HC Deb 20 December 1982 vol 34 cc672-86 3.42 pm
The Secretary of State for Industry (Mr. Patrick Jenkin)

With permission Mr. Speaker, I wish to make a statement about the future strategy of the British Steel Corporation.

The House is already aware that the crisis affecting the steel industry worldwide poses severe problems for the British Steel Corporation. Last spring, BSC just about broke even and the prospect for the current year, 1982–83, was for a small profit before interest. However, following the American protectionist measures and the sharp downturn in world markets for steel, BSC is again making heavy losses, now running at more than £7 million a week. The management has, therefore, been engaged in an urgent reappraisal of its prospects and of the steps necessary to stem these mounting losses.

In my speech to the House on 9 November I made it clear that the BSC management had the responsibility for taking such steps as were necessary to achieve that, but that any closure of one of the five main integrated steelworks would have to be considered in conjunction with the Government.

The recent BSC management decisions involving closures and redundancies illustrate the scale of the problem and the immediate measures necessary to stem the losses. In preparing their new corporate plan for the three years 1983–86, the BSC chairman Mr. Ian MacGregor has been discussing with me the further options open to him, including the option that one of BSC's five major integrated steelworks might be closed.

In considering the future of those five works, the crucial question is how much capacity is likely to be needed n the foreseeable future. Compared with a manned liquid steel capacity last year, 1981–82, of 14.4 million tonnes a year, BSC's current output is running at a rate of below 10 million tonnes of liquid steel a year. If there were no prospect of an increased output, there could be no economic justification for retaining all five integrated steelworks.

However, the position is not as bleak as that. A number of factors should result in some increase in BSC's steel production in 1983, and this is indeed the corporation' s latest forecast. How far demand is likely to recover beyond that is, of course, difficult to predict. Much depends on external factors, notably the success of the ECSC steel regime, the future trends of world trade, and perhaps above all the international competitiveness of the main steel-using industries in Britain and of BSC itself. And while the world export market for steel is bound to remain difficult, further substantial improvements in BSC's competitiveness could offer improved prospects for exports.

Moreover, as I have made clear to the House on many occasions, the United Kingdom steel industry has made far greater cuts in capacity than the steel industries in other European Community countries. It is the turn of other member States to close steelworks and to cut capacity as we have done.

It remains the Government's firm resolve that the corporation should return to lasting viability, free of Government subsidy. That is the only way to have an efficient steel industry, providing steel at competitive prices to the market, and the only way to achieve secure employment in steel. Moreover, the Community steel regime requires operating subsidies to be eliminated by the end of 1984. Although it will not now be possible for BSC to become profitable this year, as had been hoped, the corporation has accepted that its aim should be to return to breakeven before interest in 1984–85.

The problem, therefore, is what strategic decisions should be taken to achieve our commercial and financial objectives in the longer term.

The Government believe that it would be wrong to take irrevocable decisions on future steel capacity at a time of such major uncertainty. I am therefore asking BSC to prepare its plan for the next three years on the basis that steel making will continue at all five major integrated sites. However, that must depend on each site performing effectively and upon future demand and output. I must also make it clear that this does not imply that BSC will be required to maintain manned capacity at the current level of 14.4 million tonnes, nor that all the facilities within each of the five major integrated sites will necessarily remain in operation. The corporation will continue to be free to take management action to cut costs where necessary in order to maintain efficient operations and to move steadily towards the objective of viability. Indeed, in the case of Ravenscraig, BSC management is at present considering the closure of the slabbing mill because of the general reduction in steel demand coupled with growing customer preference for lower-cost slab produced through the continuous-casting route. That is entirely a matter for the corporation's management and it will make its decision in the next few weeks in the light of a careful examination of the prospects for that mill.

There is also the question of future major investment. The Port Talbot works has been substantially modernised in recent years, but the hot strip mill, which is now 30 years old, is in need of modernisation and a project proposal has been put forward by BSC. The Government fully appreciate the importance of the mill operating to the highest standards of quality and efficiency. We are discussing the details of the project with BSC in the light of the latest estimates of demand for strip products; it must also be discussed with the European Commission. I shall announce the Government's decision as soon as possible.

The House will wish to know what the financial consequences of those decisions might be. Our preliminary view is that the additional costs can be contained within revised EFLs for this year and for 1983–84, which will maintain the downward path of Government funding of the corporation, albeit at a slower rate than we had previously envisaged, reflecting the inevitably slower progress to breakeven that we now expect. I shall announce revised EFLs for this year and 1983–84 as soon as possible.

However, I must stress one point. The decisions that I have announced today do not mean that any particular works or plant is safe. That must depend on future markets and on plants being operated to the highest efficiencies. Massive sums have been invested by the corporation in modern plant, amounting to more than £3,000 million during the past 10 years. Although immense progress has been made in raising productivity to levels approaching the best European standards, Mr. MacGregor has made it clear to me that there is still quite a long way to go before BSC matches the productivity records of its major competitors. Quality, efficiency and service are vital.

The decision that I have announced is a challenge to both management and men.

Mr. Stanley Orme (Salford, West)

This is an extremely important and serious statement. Although we welcome the fact that none of the five major plants is to be closed, the Government have made no specific longterm proposals for the steel industry. Therefore, the statement in no way provides an answer to the crisis that faces the steel industry.

Nearly 80,000 jobs have been lost in the steel industry since 1979 and redundancies are still taking place at an ever increasing pace. At least 10,286 jobs have been lost since 21 October this year. How many more redundancies are envisaged as a result of the statement? We do not want a repeat of what happened in a recent debate when the Minister did not tell the House what was happening when redundancies were taking place. We do not want redundancies to take place during the recess so that the House does not have a chance to discuss them.

Is the decision not to close any of the big five permanent or merely temporary? The Secretary of State said that the plan was on a three-year basis. We want some permanence in the industry. We should like a categorical answer about whether the decision not to close the big five is permanent or temporary.

The Secretary of State mentioned the possible closure of the slab mill at Ravenscraig. How many jobs would be lost if it were closed? Ravenscraig has already suffered many job losses. What action is he taking about imports from the EEC and elsewhere? What happens if we do not accept EEC targets? Will we take action against the EEC? Will we stand up to it as the right hon. Gentleman envisaged in his statement? His actions so far have fallen far short of that.

Does the Secretary of State agree that demand in the economy is one of the basic reasons for the decline in the steel industry? Does he agree that that is a far more important element than manning in such a capital-intensive industry? The Secretary of State, in his statement, paid no compliment to the workers in the industry. Increased productivity and the sacrifices that workers in the British steel industry have made should be recognised.

The Secretary of State was extremely vague about the external financing limit. Does he agree that an increase in the external financing limit is the key to future investment in jobs? Why can he not be more candid with the House? Has his Department made no assessment? We need an early answer to those questions.

When will Mr. MacGregor submit the revised corporate plan? Will there be genuine consultation this time rather than the cosmetic discussions of the past? I give the Secretary of State notice that we wish to have a debate on the corporate plan at the earliest opportunity. Does he agree that, as long as the Government's present economic policies continue, there will be no satisfactory solution to the crisis in the British steel industry?

Mr. Jenkin

The right hon. Gentleman is deluding himself if he believes that Britain is alone in facing a crisis in steel. [HON. MEMBERS: "He did not say that."] The right hon. Gentleman was implying that the crisis was the Government's fault. I remind him that the American steel industry is working at 40 per cent. of its capacity. Even Japan is now operating at the lowest level of output for 10 years. In the EEC, output over the last quarter was at the lowest level for 30 years. It is nonsense for the right hon. Gentleman to blame the difficulties that we face on the Government and Britain alone.

Mr. Dennis Skinner (Bolsover)

Is the Secretary of State paying MacGregor?

Mr. Speaker

Order. I must tell the hon. Member for Bolsover (Mr. Skinner) that a running commentary from a sitting position——

Mr. Skinner

I only opened my mouth——

Mr. Speaker

Order. If the hon. Gentleman does that while I am speaking, I shall order him out of the Chamber. A running commentary when someone is trying to answer a question is against everything that the House stands for. I hope that the hon. Gentleman will realise that.

Mr. Jenkin

The right hon. Member for Salford, West (Mr. Orme) asked when we would have the corporate plan. My statement today is intended merely to give guidance to the corporation, on the basis of which it should prepare the corporate plan. I hope to have the plan by about the end of next month. The Government will then require a little while to consider it. I hope to be able to make a further statement to the House at about the beginning of March. That is when I should be able to give the House more details about the external financing limit for BSC which the Government will then have agreed. As the right hon. Gentleman said, my statement is not an answer to all the questions. We must await the next three-year corporate plan from BSC.

The right hon. Gentleman asked me how many more redundancies there will be. I cannot tell him. The management of the corporation is in the hands of the board. Just as was the case with our predecessors, management decisions fall to the board.

The right hon. Gentleman asked whether my announcement today was temporary or permanent. The short answer is that it is the basis on which I am asking the corporation to draw up the plan. How long steel working at all five works will remain depends on the movement of markets, on costs and on prices. He asked me how many jobs are at risk if the Ravenscraig slab mill closes. The answer is about 700.

The right hon. Gentleman asked about imports. He will know that strenuous efforts are being made by the Government and by the Community to restore stability in the European market, including a tougher regime on imports to the Community from third countries.

The right hon. Gentleman asked me what will happen if we do not accept EEC targets. The simple fact is that aid given by Governments to their steel industries requires the consent of the Commission. The Commission has made it clear that consent will not be forthcoming unless there are closures. I have said that we have made closures and that it is time for other countries to do the same.

The right hon. Gentleman's question about time for a debate is a matter for my right hon. Friend the Leader of the House of Commons.

Mr. Michael Brown (Brigg and Scunthorpe)

Although those hon. Members who, like me, represent one of the five integrated plants will be relieved that no decision about their future has been taken, does my right hon. Friend agree that there will still be uncertainty in those plants?

Perhaps I may press my right hon. Friend further about redundancies being the responsibility of management. He said in his statement that the Government have taken a policy decision regarding the future of the five works but that he is leaving it to BSC to advance proposals as to how it will produce steel in those five works. Does he agree that, after the past four or five years in which no integrated BSC works has been able to look more than two or three months ahead, and during which time redundancies have been announced in my constituency on four separate occasions—500 then 300 then 130 and finally 45 steel workers were made redundant—there comes a time when the Government should give BSC some guidance about the level of manpower that it should employ?

Mr. Jenkin

I have the utmost sympathy for those in the steel-making areas, in my hon. Friend's constituency and elsewhere, who have faced the serious personal and community stresses that the crisis in the steel industry has thrown up. I wish that I could be more definite, but I cannot.

I must make it clear that it is for the corporation to spell out the details of its three-year plan, on the basis that I have described. I expect that the plan will clarify the job prospects within the BSC. It would be a grave mistake if the Government were to attempt to tell Mr. MacGregor and his board how they should carry out their duties to manage the BSC. We appointed them to make those decisions and to run the industry, and we should leave them to do that.

Mr. Arthur Bottomley (Middlesbrough)

Is the right hon. Gentleman aware that his statement that all steel undertakings are subject to closure will cause uncertainty and will lower the morale of workers in the industry? Does he not think that it would be wiser to say that what Europe acknowledges as the most efficient and modern steel plants should be assured of a future and that they should be named?

Mr. Jenkin

It would be unwise for me to speculate on the likely configuration of plants over the next few years. As I announced, I have told the BSC that we expect it to plan on the basis of five integrated steel works remaining in existence. I cannot give the open-ended guarantee that the right hon. Gentleman seeks. The decision to retain steel making at the five sites depends on each plant making the maximum effort to perform effectively and on the future pattern of steel demand and output.

Mr. John H. Osborn (Sheffield, Hallam)

My right hon. Friend knows that the steel industry is made up of the BSC and the private sector. What guarantees can he give the private sector about special steels, which are made mainly in Sheffield, particularly as regards import penetration of stainless, alloy tool and high-speed steels? Is he aware that unfair subsidies are being paid to the BSC as against the private sector? Is it not time that we considered more privatisation of the BSC?

Mr. Jenkin

I assure my hon. Friend that I am well aware of my responsibilities as the sponsoring Minister for the private sector. He knows that the Government have been seeking to extend the list of products covered by the Paris treaty to include the engineering high-speed steels to which he referred. We believe that the steel regime would be improved if those products were included, and we continue to press that course on the Commission.

I remind my hon. Friend that we have already announced a £22 million scheme for the private sector. That sum will be increased to over £34 million to allow for all the applications that have been made and we expect to give additional assistance under section 8 of the Industry Act 1972, so that the total help available for the private sector will be nearly £50 million.

Mr. John Morris (Aberavon)

Is not all this buck-passing and non-decision making rather sickening? Has not the approach of a general election concentrated the Government's mind? Will the right hon. Gentleman accept that the Port Talbot area, which has been devastated by steel closures and job losses—7,000 losses against a mere replacement of 500—would welcome an early decision on the new mill there? Why is the decision being delayed? Why is there need for further consideration of what is, after all, only a replacement mill? Is it because the EC is holding things up and has not understood that it is a replacement mill and not additional capacity?

Mr. Jenkin

The right hon. and learned Gentleman was a member of the Labour Government who published a White Paper containing this sentence: The prime duty for this"— putting the BSC back on the road to financial viability— must lie on the management and the workforce of the Corporation. That is exactly the position of the present Government. There is no buck passing. We appointed the chairman and the board to manage the corporation and they must be free to take the decisions that are necessary to achieve viability.

It is not true to say that the Port Talbot strip mill is merely a replacement of capacity. A modernised mill would substantially enhance capacity and could provide more grades of strip steel to meet the needs of the market. The project will have to be discussed with the Commission.

Mr. Michael Grylls (Surrey, North-West)

What will be the extra cost to the taxpayer of delaying the viability of the BSC? Does my right hon. Friend agree that his decision could lead to more steel imports, because the cost of BSC products will be kept unnecessarily high by the corporation being forced to maintain five plants against its wishes?

Mr. Jenkin

I have to tell my hon. Friend that I do not think that his last point is right. The prices at which steel will be sold will be those set in the guidelines of the Commission under the Davignon regime. The effect of what I have announced, the crisis in the steel industry and the loss of sales is to delay the return to viability. Therefore, it will involve an extra charge on the taxpayer, but I cannot tell my hon. Friend more at present. We shall not have fully revised cash estimates until we have received and assessed BSC's new corporate plan for 1983–86.

Some of the figures that have been bandied about in the press—I noticed the figure of £500 million in a Sunday newspaper—are well wide of the mark. I should be surprised if we were talking of a figure one-third of that sum over the next three years.

Dr. Jeremy Bray (Motherwell and Wishaw)

Is the right hon. Gentleman aware that his decision to maintain the essential fabric of the big five, and particularly of Ravenscraig, is essential if British industry is ever to recover from the catastrophic falls of 16 per cent. in manufacturing output and 17 per cent. in production since 1979?

Is the right hon. Gentleman aware that the standard coil cost of £136 per tonne now attainable at Ravenscraig, the productivity rate of 3.9 man hours per tonne and the range of high-quality steels available from Ravenscraig cannot be matched anywhere else in Britain and scarcely anywhere else in England? Will he ensure that Ravencraig gets the share of orders that the magnificent performance by steel workers and the management at Ravenscraig has made possible?

Will the right hon. Gentleman tell his colleagues in the Cabinet that the international competitiveness of which he speaks will not be attained unless the Government allow the pound to resume a competitive level? If that is not done, not only steel but manufacturing industry generally will be drowned in a flood of imports. Are the Government aware that they have already destroyed more British industry than Hitler ever managed to destroy?

Mr. Jenkin

I cannot congratulate the hon. Gentleman on his final remark. He knows that the steel industry and others throughout Europe have suffered greatly in the recession. If he wants to know why British industry has suffered more, I advise him to look at the record of unit labour costs between 1975 and 1979. In Germany they rose by 12 per cent., in Japan by 15 per cent., in the United States by 32 per cent., in France by 54 per cent., and in the United Kingdom by 101 per cent. The hon. Gentleman does not need to look much further for an explanation for many of the difficulties confronting the British steel industry.

I have nothing but sympathy for the workers at the Ravencraig plant in the hon. Gentleman's constituency. Yes, they have begun substantially to improve productivity in that works, but no doubt the hon. Gentleman saw the table published in The Times today. It is based on European statistics and shows that, although immense strides have been made in improving the amount of steel produced per employee, the United Kingdom is still bottom of the league. That is why Mr. MacGregor is right when he says that there is still some way to go before we can match the productivity records of our main competitors.

Mr. Hal Miller (Bromsgrove and Redditch)

I thank my right hon. Friend for remedying a grave wrong by making funds available for the restructuring of the private section of the steel industry, but may I ask him to consider how private industry is supposed to compete in the circumstances he outlined to us of continuing overcapacity and the failure so far of BSC to achieve all-round comparable levels of productivity? How are private firms supposed to match that competition?

Mr. Jenkin

One of the things that I have been working towards is a clearer boundary between BSC and private sector activities. I am discussing this with the corporation and with the British Independent Steel Producers' Association. Progress has been much slower than I would have hoped, but I intend to give the matter high priority over the next few months. I am also anxious to see much greater price transparency in the case of those products where the British Steel Corporation competes directly with the private sector. The achievement of those two measures would go a long way towards relieving the anxieties of the private sector.

Mr Roy Hughes (Newport)

Many people believe that this so-called rescue operation has been carried out for reasons of political expediency. Does the Secretary of State appreciate that this vital and key industry needs more favourable and long-term treatment, and that there is intense disappointment at Llanwern at the failure to authorise a con-cast plant, which is vital if the works, which has a splendid record, is to have a long-term future?

Mr. Jenkin

I am sorry that the hon. Gentleman cannot decide whether he is pleased or disappointed at what I have announced. The decisions announced today were taken on the basis of an economic and financial assessment of the future demand for steel and of the likely path of BSC towards profitability. The closure of a major works would have entailed very significant costs, both directly and indirectly, and would have involved the writing off of substantial assets in which the taxpayer has invested heavily.

In one sense, no decision involving BSC could be described as commercial, since the corporation would long ago have been in liquidation if it had been a private sector company.

Mr. Roger Moate (Faversham)

Does my right hon. Friend agree that it would be quite unacceptable for any British company to be forced to cut back production because of quota restrictions if BSC had a surplus quota? Has not the Commission said that there is 1 million tonnes of surplus quota in the Community? How much of that is BSC's? Is it not time to help the private sector by putting all the cards on the table with regard to quota arrangements?

Mr. Jenkin

I am not privy to the answer to my hon. Friend's question about the Community's allocation of quota. However, I have asked Mr. MacGregor, if he has surplus quota, to make it available first to British companies. I am well aware of the difficulties of the small steel company in my hon. Friend's constituency. As he knows we have done everything we can to help that company through the crisis.

Mr. John Grant (Islington, Central)

Although the Secretary of State's stay of execution is welcome, is he aware that this Christmas offering is grossly unsatisfactory? It resolves nothing and gives us no guidance whatever on future job losses—the human consequences of the policy. In view of the CBI's gloomy estimate this morning about future manufacturing output and demand, how will the Government quickly stimulate demand in the economy? That is the major requirement of the steel industry.

Mr. Jenkin

The hon. Gentleman is unfairly critical. The House sought a statement from me on the basis on which I had always made it clear that a statement would be made—the guidelines to be given to the corporation on the basis of which it should prepare its corporate plan. It now has to do that. I have already suggested when I shall expect to be able to make a further statement giving more details of the prospects for jobs and of the likely effect on external financing limits.

The hon. Gentleman mentioned the question of demand in the economy generally. It is a matter of competitiveness. If British industry, having between 1975 and 1980 lost about 50 per cent. of its competitiveness, could now continue its recovery—in the past two years we have recovered about half what was lost—there will he a possibility of more output in the steel-using industry and more demand for steel from British factories.

Mr. Stan Crowther (Rotherham)

Are we to assume, from the replies given to my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) and the hon. Member for Islington, Central (Mr. Grant), that the Secretary of State still does not accept that the fortunes of the steel industry, public and private, could be greatly improved if the Government would take the necessary steps that are within their power to step up demand—dealing, for example, with interest charges, energy prices and the unrealistic rate of sterling? Is the Secretary of State still saying, after all the years of debate, that the Government cannot do anything about it?

Mr. Jenkin

The hon. Gentleman will know that over the past 12 months interest rates have fallen sharply and are down by six percentage points. He will know that there has been a movement in the past two months on the exchange rate and that in the last two Budgets, and again in November, we have announced substantial help for industry in energy matters.

On all three points that the hon. Gentleman made, the Government have taken steps and allowed developments to happen that should have the effect of increasing demand. As I go round industry, I find virtually no support for the kind of general reflation of demand that the Labour Party continually seeks. Industry wants inflation to continue to come down, and it wants us to stick to our guns.

Mr. Michael Marshall (Arundel)

Will my right hon. Friend accept that, given the uncertainties within the European Coal and Steel Community and the problems in relation to the United States steel trade, Conservative Members will not have much sympathy with him in doing what I believe the Government should not do, that is to say, trying to reach assessments of markets and capacity, but that, given those circumstances, he will have our support?

Will my right hon. Friend follow through the logic of the problem that still remains with the five plants? Will he assure the House that the investment in South Wales for Port Talbot and Llanwern will be looked at on its merits and not offset against the extra cost of maintaining Ravenscraig? Further, does my right hon. Friend hope to move further towards privatisation, which is more market-oriented than the present situation in which he has had to intervene?

Mr. Jenkin

I am grateful to my hon. Friend for his understanding remarks.

With regard to investment in South Wales, I have asked the corporation to put forward its Port Talbot project in the light of the latest demands for strip, and I have indicated the Government's sympathy with the project. I hope to make an announcement at the same time as I announce the corporate plan.

With regard to the investment in continuous—casting facilities at Llanwern—the other project that I think my hon. Friend has in mind—the corporation has not as yet put forward a project for that. With the retention of continuous casting for the time being at Ravenscraig, it would be doubtful if it could make a case now for that at Llanwern. The Government have certainly not set their face against either project. They will be judged upon their merits.

Miss Joan Maynard (Sheffield, Brightside)

Is the Minister aware that in the past few years capacity in Britain has been cut by 33 per cent., while it has been cut by only 15 per cent. in France and hardly at all in the rest of the European Community? Is he further aware that 117,000 jobs have gone, 50,000 of them in Britain? When will Ministers start to stand up for Britain, not just in the Falkland Islands but for British industry and jobs?

Mr. Jenkin

The hon. Lady will recognise that I made it clear in my statement that other countries now have to cut capacity in the same way that we have.

Recently the Commission gave consent to aid by the German Government to the private company, Arbed Saarstahl, and did not make it clear at the outset that it was to be matched by a reduction in capacity. I took up the matter at once with the Commissioner responsible and have had an assurance from him that the Commission is looking for a cut in capacity of about ½ million tonnes of steel a year from that company. It is a question of negotiating the precise timing of the cut with the company. I intend to hold the Commission to that undertaking.

Mr. Geraint Howells (Cardigan)

I believe that the steel workers of Britain should accept today's statement with a great deal of caution with regard to their future. Is it right for us to assume that the announcement today about injecting capital into the steel industry is only postponing the inevitable closures to a politically more convenient time?

Mr. Jenkin

Workers in the steel industry will be right to treat the future with some caution. I have made it clear that I cannot give an undertaking that any particular plant or any particular works is safe indefinitely. Nor could the Labour Government. Part of the problem with which the Government have had to grapple is that the Labour Government put off year after year the closures that we have had to allow to take place over the past two or three years. The future of the steelworks will depend upon the success of management and work force in raising their competitiveness to the highest European levels.

Mr. Michael Ancram (Edinburgh, South)

Is my right hon. Friend aware that, despite cavilling by Opposition Members, his statement will be greeted with great relief in Scotland and will be regarded as a token of the Government's faith in Scotland's industrial future? Does he not agree, however, that those combined forces of industrialists and trade unionists that fought so hard for the retention of Ravenscraig now have the responsibility to create the industrial and economic stability in Scotland which alone can attract the customers and markets upon which Ravenscraig's survival depends?

Mr. Jenkin

I agree with my hon. Friend. What is wanted is not so much more statements but more customers.

Mr. Bill Homewood (Kettering)

I did not think that the Secretary of State could get through his statement without quoting The Times of today. As the right hon. Gentleman knows, crude productivity figures have been a nonsense in the steel industry since their inception because various steel industries use different methods of employing their labour. Is it not the case that since 1979 employment within the steel industry in the EC has fallen by 14.5 per cent. and within the United Kingdom steel industry by 49 per cent.? Is the right hon. Gentleman aware that even if one goes back to 1974, as he wishes, the fall within the EC has been 30 per cent. and in the United Kingdom 59 per cent.? Is not the real problem that the figures for manufacturing industry within this country over the last three and a half years—I do not need to look at my notes for this purpose—show a fall of 15 per cent. compared with 5.5 per cent. in Germany and 4 per cent. in France?

Mr. Jenkin

I am not able to confirm or deny the plethora of figures that the hon. Gentleman has given. I shall study them carefully.

Several hon. Members


Mr. Speaker

Order. I propose to call four more hon. Members from either side, which will mean I shall have allowed much longer on this statement than is usual.

Sir Peter Emery (Honiton)

Does my right hon. Friend realise that it is widely believed that Mr. MacGregor recommended to the Government that one of the five major plants should be closed and that this view was overridden by the Government? Will my right hon. Friend say whether that is true or false?

Mr. Jenkin

Mr. MacGregor made it clear to me that, if he were to adhere to the profit targets that we had set him earlier, he would have to take some brutal and drastic steps involving the closure of one of the five major plants. It was therefore for the Government, as the owner of the business, to consider whether it would be appropriate to take such a step in the trough of the recession and when market prospects are so uncertain and when we have cut so much more than all the other European countries. It was in these circumstances that I suggested to Mr. MacGregor that it might be wiser to stretch it out over a little longer. [Laughter.] He has accepted the aim therefore to break even before interest in 1984–85. I cannot think why Opposition Members think it so funny. I make it abundantly clear that Mr. MacGregor fully supports the statement that I have made.

Mr. Barry Jones (Flint, East)

Does the right hon. Gentleman realise that he gives the impression that he does not truly comprehend the social consequences of major redundancies in steel areas? Does he know that in my constituency, where 8,000 jobs were lost in one year, in 1980, the county of Clywd has 27,000 people seeking work and 7,500 children receiving free school meals? Is he prepared to say today that what remains of the BSC Shotton works will not suffer any more redundancies?

Mr. Jenkin

I wish I could give the hon. Gentleman that pledge, but I cannot. He is wrong and unfair to suggest that the Government do not understand the social consequences of what has happened in the steel industry over the past two or three years. We are very conscious of them. We have taken a whole range of measures to help the areas that have suffered the heaviest steel closures, including the converting of the steel area in the hon.

Gentleman's constituency into a special development area which means that it is able to attract extra investment, which it is doing with some success.

Sir Anthony Meyer (Flint, West)

Is my right hon. Friend aware that his fateful decision to oblige the British Steel Corporation to keep open the five integrated plants will return to haunt him and his Conservative successors for a generation? Why should this Government, of all Governments, need reminding that the way to save jobs is to make industry as a whole competitive and that a massively subsidised steel industry will drag down with it into the pit many other industries and many other jobs?

Mr. Jenkin

I must say, with respect, that I do not accept my hon. Friend's criticism. The British Steel Corporation has made major efforts, with the support of its work force, to put its own house in order. Although more remains to be done, it would be a counsel of despair to refuse to recognise that the market collapse must mean slower progress to viability. It would be folly to cut off further support and to prevent the corporation from seeking to build on the progress that it has already achieved.

Mr. Gordon Wilson (Dundee, East)

Does the Secretary of State realise that his statement will create further uncertainty and that it will be seen only as a temporary reprieve of Ravenscraig and the Scottish steel industry? Has it been agreed with the British Steel Corporation that in no circumstances will the two blast furnaces at Ravenscraig be reduced to one as a result of the reductions and other changes that will obviously take place within BSC?

Mr. Jenkin

That is not a decision that it would be appropriate for Ministers to take. It is essentially a management decision for the corporation.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

My right hon. Friend made the point that Mr. MacGregor has been asked to extend for three years a decision on the closure of one of the five plants. Does this mean that the Government, at long last, are to take firm action with EC countries such as Italy which, I believe, has actually increased capacity? Has not the time come to tell them that the sacrifices that we have made have to be matched, not at some time but now, and that otherwise we shall take our own action to ensure that our industry is further protected?

Mr. Jenkin

I must make it clear to my hon. Friend that the basis on which I have asked Mr. MacGregor to prepare his plan is that of continuing steel making at the five plants. I have given no guarantee—nor can I—that steel making will remain indefinitely at all five plants. I agree wholeheartedly with my hon. Friend. It is what I have been doing individually with my opposite numbers in our partner countries, with the members of the Commission and at the Council of Industry Ministers in Denmark last month. I have made clear that we have cut a great deal of capacity and that it is now their turn.

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

Is it not misleading for the Minister to suggest to the House that these plants are to be saved when it is obvious that it is the Government's intention to slim down each of the steel operations? In any slimming-down policy, will the Minister ensure that the plant is not destroyed but mothballed?

Mr. Jenkin

The hon. Member will know that there are different considerations that apply to the mothballing of different kinds of plant. It is extremely difficult to mothball a blast furnace. The decision that I announced today is to give the management and staff at the five major integrated steelworks a chance to continue to improve their productivity so as to ensure their future. However, I cannot guarantee that.

Mr. Albert McQuarrie (Aberdeenshire, East)

My right hon. Friend's statement this afternoon will be accepted with considerable joy in the West of Scotland. It justifies the hard fight put up by my right hon. Friend and by the Secretary of State for Scotland, and the excellent report submitted by the Select Committee on Scottish Affairs. In connection with the slab mill that my right hon. Friend is suggesting may be closed, will there be positive discussions between management and unions before there is any question of the 700 redundancies being declared because, as the Select Committee report says, a large number of redundancies in the West of Scotland would be unacceptable to the people of Scotland?

Mr. Jenkin

There are established procedures in the corporation for discussion of these matters, and their implementation is a matter for the management of the corporation. I am sure that my hon. Friend, for whose remarks I am grateful, recognises that the question whether operation of the slabbing mill at Ravenscraig can continue must depend on whether markets can be found for the output. There is no sense in running a plant for making steel if there is nobody to buy the steel.

Mr. Donald Coleman (Neath)

Is the right hon. Gentleman aware that every time he has risen to speak from the Dispatch Box this afternoon he has lowered the morale of people in the steel industry, because each time he has been making contradictory statements? Will he give a clear, categoric assurance to the House and the steel industry that it is the intention of the Government to maintain the steel industry? Does he accept that sufficient sacrifices have already been made, and that it is now the turn of other people to make sacrifices?

Mr. Jenkin

I have said that in a number of different ways.

Mr. Orme

This a a publicly owned industry, and the House is entitled to know about future redundancies. How many redundancies are forecast for the end of this year, for the end of January and by the end of March when the external financing limits will be decided? There is a strong suspicion that the Secretary of State is waiting for these redundancies to take place before the external financing limits are arrived at. Did not the Secretary of State blurt out the truth when he talked about "stretching it out"? Does he not want to stretch it out until after the general election?

We wish to have a debate on steel as soon as we return after the recess. We shall not wait until March, where the corporate plan will have been prepared. My hon. Friends and many Conservative Members wish to debate the issue, and we want the debate at the earliest opportunity.

Mr. Jenkin

The question of time for a debate is for my right hon. Friend the Leader of the House. It might be wiser to wait for further and more definite figures, which the corporation will now produce on the basis of my statement this afternoon. That is a matter for the House.

I repeat to the right hon. Gentleman the point that I made to my hon. Friend the Member for Honiton (Sir P. Emery). The problem that the Government faced when confronted with the serious collapse of the finances of BSC was whether we should adhere to the path that we had set Mr. MacGregor. We wished him to achieve viability this year or at least as swiftly as possible, at whatever cost, but we then had to decide whether to recognise that it would be wrong to take irrevocable decisions on major closures at a time of such uncertainty and at the trough of the recession. It was for that reason that it seemed to us sensible—although at some cost to the taxpayer, which will become clear when we have the figures—to extend the period before which viability would be accepted. I hope that the right hon. Gentleman will think that on balance that was a wise decision, because it was not an easy decision to make, although I think that it was the right one.

Several Hon. Members


Mr. Speaker

Statement, Mr. Secretary Edwards.

Mr. James Tinn (Redcar)

On a point of order, Mr. Speaker. I recognise your difficulty in selecting Members to ask questions, but is it not unfortunate that on a statement on the future of the steel industy an hon. Member whose constituency contains one of the five major plants affected is not called to express a view?

Mr. Speaker

I allowed 55 minutes for questions on the statement, which is nearly 20 minutes longer than is usual for a statement. I have done my utmost, as the House must realise, to try to be fair to hon. Members. If we are to get to the next statement, we must end at some time. I thought that I had covered each of the five major plants. If I did not, I am sorry, and I hope that the House will allow me to call an hon. Member from either side who is involved.

Mr. Tinn

Thank you, Mr. Speaker.

Is the Minister aware that it is a measure of the harrowing times that the industry has passed through that on Teesside, despite the further 1,700 jobs that are to be lost, the decision to keep the five plants will be greeted with a sigh of relief as it gives each area an opportunity to fight back for future recovery? The loss of any of the major plants would have deprived the area of that opportunity.

With regard to productivity, does the Minister recognise that large modern plants such as those we have in the United Kingdom depend upon high output for low unit costs? That high output was achieved earlier in the year, but the low productivity now is a consequence of the surge of imports coming not only from the EEC but from South Africa and Japan. Will the Minister do something about that?

Mr. Jenkin

I am grateful to the hon. Member, and I think that he will join with me in deploring the scaremongering indulged in by the right hon. Member for Stockton (Mr. Rodgers) a few days ago about the future of the Teesside plant.

The Government and the Community have taken quite vigorous action to stop imports from third countries, mandatory import quotas have been put on steel from Czechoslovakia and Bulgaria, there is an anti-dumping order on the import of beams from Spain, anti-dumping actions are being considered by the United Kingdom producers of pig iron against Brazil, sheet and plate from Brazil may also be subject to anti-dumping action, and anti-dumping investigations are under way against Argentina, Brazil, Canada and Venezuela with regard to hot rolled coil. We are determined to do everything that we can to restore the stability of the market.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my right hon. Friend accompany his commitment of extra public funds giving these five British steel centres the opportunity to save themselves by ensuring with his right hon. Friend the Minister for Overseas Development that public funds are not committed to overseas aid which would have the effect of increasing still further surplus steel-making capacity elsewhere in the world? This is happening in Indonesia and in Singapore.

Mr. Jenkin

I wish that I could think that action along the lines advocated by my hon. Friend would have the results for which he hopes. My fear is that the steel works would be built by other countries with steel produced in other countries and that the return would go to other countries. Where a Third world country is determined to have its own steel works, the British steel and engineering industries are right to bid for that work and to get jobs back here in Britain.

Mr. Ian Wrigglesworth (Thornaby)

On a point of order, Mr. Speaker.

Mr. Speaker

Order. Before the hon. Member for Thornaby (Mr. Wrigglesworth) advances his point of order—though, of course, I must not speculate about its contents—I should point out that I called his party's spokesman on the subject. I hope that the hon. Gentleman's point of order is not about not being called.

Mr. Jenkin


Mr. Speaker

Order. The Minister cannot know any better than I do what the hon. Gentleman's point of order is.

Mr. Wrigglesworth

I want to try to be helpful to you, if I can, Mr. Speaker, in the dilemma which you face because of the urgency that I know hon. Members feel when a statement of this sort is before the House and many more hon. Members from the Back Benches want to get in than can.

Is it not grossly unfair that, after the Front Bench spokesman for the official Opposition has asked about 12 questions at the beginning of questions on the statement, he then has a second opportunity to ask another string of questions, stimulating a long response from the Secretary of State and taking up time which hon. Members could use to ask their own questions?

Mr. Speaker

I do not think so or I should not have again called the right hon. Member for Salford, West (Mr. Orme).