about the thousands of steel workers at Ravenscraig, Scunthorpe, Port Talbot, Llanwern and Teesside? Families and whole communities are awaiting the Government's decision. If we take them the message that the Minister has given us this afternoon, it will not give them any hope.

This debate is taking place before any Government decision. In a sense, the Government are a listening post. I hope that some Conservative Members will have the courage to press home the point that we cannot afford to allow any of those plants to close. I know that my hon. Friends will stress that. We are not picking out one plant. We are not picking out Ravenscraig, as opposed to Llanwern, Teesside or Scunthorpe. In the interests of the British economy, we must maintain a viable steel industry.

Last Friday I went to Scunthorpe on a visit arranged long before the debate was scheduled. I went there to visit a BSC plant and to talk tip both the management and the trade unions. I found a highly efficient firm, with high productivity and high quality steel, fighting to obtain orders from overseas. In the last three years the work force has been reduced from 20,000 to 8,000. The trade unions and the management did not juxtapose their area to any other area, but merely said that a community such as Scunthorpe would be devasted if the plant closed. The same is true of any other area, whether it is in Scotland, Wales or on Teesside.

I talked to local authority people and found that they had great pride in the industry. There is pride in the steel industry and the people want to maintain it. They are not considering the problem from a purely selfish point of view. One of the men there asked me what would happen when the upturn came. He asked where steel would be found for defence and for the shipbuilding, engineering and construction industries. Such factors must be taken into account.

Mr. MacGregor told us that the bottom line was 14.4 million tonnes. On Monday the Secretary of State gave us a figure—which the Minister has reiterated—of 10 million tonnes for production this year. If the figure falls below 10 million tonnes, the industry will no longer be viable. The Minister could have all his productivity and competitiveness, but a shrinking industry such as that would be unable to stand up to international competition. That is the reality.

The Minister challenged the Opposition because at the Labour Party conference my right hon. Friend the Leader of the Opposition talked about output of 20 million to 25 million tonnes. I remind the House that only a few years ago there was an argument in the House about whether the figure should be 38 million or 35 million tonnes. If we were to do away with imports and achieve growth in our economy, we would soon need 20 million tonnes. Consequently, that must be taken into account.

My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) referred the Minister to a letter that he had received from British Steel. I, too, have received that letter. The Government should publish the assumptions and their reply to the letter. Those assumptions are based on factors that cannot be allowed to stand. No doubt my hon. Friend will pursue the matter further and will mention the exchange rate in particular, because this is important.

Mr. Norman Lamont

The right hon. Gentleman said that it was only a question of getting some growth back into the economy. As he has acknowledged, BSC is producing 10 million liquid tonnes of steel a year. There is capacity for 21 million tonnes. Will the right hon. Gentleman do some sums in his head? What rate of growth would there have to be in the next five years to bring us near to capacity?

Mr. Orme

If the electorate will give us the opportunity to implement our policies, we shall turn round the assumption on growth. The Minister should not chastise us about growth. Who has destroyed it? What about the lack of demand? When one goes round steel communities one begins to feel the pressure there and to realise what they are looking forward to in hope, but sometimes with little hope.

Mr. Norman Lamont

The right hon. Gentleman takes an optimistic view of what would happen under a Labour Government. Is he suggesting that steel production could be doubled in the lifetime of a Labour Government?

Mr. Orme

I am not giving any figures. I am saying that we would not contemplate the closure of any of the big five. We would do everything to protect jobs. With the growth of investment in the areas that need it—Mr. MacGregor has called for investment in the railways and other areas, and so has the CBI—there would be a reversal of the present situation and jobs would be protected.

Mr. Bill Homewood (Kettering)

The Minister is saying that we cannot rectify within five years the damage that he has managed to do in three and a half years. It is as simple as that.

Mr. Orme

Much recovery will be needed to repair the damage that has been done in the past three and a half years. That is one of the difficulties.

Mr. Duffy

My right hon. Friend knows the Sheffield scene. Will he confirm that the biggest single factor in the savage jobs cuts that were announced on Monday, which the Minister was determined to avoid mentioning, import penetration apart, is a lack of demand for engineering steels and car production? In other words, the cuts are directly attributable to Government policy.

Mr. Orme

Yes. I put it to the Minister and the Government that we do not back down in any way from our argument about demand. We are in favour of expansion of demand. We have spelt out the areas where that demand should come from. Through that demand we would create the jobs that are needed. It is evident to everyone that monetarism has failed miserably in our society.

On behalf of the Opposition I say that we come to the debate in a sad mood, because we are dealing with communities and the effect on them of any further large-scale redundancies. The figure of 3½ million unemployed is too high already. We should not add skilled people to it. Therefore, we demand action on imports both from the EC and third countries. We call for a reversal of the disastrous Government policies, so that demand is created in the economy. We call for the raising of the cash limits to prevent any further closures.

When the Secretary of State makes his statement, we shall demand a full-scale debate in the House. We shall want to put our case and examine carefully any Government proposals. The Government should take away pessimism and defend one of the basic industries of the United Kingdom. It is no good the Secretary saying that he hopes that this or that will happen. We call, even if belatedly—we know that there is little chance of the Government carrying it out—for action. We call for the defence of one of our basic industries. If the Government are not prepared to defend it, they should make way for someone who will.

4.36 pm
Mr. Edward du Cann (Taunton)

My reason for wishing to take part in the debate is that I share completely the anxiety expressed by the right hon. Member for Salford, West (Mr. Orme). I suspect that every hon. Member in the Chamber does; and every inhabitant of our country should. His facts were right. Leaving aside the party political points that he naturally felt obliged to make, I believe that his call for action is justified.

I have two interests to declare. I have declared both to the House on other occasions. I am chairman of a company producing engineering steels in Sheffield, and proud to be. Second, having had some experience of the industry, I am entirely clear that those who work in it are some of Britain's most skilled and competent sons. A healthy, prosperous industry is vital to our nation. This is my second interest, to help to bring that about.

Alas, as the right hon. Gentleman said, the industry is now in severe crisis. I say plainly that I abominate what is happening in the steel industry at present. Competent as my hon. Friend the Minister's speech was, I hope that he will recognise that we shall need to give the most careful and serious thought to what action can be taken.

I wish to say a word about how my friends in the steel industry see the situation. The industrial and economic environment within which the steel industry at present has to operate, if it continues, may eventually lead to its total demise. That is the risk. The hostility of that environment—"hostile" is the word that my hon. Friend used when he opened the debate—is such that only the British Steel Corporation, if it retains unlimited access to the public purse, is likely to survive. That point was borne out by the depressing figures for BSC's half-yearly results that my hon. Friend was good enough to quote to the House.

In the last quarter of 1981 and the first quarter of this year reasonable levels of steel making activity were achieved. Trading profits were earned in the private sector. It appeared that the industry was pulling out of the deep problems that followed the BSC steel strike in 1980 and led to the beginning of the phoenix II talks, which eventually aborted. Unfortunately, that was a false dawn. Today trading is just as bad as, if not worse than, it was in 1980–81. There has been an alarming fall-off in orders, and steel production is now running at less than 60 per cent. of current capacity levels. There is no sign of improvement.

In parallel with that, there has been, as the speeches and interventions so far have made clear, a flood of foreign steel into Britain. "A flood" is right. What is worse, the trend is up. It is true that we must make our industry more competitive. The whole House acknowledges that, but now enormous sacrifices have been made in Britain—our country—in terms of both capacity and employment, apparently for the benefit of the French, the Germans, the Brazilians, the Spanish, the Comecon countries and anyone else with Government subsidies, weak currencies and the wit to protect their home base from imports of foreign-finished and semi-finished goods.

My company is one of the survivors in the private sector. It is set in what is now—Opposition Members know this better than I can describe it—the industrial wasteland of Sheffield. That city once produced 90 per cent. of all British steel and 50 per cent. of all Western European steel. We have cut the company's production capacity by 60 per cent. and its labour force by 70 per cent. during the past two years in a bid to come to terms with the diminishing market. Elsewhere, Duport, Round Oak and London Works have all closed and Manchester Steel has been to the brink. All of that, it seems, is to no avail. Wherever the count begins and whatever base year for statistics is quoted, sacrifices on that scale are not evident in Europe. Belgium, Luxembourg, Germany and especially Italy are content to fund their industry publicly, make minimum contributions to capacity cuts and, through a variety of underhand methods, sell their surplus steel to the United Kingdom.

As my hon. Friend the Minister said, by 1985 there will be 50 million tonnes of surplus steel capacity in the EEC. I want to say as clearly as I can to him, with an understanding of all the heavy responsibilities that he bears, that the Government must ensure that any further capacity cuts are made in Continental Europe, not here.

I shall now speak about countries outside the EC. We may not mean to have, but we always seem to my friends in the steel industry to have, a laissez-faire attitude towards countries outside the EC—always a bit late and sluggish. The steel and other markets of Japan and South Korea are practically closed to our exports. Comecon countries buy only those steel qualities thay they cannot make. The attitude that was recently taken by the United States—once an important market—needs no further comment. Spain has built an effective barrier of customs duties and administrative obstacles. Licensing systems in Brazil and Southern Africa utterly protect their home industries. Not only do those countries sell their surplus steel to the diminishing United Kingdom market; they destabilise the price structure that Davignon has tried to build up in the past few years. Price cutting, therefore, is now rampant throughout Europe.

There is only one conclusion. It is obvious and it must be faced. Government must, sooner or later—I beg that it is sooner—take a tough and uncompromising line with those countries which trade unfairly, resolve their socio-economic difficulties at the expense of the United Kingdom and have effectively transferred their problems to us. More than 3 million British unemployed are testimony to the need to adopt a resolute stand sooner rather than later.

I am glad that there will be no Division tonight. The House is right to unite on the matter. I am not a protectionist, but I must make it absolutely clear that I believe I was not elected to see the British work force sacrificed as a matter of practice on the altar of the theoretical benefits of laissez-faire free trade. When free trade is unfair trade, there are no benefits in it.

Ironically, nowhere has the gross unfairness of State support been more evident than in the United Kingdom. The reality is that the public sector has been bankrupt for years. It has survived by massive injections of cash. If BSC was a complete monopoly, that would be bad enough, but there are large and important areas of overlap with the private sector where the two compete for business. As a result, modern and efficient private capacity has had to close.

Since the Government that I so strongly support came to power, BSC has received more than £2.7 billion in cash. That represents a subsidy of more than £88 per tonne of steel that is sold. Of that, £43 has funded BSC's losses. I could give a series of additional figures, but I shall not trouble the House with them. I hope that I have said enough to bring me logically to the questions that I should like to ask.

How can the private sector compete with those subsidies? How do those subsidies square with the Government's declared policy of encouraging a healthy private steel industry? I say that they do not and that it is time that the subsidies stopped.

Mr. Barry Jones

Is the right hon. Gentleman aware that, of the motor cars that were sold in Britain last year, 53 per cent. were foreign? Does he agree that the amount of steel which came into Britain in those motor cars was equivalent to the annual production of one of our strip mills?

Mr. du Cann

I shall come to the hon. Gentleman's point in a moment.

The point that I am anxious to make now is that the competition from BSC which private sector companies must face in the United Kingdom market is wholly unfair. There is little evidence to suggest that the massive capital investment in BSC is making it any more viable. I wish that the reverse were true. Its current capacity utilisation is probably less than that in the private sector if the circumstances in Sheffield, where modern and expensive plant is grossly under-utilised, are anything to go by.

In these circumstances, the Government have three policy choices. First, BSC can be funded further, beyond the limits that have already been agreed by the House. I say to my hon. Friend with the greatest emphasis that I should oppose such a move if the Government proposed it at any time. The second choice is for the Government to give equal support to the private sector. My hon. Friend had something to say about that. It was a little Delphic, but no doubt more detail will emerge later. That policy also has little to recommend it.

The third choice is to make BSC henceforward live within its means, as the private sector must do. If I may coin a phrase, there is no reasonable alternative. Moreover, where BSC overlaps with the private sector it should get out of the market if it cannot make a go of it except with enormous subventions from the taxpayer.

Mr. D. N. Campbell-Savours (Workington)

Does the right hon. Gentleman agree that much of our argument with the Americans recently was that we were not subsidising steel at all? Does he agree that he has undermined our case? The money that was transferred to British Steel was for restructuring and other purposes that the Government outlined in their statement about the argument with the United States Government.

Mr. du Cann

I am grateful for the implied flattery of the hon. Gentleman's intervention. I can hardly believe that anything I say will make any difference to the normally selfish attitude of the United States Department of Commerce.

I shall now deal with the situation of our customers, as the hon. Member for Flint, East (Mr. Jones) asked me to do. The decline of our engineering base is well documented. We all know that the process has been under way for many years. In an already weakened market, as the hon. Member for Flint, East said, the fall in vehicle production this year is especially worrying. Cars are being produced at about 65 per cent. of the level obtaining in late 1981 and ealy 1982. Moreover, commercial vehicle production stagnates at about 60 per cent. of the 1979 level. The drop forging industry, another good barometer of traditional manufacturing, has virtually halved its activity level in the last decade, and deliveries of engineering steels into the United Kingdom market are now about two-thirds of the level of 12 months ago.

Imports have also ravaged the home market for those finished and semi-finished metal products which were the foundation of the steel industry, and many of the imports derive from countries such as Spain and Japan where tariffs and administration obstacles effectively block out British goods. This further unfair trading can be stopped. It must be stopped. It is idiotic, if not criminal, to place ourselves and our people at such a disadvantage.

I want to see a programme for national economic recovery led by investment in substantial capital projects. There is plenty of scope for that. No one in the steel industry, particularly in the private sector, can look forward with any confidence unless there is a fundamental shift in attitudes.

Certainly, in the private sector, we are looking not for State interference but for Government to ensure that damaging influences outside individual company control are dealt with quickly and effectively. Those influences now combine to produce such a hostile environment that it may be that only a subsidised BSC will survive and, contrary to Government intention, the private sector will disappear. That will be unacceptable to me and to my colleagues on the Conservative Benches.

4.52 pm
Mr. William Rodgers (Stockton)

The right hon. Member for Taunton (Mr. du Cann) was as fascinating as usual in his arguments, although his remarks were not short of contradictions. I agree with him that there is widespread anxiety about the steel industry and that it is in danger of total demise.

We are having this debate because the steel industry is facing catastrophe. We are asking ourselves why and seeking to find our way through a complex of causes. In that respect, I agree with the Minister that it is not sufficient simply to blame the Government. This problem has a long history. Successive Governments have made errors and have over-estimated capacity requirements. Successive boards have also made errors. The Minister was right to draw attention to the dimension of the world economy. We cannot escape it, although that alone is not responsible.

Until two years ago there were low levels of productivity in the steel industry, and we cannot deny that the 1980 strike had damaging consequences. We should, therefore, put the problems of the steel industry in their full context and not look for scapegoats. But the industry is at present the responsibility of this Government, and this Government alone can do something to stave off a dangerous situation which is getting worse all the time.

The central dilemma is that over a period we cannot continue to make steel that no one wants or no one can afford to buy. That should be obvious, but it must be restated. On the other hand, we cannot abandon to virtual extinction a basic industry that must be able to respond to the upturn in the economy, whatever form it takes and whenever it occurs. It must also make a substantial contribution to the United Kingdom's export performance.

I noted what the right hon. Member for Taunton said about the private sector. Although we are mainly debating the BSC, we must all be concerned with both the public and private sectors. In that respect, the question of ownership is irrelevant.

Like many other hon. Members, I have a direct constituency interest in steel. The right hon. Member for Salford, West (Mr. Orme) rightly listed the closures that have taken place recently, but he omitted to mention the closures in my own constituency of Stockton-on-Tees. The decline locally in the tube sector of steel—from more than 2,000 jobs 10 years ago to a few hundred today—has been so much taken for granted that it is no longer a subject for public discussion. That decline from many thousands of employees to a few hundred mirrors a decline of more than 10,000 jobs in heavy engineering in my constituency over the last 10 years. I emphasise "the last 10 years", because the decline of the United Kingdom heavy engineering industry has contributed sharply to the long-term problems of the steel industry.

Today, the steel industry in my own area is focused mainly on the steel-making capacity of Redcar. That is a source of employment throughout Cleveland, including my own constituency. There is deep anxiety about the plant's future, and there would be a disaster if it were to close. There are many parts of my constituency, of Cleveland and of the North-East as a whole, where male unemployment is now above 40 per cent. Were the Redcar steel-making capacity to close, that figure would rise even further.

The plain, simple and incontrovertible facts about Redcar are that the number employed has fallen from just over 15,000 at the beginning of 1981 to just over 9,000 today, that in a short time productivity has virtually doubled, and that in February of this year used capacity totalled almost 85 per cent. I believe that Redcar could break even and could perhaps operate at 70 to 75 per cent. capacity by March 1984, while still employing about 7,500 men. I hope that when their review is complete the Government will instruct the board to set such a target and that they will meanwhile guarantee security to Redcar.

There is a strong case for a national moratorium on closures for 18 months, with no major redundancies meanwhile. I accept the fact—we should face this—that the cost could be as high as £800 million in a full year, but it may well be worth the risk of spending that sort of sum to make sure that capacity is not closed within the next 18 months, when there is the prospect of higher use thereafter.

If there is not to be moratorium, there should at least be a holding strategy. I agree with hon. Members who say that there should be no closures of major plants during that period and that such plants should be given 18 months to put their house in order and to take advantage of steps towards reflation.

I have never understood why the steel industry was not thought to he as important by Government as coal. In 1981–82, about £574 million in subsidies went to the coal industry, including a huge deficit grant. It has not been demonstrated to me that, politics apart, there is any logical justification for such a large subsidy to the coal industry, but none whatever to the steel industry. What is the logic of such unequal treatment? Over a relatively short period the Government should be prepared to face the large losses which, on the most optimistic estimates, would result from retaining present capacity.

There are some matters which I take for granted which should be common to all parts of the House. First, I agree that there should be an equality of sacrifice within the European Community in reducing capacity. I take the point made by the right hon. Member for Salford, West about Italy and, broadly speaking, I endorse what the right hon. Member for Taunton said on that matter.

Secondly, I take it for granted that the dumping of steel will be prevented and that voluntary restraint agreements will be enforced. Penetration of our market may be only 27 per cent., but in present circumstances that figure is much too high.

Thirdly, because in the long run Britain has a principal interest in maintaining free trade—broadly speaking—I believe that it is the job of the Government to ensure that there is fair competition in steel, both now and in the future. I am prepared to accept that the Government's intentions are good, but they have been very slow off the mark. A demanding time lies ahead of them and we shall be critical of their performance.

The Government must now take the first modest fiscal and budgetary steps to pull the United Kingdom out of that part of the recession which is of its own making. This is right in principle, and the best hope for the steel industry. The case for a reflation of about £4 billion—1 suggest nothing larger than that for the moment—is overwhelming. Such a reflation feeding through the economy over 12 months from the beginning of 1983 would be likely to increase the total United Kingdom demand for steel by eight per cent. to nine per cent. or two million tonnes of crude steel.

Mr. Allen McKay (Penistone)

I have listened closely to what the right hon. Gentleman has said, but perhaps I have missed part of his argument. Does he agree with the Opposition that we need a complete ban on imports of steel into this country so that we can restructure the industry?

Mr. Rodgers

A complete ban would be very damaging to our wider trading interests. I believe that the Government were slow off the mark in examining whether voluntary agreements were being met and that they must prosecute this leg of their policy much more strongly, but, in the light of the world trading picture and the breakdown of the GATT negotiations last weekend, a total ban would not be the best step for the Government to take.

I know that this is not within the capacity of the Minister of State, and I make no criticism of him, but I believe that if the Government now decided on a £4 billion reflation package, by the end of next year there would be 5,000 or more jobs in the British Steel Corporation than otherwise there could be, and increased employment in the private sector as well. I have made plain my direct interest in the steel-making plant at Redcar. On the assumption that Redcar had been reprieved, the effect of such reflation, with 5,000 jobs as a result, would save Ravenscraig as well. There could be no easier way of helping at least to ease the problems of the steel industry. Those problems are complex, but it is within the power of the Government now to make a major contribution and to stave off catastrophe.

5.3 pm

Mr. John H. Osborn (Sheffield, Hallam)

Much of what is happening in Sheffield is, in a way, beyond the control of the management of the public and the private sector—I have met members of those managements—and beyond the control of the Government. A crisis has been growing over the past 10 years. It is easy for Labour Members to accuse the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Industry of deliberately wiping out Britain's basic industries, including the steel industry, but it would not be in the interests of any Government to do that.

Emotive words have been used, designed to attract a huge response from those facing the dole queue, and I accept that there are likely to be a further 1,700 redundancies in the Sheffield area. The sensation that is produced is not unlike that experienced by a canoeist descending the rapids of a fast-flowing river. The main concern must be to avoid hitting rocks and to navigate with all possible skill. The navigators of Sheffield, irrespective of crew, must have it as their ultimate aim to stay afloat and to avoid capsizing. The same sensation perhaps applies also to the Government, who of course have some control of these matters. But it is not merely a British phenomenon. The steel industry in Britain has taken a terrible knock, but the bitterness of steel managers in other countries is equally severe. The House cannot afford to ignore that. The phenomenon is world-wide. It is essential, therefore, that the industrial leaders concerned should understand the nature of the rapids that we are crossing. They are fast and dangerous, and our immediate aim must be to stay afloat.

The leaders of the British steel industry must ensure that Members of Parliament and governments do not make the navigation of the descent any more difficult than is necessary. Our industry's competitors throughout the world are certainly obtaining assistance—overt, discreet or blatant—from their own Governments. The message of this debate is that the British Government should now take off their kid gloves. I certainly support those who have taken that view.

The Sheffield special steels industry includes private sector companies. As a result of nationalisation, they have had to navigate even more perilous and treacherous waters. It is poor consolation to those already on the dole queue to face the categorical assertion that a major cause of the present awful prospect was the very act of nationalising steel, first under Clem Attlee and then under the right hon. Member for Huyton (Sir Harold Wilson). That tragic act resulted in Labour and Conservative Governments pouring investment into an industry that has inevitably buried its head in the sand and proved incapable of showing the flexibility necessary to face the tornados of today's market forces. It has been a tragedy for all of us and especially for the steel industry in Sheffield.

In the debate on the Queen's Speech, the hon. Member for Sheffield, Attercliffe (Mr. Duffy) accused me of not caring. In fact, at the time of the general election in 1979 I ceased to be a director of the company founded by my great grandfather. As I have said before, Aurora took over Samuel Osborn and Co. Limited and my life's work of more than 25 years was put into cocoon in 1982. To imply to the people who once looked to me and other directors of the company that I do not care is a travesty of the truth and I greatly resent it. Moreover, all that happened to my company as far as I was concerned happened before 1979, under the Labour Government headed by the right hon. Member for Cardiff, South-East (Mr. Callaghan).

Throughout the late 1960s and the 1970s, the private sector had to compete with the public sector for finance. The existence of the public sector meant that those who might have invested in the private sector during that period were unable or unwilling to do so. Therefore, whatever the rights or wrongs of the matter, for more than 15 years the private sector has been at a gross disadvantage compared with the public sector. Thus, to some extent, those on the shop floor in Sheffield who backed Labour and nationalisation have only themselves to blame for a major cause of the tragic unemployment that they now face. I shall not embark on that argument, however, as I made it clear in the debate on 14 July that there were also other factors when I outlined the economic forces and other pressures that have contributed to the situation.

In the Financial Times of 24 November, Mr. Ian Rodger sought to analyse the pressures affecting the world steel industry. It is no good Opposition Members behaving like ostriches and refusing to recognise those pressures. When Fred Cartwright, who was president of the Iron and Steel Institute, of the Steel Company of Wales predicted in the early 1960s that world demand for steel would jump from 350 million tons to 750 million tons by the 1980s he was about right. When Michael Dowding, a good friend of mine and president of the Metals Society, predicted a few years ago that this figure would go up to 1,500 million tons by the year 2000, I think that he miscalculated.

In the past 10 years the United Kingdom share of the market, according to Mr. Rodger, dropped from 4.1 per cent. to 2.2 per cent. The EC share went from 21.9 per cent. to 17.7 per cent., and even the USA's share dropped from 18.7 per cent. to 15.4 per cent. Other world producers such as South Africa, South America and Mexico have been able to increase their share of the market from 23.7 per cent. to 31.6 per cent. I mention this because the Western world has contracted at the expense of the newer countries.

Perhaps the third world, the developing world that we are trying to encourage, with its resources, has enjoyed immense expansion. Why has this happened? There has been huge investment into South America, South Africa, India and Australia. In these areas there has been cheap opencast coal, hydro-electricity or high grade ore.

The British Government must take immediate action to prevent the complete collapse of the Sheffield steel industry and the BSC. Fire-fighting to put out sudden conflagration hits the headlines and is necessary.

I spoke to my right hon. Friend the Secretary of State before the ministerial meeting of industry Ministers last month in Copenhagen. His problem is to ensure that the cartels backed by Commissioner Davignon work. Both the BSC—the commercial side, anyhow—and the private sector wish to see a little more teeth behind the various Eurofer committees. It was many years ago that I started talking to Commissioner Davignon about the need for this.

I am one of the few British Members of Parliament who spent considerable time with trade and price associations, particularly in the steel and allied industries, in the 1950s. This discipline is only too frequently difficult to uphold in one country. The concept of the trade association in a seller's market had become unpopular by 1957, although it was essential for Sheffield in the 1930's when there was a buyers market. The Secretary of State gave an assurance after the Copenhagen meeting that price competition would be controlled and that cheap imports would be curtailed, and the Minister has repeated it.

Let us have no illusion that, although not affecting so much Stockbridge BSC and Shepcote Lane, which have stainless steel, the import penetration for other steels is reputed to be as high as 60 to 70 per cent. The hon. Member for Rother Valley (Mr. Hardy) quoted these figures last month. If there has been important penetration on this scale, the House should have details of it and the Minister must see that it is stopped forthwith.

I welcome the Minister's assurance that there is to be a 12½ per cent. reduction of bulk steel into the EC from outside countries. I shall study his reply to the written question with great interest. However, it must be borne in mind, with regard to steel, that I have tackled some of the re-rollers and processors of steel and they have never wanted to rely on ingot or billet from one source alone. The tragedy is that that one source in Britain has become the BSC, with the exception of one or two instances such as that of my right hon. Friend the Member for Taunton (Mr. du Cann), who is involved in private sector steel.

If one is a processor of ingot or billet, one might buy 51 per cent. from BSC, or even 25 per cent. from a private steel maker in Britain. However, I have spoken to others who have told me that the balance of steel from elsewhere—foreign sources—is cheaper. This is one of the problems affecting the re-rollers and steel processors, but, in spite of this, I would still advise them to buy British.

A few weeks ago I met Mr. John Pennington, who has made some statements about what is happening in Sheffield. He raised two points with me of which the Minister is aware and which I have raised with him. There is no doubt that the Sheffield steelworks is buying electricity at a very high price because the cost of production of coal-fired electricity from deep-mined coal is inevitably expensive now, and will increase in price. That is why I reject the unholy collaboration between Arthur Scargill, the NUM and some of the steel workers' unions who oppose the Sizewell nuclear programme. If the steel industry could look forward to cheaper electricity in 20 years' time, let alone 50 years hence, although it is difficult to do much about it now, better job security could be obtained.

Secondly, Mr. John Pennington has come up with the cost of rates in Sheffield. This is why both private and public sectors are finding it impossible to continue in the city. Therefore, the city council should do something more to keep industry in the city.

I have met Mr. Derek Bray and seen his analysis of the economic reasons of what he has to do. Last week, the industry committee of the Conservative Party met Mr. Ian MacGregor. I tackled him on the trends, going worldwide, of the steel industry. He has had vast international experience and was at the international iron and steel conference in Tokyo. He pointed out that one of his major markets is the car industry, but Great Britain has some 50 per cent. import penetration of cars.

To every person buying a car I would say "Buy British". To every steel worker I would say the same thing. I have observed the cars parked outside the steel works in Sheffield, and many of them have been anything but British. What is more, cars are using new materials such as plastic bumpers and fibre bodywork so that the weight of a car is being reduced considerably. The modern car is built of less steel.

My right hon. Friend the Member for Taunton has reflected the view that there is a crisis. I have said that this is affecting the world. I have met people saying that steel factories in Pittsburg are working at 41 per cent. capacity. There is an OECD steel committee and in questions to the Secretary of State I have said that as a member of the Economic Affairs and Development Committee of the Council of Europe, I put the problem of steel to the OECD committee. Yesterday, as a result of that, I had a private meeting with the secretariat of the OECD steel committee. I gained the impression that the OECD will talk about this only pressure from its member Governments and from this Government as well.

Therefore, the British Government must press the OECD to let those in the industry know what can be a reasonable strategy for steel in Britain, bearing in mind the world-wide trends. The Government must look after the steel industry. The British Steel Corporation is still top heavy. It has enjoyed immense funds from the State purse whether for the manufacture of bulk steels, on the one hand, or special high value steels, on the other. It is the importation of the latter that is so important to the private sector companies, but especially the industry of Sheffield.

I hope that the action outlined today will work, and work effectively, by the turn of the year. The proposal for monitoring quotas and prices of imports must be examined. The Chairman of the Select Committee on Industry is in the Chamber. I hope that he will ensure that the House has adequate information to ensure that British Government action is effective.

5.18 pm
Mr. Roy Hughes (Newport)

For a long time it has seemed that our steel industry has been in a perpetual state of crisis. How on earth the men produce steel is amazing, because morale must be at rock bottom. The Government waved the Union Jack and called for the return of the Falkland Islands. We expect the same level of patriotism to save our steelworks and the vital steel communities living around them, but every day we receive reports of closures, and rumours of closures, redundancies and short-time working. If it is not one works, it is another.

The repeated references to the Llanwern works are particularly irritating. What is the nature of its crime? It is producing steel efficiently and has been the success story of the BSC in recent years. There are reports that Llanwern could be a sacrificial lamb. It is argued, apparently, that if Ravenscraig were to close there would be a political upheaval in Scotland. What an indictment! It is a scandal that the Government should allow that position to drift on. I do not want to see Ravenscraig close. I want BSC to reach the target of 14.4 million tonnes, and as the recession ends I should like to see that figure increased.

We can all ask why our steel industry is in such a parlous condition. It has been suggested that years ago it was not producing steel as efficiently as it might have done and that we have not kept up with technological change. The recession has played havoc with the world steel industry and has had a traumatic effect on our own. If I were asked, I should unhesitatingly say that the major factor in the present depressed state of our steel industry is British membership of the Common Market.

Steel imports are flooding in, and 67 per cent. of those imports come from Common Market countries. According to Mr. Sirs of the Iron and Steel Trades Confederation, imports are the immediate cause of the problem. There has been no more devout supporter of the Common Market over the years than Mr. Sirs, but he is beginning to see the reality of the position. He is now calling for unilateral action by the Government against other EC countries.

If Mr. Sirs has any lingering doubts, his membership has not. Three years ago, against his advice, his members called for British withdrawal from the Common Market. Steel workers are at the sharp end of the problem. During the 10 years of our membership of the Common Market—that 10-year period has been mentioned many times during the debate—there has been a growing deficit in our trade in manufactured goods with other EC countries. In contrast, our trade with the rest of the world has stood up.

Sir Anthony Meyer


Mr. Hughes

I shall not give way. I have debated this subject with the hon. Gentleman many times. I know that he is a propagandist for the Brussels outfit. Exports to the rest of the world provide a healthy trade surplus and help preserve jobs. We pay for our imports from West Germany—Volkswagens, Mercedes, or other manufactured goods—with North Sea oil. Our precious North Sea oil is being used to put our people out of work. There are well over 3 million people in the dole queue at present.

Our steel industry has been cut back compared to those of other EC countries. The Minister tended to gloss over that fact, but my right hon. Friend the Member for Salford, West (Mr. Orme) brought him back to reality. The Eurostat "Quarterly Iron and Steel Bulletin" published a few days ago shows that since 1979 employment in the British steel industry has been halved, from 162,000 to 84,000, but employment in the combined steel industries of France, West Germany and Italy has fallen only from 427,000 to 375,000. During the past three years we have lost 78,000 steel jobs, while our three principal EC partners have lost only 52,000. I say to Bill Sirs, who is a sincere, conscientious man, "You have been conned."

Italy has actually been increasing its capacity in recent years. Its steel is allegedly going to cars and consumer durables such as washing machines. When we joined the Common Market there was a massive expansion of the Hoover washing machine plant at Merthyr. There was to be a great boost in jobs. In fact, those factory doors never opened. All Merthyr had was redundancies.

Steel is the predominant material in the motor car, yet 46 per cent. of the new cars going on to our roads come from Common Market countries. Those imports should be severely curtailed. A country has the right to protect its vital industries, especially when areas with high unemployment rates are affected. If we were to curtail imports, our car industry would blossom overnight. In the past few days we have had the news that Cowley is to take on an additional 1,000 workers. If we imposed the necessary import controls, that figure would increase to 10,000, order books would expand rapidly and our steel workers would be working to capacity.

Last Thursday we had the celebrations to mark the tenth anniversary of Great Britain's entry into the Common Market. Thousands of our steel workers had plenty of time to celebrate if they had not spent all their redundancy payments. The celebrations were headed by the President of the Commission, Mr. Gaston Thorn. He was chaperoned by our good friend Mr. Ivor Richard. I understand that he is known as the Commissioner for Employment and Social Affairs. He was the Labour Party's nominee for the Commission, but he does not uphold the Labour Party's policy of withdrawal from the Common Market. If public opinion over a long period is anything to go by, he does not speak for the vast majority of the British people. A recent poll shows that 60 per cent. of the people of Britain are calling for withdrawal. Mr. Richard holds a highly remunerative and prestigious position, but he is living a lie. If he had a conscience he would resign and the gesture would be welcomed throughout the country, not least by the steel workers.

5.30 pm
Mr. Michael Brown (Brigg and Scunthorpe)

Over the past three and a half years I have had the good fortune to be called to speak in our many steel debates, but on each occasion I have realised that I should have yet again to draw attention to the industry's problems and to hope for better things to come. Each time that I am called to speak the problem is worse.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)

Perhaps my hon. Friend should stop speaking!

Mr. Brown

My hon. Friend may not like what I say. My words will not be music to his ears.

Over the past three and a half years I have consistently supported—and I continue to support—the strategy announced by Mr. MacGregor and my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) who was at the time Secretary of State for Industry. The corporate plan envisaged a steel-making capacity of 14.4 million tonnes. However painful personally, I have always told my constituents that certainly in 1979 and 1980 one could not justify the manning levels in the industry in Scunthorpe. But, as my hon. Friend the Member for Flint, West (Sir A. Meyer) said, when one compares the output per man hour of the British Steel Corporation with the output in Germany or Japan, one realises that we have gone as far as we can go.

My hon. Friend the Minister of State said that he would judge the feeling and mood of the House, and I am glad to see him in his place now.

I agree with the sentiments of my right hon. Friend the Member for Taunton (Mr. du Cann). The right hon. Member for Salford, West (Mr. Orme) also made some important and valid points, allowing for the political bias in what he said. He visited my constituency about three or four days ago and was impressed by what has been done in an area totally dependent on the steel industry.

When I first represented the constituency, the work force in the industry was about 18,000. It was reduced by 3,000 in late 1979. In early 1980 we suffered a steel strike, and the Normanby Park steel works was closed at the end of 1980. I still support the reasons behind the decisions. I hoped that we should be out of the wood in 1981, but towards the end of last year we had further redundancies of 600 to 700. Four or five weeks ago the local management announced yet further reductions. The Secretary of State has not yet made the announcement for which everyone in Scunthorpe is waiting.

However, I do not wish to make only a constituency case. Every hon. Member associated with the steel industry, whether the public or the private sector, will, I believe, support me in this. We are all shareholders in the British Steel Corporation. In the coming weeks we must decide whether to back the optimism of Mr. MacGregor two or three years ago. We must consider the generations yet unborn. We should be enterprising and press the Government to decide to support the steel industry in all parts of the country.

I should not rest easy in my bed, even though my right hon. Friend told me that he was making no cuts in my constituency, if he asked me to shut up as I had got away lightly and the burden would fall elsewhere. I hope that later in the year, when my right hon. Friend makes his announcements, every hon. Member associated with the steel industry will make it clear that the loss of capacity in any of the big five plants is unacceptable.

Mr. Homewood

Many of us feel that, although there will not be a major closure, chunks will be chopped off the five major plants, which will amount to greater job losses than if one entity was completely closed.

Mr. Brown

We still have a steelworks in Scunthorpe, but only 7,000 of my constituents are employed there, whereas three and a half years ago the number was 18,000. The work force has been cut by two thirds. I take the hon. Gentleman's point. We must add up what capacity will remain in the industry. We should retain 14.4 million tonnes.

I hope that this debate is not about further job losses. My hon. Friend the Minister of State said that he would listen carefully to what we said. Every speaker has stated that we require our present capacity. I believe that the speeches to come will be to the same end. The House is speaking with a unified voice.

I believe that we should continue to back the strategy put forward by the Government and Mr. MacGregor two or three years ago. In our argument to the Government we must consider imports. My hon. Friend the Minister of State used the word "myths". I have spoken to the managements of BSC and of Allied Steel and Wire in my constituency and they have given me statistics. The flood of imports of reinforcing bar and of wire and rod from other EC countries is no myth.

Allied Steel and Wire, not now part of the British Steel Corporation, and other private enterprise firms, are being adversely affected by the heavy influx of imports. These firms are often the largest customers of the British Steel Corporation. If they are unable to survive import penetration and they go under, several British Steel Corporation plants will lose major customers to which they supply billets.

Ministers within the Department of Industry tend in their rhetoric to say that hon. Members make too much of the problems associated with the Common Market. I do not believe that we are overstating the problems of the EC. Those who are daily associated with the steel industry in their constituencies, meeting unions and management at various levels, cannot fail to be impressed by the statistics that are available.

My hon. Friend the Minister of State said he felt that the EC regulations, like a cartel, protected the United Kingdom. I have always understood a cartel to mean everyone acting together. It is, in fact, a price ring. If a cartel means that there is no difference in price between Italian, German and British steel, there should be no price advantage in EC steel entering this country. Therefore, it is plain that the cartel arrangements in which my hon. Friend has some confidence are not working to protect the British steel industry. A cartel means that there should be no advantage to any customer in Britain taking supplies from a member of the cartel outside the United Kingdom. But those supplies are being imported. The EC arrangements are therefore not satisfactory in protecting the British Steel Corporation.

I have no confidence in the so-called policing arrangements of the European Community. There have been delays in getting the Departments of Industry and Trade to accept that there is a case that should be taken to the Commission. During the three and a half years that I have been associated with the steel industry as a Member of Parliament, the arrangements that have been agreed within the European Community have not been satisfactory in protecting and preserving the fair competition that the British Steel Corporation and the private sector of the steel industry are entitled to expect.

My hon. Friend drew attention to the recent discussions between my right hon. Friend the Secretary of State and his European colleagues in Copenhagen. From what I have read, I do not have much confidence that those discussions will solve the problem. The Government are entitled to suggest to the EC that unilateral action is in order for the British Government if we have no confidence that the Commission's policing arrangements are delivering, or rather not delivering, the steel goods to this country.

Mr. Crowther

The hon. Gentleman may not appreciate that the prices recommended by the European Commission are not enforceable. They are not mandatory. All that is mandatory is that suppliers shall not discount from the published price list. No penalty can be imposed on anyone who sells steel at a price less than the Commission has recommended. It is only for breaches of the quota that penalties can be imposed.

Mr. Brown

I acknowledge the remarks of the hon. Member for Rotherham (Mr. Crowther), who has experience of the damage caused by imports to the fine products produced in his constituency. The hon. Gentleman implies that there is not the actual protection that supposedly operates under the cartel suggested by my hon. Friend the Minister of State. I believe that the problem stems to a greater degree from imports of European Community steel than from Third world imports. It is to Europe that we should devote the bulk of our attention.

I shall be fair to my right hon. and hon. Friends at the Department of Industry. I shall resist the temptation to suggest that they are apologists for the European Community. However, they sometimes tend to give the Community the benefit of the doubt. This results perhaps from all the negotiations that they conduct—my hon. Friend performs this role with great skill—in endeavouring to obtain from the Community all sorts of regional funds and aids and moneys supposedly for the steel industry, but purely, in the end, for redundancy payments. Is it necessary for us to pussyfoot around? Must we be kind and polite to the European Commission, because otherwise we might prejudice regional assistance or money from the European social fund? I wonder whether it is worth selling our steel industry down the river simply to obtain that money.

My view, at one time, was that it was right for Ministers to obtain everything possible from Europe to help hard-pressed, high unemployment areas of Britain. I am now starting to wonder whether it is worth while co-operating with the Community if the price to be paid for obtaining these moneys—with all the strings attached—which seem to do nothing more than provide the Government with the cash that they would otherwise have to find for redundancy payments, also means selling our steel industry down the river. Should we not forget about the money that is theoretically available from the European Community and concentrate instead on fighting the Community over the imports that damage our steel industry?

I have always endorsed and defended the views of my right hon. and hon. Friends within the Department of Industry. I have experienced some of the unpopularity that goes with defending difficult decisions. I acted on the basis that there was a long-term future for the 14.4 million tonnes of capacity in the British Steel Corporation. Nothing has happened during the past few months to change that view. If anything, my view has been strengthened. Since the MacGregor proposals have been implemented, backed with massive sums of taxpayers' money, the steel industry unions and the work force have delivered the goods in terms of competitiveness and capacity per man hour compared with German and Japanese workers.

The steel industry is now competitive on every criterion that can be applied. Indeed, I suggest that our industry is more than competitive when one acknowledges and takes into account the unfair subsidies towards energy and freight charges that unfairly sustain the German steel industry. My hon. Friend the Minister of State shakes his head. What statistics does he want us to produce to his Department?

Mr. Norman Lamont

I draw my hon. Friend's attention to the remarks of the chairman of the British Steel Corporation, who has stated that the problem of the corporation is still lack of competitiveness.

Mr. Brown

I acknowledge that, but I am constantly told by the local BSC management in my constituency about the high price of electricity from the Yorkshire electricity board. I am constantly provided with statistics that clearly show the difference in price between what the BSC pays for its electricity and what the German steel industry pays for its electricity. I take on board what my hon. Friend says, but I want to draw his attention to the lobbying that is done by Mr. MacGregor's senior management in my constituency.

In considering our share of the market, we must acknowledge that the whole cake is smaller this year than it was last year, but that the proportion of the cake taken by foreign suppliers today is much greater than the proportion that they took last year.

If we are told later this year that steel making will continue in Scunthorpe in future, I shall be greatly relieved, but I shall look carefully at the manpower and future capacity that will be involved. I shall also have regard to the capacity and number of workers in steel plants in the rest of the country. Only then will I decide, if as a Member of Parliament I am called upon to endorse whatever my right hon. Friend the Secretary of State puts before the House, which way to cast my vote.

5.51 pm
Mr. James Hamilton (Bothwell)

I have always been opposed to Britain's membership of the European Community. However, I realise that we are in the Community and that until we withdraw we must get the best possible terms that we can for our industry.

Labour Members are fighting for the retention of the five major plants. There is no difference of opinion on that issue. Nevertheless, I trust that I shall be forgiven if I mention Ravenscraig, which is in the constituency of my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray), because the demise of Ravenscraig would mean the demise of the steel industry in Scotland. I, too, have steel in my constituency, and I shall refer to that during my speech.

All those who have spoken so far in this debate have referred to the production figure of 14.4 million tonnes. I have met Mr. MacGregor on several occasions and I have never lost faith in his ability, but I have lost faith in the possibility of getting a straight answer to questions put to him. At a meeting in Glasgow only last Sunday he spoke about Ravenscraig in a way that made me despondent. Ravenscraig has invested £240 million, and it would be ludicrous if the British Steel Corporation were to decide to spend money on other plants.

We in Scotland talk about Ravenscraig, but the steel industry in Lanarkshire has almost been decimated. Clydebridge has virtually closed. The Clyde ironworks has closed, and in my constituency the engineering side, which came under the aegis of the BSC has been closed. The Imperial works in Airdrie published a long redundancy list only the other week. On the tube side of the industry in my constituency, the workers are working two on and two off.

The money that we are getting from the European Community is being used, as it were, to sell the jobs of all the workers in the steel industry. Once the workers in the industry hear about the juicy carrot that is available to them, the consequence will be quick closures. I am convinced that without those inducements many of the workers in the industry would fight tenaciously to retain their industry, because once that goes, virtually the whole industrial belt of Scotland will go.

In case my hon. Friend the Member for Motherwell and Wishaw is not called to take part in the debate, I shall say a word about the Craigneuk works in his constituency, because many of my constituents work there. The workers have until Friday of this week to put a case for the works to remain open with the existing work force. If they do not succeed, 427 jobs will go. The Craigneuk bar complex has made significant profits. This year, even in the depths of a world recession, there is a projected loss of only £0.8 million.

Low activity is the greatest factor in the loss. Owing to the lack of orders, the plant is producing only 16,000 tonnes a year. The projected loss of £0.8 million is offset by the fact that the mills contribute a total of £1.7 million to the finances of the corporation, in the form of £1.4 million as a contribution to the fixed costs of the Sheffield billet mills and £0.3 million to headquarters and divisional overheads. Closure of the works would result in a net loss of £0.9 million to the corporation. The divisional organisation puts the selling effort and the financial gains from billet purchasing outwith the group. As a result, the group management of BSC Holdings sees only an operating loss for the mills and could make decisions based on incomplete information.

I hope that Conservative Members, particularly the Secretary of State for Scotland and the Minister who is responsible for industry in Scotland, will join us on Friday at those works to ensure that the greatest possible pressure is put on BSC, because there is no justifiable reason why 427 men should be paid off.

Britain has been told that its plans to cut back the steel industry do not go far enough. The EC Commission has told all the EC countries to reduce production, with further losses of jobs, but no details have been given. Since 1977 the United Kingdom has cut capacity by 37 per cent., France by 1 per cent., Belgium by 3 per cent. and Germany by 0.5 per cent., while Italy has actually increased its capacity. Over the same period 100,000 jobs have disappeared in the United Kingdom, compared with 33,000 in Germany, 53,000 in France, 11,000 in Belgium and only 200 in Italy.

About 3 million tonnes of steel have been imported from Europe—this relates to what my hon. Friend the Member for Rotherham (Mr. Crowther) said—at prices below those that were agreed by the Commission. There is a distinct possibility that the British Steel Corporation will make recommendations to the Government. The Secretary of State for Industry will then tell the House that none of the five plants will be closed, but that certain furnaces will be put into mothballs. We all know that when Beecham carried out his railway closures he used the same terminology. He said that the railways were being put in mothballs, but we know that none of those lines have been reopened. Unlike the hon. Member for Brigg and Scunthorpe (Mr. Brown), I am very worried about what is happening, because I want the five plants to be retained, and, together with the steel workers of Lanarkshire, I shall fight with all the vigour at my command, for the retention of the Ravenscraig works.

For a long time, Clydesdale Tube Works in my constituency has been making a profit. Three weeks ago, together with the shop stewards, I met the management of that company. I was told that because Clydesdale Tube Works did not have a Concast plant, 1,000 tonnes of steel would have to be purchased from Italy. I asked why we did not have a Concast plant. If we do not have one, Clydesdale Tube Works will have to be closed because it will not be competitive. That fact has come from people in the industry—management and trade unions.

Import controls are a must—if not permanently, at least temporarily. We now find that 30 per cent. of the steel used in the home market comes from other countries. Last week I discovered that some of that steel was coming from South Africa—a country whose habits and way of life are anathema to us. We should draw the line at that and do something positive about it.

We have also been informed that of the 30 per cent. of imports into Britain, two thirds come from Common Market countries. That means that there is something radically wrong with the so-called cartel system.

It is not only the steel industry that will suffer. I worked in the steel construction industry, and that is dependent upon steel coming from various mills. We are told by senior management, shop stewards and other union officials that many customers have requested that their steel should come from the Ravenscraig works. The Secretary of State for Scotland has said that closure is a matter for the Government, but that the mothballing of one of the furnaces, is a matter for the management. I find that difficult to understand.

Clydesdale Tube Works, Ravenscraig and Craigneuk Bar Company are the heart of Lanarkshire's industry. Local authorities and railways will be the losers, as will the Polkemmet colliery, which supplies coal to the Ravenscraig works. Therefore, we are entitled to examine the social consequences of any closures.

Mr. David Lambie (Central Ayrshire)

Does my hon. Friend realise that the disaster will be greater than he has forecast? If Ravenscraig and Gartcosh close, Glasgow, under the ECSC Treaty, will no longer be a price basing point for steel. We are dealing not only with the 14,600 jobs in the steel industry, as my hon. Friend has mentioned, but with the 230,000 jobs in the steel-using industries in Scotland, which will be uncompetitive as a result of increased transport costs. The loss of those jobs would decimate industrial Scotland.

Mr. Hamilton

I accept everything that my hon. Friend says. It is worth consideration and I am glad that the Secretary of State for Scotland has heard that.

In fairness to the Secretary of State for Scotland, it must be said that he is on record as saying that he will fight, and fight tenaciously, for the retention of Ravenscraig. At a meeting convened by the Scottish Trades Union Congress, the hon. Member for Edinburgh, South (Mr. Ancram) also said that he would fight for the retention of Ravenscraig, and I congratulate him on that. None of the Scottish parties will tolerate the closure of the Ravenscraig works. I hope that they will also fight to ensure that none of the mills are mothballed.

I hope that the Government accept that it is vital that we get to grips with the problem of imports as quickly as possible and that we show our fangs to the EC in relation to the so-called cartel system. In the final analysis, it is the Government's responsibility to ensure that no holds are barred in the fight to retain the British steel industry.

6.5 pm

Mr. John G. Blackburn (Dudley, West)

This afternoon there is great unanimity of view across the Chamber. Genuine concern has been expressed regarding the five major steel plants in Britain. Hon. Members have spoken in firm and clear tones about the problems of those five plants. The matter is serious.

The position in Dudley is critical—not serious. For the past 125 years my constituency has been dominated by the Round Oak steelworks. It is a fine modern plant, and it produces excellent products. It has reduced its labour force from 3,500 in 1979 to 1,286 today. There is a genuine desire by the trade unions to reduce it to 900, but to retain its clout. Industrial relations in that company are a model to the industry. There is advanced technology, and the management and the unions work together in complete harmony. That reflects the greatest possible credit upon both.

In 1981–82 that company produced 304,000 tonnes of steel. In 1980 it received the Queen's award to industry for its export achievement. The Minister's speech this afternoon was a sincere cry not only to reduce imports but to increase our export potential. The Round Oak steelworks won the Queen's award for an export penetration of about 43 per cent. of its production. In essence it is a good steelworks and it should be retained.

I applaud what the hon. Member for Bothwell (Mr. Hamilton) said about steelworks in Scotland. He is entitled, for reasons that he holds dear, to object to steel imports from South Africa. The hon. Gentleman holds that view most sincerely. I hope that he will allow me to say that I object to the quota of 12,000 tonnes that is imported from Russia. That steel represents a corporate loss of production to Britain's steel industry.

Mr. James Hamilton

The hon. Gentleman need have no illusions about me. I am in favour of import controls on steel from any country. I have no great love for Russia, and certainly not for South Africa.

Mr. Blackburn

I described the excellence of the Round Oak steelworks, and I am not alone in expressing that opinion. The Department of Industry, in conjuction with the British Steel Corporation, decided on 15 November 1982 that the steelworks had great potential for the production of slab ingots and that trials would start. The potential production was 55,000 tonnes a year. It is important to remind the House of the date of the decision—15 November 1982. On 17 November, notice of closure was delivered to the steelworks. At 1 o'clock in the afternoon, the British Steel Corporation announced that the Round Oak steelworks would cease production on 23 December.

I hold the view now, and I expressed it publicly at the time, that the manner in which the announcement was made was nothing short of a disgrace. Hon. Members on both sides of the House would expect better treatment and courtesy from a nationalised industry than a telelphone call at 2 o'clock in the afternoon telling them that the steelworks in their constituency was to be closed. It is of added interest that there was five weeks' notice of closure. The Corby steelworks had 12 months' notice. I understand—I put it no higher—that the redundancies in Scotland will be completed by February or March 1983. We had only five weeks' notice, which is a great insult to the steel workers in my constituency, who have been tremendously loyal over so many years. Such treatment is unacceptable, and I invite the House to share my view.

I have been received with great courtesy on two occasions in the past seven days by Mr. MacGregor, the chairman of BSC. When he recently visited the Round Oak steelworks—at my invitation—he paid a warm and generous tribute to my constituents for their spirit of co-operation, which was self-evident in the works. The workers have a flexible working arrangement in the mills that many steel companies throughout the country would envy.

The Round Oak steelworks has the Concast system and the ability to produce bearing steel. This modem plant must remain open. It would be a different argument—one that I could not possibly defend in the House—if I were talking about a plant that needed modernisation, that had poor labour relations and a limited means of production, but it has none of those defects.

It is impossible fully to outline the social consequences of the closure of the works. I shall not dwell on them because, as recently as 24 hours ago, a deputation from the local authority in my constituency visited my right hon. Friend the Secretary of State for Industry and presented fully documented evidence of the likely social consequences. I shall merely say that they would be grievous.

Last evening I addressed an audience of 1,800 at the Dudley town hall. Mr. Bill Sirs was on the platform. I was talking to my people. When I know that 1,800 of them will be losing their jobs before Christmas, I have a solemn and moral responsibility to associate myself with them, and I do.

There are very few hon. Members who, on a closure issue, can say that they have the full support and endorsement of the trade unions for the way in which they are handling the issue. I have been given a vote of confidence by the unions for the way in which I am handling it. I have the full support of the Dudley local authority and I am delighted to have the support of the West Midlands county council. I also have the full support of the community. Nothing has ever bound it so closely together with one purpose as the closure of the steel works.

The Round Oak steelworks operated in the private sector for 124 years. When it was taken into the safe custody of the corporation in 1981, a covenant was entered into, to which I subscribed. It was covenanted that the company would return to its natural habitat in the private sector and would form part of the Phoenix II operation. That pledge must be honoured. The company is the kingpin of the private sector. It would be the largest manufacturer in the private sector. Without it, the political philosophy of Phoenix II lies in shreds. If that happens, it will be one of the darkest days in the industrial record of the Conservative Party, of which I have the privilege to be a member.

We must have a private sector. It will take political valour on the part of the Secretary of State to accept this statement and it will take courage from the Treasury Bench to implement it. I stress that the covenant must be honoured. The Round Oak steelworks is the jewel in the crown of the industrial West Midlands. There is talk about steel production of 14 million tonnes. I am interested only in the special steels sector for the engineering industry. With the demise of the company, BSC will have the ability to produce 1.7 million tonnes a year. It is ironic that the engineering industry will require at least 4 million tonnes when it returns to full capacity. I leave it to hon. Members to ponder sadly on where the remainder is to come from. We all know that we shall be subject to further import exploitation.

A parliamentary assurance was given that no closure of any of the five major steel plants would take place without a debate in the House. That was an honourable assurance. The House of Commons has a sovereign responsibility to debate such a decision. If so, I say with all the power at my command that exactly the same should happen with the Round Oak steelworks, which would be the foremost steelworks in the private sector.

I appear before the House not with a begging bowl. The opposite is the case. The plant does not need unlimited subsidy. It does not need money to be spent on modernisation. It has the Concast system, smelting shops and casting and rolling facilities.

Since 1977 the numbers employed in steel making have fallen from 182,000 to 79,300. I have outlined to the House the position at the Round Oak steelworks. I am dedicated to my constituents. I go to the employment exchanges and speak to the men who are signing on for benefit. Few Members of the House of Commons do that. Probably even fewer Conservative Members do so.

Mr. Lambie

Some of them will be signing on after the next election.

Mr. Blackburn

Steel workers in my constituency who have been made redundant say that they only hope that their sacrifice has not been in vain and that the steelworks will continue. With all the power at my command, I beg my right hon. Friend the Secretary of State to retain a private sector within the steel industry and I say that it is crucial that the Round Oak steelworks should form part of that sector.

I am, without shame, a Conservative because I want to hold on to all that is good in our industrial society.

Mr. Lambie

That is a contradiction.

Mr. Blackburn

The Round Oak steelworks represents all that is good. I am bound by all the ties of personal loyalty to attempt to retain that steelworks. The only reward I seek is that the House should share my view and dedication.

6.22 pm
Mr. Stan Crowther (Rotherham)

I listened with great sympathy to the speech of the hon. Member for Dudley, West (Mr. Blackburn). I fully understand his feelings. It will be no consolation to him or to his constituents to learn that many constituencies have suffered a similar fate and, in some cases, an even worse one. All Members who represent steel constituencies live in fear of a similar fate. A disaster is a disaster, whether it descends suddenly or creeps up. In Rotherham we have lost thousands of jobs in the steel industry. The figure is not 100 jobs, 1,000 jobs or even 5,000, but about 15,000 or 16,000 in one constituency over a number of years.

It is no doubt a coincidence that we are holding this debate just two days after the announcement of a further 1,709 redundancies at the BSC plants at Sheffield and Rotherham—794 at the Rotherham works. That will bring the total number of job losses in the steel industry—public and private sectors—in the Sheffield and Rotherham areas to 9,704 in a mere 18 months. Those redundancies have occurred—with 100 here and 500 there—at different plants throughout the area, but the total of 9,704 represents the closure of one large steel works. The fact that the redundancies have occurred in comparatively small numbers, without producing the same impact, does not mean that the effect on employment prospects in the area is any less severe.

The new agony of the past 18 months is piled on top of the loss of many thousands of jobs in the previous two years, and the process continues. Although I said that it is no doubt a coincidence that we are having the debate just two days after BSC's announcement, whatever date the Government had chosen we could be sure that it would have been within a few days of yet another announcement somewhere in the country of further job losses in the steel industry.

This is not only a human tragedy, but an appalling waste of the nation's resources. We are throwing skill and experience on to the scrap heap. That should cause us the gravest anxiety, because we cannot afford to lose the skill and experience of those people. Within the next few days, or the next few weeks, we shall no doubt hear Mr. MacGregor's latest survival plan and the Secretary of State's decision on it. No doubt there will be further announcements of more massive cuts in the work force of the British Steel Corporation. Will there be an end to this slaughter before BSC is wiped off the face of the earth? The slaughter goes on and on and there is no let up.

During a previous debate on the steel industry—it was a long time ago—I said that I feared that Mr. MacGregor would find himself in the position of the surgeon who said that the operation was a complete success, but unfortunately the patient died. That is precisely what is happening.

I listened with considerable interest to the hon. Member for Brigg and Scunthorpe (Mr. Brown). I admired the honesty with which he told the House of his own change of opinion. The hon. Gentleman was a great admirer of the first corporate plan, with its loss of 22,000 jobs, but he is now beginning to realise that the problems of an industry are not solved simply by putting people out of work. A great deal must be done to put the industry back on its feet. Simply to say week by week that another 1,000 jobs must go here and another 100 jobs must go there will not, in the long run, solve any problems.

The Secretary of State for Industry, unlike his predecessor, who had no interest in the steel industry, has at least made sympathetic noises. He has assured the House time after time that he wants to ensure a satisfactory future for the steel industry. The only problem is that he never does anything about it. He cannot point to one thing that he has done during his time in office to improve the market for the steel industry in Britain. The right hon. Gentleman and his Cabinet colleagues will not take the necessary steps to create the economic environment in which the steel industry, both the public and private sectors, can hope for survival—I intended to say in which it could hope for success. My right hon. Friend the Member for Salford, West (Mr. Orme) drew attention to those matters at the beginning of the debate.

Ever since the Government came to office they have assured us that their policies will make British industry more competitive, especially British manufacturing industry, but precisely the opposite has happened. Industry has become progressively less competitive during the past three and a half years, yet the Government obstinately stick to the same course. They are heading for disaster, and after three and a half years they must know it, but they will not do anything about it, despite pleas from Conservative Members, which we have heard once again today.

We have heard several hon. Members asking for intervention and Government action to improve the position of our manufacturing industry. Are the Government blind? Why cannot they see the evidence right in front of their noses? Why do they refuse to understand—as everyone else understands—that their polices are leading Britain into the depths of a depression from which many of our industries will never recover? Everyone tells them that. Industrialists and trade unionists point that out, but they resolutely follow their course, however disastrous it may be for Britain.

As hon. Members have said, the fortunes of the steel industry are obviously and inextricably bound up with those of the steel-using industries. The steel industry does not sell its billets and bars across a Woolworth counter. It can sell its products only to other industries. If those other industries are sinking—as they are—the steel industry will sink with them.

Changes in Government policy could transform the position almost overnight. I refer, for example, to energy prices, which the hon. Member for Brigg and Scunthorpe rightly mentioned. The Minister did not seem to accept what he said, yet industrialists all over the country complain week after week about energy costs, and particularly about electricity charges.

In a recent written answer my hon. Friend the Member for Flint, East (Mr. Jones) was told: The most recent details of prices paid for energy by European steel producers were contained in the energy task force report published in November 1981. The Government are considering what further action can be taken in the light of the report".—[Official Report, 8 November 1982, Vol. 31, c. 70.] It is now December 1982. A year has gone by and the Government are still considering what action to take, while British industry suffers a disadvantage of at least 30 per cent. compared with the energy costs of its European competitors. A year later the Government are considering what action to take. No wonder British industrialists despair.

Within the last few weeks we have had still further demands from the European Commission for another massive cut in our capacity. I was pleased to hear the Minister's comments on that. However, we still have not had a cast-iron assurance from the Government that they will reject those demands.

I must take issue with the Minister—I am sorry that he is not in the Chamber at present—on the number of jobs lost in the steel industries of the Community countries. He kindly allowed me to intervene on that matter, but he denied the truth of what I said. I remarked that since 1974 the steel industry in Britain had shed more manpower than the steel industries of France, West Germany and Italy put together. The Minister said that that was true from 1979 onwards, but not since 1974. In view of that denial, I must briefly burden the House with figures to show that I was right and that the Minister was wrong.

The Eurostat "Quarterly Iron and Steel Bulletin" has published the following figures in the form of monthly average figures of employment. They show that during that period 113,600 jobs were lost in the United Kingdom. The total for West Germany and France was 106,600. As Italy increased the number of those employed by 1,900, the total for the three countries is 104,700. That is about 9,000 fewer job losses than occurred in the United Kingdom. I hope that at some stage the Minister will explain how he managed to get his figures wrong.

All the arguments about further capacity reductions at the insistence of the Commission will be purely academic if we continue along this path, because there will be no steel industry left in Britain. My hon. Friend the Member for Rother Valley (Mr. Hardy) and I have often drawn the attention of the House to the world production records set in various departments of the Rotherham works of the BSC. We are very proud of those achievements. We have shown over and over again that, given a chance to compete on equal terms, British steel makers can beat anyone in the world. I ask only that the Government give the British steel industry a chance to compete on equal terms. Unfortunately, they have not shown any willingness to take the necessary measures, but I hope that they will do so now, because time is very short indeed.

6.35 pm
Mr Michael Ancram (Edinburgh, South)

Perhaps the most useful and constructive aspect of the debate is that it is being held before a decision is taken by the Government on any plan put forward by Mr. Ian MacGregor and the BSC. It must be evident to those who sit on the Government Front Bench that the House is very concerned about the future of the steel industry and is united in the feeling of crisis that surrounds the industry.

I make no excuse for following the example set by the hon. Member for Bothwell (Mr. Hamilton) in referring to the situation in Scotland. Hon. Members will know that in the past few months the plant at Ravenscraig has been starred as a possible candidate for closure both by rumour and now by statement from the BSC. In Scotland, we are talking not only about the restructuring of the steel industry and the large and appalling job losses that would be occasioned by the closure of Ravenscraig—important though they will be—but about the very survival of the Scottish steel industry.

If Ravenscraig closes, steel making in Scotland will come to an end. That is why the hon. Member for Bothwell was right to say that all the political parties in Scotland are united in the view that Ravenscraig should not close. Indeed, I go further and say that the rest of Scotland is also united in that view. Since becoming involved in the political world in Scotland I have never before seen everybody from the CBI, the Scottish Council (Development and Industry), all the churches, the trade unions and the chambers of commerce holding the same view. I hope that in particular the Under-Secretary of State for Industry will understand the strength of feeling in Scotland. I believe that my hon. Friend the Under-Secretary of State for Scotland is already aware of it.

None of us questions the difficulties facing the steel industry and we have heard explanations for those difficulties this afternoon. Some say that the problems are still structural and that there is a lack of competitiveness and others say that they are occasioned by the state of the international steel market. The latter point is perhaps the most important to my argument. It was only in March that Mr. MacGregor announced—I think that I quote him correctly—that British Steel had turned the corner. Since then, there has been no structural alteration. However, the state of the world-wide steel market has changed. Although it may take some time for the market to readjust in our favour, the alteration that we have witnessed is not permanent.

Therefore, if it is not a permanent cause of the problem we should not provide permanent solutions. On any view, the closure of Ravenscraig would be permanent, because, once closed, it is inconceivable that it would reopen or that any other steel plant would open again in Scotland.

None of us can pretend that everything at Ravenscraig is easy. We realise the current problems that face the plant. One of the plant's difficulties is that so few of its products are consumed in Scotland. That is something that we must face up to. I should be interested to hear from the Minister who replies to the debate how much of its production is taken up furth of Scotland and in what areas. I do not believe that Ravenscraig is analogous to Linwood. It was sad to see Linwood close, but the closure was inevitable because it had no future. I believe implicitly that the argument about Ravenscraig is not so much about the present but about the future, particularly the future industrial prospects of Scotland.

I shall pose one question on inward investment to the Government. We as a country and a Government in Scotland have talked for a long time about the possibilities of industrial regeneration and how we would be able to attract industry from overseas to Scotland partly because of our associations with the Common Market. It is clear that, if we were to depart from having a steel-making capability in Scotland, the chances of our attracting any business or industry of merit to Scotland would be slight.

Perhaps it is invidious to look at the past. I remember the hopes that were raised last summer when Nissan was looking around the United Kingdom and came to Scotland to look at one or two sites there. Would such a firm even bother to come to Scotland if it thought that the only place it could get the steel that it needed was further south?

It is not just the inward investment that matters but the domestic infrastructure. The skills of Scotland are basically engineering skills. However much we hope and believe that in future we shall be able to provide employment through the new technological industries, none of us can pretend that they will match all the employment demand of Scotland or fulfil more than, at most, a quarter of it. We shall still be dependent on engineering not only in the present industries that require steel but in the industries that we hope will be built in the years to come.

When we look at the oil-related industries that use steel, the oil companies that are beginning to move towards gas collecting in the North Sea, the pipelines that will be required, and the need for steel in that respect, and at the Energy Bill at present before the House, which we hope will open up a new energy generation area with private companies coming in to generate electricity, again requiring steel, how can we say that we believe that that will happen if at the same time we remove the means for those companies to get the steel at competitive prices? It is vital to retain a steel-making capability in Scotland on which we can build. I am certain that the closure of Ravenscraig would destroy that.

When the Government come to make the decision, they will have the opportunity to demonstrate their faith in the ability of Scottish industry to survive and regenerate. If they fail to do that, many of the harsh sacrifices that we have demanded of Scottish industry over the past few years will be questionable. People will wonder whether they were worth while.

That is why the decision has to be taken by the Government. The British Steel Corporation must look at its balance sheet and profit and loss account. It is interesting that BSC is only marginally required to consider future demand that might occur. The Government can take a stronger and longer view than that. They should do so. The Government must ask themselves what industrial structure they foresee in Scotland. If we are right in saying that Scottish industry can regenerate in years to come, there is only one decision that the Government can take on that basis.

Adjustments must be made to meet the current crisis. None of us with common sense could deny that. Inevitably some jobs will be lost, but I hope that we avoid competition between the big five plants about which plant is to close, with a closure taking place because there has been another before it. The right hon. Member for Stockton (Mr. Rodgers) spoke of equality of sacrifice in a European context. Just as we need that in a European context, if there is to be a readjustment in the United Kingdom steel industry, there must be equality of sacrifice, too.

Perhaps Ravenscraig in Scotland is a symbol as much as an industry. It has been the repository of a massive investment of public money and also of the confidence of Governments in the past which we cannot afford to write off. It is also the massive repository of Scottish hopes for the future which it would be disastrous, in every sense, to destroy.

6.45 pm
Mr. Martin Flannery (Sheffield, Hillsborough)

The Minister of State's speech gave us no hope at all. It was in stark contrast to most of the speeches from the Conservative Back Benches. There must have been a crisis of loyalty about which many of them agonised before they made their speeches. I welcome those speeches as they were realistic and faced up to the terrible and harsh facts that our steel industry is having to face. The hon. Members who have spoken, with the exception of the hon. Member for Sheffield, Hallam (Mr. Osborn), are facing reality.

There was a contradiction within some of the speeches. In two speeches—one by the hon. Member for Brigg and Scunthorpe (Mr. Brown), which I admired, and the other by the right hon. Member for Taunton (Mr. du Cann)—it was said that we were united. They were talking utter nonsense. Of course we are not united. We have a policy of hope for the steel industry and the Conservative Party has a policy of death to the industry. There is no unity. Until those speeches were made there was the unanimity of the graveyard on the Conservative Benches. Those speeches made me think that we should have had a vote after the debate.

Those speeches embody the future for all of us. However, let us face the fact that they were made by hon. Members who have backed the entire policy of monetarism in the Tory party up to the hilt. The logic of that policy is that we have landed in dire straits. We cannot isolate the steel industry from the devastation that the monetarist policy is causing to our economy.

The Conservative Government seem determined to preside over the liquidation of the entire British steel industry. Everything shows that that is so. They are the greatest demolition team in the business at present. They are destroying whole cities. If they do not waken up to that, the fabric of our society will be rent when it is too late for us to do anything about it.

The Conservatives' stated aim is to slim down the industry, make it leaner and fitter. They have used such words throughout the terrible demolition of the steel industry that is now well under way.

That reminds me of an anecdote that I heard about a man who sold another man a donkey. He was given the advice that he should not feed the donkey too much because if he kept it leaner and fitter it would work much better. When the man saw the other chap later he said "I did exactly what you said, but when I got the donkey used to living on no food at all, it went and died." That is happening not merely to the steel industry but to all our industry.

The Conservatives talk about balancing the books. If we produce nothing and sell nothing, the books will balance beautifully. That may be what the Conservative party wants, but we do not want it. Time and again the Government have made Mr. MacGregor start the process. Mr. MacGregor knows the American steel industry well. He is a great entrepreneur. I should love to know how many shares he has in that industry and how many he has in ours. He is a smooth operator. He is an able man. He is cool and never loses his temper, no matter how many sackings there may be. Every time we meet him he tells us that there will not be any sackings. Then the reality comes through to our steel-producing cities and we realise that Mr. MacGregor came here as the top agent of the demolition group. He is here first to denationalise the industry and then to demolish it. If any Conservative Member can prove that that is not what is happening, I shall be delighted to hear his case.

Mr. David Lambie (Central Ayrshire)

Is my hon. Friend suggesting that Mr. MacGregor is an industrial mole?

Mr. Flannery

I am loth to say anything too harsh about Mr. MacGregor, but one pays one's money and one takes one's choice. We have all seen what he has done. It has not been in favour of the British steel industry. The American steel industry is in nothing like the plight of the British industry. At first, he tells us that there will be no redundancies. Then there are some redundancies, and then the whole factory closes down. But that is not all. In places such as Consett and Corby the whole town closes down, never mind the factory. The Government's excuse is always the slump, as though the slump is an act of God. It is an act of capitalism and politicians. It is not an act of God. We do not lie down in front of it and act as though it came from nowhere. It came from the failure of capitalism to grasp the reality that if people are paid miserable wages they cannot afford to purchase the commodities that they produce. If that is the case, those who make the commodities will be laid off.

If, as my hon. Friend the Member for Rotherham (Mr. Crowther) said, the commodity is large and cannot be sold over the counter at Woolworth's but is sold to other factories, everything is closed down. It means that shopkeepers no longer get money from those who go shopping. In Sheffield, it means that the largest store in the city closes down, as happened last week.

Capital from Conservative Back Benchers is flying by the thousands of millions of pounds to places such as Hong Kong and Taiwan where there is no trade union movement and where profits are high. At the same time, the big drum of capitalism is being beaten by those who are selling Britain short rather than investing their money in their own country where it is urgently needed.

Conservative Back Benchers pretend, as they did with Argentina, that they hate Fascism, yet they invest their money in Fascist countries. They invest it in Latin American countries or anywhere else where the Right is in control and big profits can be made. They never understand, or pretend not to understand, what causes slump. They have a love for South Africa which, on examination, they own, but they pretend that they oppose apartheid. What is more, they damn everyone who fights against apartheid and asks for the freeing of the miserable prisoners there. They stab their own country in the back while pretending to be patriotic. No wonder that Dr. Johnson once said that Patriotism is the last refuge of a scoundrel. The slump is caused by what is happening in Britain—holding wages down to the extent that the workers cannot buy what is being produced. Conservative Members do not seem to have learnt that simple lesson.

Even that stupidity is not the whole story—it is for the rest of the world but not for Britain. On top of the slump about, which something could be done, the wretched Government have created unemployment that is twice as great as almost anywhere else and is pushing Britain into worse circumstances than it has ever experienced. Our economy is far more sick than those of the rest of the EC.

The slump is not the problem. The Government, superimposed on the slump, are the problem. Our people and our steel industry must suffer not only the slump but this execrable Government who do not know what they are doing. Everything is out of control, yet, with one or two exceptions, Conservative Members pretend that everything is wonderful and that we will emerge from the slump because of the Government's policies.

It is time that the Conservative Party woke up to what its Front Bench is doing to the British economy. The British public are beginning to do so and we shall see the result of that.

The Common Market lingers in the background. We were told recently that there were 110,000 sackings in the steel industry throughout the Common Market since the Government came to office. I could scarcely believe it, but only 10,000 of those redundancies were in the EC. The remaining 100,000 were in Britain alone. We suffered 10 times as many job losses in steel as the rest of the Community. If there is any reply to that point, I am eager to hear it. Even if the figures are not correct, the stark reality is that the EC is siphoning off our blood supply. It is doing almost unheard of things to our economy. That malign influence is now percolating through to the Tory Benches.

The combination of the EC and Tory policies will lead to the closing down of the bulk of the British steel industry. There used to be 18,000 employees at the Scunthorpe steel works. There are now only 11,000. That represents a drop of 61.1 per cent. It is appalling. I hope that the hon. Member for Brigg and Scunthorpe believes what he says. If he does not, God help him when the steel workers of Scunthorpe vote at the next general election.

I am told that Britain produces 14.4 million tonnes of steel a year. We have cut our production by 33.2 per cent. in the past two years. France has reduced its output by 15 per cent., West Germany by 0.5 per cent. and the rest have done nothing. Italy increased its production by 1.3 per cent. We have been cheated by a combination of the Tory Government and the Common Market. In 1979, we imported 17.4 per cent. of our rolled bar requirements, compared with 24.7 per cent. in 1980, 21.8 per cent. in 1981 and 29.5 per cent. to August 1982. The main source.75 per cent. of it.came from the EC. Thirty-three per cent. of that came from Italy.

As my right hon. Friend the Member for Salford, West (Mr. Orme) said, 20,000 jobs in steel have been sacrificed in Sheffield. The east end of Sheffield is like a desert. One can identify the great factories by their signs and see that their roofs are falling in. I understand that if one knocks in the roof one does not have to pay rates. In the meantime, we are importing GATT steel. That is what it amounts to—it is subsidised steel that is being dumped here. The Government do not have enough guts to stand up to the EC to stop that happening.

As long as that continues, the effect in British steel and engineering works will be horrific. The local Sheffield newspaper has a headline that runs "Steel bombshell.17,000 jobs to go." The whole of Sheffield is deeply shocked by the news. Mr. MacGregor has been telling the city that nothing like that would happen. Thank God a couple of Tory hon. Members have shares in private steel industries in Sheffield. We would like them to help us. If a man is sacked, irrespective of whether he is in the private or the nationalised sector, he is out of work. We want to help the private industry and the nationalised industry to get our people back to work.

Through their shop stewards, the work force in Sheffield have said that they believe that the 1,700 redundancies are merely a beginning and that the factories in Sheffield, Stockbridge and Rotherham will close.

If the upturn comes we will not be able to grasp it. What has happened in the EC means that European steel industries are virtually intact while ours is moving towards ruin. We are waiting for the upturn like Mr. Micawber. We are hoping to God that somehow the slump will handle itself.

It being Seven o'clock, and there being private business set down by the direction of THE CHAIRMAN OF WAYS AND MEANS, under Standing Order No. 7 (Time for taking private business), further Proceedings stood postponed.