Aluminium Smelter (Invergordon)

HC Deb 21 January 1982 vol 16 cc436-514

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

4.48 pm

Mr. Bruce Millan (Glasgow, Craigton)

I beg to move, That this House deplores the closure of the British Aluminium smelter at Invergordon as another devastating blow to the Scottish economy, condemns the failure of the Government to ensure the continued operation of the smelter, expresses its deep concern about the disastrous effects of the closure on the Highlands and its anxiety over the lack of assurances about the company's operations elsewhere, and demands that every effort be made by the Government to have the smelter re-opened on a viable basis. When the Secretary of State for Scotland made his statement on Monday this week, I stated that the Opposition wanted a full debate on the matter. By courtesy of the Opposition, in giving up one of our Supply days, we shall have that debate now. I need not emphasise the seriousness of the situation that has been caused at Invergordon, in the Highlands as a whole and, indeed, in other areas of Scotland, by the announcement on 29 December about the closure of the smelter at Invergordon. It came at the end of another year of disasters for the Scottish economy under the present Government, including the closure of the pulp mill at Corpach and the Linwood closure, but there were many other redundancies—a whole roll call of them, day after day and week after week.

The right hon. Gentleman said that the closure at Invergordon was a profound disaster for the area. We are expecting more from him than sympathy and a wringing of hands. It is his job to prevent these profound disasters from happening in the first place. He has not done so in this instance, just as he failed to do so in many others.

The effect on the area will be very much more significant than the immediate effect on the 890 people directly employed. Between 1, 500 and 2, 000 jobs will be involved. There is not only the job loss; the whole hopes of the area for a more permanent prosperity were almost exclusively based on the permanence of the British Aluminium smelter. Therefore, as the right hon. Gentleman will find, and as his hon. Friend the Under-Secretary must have found—I visited the area, as he did a few days after the announcement—there is not only a sense of anger and bitterness in the area but some sense of hopelessness that once again something that promised so much for the Highlands may very well crumble into nothing.

Part of the task that the official Opposition have set themselves is to reassert the hopes of the area and the hopes of the Highlands, and that can be done only by reopening the smelter. The consequences of the closure are felt not only in the Highlands. There are consequences over the whole of Scotland, and some of my hon. Friends will want to expand on those matters in the debate. I shall mention them only briefly.

There is, first, the effect on the electricity industry. The supply industry in Scotland already has an excess capacity compared with present demands, and the closure of the smelter adds very considerably to the problem there. It calls into question what will happen when Torness comes on stream, or what will happen when the power station at Peterhead is available.

There is a major problem of surplus capacity in the electricity industry in Scotland. That impinges directly on the coal industry in Scotland, which is almost exclusively dependent at the minute on the electricity supply industry for its prosperity. There has been talk of possible pit closures arising from that. I do not wish to cause even more gloom than has already been caused by the announcement, but we roust accept that very serious problems are involved for the coal industry in the closure. I should be glad if the Secretary of State would say something about that.

There are problems for the railway industry and for the local authorities, problems that the authorities have already put to the Secretary of State in vehement terms. They, like the work force, are determined that the decision to close the smelter should be reversed. I am delighted that the work force at Invergordon has taken up the fight in this way and that it has the support of the local authorities in the area. This fight must be pursued until it is won and the smelter is reopened.

Inevitably, in a circumstance of this sort, there are those who say that the original decision to site the smelter at Invergordon was misconceived and that it could never have worked, just as the same kind of weary Willies say that the pulp mill could not have been successful at Corpach, that Linwood could not have been successful, and so on. I utterly reject such propositions. Whether the projects were initiated by a Labour Government, as in the present case, or by a Tory Government, as in the case of Linwood, it is absolute nonsense to say that they could never have worked. That applies in particular to the smelter at Invergordon.

The idea was to provide cheap and unsubsidised power—I say that in view of the later events and certain comments that have been made—to allow aluminium smelting to take place in the United Kingdom, not just at Invergordon but at Anglesey in Wales and at Lynemouth, under contracts that were rather different but basically directed towards the same end of providing an aluminium smelter industry in this country. It was considered to be desirable at that time—I still consider it to be desirable—from the point of view of the industrial base and industrial prosperity of Britain.

The projects were welcomed at the time on an all-party basis; indeed, they were welcomed by the companies. They did not go into these projects with reluctance; they went into them with enthusiasm, competing with one another to be allowed to be involved in the new projects. As recently as 1976, when the previous Labour Government introduced the Electricity (Financial Provisions) (Scotland) Bill relating to smelters, the present Secretary of State for Scotland said that the concept was imaginative and that he welcomed it. He did not go back on the view that he—and, indeed, everyone else in the House—took in 1968. He held that view until recently.

I shall not pretend that nothing went wrong once the contracts were established and once the smelters were set up. The original promise concerning power costs has not, of course, been fulfilled, and I shall deal with that later at some length.

There were delays in the completion of the plant at Hunterston, and then there were problems with load factor, de-rating, and so on. While some of the costs arising from these problems have imposed a burden on the company, most of them have not been borne by the company. Ultimately in this case they have been borne by the taxpayer. In any event, the additional costs that halve been borne by the company, and the way in which the contract has worked—particularly in relation to its escalation clauses—have meant that the company has been paying more for its power at Invergordon than could reasonably have been expected in 1968.

Before anyone runs away with the idea that the only matter at issue is the power costs, and that only the power costs have caused the trouble, it ought to be said that British Aluminium has suffered from a lack of demand for aluminium products in the United Kingdom. That in turn is a reflection of the slump, which is the responsibility of the Conservative Government. It is not caused simply by world trading conditions.

When he was introducing the company's annual report for 1980 in March of last year, the chairman, Mr. Utiger, said: Demand for semi-fabricated aluminium in the UK fell by 22 per cent. between the first and second quarters, and by the last quarter of 1980 was 35 per cent. below the previous year. When the chairman was introducing the interim statement for the six months to the end of June 1981, be referred to the depressed state of the market in the United Kingdom—which, as I have said, is a reflection of the Government's economic policy—[interruption] Incidentally, Conservative Members vote against increases in the housing programme, and that is not irrelevant to the present considerations. The chairman drew attention to the fact that the slump in the United Kingdom was an important factor in the lack of demand for the company's products, and that had the unfortunate effect that the company became a net seller of metal to a very considerable degree, and was also selling the metal at a loss because of the depressed state of the world market.

It is not simply a question of power costs at Invergordon. It has to be put on record—in view again of some of the things stated in the press—that Invergordon is an efficient plant that has operated efficiently. The company has no complaints about the productivity or about the performance of the work force. Indeed, rather ironically, two or three days after the closure was announced—at no more than 48 hours' notice—the work force was told that its productivity over the previous period had been the best that the company had ever experienced, and that productivity bonuses were to be raised accordingly.

One of the things that has bedevilled discussions about the whole matter of the Invergordon smelter since the announcement on 29 December has been the lack of frankness on the part of the Secretary of State in letting the House and the public know exactly what happened during the negotiations. We expect the Secretary of State to remedy that defect this afternoon.

There has been not only a lack of frankness, but a deliberate intention to mislead on many of the important matters. First, with regard to the question of timing, the Government knew about the crisis at Invergordon, but the Secretary of State was giving the impression that the crisis was brought to the Government's attention only in December. In the Secretary of State's statement to the House on Monday this week he spoke of the crisis being brought to the attention of the Government at the end of the year.

When my hon. Friend the Member for Dunfermline (Mr. Douglas) mentioned a period of six weeks, the Secretary of State agreed that it was deplorable that the Government had only six weeks' notice. However, those of us who met representatives of the company earlier this week were told that notice was given formally to the Government on 6 October and that it was brought to the attention of the Government that there was a strong possibility that the smelter would have to close at the end of the year.

The Government had not merely the three weeks in December, or the six weeks about which the Secretary of State spoke, but the period since 6 October. The Government must have been aware even before then that there was a serious problem in British Aluminium. The Secretary of State met the chairman of the company and discussed the disputed power charges sometime in 1980. He must have known that the problem was building up. The Government's claim that they had only two or three weeks' notice and no time to put together anything satisfactory does not wash. It is not true. The Government had more time and if the will had been there some satisfactory settlement could have been reached.

Mr. Albert McQuarrie (Aberdeenshire, East)

Will the right hon. Gentleman give way?

Mr. Millan

I have a lot to say and we started late today. I do not wish to be discourteous, but it will help if I am not interrupted. I will give way this time but it would be better if there were not too many further interruptions.

Mr. McQuarrie

I am obliged to the right hon. Gentleman as I want to make it clear that the statement that he has just made that the Government were aware of the intended closure on 6 October is not correct. I draw his attention to what was said in The Scotsman on 30 December 1981. It said: OCTOBER 1981—BACO forced to deny Invergordon closure rumours which are causing a run on their shares. 'No intention of closure' says finance director. That does not accord with what the right hon. Gentleman said.

Mr. Millan

A fortnight before the announcement the company was telling the work force that there was no prospect of closure, but the Secretary of State knew that there was such a prospect, and he knew from 6 October. That was where the message had got. The Secretary of State will not deny that because he knows that what I am saying is true.

Another question is whether a formal offer was made. The Secretary of State keeps saying that there was one, but the company denies with considerable vehemence that any particular offer was made to it. I am less concerned with whether the offer was formal or informal than with knowing what the offer was. The Secretary of State told us that there was an offer, but he described it in an interesting and misleading way. He can clear up all these matters and tell us the full story this afternoon—I should be delighted to hear it.

However, what the Secretary of State said and what was put to the press is different. The press was told that the company was offered a three-year contract with a break clause at the end that would have cost the Government £16 million a year, with the £47 million disputed charges to be written off. That would have meant a total of £95 million. Concealed from that piece of information to the press was that as a quid pro quo for that the company was to give up its residual rights, which were subsequently valued at £79 million. Looked at from that point of view, the offer is not as generous as it looks. If that was the language in which the Government were talking to the company that was neither an adequate nor a generous approach to the problems of Invergordon and the repercussions that the closure will have throughout Scotland.

The Secretary of State has also been saying that the alternative was to provide a subsidy of £16 million a year until the end of the century. That figure of £16 million is misleading because it is not a new subsidy. It is merely an increase in the subsidy—I shall deal later with what I mean by the word "subsidy"—from £8 million to £16 million a year. The subsidy was not new. It was an adjustment to the contract that would have taken about ½p per unit off the price of the power supplied to Invergordon. That is the scale of the figure and it is compatible with the consumption of the smelter.

British Aluminium has circulated a document to all hon. Members claiming that there was not just a question of a simple contract with a three-year break clause or of giving the company everything it wanted until the end of the century. The company has said that many other matters were discussed, such as escalation. One of the worrying features of the contract, as it has worked in practice, is that, because of the way that the plant at Hunterston has operated, the escalation in charges has been higher than the escalation in normal charges to industrial consumers. That was not intended in 1968 and it should be examined.

The question of the flexibility of the power supply should also be looked at as the company has requested. At the moment it is ridiculous that, under the terms of the contract, the company has to accept 200 MW of capacity whether or not it can use it. Therefore, the company is forced to produce aluminium for which it does not have a market except at a loss. If it reduces its power intake it suffers a penalty.

I do not accept as the gospel truth everything that the company says in its document. However, the simple and simplistic way in which the Secretary of State has presented the matter has been misleading, and it is up to him to tell us the real facts. For example, the company says that on the three-year contract it was willing to enter into an arrangement with the Government whereby instead of a break clause, if the new contract turned out to be disadvantageous to the Government and gave excessive profits to the company, it was willing to enter into a profit-sharing arrangement.

I heard about that for the first time this week, when I met Mr. Utiger and other directors of the company. We had no information on any of these matters—certainly not from the Government—until we had it from the company. There was no information on the financial settlement until the company gave the details, after which the Secretary of State gave an inaccurate account, then later confirmed the company's version. Was profit sharing offered? It is important that we should know.

The company has said that until 17 December it believed that there was on the table a package that would have allowed the smelter to continue, but it was turned down on 18 December. I can guess what happened. First, the Government decided to give no help. Then they panicked because they were frightened about the consequences of the closure, and decided to put a package together, but at the end of the day it was turned down by senior Ministers. That must be what happened. It is the only explanation that is compatible with the events, but it is speculation. The person who can tell us the true story is the Secretary of State. Will he be telling us the true story this afternoon?

It is not a question of recrimination or history. Knowing what happened is essential in terms of getting a new operator into the plant. We must know what was offered to British Aluminium. We must have some idea about what will be available to a new operator.

I turn to the question of the so-called subsidy. Two separate issues are involved. Sometimes they have been muddled in press comment and elsewhere. It was envisaged that the original contract might turn out to be bad for the company. Therefore, in 1968 the company was given a letter of comfort by the Government. On the basis of that letter the company approached the Government on 6 October. It was also envisaged in 1968 that the contract might turn out to be bad for the electricity board because it might be contracted to supply electricity to the smelter at an uneconomic price.

That is significant in relation to Invergordon. Assurances were given at that time that the Invergordon contract would contain no penalty and that no burden would fall on the other consumers in the North of Scotland. The hydro-electric board is small and has few consumers. It was estimated that the smelter consumed about one-third of the total electricity supply in the area. If the contract went wrong the loss would fall heavily on other consumers in the North of Scotland.

The Labour Government offered a commitment, which they honoured in 1976, that any loss from the smelter would not fall on the consumers in the North of Scotland, but would be borne by the Government. Because of that many misleading comments have been made. No such assurance was given in relation to Anglesey which depends upon nuclear power which is meant to come from the Dungeness power station. No assurance was given in relation to Lynemouth which has its own generating station and uses coal under a long-term cheap contract with the National Coal Board.

Anglesey is the most parallel case. There it was assumed that if a loss arose on the smelter account it would be paid for by the other consumers in England and Wales. The Secretary of State cannot deny what has happened. Electricity has been supplied to the Alcan smelter at Lynemouth and to the RTZ Kaiser smelter at Anglesey at cheaper prices than those paid by British Aluminium up to the termination of the contract. The figures might not be entirely accurate, but I believe that 1p a unit was charged in the case of Alcan, 1.3p per unit in the case of RTZ and 1.7p to British Aluminium.

I do not know whether losses are being borne by the National Coal Board under the contract for power at Lynemouth or whether losses are being borne by the Central Electricity Generating Board under the Anglesey contract. The Anglesey smelter is being supplied with electricity at artificial prices estimated on the basis of what the cost would be when Dungeness came into operation, but 14 years later Dungeness is not in operation. Since Anglesey is being supplied with cheaper power than Invergordon it would be a miracle if the so-called smelter subsidy at Anglesey were not already substantially higher than that quoted for Invergordon. The difference is that we know the size of the smelter deficit at Invergordon because the Labour Government said that they would reimburse the deficit. Orders to that effect have been passed. We do not know the deficit at Anglesey or Lynemouth. Those figures are shrouded in the cloak of commercial confidentiality.

The Secretary of State can deny it if he wishes, but it would be incredible if the Anglesey plant had not been given a bigger subsidy or sustained a bigger smelter loss than Invergordon. Yet the implication is that Invergordon is inefficient, that the other two places must be efficient and that Invergordon has cost the taxpayer a lot of money when the others have not. The electricity consumers in England and Wales have been paying for Anglesey's losses and any deficit at Lynemouth will be paid by the taxpayer through subventions to the NCB.

What was meant to be an advantage for Invergordon has turned into a disadvantage because the losses there have been made public whereas in the other places they have been kept confidential. Nobody knows what the losses are.

Those points are fundamental to what happens now. I make them because I want to know whether the Government, in making decisions about Invergordon, took fully into account what was happening at Anglesey and Lynemouth, and whether the Government decision on Invergordon was compatible with what is happening at Anglesey and Lynemouth and was fair to Invergordon and Scotland. If it was not it is a scandal.

We shall have the truth in due course because the Anglesey contract comes up for renegotiation this year in readiness for when Dungeness comes into operation. The Lynemouth contract comes up for renegotiation in 1983. The sooner the Government come clean the better. We demand the facts. They are essential to the whole issue.

Let us examine the outcome of the negotiations. I assume that the Scottish Office wanted to keep the smelter open. It is a doubtful proposition, but I give the Secretary of State credit at least for that. I do not, however, trust the Department of Industry or the Treasury in that respect. What happened?

As a result of the negotiations the smelter was closed. The Secretary of State said ad nauseam on Monday that he wanted to receive assurances about the the plant at Falkirk. He told us that the extra £21 million, as well as the £79 million for residual rights, was specifically directed to safeguarding the other plants in Scotland. The Company received £100 million, not £21 million. Most of the £79 million was credit for the company because it has already written the power charges of £47 million off its books. The £21 million was to keep open the Falkirk plant. But we have discovered that the £21 million of written off loans was not connected with the Falkirk operation in any way. We are told that Falkirk has been making a loss of about £5 million a year. That sum would keep it going for four years. Why was it not given the sum in bits of £5 million a year? The money was given with no strings attached. Within days of the announcement about Invergordon we are told that Falkirk is now in danger, involving the loss of another 1, 200 jobs. If the Secretary of State wanted to protect Falkirk why did he not tie the £21 million of written off loans to specific assurances about Falkirk? I should have accepted that. I would have accepted that, and that the money was well spent. However, the money has gone into British Aluminium and the right hon. Gentleman has secured no assurances in return.

Presumably the other objective of the negotiations, once it was clear that Invergordon was to close, was to get some assurance about the price at which the plant would be made available to a new operator. What happened on that? Nothing. The £21 million has been paid and the company still holds the plant. I do not complain about the company on that, because the company is only looking after its own interests, and it will not give an assurance on the price at which it will make the plant available to a new operator. It ought to be a break-up price, and nothing more. My complaint is that the Government ought to have settled that during the December negotiations, but they clearly did not.

What has happened? First, there was the £10 million sop to the Highlands board, but as the Secretary of State knows, that means nothing. The board will no doubt do the best it can, as it does in other desperate situations, but in terms of the area's needs—the 1, 500 to 2, 000 jobs—that is meaningless.

I hope that the Secretary of State will take on board what happened in the last major closure in the Highlands—the Corpach pulp mill. The right hon. Gentleman knows that major efforts were made to secure new employment, but virtually nothing has happened there. Although Lochaber Timber Industries is interested in reopening the pulp mill, the convenor of the district council told me that Wiggins Teape will be dismantled shortly. The Under-Secretary knows the problem and I hope that he will give us assurances about it.

The aim must be to reopen the smelter. I do not feel the least confident that, whatever happens with British Aluminium, it is likely to do that. The extra £8 million subsidy does not meet the £18 million or £20 million loss that British Aluminium made on the smelter in 1981. The company is still strapped for money, although the Government have been generous to it, and it will not reopen the smelter on its own account under any conceivable contract likely to be offered by the Government. It may come in as a partner and there might be certain advantages in that, although the recent experience of the work force means that it is not enamoured with being involved with British Aluminium.

What procedures are the Government carrying out to secure a new operator? The Secretary of State said last week that there were two companies "nibbling" at the idea of taking over the smelter. We asked British Aluminium on Wednesday whether it knew which companies they were, but it said that it had no idea; the Scottish Office had not told it and it had been approached by nobody.

The Government are responsible for the inconvenient fact that, whether we like it or not, the company still owns the plant. Yet the Government and the Highland board have not told the company who the nibblers are. I know that the Secretary of State will not tell the House, because he does not even tell us what we ought to know. If it is to be a proper operation, rather than a facade, we must know far more about what is happening. Reports appeared in The Guardian today and, no doubt, in the Scottish newspapers, although I cannot quote from those because of the rail strike, concerning the setting-up of a holding company by the Highland board. The Guardian states that there are six people on a short list. Is that an accurate statement?

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

No.

Mr. Millan

The Under-Secretary says "No". Let him tell us what is accurate, what is going on, and let him say something about the two key factors involved in order to get a new operator.

First, I make it clear that it will be shameful if the plant is not offered by British Aluminium at a break-up value. The Conservative council in the area has said that the plant ought to be nationalised without compensation and I have a certain amount of sympathy with that view.

Secondly, what will happen on the power charge? The Government said that they would be helpful. They were "helpful" during the negotiations before the smelter closed down. Therefore, when the Government say that they will be helpful, we must reach for our guns. However, what do they mean? If it does not mean money, it means nothing.

What will be offered under the new contract which is better than was offered to British Aluminium? If the same offer is made to a new operator as was made to British Aluminium, the smelter will not be reopened.

I state as clearly and as categorically as I can that there must be even-handedness between Invergordon, Anglesey and Lynemouth. It will be intolerable if arrangements are made to keep Anglesey and Lynemouth open under more favourable power arrangements than have been offered so far or were likely to be offered to Invergordon. I do not say that to knock the other two smelters because I want to see them kept open. However, if the Government approach the problems that those smelters will face in 1982 and 1983 in the way that they have approached Invergordon's problems, their future must be open to considerable doubt.

The Government must decide whether they want a smelter industry or not. If they do, it requires a far better power contract, whatever the mechanics and whether with the Highlands Board's idea of linkage to hydro-electric power or in another form. The mechanics do not matter so much as the ultimate end. If the Government want a smelter industry, they must give power costs much more favourable than those so far available at Invergordon. Unless the Government take that attitude and make that a reality in the negotiations, the smelter will never reopen.

The Opposition not only regret the disaster but deplore the fact that the Government prevented the smelter from being saved during the December negotiations. We shall do everything possible to get that deplorabe decision reversed. We shall support the workers, trade unions, local authorities and everybody else in the Highlands who wants to see the smelter reopened. That is what we demand from the Government.

5.27 pm

The Secretary of State for Scotland (Mr. George Younger)

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof: 'this House deeply regrets the closure of the smelter at Invergordon with the loss of 890 jobs; notes that the power contract between the British Aluminium Company and the North of Scotland Hydro-Electric Board signed in 1968 became the major factor threatening the future of the entire British Aluminium Company; recognises the need for the prompt action taken by Her Majesty's Government to assist the retention of the remaining 2, 700 jobs in Scotland; and supports Her Majesty's Government in its efforts to find a new operator for the smelter and to attract new industry to the area.' We are grateful to the right hon. Member for Glasgow, Craigton (Mr. Millan) for making the time available to have a proper debate on this important issue. I agree that the closure is extremely serious. I described it as a "profound disaster" for the Highlands and it is just that. I also agree with the right hon. Gentleman that it is a question not merely of the smelter, but of the ancillary jobs connected with it and the other large and small businesses dependent on that smelter. I am sure that the right hon. Gentleman can imagine just how seriously anyone in my position would react on hearing that the company was to close the smelter.

Having agreed with the right hon. Gentleman, I profoundly disagree with his utterly unsupportable and groundless suggestion that I have shown a lack of frankness on this matter. Since the company made the announcement in December I have met the press, appeared on television and met a series of deputations from the local authorities, workers, people in the area, hon. Members and a deputation led by the right hon. Member for Craigton. He will agree that that was a helpful and useful meeting.

On each of those occasions I did everything that was humanly possible to give all the relevant facts. It is unworthy of the right hon. Gentleman to suggest otherwise. I have no objection to his disagreeing with what we have tried to do, but I take exception to being told that I have not been frank, when he knows perfectly well that I have done everything that I could to keep everybody informed of the facts. I shall carry that through today. I intend to spell out every possible detail. If it appears at times that I am giving too much detail, I hope at least that I shall not be accused of saying too much. It is in everyone's interest that the maximum possible information about the situation should be known.

The right hon. Member for Glasgow, Craigton was right to describe the problem as complex. Everyone concerned will agree that this is one of the most serious industrial closures for many years, and certainly one of the most complex. Therefore we have to go into the question of the original contract, how it worked, the possibilities for power contracts and the reasons and time scale involved in the closure.

My objective will be to cover as much ground as I can.

Dr. M. S. Miller (East Kilbride)

Will the right hon. Gentleman give way?

Mr. Younger

One consequence of the approach that I propose is that I do not believe that I should give way, because I know from experience that that will lengthen the time that I take.

Dr. Miller

Will the right hon. Gentleman give way?

Mr. Younger

If I give way to the hon. Gentleman, it will have to be the only time that I give way.

Dr. Miller

Will the Secretary of State tell us what is meant in the amendment by recognises the need for the prompt action taken by the Government? What prompt action have the Government taken?

Mr. Younger

I do not think that it is worth wasting the time of the House on that.

I start with the background to the contract that ended on 31 December, how it came into effect and the details of it. The right hon. Member for Craigton referred to some of the matters involved.

The late 1960s saw the setting up of three aluminium smelters. The Government of the day decided that, since the new generation of advanced gas-cooled reactor nuclear power stations were expected to produce electricity at highly competitive prices, steps should be taken to attract electricity-intensive industries to the United Kingdom. Aluminium smelters were particularly attractive candidates, because they use vast amounts of power and at that time virtually all our aluminium was imported, adding to balance of payments difficulties. The Government therefore invited applications from potential smelter operators and, after complex negotiations, the three smelters were set up. Two of these, at Anglesey and Invergordon, had special contracts for electricity, while the third at Lynemouth had a special contract for coal, from which it would generate its own electricity.

It may help the House if I explain in more detail the provisions of the 1968 contract. It is central to many of the events that we are discussing. Under that contract the company agreed to pay for the construction of about 21 per cent. of Hunterston B, in return for a guaranteed supply of electricity for the smelter until the year 2000. About 21 per cent. of the station was the proportion expected to be required to meet the smelter's demand.

The first important point is that after the station was commissioned it became clear that the output would not reach the original design level and that, therefore, 21 per cent. of the station would not be adequate to meet the company's requirements. The then Government decided in 1976 that it would be wrong to ask the company to acquire the further 5 per cent. of the station needed to meet the smelter's demands and, instead, the capital cost of the additional 5 per cent. was met by the Government through the reimbursement of smelter deficit to the hydro-electric board.

There seems to have been some confusion over the power charges paid by the company. The charges were naturally confidential to the parties involved while the contract was in operation, but now that it has been terminated both parties have agreed to their being disclosed. The contract provided for a basic annual charge, to be escalated in line with the cost of replacement fuel at Hunterston B and the operating costs of the station.

It was expected at the time that the charges under the contract would remain at least broadly stable in real terms. In fact the charges have increased in real terms, particularly in recent years, as the electricity boards have started to provide for the costs of reprocessing nuclear fuel. Many of the costs associated with nuclear power have turned out to be considerably higher than was foreseen in 1968 when the AGR stations were in the early stages of construction. AGR costs remain, of course, cheaper than the costs of supply from fossil-fired stations, but they are not as low as was originally expected.

The company told me at a meeting that it was told in 1968, while negotiating to go to Invergordon, that the crossover point would come at some time half way through the contract, when the cost of the nuclear power concerned would become cheaper than that of fossil-fired power. The right hon. Member for Craigton was in the Government at that time, but I do not know whether he can confirm that what the company told me is true. Certainly it is far from remotely like what has happened.

The charges actually made to the company in recent years are as follows. In 1980–81 the company was charged by the board a total of £18.2 million for the contracted supply of 1, 747 million units. When the company's own annual capital and other charges of £3.9 million are taken into account, its total power costs were about £22.1 million, or 1.26p per unit. For 1981–82 the charges provisionally notified to the company in September by the board were £25 million. Including the company's own annual capital and other charges of £4.1 million this was equivalent to total power costs of about £29.1 million, or 1.67p per unit.

The company queried certain elements in the increased charges and the board, after consultation with the Government, offered to adjust the charging formula in a way which would have cut the charges in 1981–82 by about £3.4 million while increasing the charges for earlier years by about £2.6 million in total. Had that revision been made to the power charge, the company's total power costs, including capital and other charges, would probably have been around £25.7 million, or about 1.47p per unit. The final charges would not have been known until the end of the year when the actual fuel and operating costs of Hunterston B were known.

I come to the so-called "residual value" provisions of the contract. The contract between the company and the board, to which, of course, the Government were not a party, provided for the company to receive, in the event of early termination of the contract, the so-called "residual value" or the tranche of Hunterston B for which it had paid originally. I should underline—and this is very important—that this payment was provided for explicitly in the contract; it was not a matter over which the Government had any control or discretion. I see nothing surprising or improper in that. If two people go into partnership in an industrial enterprise, or even to buy a house, and one subsequently decides to move, he is surely entitled to the appropriate share of the value.

In the case of a power station, the residual value is the value to the electricity boards of the output expected from the station in the future and that is what BA was entitled to—the value of the output expected from 21 per cent. of Hunterston B from the date of termination until 2000.

Dr. Jeremy Bray (Motherwell and Wishaw)

Will the right hon. Gentleman give way on this point?

Mr. Younger

I must resist. I said that I would not give way. I am not being discourteous, but I know that many hon. Members wish to speak.

The right hon. Member for Craigton referred to the discussions with the company. I should like to record the contacts between the Government and the company prior to the announcement of the closure of the smelter.

With my hon. Friend the Under-Secretary of State, I met representatives of the company on 12 February 1980—the meeting referred to by the right hon. Gentleman—to discuss the dispute between the company and the hydro-electric board over charges for electricity supply to the smelter. The company made a number of points to me about the terms of its contract with the board and about the issues in dispute, but at no time during the meeting did it suggest that there was an underlying doubt about the future of the company as a whole or the Invergordon smelter in particular. I invited the company to approach me again if it wished to discuss the position further.

The first indication that the Government received from the company of the seriousness of its position and of the possibility of closing the smelter came during a meeting in October 1981 between officials of the Department of Industry and representatives of the company. The Government immediately instituted an intensive series of discussions with the company involving both Ministers and officials in an effort to find a solution. At the beginning of December I had the first of two meetings with the chairman of the company and it was made clear to me that the company's financial position had deteriorated to such an extent that it was faced with a stark choice—either the Invergordon smelter had to close by the end of the company's financial year on 31 December 1981 on the basis of a negotiated settlement with the Government and the North of Scotland Hydro-Electric Board, or the whole company would go into liquidation.

Faced with that choice in early December, and considering the effect that the company's liquidation would have on employment elsewhere in Scotland, we concluded—I am as certain today as I was at the time that we were right—that if no means could be found to keep the smelter open we had no alternative but to proceed to a negotiated settlement. That is what happened at the time. [Interruption.] I hope that Opposition Members will be kind to their colleagues and allow my remarks to be heard. Hon. Members want information to be able to make a judgment on whether the Government acted rightly or wrongly.

That was the choice with which the Government were faced, and, even if he cannot do so now, I hope that the right hon. Member for Craigton will think quietly to himself about what choice he would have made. The choice was either to threaten the whole company with possible liquidation and the loss of 2, 700 jobs in many parts of Scotland, or to make some arrangement with the company in the light of its requests.

Mr. Millan

The fact is that the Labour Government took the smelter to Invergordon and the right hon. Gentleman has closed it down.

Mr. Younger

That was a pathetic intervention. It was worse than that. The right hon. Gentleman will not face up to the fact that, if he denies that, he is saying that he would have preferred to risk those other jobs. He knows very well that that is so because that is the choice that I faced. [HON. MEMBERS: "Rubbish."] If I had refused to do anything about making an arrangement with the company in its difficulties before 31 December, I might be standing before the House today defending a failure of mine, which led to 2, 700 jobs being lost throughout Scotland. I was not prepared to put myself in that position, and I do not believe that the right hon. Gentleman would have been. I would make the same decision again today.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

Is it not a fact, as the company told us on Wednesday, that it put a proposition to the Government which, up until 17 December, it had reason to believe would have been acceptable? It would have kept the company going and therefore would have achieved the purpose that the Secretary of State proclaims to the House that he is interested in achieving. It would have saved not only the other 2, 700 jobs but the 900 jobs at Invergordon. Is it not true, therefore, that the Secretary of State had a choice and that had he heeded it he could have kept the company open and the smelter at Invergordon running?

Mr. Younger

The hon. Gentleman's point is fair, but it is different. The proposition was made by the Government to the company. Our first objective was to try to keep the whole company in being, including the smelter. We negotiated hard with the company to try to find a basis for doing so. I have clearly said in all my statements that we reached the point whereby the only deal that we could have arranged would have cost the taxpayer approximately £16 million a year every year until the year 2000, with the figure probably escalating.

It is open to Opposition Members to say that that arrangement should have been accepted. However, no hon. Member has so far said it, simply because, in their hearts, Opposition Members know very well that that is an astronomical sum. We believe that it could not possibly have been justified in comparison with other industries in Scotland, including high energy-using industries. I am sure that Opposition Members realise that no Government would have been able to carry that sort of weight.

Dr. Bray

Will the right hon. Gentleman give way?

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The hon. Gentleman knows that the Secretary of State has said that he will not give way.

Mr. Younger

Discussions on the negotiated settlement were carried out by officials throughout the first half of December. We began with the intention of reaching an agreement that would be acceptable both to the company and to the Government.

Dr. Bray

Will the right hon. Gentleman give way?

Hon. Members

Give way.

Mr. Younger

Very well, I give way to the hon. Gentleman.

Dr. Bray

In calculating the compensation to the company for the loss of the electricity contract up to the year 2000, it should be borne in mind that a specific quantity of electricity was to be supplied to the company. Therefore, crucial to the calculation of the compensation is the price that was assumed in breaking the contract. The Secretary of State has given the House no information about the basis of the future price assumptions up to the year 2000. It is a highly speculative matter. I do not see how the House can judge whether the compensation is justifiable.

Mr. Younger

I am not quite clear of the hon. Gentleman's point, but I shall deal shortly with the arrangement with the company, the residual value and all the other factors.

We have explored every avenue possible to try to get agreement. The right hon. Member for Craigton asked whether any formal offers were made. There were no formal offers because it was made clear in the discussions that none was acceptable. That is the point about the short-term offer. In spite of what has been said so many times, we are now clear about what happened and it is confirmed by the joint statement that was made by Mr. Utiger and my hon. Friend, and is also confirmed by the terms of the letter that has been sent to hon. Members. I quote from the joint statement: The question of a break clause after three years was raised by Government during last month's negotiations. The company felt that such a right of termination was inappropriate in the package under discussion which was aimed at securing the long-term viability of the smelter. That is perfectly clear and I hope that there will be no more mumbo-jumbo or mysteries about it.

The basis of the agreed proposal was discussed by the Government on 18 December. It involves increasing the annual deficit payment from about £8 million to about £16 million, at today's prices, until the year 2000. That deal was considered to be unacceptable because of its vast cost. Further discussions then had to take place on the terms of the closure settlement, which continued until the company made its announcement on 29 December.

I come now to the termination of the settlement. I spelt out in my statement to the House on Monday the details of the settlement reached between the Government, the board and the company. However, there is still considerable misunderstanding on the subject, so I shall explain it. The residual value set on the company's share of Hunterston B by the Scottish boards was approximately £79 million. The board deducted from that sum the charges which the company had been withholding because of the dispute over the interpretation of its contract, so that the company actually received about £32 million from the board in return for surrendering its share of Hunterston B.

The company at the date of termination owed the Department of Industry about £33.5 million in outstanding loans. It was clear from the investigations we ourselves carried out into the company's financial position that, had the Government required the company to repay these loans in full, the company would have been permanently weakened, and would have been obliged to close down at least some of its other operations in the United Kingdom, starting with its rolling mill at Falkirk. In view of the threat to the company's other activities, and the large losses it had accumulated at Invergordon over the years, for reasons which to some extent were beyond its control, we decided that it would be equitable to waive repayment of approximately £21 million of the loans. The company therefore repaid £12 million to the Department of Industry out of the £32 million it had received from the board, and retained about £20 million. The company received that £20 million from the residual value settlement, not directly from the Government.

To say, as the right hon. Member for Craigton said, that the company received £100 million to close down the smelter is a total distortion of the settlement. The waiving of full repayment of the loans does not guarantee the future of any of the remaining plants. It cannot do so. No company in any line of business is in a position to guarantee that in all circumstances it can keep going. It is quite clear that, if we had insisted on the full repayment of those loans, we should have put several thousand more jobs at risk. I can imagine what Opposition Members would say if we had insisted upon full repayment of that loan and one job had been lost. The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and others would have been at my neck saying that it was the wrong thing to do. We all know that that is so.

What are the implications for the electricity boards? There are three main implications. They are somewhat complicated, but I shall explain them as simply as I can.

First, the boards will lose the revenue from their largest customer. Secondly, the boards' direct generating costs will be reduced, because electricity demand will be lower. The boards will respond to this lower demand by reducing the operation of their least efficient stations—the stations with the highest generating costs. This means that the more expensive coal-burning stations at Cockenzie and Kincardine and the oil-burning station at Inverkip will be used somewhat less frequently. The SSEB's annual coal consumption will fall by about 750, 000 tonnes per annum. The reduction in direct generating costs over the next few years is likely to be greater than the loss of revenue.

Thirdly, the boards will incur additional interest charges, because they have had to acquire the tranche of Hunterston B hitherto allocated to the smelter. The tranche allocated to the smelter amounted to 26 per cent. of the station's output. The company paid for the construction of only 21 per cent. of the station, as I said earlier, but, as I explained, 26 per cent. of the station has had to be reserved for the smelter requirements in the event of the performance of the stations. It follows that, on termination of the contract, the full 26 per cent. tranche was recovered by the SSEB, with payment for 21 per cent. being made to the company and payment for 5 per cent. being credited to the hydro board's smelter account. The SSEB paid £99 million to acquire the 26 per cent. tranche, and the interest charges on this sum will be borne by both boards, because of the operation of their joint generating account.

Taken together, these three effects—the loss of revenue, the lower direct generating costs, and the higher interest charges—should broadly balance out over the next few years. The boards are still evaluating the implications in detail and at the moment I am not in a position to give more precise estimates. It appears at this stage that there will be no significant effects on the Scottish electricity boards' tariffs in the near future. In the longer term, the savings in generating costs will rise in line with the cost of fossil fuel, whereas the interest charges will remain fixed in money terms, and the overall effect will be to reduce the boards' total costs.

It has been suggested that the closure of the smelter removes the need for the board's nuclear station at Torness, which is now under construction. The hon. Member for Edinburgh, Central (Mr. Cook) suggested that the closure is a nail in the coffin of Torness.

Such nails would make little impression on the millions of tonnes of concrete which the board is now pouring and has poured into Torness. There is here a misunderstanding of the role that Torness is to play. The Government have allowed Torness to proceed because it will be very much cheaper to operate than the board's oil and coal-fired stations, not because the additional generating capacity will be needed when it is commissioned in five or six years. Over the period of the new station's life, the operating savings are expected to exceed by a considerable margin the capital costs of the station. This should result, therefore, in a direct and clear benefit in terms of electricity prices to Scottish consumers in the future. It should hold down the cost of electricity in the 1990s, when coal and oil are expected to get increasingly expensive.

Mr. Millan

We shall all be dead by then.

Mr. Younger

I very much hope that the right hon. Gentleman will not be dead by the 1990s, but if by any chance he were there would still be no excuse for being irresponsible enough to stop the building of a proper power station for keeping people going in the 1990s. That kind of silly comment does not help our debate.

The board has assured me that the project at Torness is still on programme and it is pleased with it.

I was asked about the effect on the National Coal Board and British Rail. There are, of course, important consequences for both these bodies. As I said, the NCB faces a drop in the coal requirements of its largest customer in Scotland, amounting to some 750, 000 tonnes per annum. The board is not yet in a position to assess the full effects of this loss of sales, and these will obviously depend on the extent to which it can find alternative markets for this quantity of coal. I gather that it expects to do so. The board has enjoyed considerable success in the export markets in the last year or two. British Rail will lose a very important customer for its services beyond Inverness. The board has said that savings will have to be made to compensate for this loss, and the Government are obviously concerned about the impact which it may have on British Rail Scottish region, but at the moment there is no suggestion that there is a threat to the services.

I announced on 29 December that I am providing a special extra allocation of funds, amounting up to £10 million over the next three years, to enable the Highlands and Islands Development Board to undertake special measures to provide new employment opportunities in the Invergordon area. It is a large sum, compared with that board's annual budget, and if it is needed I am certain that it will be much valued. The board's efforts can be split into two linked activities. Firstly, HIDB and Locate in Scotland are co-operating in efforts to find an alternative user for the Invergordon smelter, which must be the No. 1 priority. The HIDB's board member for industry, Mr. Gordon Drummond, is leading this search. There is no one better qualified than Mr. Drummond to do this. Before he joined the HIDB full-time in 1977, he was managing director of the primary division of the British Aluminium Company at Inverness and was responsible for setting up and running the Invergordon smelter. He thus has a unique knowledge of the aluminium industry, and I am confident that if there is another operator willing to take over the smelter Mr. Drummond will find him, and I am grateful to him for the lead that he is taking in this matter. As he knows, he has my full support.

Mr. Robert Maclennan (Caithness and Sutherland)

The search for an alternative operator for the smelter is clearly crucial, but what can Mr. Gordon Drummond and the highland board offer by way of inducement in respect of a power contract to any potential smelter operator? Without that information, Mr. Drummond cannot hope to attract a smelter operator.

Mr. Younger

I accept what the hon. Gentleman says, and I am coming to that point.

The second strand of the board's efforts is the contingency exercises. We must all accept that although the first priority must be to find a new operator to start the smelter running again there is the possibility that this may not succeed in which case we must think ahead to what must then be done. My Department and HIDB are working urgently on a study of action which might be taken to mitigate the effects of such a closure. The aim will be to set out the scale of the difficulties facing the Invergordon area, to analyse all possible approaches towards overcoming them and to draw up a programme of action. I announced this exercise at a meeting with representatives of the Highland regional council and Ross and Cromarty district council on 12 January and we have asked the study team to produce a draft report by mid-February. I intend to publish the report after consultation with the local authorities and to use it as a basis for further action. I hope that all concerned in the area will co-operate with the study team by submitting views and ideas to my Department and the board—we would welcome that—and by responding to any requests for information and assistance.

Mr. Dennis Canavan (West Stirlingshire)

rose—

Mr. Younger

I think that I have been very generous, but if this is the last intervention I shall give way.

Mr. Canavan

The right hon. Gentleman referred to the views of local authorities. In common with every Scottish Member, he will have received a letter from Highland regional council, backed by Ross and Cromarty district council. Neither of those local authorities is known for its domination by Left-wing extremists, but the Secretary of State will have read in that letter that the smelter must be made available for public ownership intact and gratis—that is, public ownership without compensation. Will the Secretary of State support the local authorities, because that would be of considerable assistance in getting an alternative operator to come in? Will he bear in mind that, with the Secretary of State's approval, the BACO has already walked off with over £20 million profit from the closure and therefore deserves not a single additional penny of compensation?

Mr. Younger

That is a matter of opinion. I can think of nothing more likely to drive away anyone thinking of coming to the area than the hon. Gentleman's suggestion. His language is a certain turn-off to anyone who might want to come to the area. I hope that he will bear that in mind when he makes public speeches on the subject. I have been a little too generous in giving way to the hon. Gentleman.

Perhaps I should say a little more about some of the factors which the study will cover. We need to identify in more detail the direct and indirect employment consequences of the closure and the knock-on effects, such as under-utilisation of infrastructure and the decline in demand for the services of other industries such as the National Coal Board, British Rail and the electricity boards. We need to see how far other employers are likely to need further labour in the near future and an assessment of the power costs necessary for such an operation to operate viably at Invergordon. Consultants hired by the HIDB had started to look at this subject generally, even before British Aluminium announced the smelter closure.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) and, I think, the right hon. Member for Craigton asked about the possibility of a new power contract. That is one of the aspects that the HIDB study will need to cover. I do not wish to anticipate the study's findings, but several proposals have been put forward in recent weeks on which I should perhaps comment. One simple general point is that if a new smelter operator at Invergordon were to be treated by the hydro board like any other large industrial consumer, the board would have to charge over 2.5p per unit in the coming year for its electricity in order to cover the cost of supply. It was evident from our negotiations with BACO that for the smelter's operation to be economic a price at least 50 per cent. below that would be necessary.

There are two ways in which the gap can be bridged. Either the Government can compensate the board for its losses, as was done for the British Aluminium Company, or the costs can be borne by other electricity consumers, as would happen if the board set aside some of its most economic hydro stations to provide the supply. It would be necessary to set aside about 60 per cent. of the board's hydroelectric capacity, because the board's hydro stations do not deliver their full design output on a continuous basis.

There is no escaping the basic choice. The cost would have to be met either by the taxpayer or by other electricity consumers. The amount involved is not necessarily insignificant. It would probably be about £15 million to £20 million a year, depending on the precise terms of supply.

As the joint statement issued by my hon. Friend the Under-Secretary and the chairman of BAC said: Any improved arrangements for a new company would present formidable difficulties., since that contract already provided power at a price approximately half that paid by Scottish consumers. Nevertheless, the Government are ready and willing to discuss with the electricity boards and any potential new operator, or operators, new arangements for a power supply for the smelter. The arrangements would obviously depend on the operator involved, the nature of the operator, what other interests he might have, his background, the circumstances of the approach made, and the other factors involved. Any operator can be sure that we are ready, willing and anxious to discuss that with them as soon as possible.

Many questions have been asked about the other smelters. We intend that the HIDB study should consider the position of other smelters in Western Europe, and the board has already assembled some of the relevant information through consultants. Several European countries such as France, Norway and Switzerland that have substantial smelter capacity also have massive resources of hydroelectric power. Our hydroelectric resources in Scotland are very small compared with those countries.

I shall deal briefly with the position of the other United Kingdom smelters, at Anglesey and Lynemouth. The operators of those smelters, like British Aluminium, negotiated special arrangements for power supplies in 1968. The criticisms that I thought that the right hon. Member for Craigton made about the nature of the arrangements for Anglesey and Lynemouth must be considered against the background that he was a member of the Labour Government who negotiated them. If he did not like them then, he did not say so. Perhaps he was just keeping quiet. I do not know.

The arrangements are not identical and the details of the contracts, which are commercially confidential, were not determined by the Government but fixed in negotiations between the companies and, in the case of Anglesey, the CEGB and, in the case of Lynemouth, the National Coal Board. Clearly, since the power arrangements have been agreed between the boards and the companies, the Government cannot intervene in the operation of purely commercial contracts.

It has been suggested that the contracts enable the companies to enjoy cheaper electricity than was available to BACO at Invergordon. I cannot comment on the prices involved, although it is no secret that both contracts now involve the respective boards in heavy losses. The important point is that the Anglesey and Lynemouth smelters are operating under long-term contracts in which the Government cannot intervene. I accept the right hon. Gentleman's point that there is, and must be, a relationship between the smelters—we hope that there are still three—and that will be borne very much in mind.

Mr. Millan

The right hon. Gentleman has just confirmed my suggestion that those contracts are also making severe losses. However, the losses are not being disclosed. Will the right hon. Gentleman confirm something that is common knowledge—that the contracts are providing power supplies to Anglesey and Lynemouth at a cost per unit that is significantly below that being charged to British Aluminium at Invergordon?

Mr. Younger

As I told the right hon. Gentleman, as the contracts are commercial, commercial confidentiality is involved. The right hon. Gentleman can make inquiries, just as I can. However, I cannot confirm that officially, because commercial confidentiality is involved. Under Governments of both parties that has always been the case and I think and hope that the right hon. Gentleman will respect that.

Mr. Millan

I cannot leave that point there. The right hon. Gentleman has given us the information that losses are being made and I said that that was inevitable. However, we want to know whether Invergordon has been treated fairly compared with the other two smelters, given the negotiations that the Government had with British Aluminium between October and December. From what the right hon. Gentleman said, it has not been treated fairly compared with them. Will the right hon. Gentleman answer that point?

Mr. Younger

That is not quite the position. I have been open and have told the right hon. Gentleman that I cannot give the precise cost per unit for those smelters. However, in one case the contract was between Anglesey and the CEGB and in the other it was between Lynemouth and the NCB. In both cases, the shortfall in the cost, or subsidy, comes not from the Government, but from the other consumers concerned. When we came to considering the Invergordon smelter and whether we could let it continue, the two contracts at Anglesey and Lynemouth were not up for renewal. They are still running and the Government cannot interrupt them or change them in any way.

Mr. Milan

The right hon. Gentleman is not answering my question.

Mr. Younger

I accept that there has to be a relationship in the way that all three smelters are treated. The right hon. Gentleman must accept that we cannot stop the clock in the middle of contracts that are already running. We cannot alter overnight the terms for the other two merely because it would suit us to do so. I hope that he does not expect me to do that.

Mr. Millan

I wish to make it clear that I wish to do nothing to damage the other two smelters, but unless we achieve some satisfactory position in relation to the other two smelters when their contracts subsequently come to be renegotiated they will be in danger as well. I was asking not that their contracts should be renegotiated now but whether what the Government offered to British Aluminium in October and December was fair in relation to what is happening at Anglesey and Lynemouth now. Why cannot the right hon. Gentleman answer that question?

Mr. Younger

That was not the breaking point. The problem arose when we came to negotiate a possible new contract, or a variation of the old contract, to keep the Invergordon smelter going. The difficulty was that the company felt that nothing short of an agreement right through to the year 2000 would work, would be tolerable or would be possible. That was why the suggestion was made—the company agreed with it—that a shorter term solution would be better. However, the company, for the reasons that I have explained, felt that that could not be done. I hope that that has cleared up the matter. I am certain that it has.

The fundamental reason for the closure of the smelter was that, in the extremely weak conditions which prevail in the world's aluminium markets at present and which are expected to prevail for some time to come, the smelter needs access to exceptionally cheap power in order to survive. The arrangements which were developed in 1968 were formulated with the best intentions. I repeat that I did not criticise them then and I do not criticise the then Government for them. However, they did not provide power at anything like a sufficiently competitive price to enable the smelter to continue in the present circumstances.

Mr. Dick Douglas (Dunfermline)

rose—

Mr. Younger

I shall not give way. The hon. Gentleman has been speaking throughout the debate. We have so enjoyed his speeches that I do not think we shall have any more.

Mr. Douglas

rose—

Mr. Deputy Speaker

Order. The hon. Member for Dunfermline (Mr. Douglas) knows perfectly well that the Secretary of State is not giving way.

Mr. Younger

I am sorry. I am not normally discourteous to hon. Members who wish to intervene, but I must finish my speech.

The right hon. Gentleman was absolutely off-beam when he suggested that the low point which has been reached in the aluminium market is a result of the Government's economic policy. That is an overstatement of the most extraordinary size. If that is so, we must be responsible for the state of aluminium markets all over the world, including Japan's, where aluminium smelters are being closed because of the state of the overall market. The Government's main priority remains that of the people in the area—to find, by any means possible, a new operator to come in to run the smelter as a going concern.

Mr. Douglas

rose—

Mr. Younger

That is the Government's main priority.

Mr. Douglas

rose—

Mr. Deputy Speaker

Order. The hon. Gentleman must remain in his seat. The Secretary of State has made it plain that he will not give way. There are 18 right hon. and hon. Members who wish to take part in this important debate, and interruptions will make it highly unlikely that they will all be called.

Mr. Younger

We shall spare no effort, nor will the Highlands board, to find another operator if we possibly can. If we can find one, we are ready and willing to negotiate a power contract with it. We shall do our best to achieve that.

Mr. Douglas

rose—

Mr. Younger

The right hon. Member for Craigton, at the beginning of the debate, produced a great many facts and figures, many of which are absolutely correct and with which I agree. I do not accept his interpretation of the other facts and figures that he produced. However, I agree entirely that the closure is a major disaster for the Highlands. I agree that it is our responsibility to do everything we can to try to repair the damage.

The closure was a tremendous disaster to the area. The Government moved immediately and did everything possible to prevent closure. They did everything to provide the maximum number of facts and to present the truth to the public. They have made every effort to save the rest of the company, which was in great danger at the critical point in negotiations. They have made a full commitment to the Invergordon area that they shall stand by it and help in every way that they can in this crisis. The Government have it as their first priority to try to find another operator to keep the smelter going. By any standards, that is a Government response which deserves the commendation of the House, and I ask the House to commend it.

6.17 pm

Mr. Donald Stewart (Western Isles)

The Secretary of State lives in cloud-cuckoo-land if he believes that that statement will meet with the approval of the House. At any rate, he does not disagree that the whole matter has been a tragedy and disaster for the Invergordon area. I believe that there will be general agreement on that if on very little else.

The closure will mean an unemployment rate of over 20 per cent. in the Invergordon area. I represent an area that has that rate now and has had it on many occasions in the past. I am therefore aware of what it means to an area, but not even in the Western Isles have we ever had the trauma of a whole industry collapsing overnight, with all the possible consequences. It will have a deleterious effect on local government in the Highlands. The Highland region will lose over 2 per cent. of its rateable income. The Dingwall—Wick railway line, which had receipts of over £500, 000 from freight charges and which is already heavily subsidised, will have its future operations called into question.

The Secretary of State referred to the cost of £16 million to keep the plant going. He said that as though the £16 million would be wasted and would disappear down the plughole. That money would keep the work going, keep the Highland region in some finances, keep the railways going and keep the ancillary industries going. That money would be an injection. Compared with some of the injections that have been given to other industries in the United Kingdom, it would be peanuts. The right hon. Gentleman challenged anyone to say whether it should be spent. I believe that it should be spent and that it wound be money well spent.

The Prime Minister and her Scottish lackeys have caused more damage to the Highlands than has been caused since the days of Butcher Cumberland. The harsh and ill-timed announcement by the British Aluminium Company on the eve of the new year added insult to injury. Only a week before there had been a denial that the plant would close, despite a challenge to that effect. The timing of the redundancies has even cheated the work force out of earnings-related benefit. That was an unnecessary and cruel blow. There is great determination in the House and in the area to ensure that redundancy payments will not be paid and that the plant will have to be kept open for the benefit of the people of Invergordon and of the area.

Despite the Secretary of State's explanation today, I still believe that the Government were easily taken in. They were babes in the wood in dealing with the British Aluminium Company. It ran circles round Scottish Office Ministers. It is a disgrace and a scandal that the company should be better off as a result of the deal. It was quite a deal—in return for wiping out the £21.2 million outstanding loan the Government negotiators obtained absolutely nothing, not even a guarantee that the other plants would remain open. The company will close them next week if it suits it to do so, and the Secretary of State, despite his generous handout to the company, will be unable to do anything about it. He should have pinned the company down when he was handing out public money to it. Why did the Government not use the money to take the company into public ownership?

Shop stewards say that they were mystified by one aspect of the talks. On 30 December they were told by the chairman of the company that it would be prepared to consider a re-start if a reasonable cash injection were offered by the Government. However, when they contacted the Minister responsible for industry in the Scottish Office and the Minister of State, Department of Energy, they were told that there was no change in the company's decision to close. Finally, on 1 January, Mr. Utiger assured the shop stewards that he had not spoken to the Minister at the Scottish Office responsible for industry since before Christmas. Clearly credibility is called into question there.

The company itself is not guiltless. Only a week before the closure the management was assuring the work force that rumours of closure were unfounded. It has since become obvious that the company has no interest in keeping the plant operational or in any offers of help to do so.

The incident has conferred a mantle of incompetence, negligence and indifference on Government Ministers. The Secretary of State confirmed today that the company advised the Department of Industry as long ago as 6 October 1981 that it was in financial difficulty and feared closure. Yet this information was apparently not passed to the Scottish Office until December. I should be glad to know whether that is true.

This is not the first time that the Department of Industry has ignored the Scottish Office. Two years ago we lost the chance of a major microelectronics development by MOSTEK because of the "couldn't-care-less" attitude of the Department of Industry. The minor status of the Scottish Office is a direct result of the continued reduction of the Scottish dimension in British politics. The recent sequence of disasters—Copach, Linwood and now Invergordon—heralds the collapse of the regional policies adopted by successive Governments.

Ownership of the smelter must be taken over either by the Highlands and Islands Development Board or by the Scottish Development Agency, free of capital cost. The taxpayers have already paid for it, and only Government incompetence has lost the money. If there is no permanent operator on the immediate horizon, the HIDB should be given control and responsibility for the re-start and maintenance of the smelter while the search for an operator is intensified.

We must look again at the power contract. Electricity should be supplied as cheaply as it is supplied to the Alcan plant. It is a pointer to the utter failure of the so-called cheap nuclear energy policy so long pursued by the South of Scotland Electricity Board that this state of affairs has come to pass. Even now that body refuses to change its policy.

It was interesting to hear the Secretary of State give an assurance that Torness would go forward and produce cheaper power, having said earlier in his speech that part of the problem at the Invergordon smelter was that the Hunterston reactor had not come up to expectations and the cost of fuel had been far greater than had been expected. If this Parliament continues as the British Parliament, and if Scotland is still represented here in 10 or 20 years—I hope that that will not be—I forecast that a future Secretary of State will be telling the House that the cost of power from Torness has far exceeded what was predicted in 1982. These lessons will never be learnt until it is far too late.

The Invergordon plant was no lame duck. It fulfilled many of the Government's criteria for success. It should not be compared with lame ducks such as De Lorean, which has been given a great deal of money and is to be bailed out again because the Government are intent on propping it up. In 10 years of operation there have been only one and a half days of industrial dispute at the Invergordon plant—an excellent record—and the quality of its finished product was second to none. Although the aluminium market is depressed, as the Secretary of State said, the Standard Research Institute has said that world production of aluminium will rise from 16 million tonnes in 1980 to 25 million tonnes by 1990. It is a product that will not disappear, but will be required in the future. Alas, however, if this closure is allowed to stick, that future in Scotland will be lost for ever.

The Government have been found wanting. The argument that Invergordon had to be allowed to close because other jobs would have been at risk does not hold water. How will the Kinlochleven plants be supplied with alumina? Will new piers and storage silos be constructed at Lochaber, and, if so, who will pay for them?

The way in which the Government have handled this issue has been shown to be a series of blunders. Once the future of the plant is assured they would do well to make amends by reversing their decision on the gas-gathering pipeline, which we had expected in the Highlands. As the Minister of State, Department of Energy is present, I may say that I should have thought it was a matter for resignation on his part that that failed to materialise. On top of that failure we now have the Invergordon closure.

The Government must grasp the nettle and not allow the smelter to go out of existence. As has been said—by a Conservative councillor, I believe—it should be made available for public ownership, intact and gratis. The Government are able to do that if they so wish. If they have any regard at all for the people of the Highlands and of Invergordon, that is what they must do.

6.27 pm

Lord James Douglas-Hamilton (Edinburgh, West)

I listened carefully to what the right hon. Member for Western Isles (Mr. Stewart) said. There can be no possible doubt that this matter is of enormous importance to the economy of the Highlands. Moreover, there can be no doubt that the trade unionists involved have behaved extremely well and worked hard. They fully deserve the public sympathy that they have received and continue to receive.

My hon. Friend the Minister of State, Department of Energy has also worked extremely hard. He has been to the smelter several times and has spent countless hours working on the problem, virtually every day since. The Secretary of State and his colleagues were absolutely right to waive the £21 million to safeguard the 2, 700 jobs elsewhere in Scotland.

The situation is obviously extremely serious. If what has been done had not been done, it could have been even worse and jobs in Glasgow, Falkirk, Kinlochleven, Lochaber and Burntisland might also have been affected.

However, although the Government were fully justified in doing what they have done, I must express a reservation about the interpretation placed on the negotiations by the company. On Tuesday, the hon. Member for Caithness and Sutherland (Mr. Maclennan) quoted the chairman of British Aluminium as saying: At no stage did the Government negotiators indicate that they had authority to offer any particular package either short or long term."—[Official Report, 19 January 1982; Vol. 16, c. 255.] The joint communiqué issued by the Under-Secretary of State for Scotland, my hon. Friend the Member for Edinburgh, North (Mr. Fletcher), and the chairman of British Aluminium, however, gives a different impression. It said: The question of a break clause after 3 years was raised by Government during last month's negotiations. The Company felt that such a right of termination was inappropriate in the package under discussion which was aimed at securing the long term viability of the smelter". It further stated: Attempts were made by both sides to find an alternative arrangement which would have enabled the smelter to continue in operation. But the Government judged that the terms resulting from these negotiations which involved a substantial increase in subsidy to power supply on a long-term basis amounting to £16 million a year, represented an excessive burden for the taxpayer. In other words, the Government were putting forward proposals to cover the next three years, with a renegotiation after three years, in order to see the smelter's operations through the worst of the recession. Unhappily, the company was putting forward long-term proposals indexed to the year 2000 and was not interested in any help which would not see it right through until then.

The Government were prepared to consider giving help on a short-term basis. It was discussed and turned down.

British Aluminium made it clear that it was not interested in a short-term solution. Even so, it has said that it would be interested in having a minority interest in a new company mounting a rescue scheme but would not wish to be the prime mover in any attempt to restart the smelter. In these circumstances, it seems that there is a very strong moral obligation on the company to see that the smelter is preserved intact so that another company moving in can receive all the equipment and take up the work from there.

All parties support the re-opening of the smelter. The Under-Secretary of State, my hon. Friend, the. Member for Edinburgh, North, in his speech on Tuesday said: The first hurdle…will be to try and find a new operator…if such an operator is found, there is a further massive hurdle to be overcome in trying to work out a power contract which will provide a viable operation…"—[Official Report, 19 January, 1982; Vol. 16, c. 258.] It seems that clearing the second hurdle, or giving some indication of how to clear it, may be of great importance in clearing the first hurdle. If I understood the Secretary of State, he was saying that a subsidy might be considered to the extent of £15 million to £20 million a year. Again, if I understood what he said correctly, the total running cost is somewhere in the region of £25 million. If he could say in percentage terms what kind of subsidy might be on offer, this would greatly help Locate in Scotland and the Highlands and Islands Development Board in their attempts to find a new operator. I hope some further indication of percentage may be given later on.

I would also ask the Minister to make urgent inquiries of other Ministries about the most appropriate and economic form of energy. In a recent press statement, Mr. John Armstrong, assistant managing director of the British Aluminium Company, was reported as saying: As things have turned out, it might have been better for us to have built a coal-fired power station in the first place instead of planning to rely on cheap nuclear power. It may well be that this option is no longer available but I sincerely hope that the possibility of hydro-electric power and other options will be examined by a team of experts so that they can weigh up the advantages of the different schemes. I understand that the smelter requires 200 MW of power all the time, and it would be valuable to know whether hydro-electric power schemes could supply the required power reasonably economically.

This brings me to the state of the aluminium market. Here I think I should mention a matter which is very much in the nature of a long shot. We all know that the Japanese Nissan car company may set up a factory somewhere in the United Kingdom and that there will probably be an announcement about this in the near future. If it does set up a plant employing several thousand people, it will be interesting to know what effect that will have on the aluminium market and whether any advantage can be gained from it.

Mr. Geoffrey Robinson (Coventry, North-West)

None whatever.

Lord James Douglas-Hamilton

No stone should be left unturned. Even if the hon. Gentleman is right, it is well worth making inquiries.

I support the Secretary of State's action in making available £10 million to the Highland and Islands Development Board. Obviously, this is nothing like as much as one would wish but it will go a long way to helping with employment opportunities. I know that the Secretary of State has done everything he can to find a short-term solution at a time when the company was losing £½ million a week. Indeed, even if the company had received all its energy requirements this last year free, it would probably still have made a loss. I wish my right hon. Friend every success, in the interests of those who work at Invergordon, in finding a solution to a difficult problem, to get the smelter working again and through the recession.

6.33 pm

Mr. Robert Hughes (Aberdeen, North)

There has been one point of agreement in this debate so far, both in the House and elsewhere. It is that the closure of the smelter is an immense tragedy. Not only is it a disaster in its own right, however. It is yet one more example of the collapse of major industry in. Scotland. Two others come to mind: the closure of the Talbot Linwood car factory and the closure of the Fort William pulp mill. Other examples throughout Scotland could be quoted. Even worse than that, what we are seeing here is the collapse of decades of regional development policy. One of the saddest aspects of the discussions which have taken place in the public press is that some people are now beginning to question the wisdom of putting the smelter at Invergordon in the first place. I am not now speaking of the details of the power contract. I am referring to the principle of having a major employment industry in the Highlands or in any, other remote area.

The history of the Highlands is one of tragedy, of decline, of exploitation and of the migration of surplus population. It was to try to arrest this trend and to improve living standards and provide a secure future for Highlanders and their families that the Highlands and Islands Development Board was established, a decision, I feel compelled to remind the House, that was bitterly opposed by the Conservative Party. No one car. really imagine that a proper decent living and good employment prospects for the Highlands can be sustained by tourism, crofting or small business or even by a combination of all three.

No one is suggesting that we try to settle large industrial complexes which still, to some extent, exist even today in such as the Forth-Clyde valley. The whole ethos of establishing the smelter at Invergordon was an intelligent assessment of the facilities available married to the concept of improving the general life of the people in the area. I would like to stress, because I think an element of doubt has been introduced into this debate, that when the smelter was established there was no element of doubt about the success of this operation. No one said then that this was a dodgy business about which we ought to be rather careful. The whole idea was welcomed and we know that more than one company was interested in going to Invergordon.

The production at Invergordon was not meant for export so to some extent the depressed state of the international aluminium market is irrelevant. The smelter was designed specifically to provide for domestic needs. That is why the Government are to blame because of the collapse of industry in this country. That is why Invergordon is in difficulty. I say with certainty that the decision to put the smelter at Invergordon was correct at the time it was made. One of the greatest damages, apart from the immediate, short-term problems of Invergordon, which can be caused by the closure of the smelter and the controversy surrounding it is that in future Governments may hesitate before they move large industries to remote areas and the Highlands. Because this Government have had their fingers burned over Invergordon, they and future Governments may be inhibited, which could damage the prospects for remote areas.

The Government's defence of their case to allow the closure of Invergordon rests broadly on three grounds: first, that time was short; secondly, that Invergordon had to go in order to safeguard other jobs in the company's operations; thirdly, that the rescue operation was too expensive. I agree with my right hon. Friend the Member for Glasgow, Craigton (Mr. Millian) that the Government knew well in advance of December that the company was in trouble. Indeed, I believe that the Government knew well before 6 October that this company was in trouble, because the power contract was in dispute. What the Government should have done, immediately they knew of the difficulties about the power contract and the disputed charges, was to go to the company and discuss its whole future. It is really no use for Government to sit back, wait for and react to events. They must take the initiative. Long before they received a formal notice of closure, the Government should have had contingency plans available. That is what Governments are for. They must take the initiative. They must propose, and not simply react to events and dispose.

I do not believe that the company is free of blame. The management must have known that the Invergordon operation was running into trouble. If not, it was incompetent in leaving the matter until October. If it knew, it was scandalous for the company to wait until October before approaching the Government if not only the smelter but the company's whole existence was in jeopardy. That is what the company tells us. On page 2 of the document that British Aluminium sent to us, it said that it had three alternatives: To improve the power contract substantially… To terminate the power contract and close Invergordon. To allow the whole group to go into liquidation". It is nonsense that the company should leave the matter to that stage when its whole status was in jeopardy.

Despite the shortage of time claimed by the Government, even if we accept their case to that extent, it should still have been possible to put together a rescue package. We are advised that the company thought that such a package existed, even if it was not formally offered, right up until 17 December. I believe that the rescue package fell through because the Secretary of State capitulated to the Treasury. There can be no other construction.

The Government's second defence is that it was necessary to allow Invergordon to go to save the other jobs. No hon. Member wishes to be a prophet of gloom. None of us wants to send those in the other parts of British Aluminium's operations to bed tomorrow night worrying about their future. But the blunt truth is that we have had no assurances that the other jobs are safeguarded.

The Government should not have accepted from the company that the only choice was to close Invergordon or lose the lot. They should have been discussing with the company Invergordon and the other jobs, and should have put together a wider package to provide a secure future and safeguard all the jobs, not allowing them to be picked off piece by piece. The Government are wholly negligent in this respect.

We are told that the rescue package was too expensive. There seems to be an issue whether the company wanted £16 million a year in perpetuity or an offer by the Government of a break in the contract. It does not seem to me to be beyond the bounds of reason to tell the company "We shall give you the £16 million a year". That could have been done without a break in the contract, but the Government could easily have written into the contract a clause saying that once the smelter became profitable again the price of electricity would be linked to rising profitability.

That solution would have assured the company of continuity beyond three years and at the same time safeguarded the Government for the time when, as we all hope, the economy picks up and that smelter is once again making profits. The Government could have done it if they had had the wit and the intelligence.

If it is said that a rescue package in the form of a subsidy of the company would be too expensive, the following issue arises. What assistance are the Government prepared to make available to any new owner or operator? If an extra £16 million was required by British Aluminium to keep Invergordon going, and if, as the Government still insist, that is too much, how much will be available in subsidy from the Government to have the plant reopened? Will it be an additional £12 million, £8 million or £4 million a year? We are entitled to know what the Government are willing to do to have it reopened with a new operator. We need an answer today, not in six months, if the company then says "That is it. The place will be broken up."

It would be the greatest irony if at the end of the day the Government, compelled by force of events, compelled by the fight put up by the people of Invergordon and the pressure of public opinion, made available the £16 million that they had refused to British Aluminium, having put the work force and their families through the trauma of closure and uncertainty over the next few months.

The whole matter has been badly handled both by the Government and by the company. Not the least aspect of that is that the last people to know what was happening were the work force. The loyal service of those who have been at the smelter for some time has been treated with contempt.

I regret to say that such contempt of the work force is not unusual. In Aberdeen a factory is to be closed on 9 March. The work force were told at the beginning of December that it was to close. We now learn from the company, Consolidated Pneumatic Tools, at Tullos that in November 1980—not last year—someone from the parent company went to see Mr. Robin Duthie at the Scottish Development Agency to discuss the company's future in Aberdeen, telling him that the company was in difficulties. After that the SDA made several approaches to the company, asking what help it wanted, and no response was received. Then we learnt that the place was to be closed. The problem is that no one in Aberdeen—none of the work force, none of the full-time union officials—was aware that the plant at Tullos was in such serious trouble that it was likely to close, with the statutory three months' redundancy notice.

Almost exactly the same thing is happening at Invergordon. It is something that is repeated time after time. That example and the others that I have quoted show that the Government must put their house in order. They must have available a great deal of knowledge about the state of industry in Scotland. They must act with resolution.

The smelter at Invergordon must be reopened. The Government's preferred solution is clearly that a new operator should be found. What are they doing? We have been told that the Government owe it to the people of Invergordon to scour the world to find an operator. Who is doing the scouring? We are told today that it is Mr. Gordon Drummond, who has some experience in aluminium. I hope that more than one man is doing the job.

Mr. McQuarrie

If the hon. Gentleman had listened to my right hon. Friend the Secretary of State on Monday and again today he would know that the Scottish Development Agency, Locate in Scotland, the Scottish Office and the Department of Industry are scouring the world to find another operator. It is not Mr. Drummond on his own. The hon. Gentleman should have been listening if he has the least interest in ensuring that the smelter is reopened at the earliest opportunity.

Mr. Hughes

It is always a mistake to give way to the hon. Gentleman, who always states the obvious. It has been confirmed that it is not simply one man who is scouring the world for another operator, but we have not had an answer to the question of what package is on offer. I go further and ask whether there is a package on offer. Do the Government have a package, so that if a potential operator comes to them tomorrow or in a week or in a fortnight they can say "Here is the offer. Have a look at it, and let us negotiate"? I suspect that the answer is that the Government have no package on offer. They should be clear about what they are trying to do and let us know.

I have doubts about whether a buyer can be found, for simple commercial reasons. If one believes that British Aluminium is an efficient company—I have heard no one suggest that it is not—if it cannot make a profit at Invergordon in the circumstances, neither can any other private operator. No private operator will come to Invergordon for social reasons. Private operators will come only if they can have a good price and make some money out of it.

An alternative, which has already been suggested by the local authorities in the area, is public ownership of the Invergordon smelter. We shall probably have to go further and take into public ownership not only the Invergordon smelter but the whole of British Aluminium, if we are serious about protecting the jobs in the future.

Whatever other lessons are to be taken from this episode, and however optimistic we may be—I remain optimistic—that Invergordon can be reopened, there is one other lesson which even the Government must be aware of. Linwood, Fort William and Invergordon are each part of a whole industrial tragedy. They will be repeated again and again and again until the Government are willing to change their entire economic and industrial strategy. I suspect that the Government are incapable of doing that. Therefore, the sooner they go and allow a Labour Government to take over to begin to try to repair the damage, the better.

6.51 pm

Mr. Albert McQuarrie (Aberdeenshire, East)

Despite the remarks of the hon. Member for Dunfermline (Mr. Douglas), who, I hope, will not intervene as often in my speech as he did during the speech of the Secretary of State for Scotland, let me say at the outset that there is not one hon. Member on either side of the House who has not the deepest sympathy for the work force at Invergordon. The BACO was the backbone of employment in the Cromarty Firth. If the smelter is allowed to remain closed the area will be reduced to a wilderness of closed factories, shops and houses, with the lives of thousands of good people and their children ruined. It is under those circumstances that we must look at the position. We must also be prepared to look at it realistically, in the knowledge that there is no alternative to restoring the smelter to full production, and it must be done with the least possible delay.

At the end of this week the work force will collect the final week's wages, leaving only one week's lying time to be collected. Redundancy pay has been in dispute. This will hold up any additional income which the labour force might hope to have to tide it over the immediate future.

It is not the impact of the money situation that is causing the deepest concern at Invergordon. It is the fact that the smelter has closed down and that there is no alternative employment in the area. At the jobcentre in Tain yesterday only three vacancies were available, none of which was suitable for any of the BACO employees.

We have heard from my right hon. Friend the background to the closure. We have also listened to Opposition Members condemning the Government's failure to keep the smelter open. This is what we on these Benches would have expected from the Opposition, who have to accept a great deal of the blame for what has happened. The right hon. Member for Huyton (Sir H. Wilson) at the Labour Party conference in Scarborough in 1967 stated that the Government were ready to discuss with the industry the provision of one or more smelters.

Mr. George MacKenzie (Rutherglen)

I am astonished to hear the hon. Member say that. Perhaps he would care to hold a conversation with his right hon. Friend the Secretary of State, because in the discussions that we had about this business in 1976 his right hon. Friend, then speaking as the Member for Ayr, said: It was an imaginative and right thing to do and it was to the immense benefit of the area that we should attract British Aluminium there. I am extremely pleased that it has settled in so well".—[Official Report, 11 May 1976; Vol. 911, c. 31.] If his right hon. Friend thought that it was an imaginative and right thing to do, it is astonishing that his Back Benchers are not supporting him in that point of view tonight.

Mr. McQuarrie

I am grateful for the right hon. Gentleman's intervention, but he has misinterpreted what I was saying. I was saying that at the Labour Party conference in October 1967 the right hon. Member for Huyton said that the time was ripe for the creation of these industries and one or more smelters. Later that day the then Under-Secretary of State, Department of Economic Affairs, Mr. Edmund Dell, made the optimistic statement that British Aluminium would build a 100, 000-ton smelter plant at Invergordon, together with a 240, 000-ton alumina plant in the same area, both to be powered by nuclear power. However, despite this statement, the Invergordon smelter did not commence with nuclear power. It was compelled to reach an agreement with the North of Scotland Hydro-Electric Board for the supply of power.

The contract for the power, which was to last until the year 2000, was 1.7p per unit of electricity. As was pointed out by the right hon. Member for Glasgow, Craigton (Mr. Millian), this was against 1p per unit which Alcan was paying at Blyth and 1.3p which RTZ was paying at Anglesey. It might interest the House to know that the cost to the North of Scotland Hydro-Electric Board to produce a unit of electriciy is 0.8p. When one looks at the 0.8p and at the 1.7p which was the charge in the agreement between the parties when the smelter was set up, it is clear that the agreement reached by the Labour Government in 1968 was the start of the rot which has finally caused the collapse of the smelter.

From 1971, when the smelter opened, the then Secretary of State for Scotland, now Lord Ross of Marnock, failed miserably to ensure that the agreement made between the company and the NSHEB was viable, especially as the taxpayer was to foot the bill for any losses by the company over its power costs. Since 1971 it has cost the taxpayer £180 million. If the agreement had continued to the year 2000 it would have cost the taxpayer a further £288 million, taking it on the basis of £16 million a year at today's prices.

Mr. Robert Hughes

May I ask the hon. Member a simple question? Is he now saying that the smelter should not have been established at Invergordon?

Mr. McQuarrie

No, I am not saying that. [Interruption.] Mr. Deputy Speaker, may I appeal for your support in asking the hon. Member for Dunfermline at least to give me the opportunity to make my speech rather than making comments from a sedentary position?

My reply to the question by the hon. Member for Aberdeen, North (Mr. Hughes) is that I am not suggesting that the smelter should not have been put at Invergordon. Contrary to what some other people think, I accept that it is right to popularise the rural areas. One way to increase the populace is to establish an operation like that, provided it is ensured that it will be viable, but it must not be forgotten that since this factory was placed there, only in one year of its operation has it made a profit. I am not prepared to argue about it, for the simple reason that I was completely in favour of ensuring that that work went to Invergordon.

Mr. Douglas

If I may say so, the hon. Member seems to be in a revolving door argument. He seems to be suggesting to the House that it was right to put the smelter there, but that it is wrong for us to subvent it because it is costing the taxpayer £x million; however, to make it viable we should have subvented it by even more to get the power costs down. Am I incorrect in those assumptions?

Mr. McQuarrie

Yes, the hon. Member is incorrect. I am not suggesting that we should not have subvented it. What I am suggesting is that any subvention that was agreed should have been agreed between BACO and the hydro-electric board in such a way that it was a viable proposition. If it needed a certain amount of Government subsidy, that subsidy should have been put in. I was merely quoting the kind of money that would have been required had we continued the contract that my right hon. Friend has terminated. If the Government of the day had examined the ongoing subsidies they would surely have given thought to the creation of a power station at Invergordon, as suggested by one of my hon. Friends, which would have reduced dramatically the losses and made the plant more viable.

All those matters are behind us, and it is not at them that we should look today, but at how and when we can put the smelter back into operation. As was said by the right hon. Member for Craigton, it is reported today in several national newspapers that talks are well advanced on putting together a package to reopen the smelter. I hope that my hon. Friend the Under-Secretary will tell the House more about that, because when it was mentioned by the right hon. Gentleman my hon. Friend gave a negative response.

As has been said by the Highlands and Islands Development Board in the Financial Times and The Scotsman, which the right hon. Member for Craigton said he had not seen, but which I have been fortunate to see, people are not only interested, but the HIDB has a short list of six firms that are interested in taking over the smelter. If that is a fact, as the right hon. Member for Craigton said—and I am sure my hon. Friend the Minister will agree—the House has a right to know. It is not only the House that has a right to know, but the workers in Invergordon, who are standing by doing nothing wrong, begging for their jobs, to which they are justifiably entitled.

Mr. Robert Hughes

They are not begging. They are fighting for their jobs.

Mr. McQuarrie

When I say begging, I mean that those people want to return to their jobs. British Aluminium has blatantly thrown them out of those jobs.

I hope that my hon. Friend the Minister will tell the House about the six firms that the HIDB has shortlisted as being willing and suitable to take over the smelter. We do not want any more lies or deceit on that issue. [Interruption.] I am not referring to the Government when I say that. We do not want lies such as we had at the end of August 1981, when Mr. Ronald Utiger claimed that only £6 million of disputed charges to the hydro-electric board in the first six months of 1981 had prevented the smelter from making a profit. If that was so, it is criminal that British Aluminium decided to back out. A firm the size of British Aluminium should have been able to stand a loss of £6 million. Such figures have not been mentioned to the Government.

The Scotsman of 30 December said: Ronald Utiger claims only £6 million of disputed charges to Hydro Board in the first six months of this year prevent smelter being in the black. If that prevented the smelter from being in the black, the company could have kept on the 890 workers who are being made redundant at Invergordon.

In October 1981 the financial director of British Aluminium made a statement denying that there was any intention to close Invergordon. Finally, two months later, the statement was made that to keep Invergordon in operation would seriously threaten British Aluminium's whole group. Where are we with British Aluminium? How can anyone believe anything that is said by British Aluminium? As the right hon. Member for Craigton said, two weeks before the factory closed the work force was not aware that that would happen.

That was disgraceful conduct by a firm that calls itself British Aluminium. It denigrates the word "British" by acting in that manner towards 890 people who are dependent on that factory for their jobs. Is there any wonder that the work force is bewildered when it is subjected to such deceitful actions by British Aluminium?

Another factor that the Government must consider is the 997E casting head, the facility to use it and the material from it that sells at £900 per ton. There is also the 109 wired bar head. Both those heads produce material for Swansea. I understand that those two operations at Invergordon cannot be carried out anywhere else in Britain, if not in the world. I have been advised that British Aluminium wants to employ 54 people to carry out those two operations and dispatch the material to Swansea by sea from the pier. Does British Aluminium honestly think that any 54 of the 890 people who have been made redundant will rat on their fellow workers to take on those jobs? There is no way in which British Aluminium will get supplies from Invergordon as long as the smelter remains closed.

The Government must also ensure that British Aluminium is not allowed to remove machinery from the plant or to obstruct the efforts of any of the interested parties to get the smelter back into operation. It is tragic that when the Government were negotiating to write off the hydro-electric board's claims against British Aluminium they did not insist upon the right to control the smelter buildings, of which the book value is only £20 million.

Another factor that could have saved the smelter was the installation of computer control, which would have put a break in the process. It would also have affected the cell voltage, which would have reduced the power costs of running the smelter. I am led to believe that the cost of the computers, which are lying in Manchester, was to be £750, 000 for 20. If the company had computerised, the whole factory could have been self-financing and it would have remained open.

Why the Government could not consider all those matters is beyond me. We have poured millions of pounds into British Leyland and we are now faced with the possibility of a whole area being decimated if we allow the smelter to remain closed. Until a buyer is found, the Government must seriously consider maintaining the plant and the work force. That area is not the Midlands of England, but a part of rural Scotland, where people's livelihood depends upon their employment at the smelter. The jobs of many thousands of other people who are affected by the disaster could also be saved.

There must be one more top priority for the Government in securing the opening of the smelter. Politics should not enter into the matter. What matters is the human misery that is being caused to the people of Ross and Cromarty, who have had their livelihood snatched away by a company with no soul. The Government are desperately trying to find a buyer, but now that the smelter is closed there is little chance of its opening again. Despite the shortage of money, and at the risk of not cutting income tax in the Budget on 9 March, if a cut is envisaged, the Government should step in and put the smelter back into operation so that any future owner or consortium can take it over as a going concern.

I congratulate my right hon. Friend the Secretary of State on the efforts that he and his Ministers have made so far. I praise my hon. Friend the Member for Ross and Cromarty (Mr. Gray), who has been exploring every avenue so that the smelter can be reopened. I hope that the people in his constituency appreciate the countless hours that he has spent trying to find a solution to this serious problem.

Let me say to the workers of Invergordon "We are not out to give you sympathy. We are desperately trying to get you back to work. You have behaved in a most responsible manner under these terrible circumstances. Please do nothing that will upset the work that is going on to reopen the plant. If, after every avenue has been explored, failure has to be admitted, it will not have been for the want of trying to save your jobs, your homes, and your way of life". The plant must not be allowed to die. It is up to all of us, on both sides of the House, to work towards a solution to the problem.

7.10 pm

Mr. Russell Johnston (Inverness)

The hon. Member for Aberdeenshire, East (Mr. McQuarrie) has made a forthright, direct and, indeed, courageous speech for which he must be complimented. I agreed with many of the remarks of the hon. Member for Aberdeen, North (Mr. Hughes) who pointed out that the subject we are debating is not only a terrible event but that, as in the case of the pulp mill at Corpach, the smelter was thought to be a sound, reliable provider of employment in the Highlands for as far ahead as one could reasonably see. With the best will in the world, the same cannot be said for the various rig construction units and yards on which many people in the Highlands depend for work. We are discussing the destruction of what was seen as the safe part of the developing and interrelated industrial base of the Highlands. That is the worrying aspect. It should be a factor much to the fore in the Government's thinking.

Hon. Members are discussing what is undoubtedly a complicated issue. It is difficult to assess thoroughly without considerable knowledge of the technical requirements of the industry and some informed assessment of the prospects for the industry. The problem is made more difficult because different experts say different things. I have always found one of the more stressful aspects of the life of an hon. Member, trying to do the best he can, is that he frequently has to struggle with technical issues of which he may have a limited understanding, but knows at the end that political decisions have to be taken on the basis of technical assessments.

During the recess, on the issue of cheap power, which is a central issue and one on which British Aluminium concentrated in its initial statement, I put a proposition to the Secretary of State involving the transfer of hydro resources to the company on a "reversion to the State" argument, but found ultimately that the base figures were inaccurate. I have written to the Secretary of State to apoligise. I wish to return to the question, but I should like first to say that it will not be part of my purpose to argue that the Government have had bad intentions or that the Government in 1967–68 had bad intentions. But even Governments, who have much greater access than individuals to information, can make mistakes. I suggest that the present Government may well have made some mistakes. I do not, however, question their good intentions.

The basic issue is whether the Government could have taken action that would have enabled British Aluminium to continue. There was a loss of £20 million in 1981 with its possible effect on the company's future. I am not sure how the hon. Member for Aberdeenshire, East arrived at the figure of £6 million. Three months warning was given. The right hon. Member for Glasgow, Craigton (Mr. Millan) has referred to the approach made on 6 October in the context that this had not been made clear previously. The point was not taken up by the Secretary of State. It is my understanding that on 6 October the company came to the Government with a written document. It was not a casual chat with officials. That is what I am told.

Given that situation, one is faced with trying to clear up the differences that have emerged between the Government and the company about what was said during the negotiations. It must be a matter of great concern when an experienced company and the Government are negotiating on a question of such critical and urgent importance that a dispute should arise over what they said to each other. It should not happen. The expertise exists to avoid that. According to what Mr. Utiger told me on Tuesday, the company was asked by the Government to make proposals about what would be necessary to keep the company going. The company produced a package. It was only then that the Government suggested a seventh point to be added to the six point package by the company suggesting a three-year break clause. The company, I understand, argued that the three-year agreement was inadequate for investment. Money had to be invested. If there was a possibility that it would be broken off after three-years this would affect the whole accounting procedure.

The Government argued in turn that conditions might change. This has been the Government's argument for some time.

They said that the recession might go away, that things would get better, and that they might therefore find themselves in the highly unpopular political position of having given extra support to the company and the company then making a large profit. As the right hon. Member for Craigton remarked, the company put up a proposition for some sort of profit threshold. The argument, I understand, was never properly developed during the negotiations which ended on 18 December with the Government saying that the package was too expensive.

Mr. Utiger says flatly that at no time did the Government say that they would accept the package produced by the company if the company in turn accepted the three-year limit. Nor was the idea developed of a profit threshold in the event of things getting better generally. I have listened carefully to the Secretary of State and also noted the statement by the Minister on 7 January. I still do not feel that the issue is properly resolved. The three-year limit, according to Mr. Utiger this Tuesday, and obviously repeated to the right hon. Member for Craigton yesterday, was never made in his view a fundamental part of the negotiations. Whether, if it had been made a basic part of the negotiations, this would have altered things, I am not in a position to say. But there is undoubtedly a dispute about the matter. Mr. Utiger says one thing and the Government say another. That is not good enough. The Secretary of State shakes his head. However, that is fact. It must be a matter of concern.

Secondly, there is the question of power costs. The right hon. Member for Craigton has developed a powerful and well documented argument involving the related position in Anglesey and Lynemouth. The right hon. Gentleman said that the figure was not a new £16 million. It is £8 million added to £8 million. I should like to clear up this question of figures. According to the minutes of evidence of the Committee on Scottish Affairs on 15 June, the table on page 10 shows the support for nationalised industries other than transport industries. As paragraph 5 at the bottom of page 11 states: Provision is made for payments for the North of Scotland Hydro Electric Board towards its losses under the 1968 contract to supply electricity to British Aluminium at Invergordon. The figures are given from 1975 and include a projection to 1984. The figure for 1977–78 is £17 million and thereafter £8 million, £12 million, £14 million, £11 million in 1981–82, followed by £10 million and £10 million again in 1983–84. It is not clear what proportion of that figure relates to the Invergordon subsidy. I should like to know that proportion. I should also like to know the answer to the question raised by the right hon. Member for Craigton that was not really answered.

Mr. Millan

I was saying that the smelter deficit order that we debated on 22 July last year for the year 1980–81 provided a sum of £8.7 million at that time. It is the difference between that and the £16 million that I was referring to as additional money. That is approximately equivalent to 0.5p per unit of electricity consumed at Invergordon. The figure is even better than that from the point of view of my argument. In earlier years, including 1979–80, the smelter deficit was considerably more than £8.7 million. I speak from memory. In the year 1979–80, it was I think £15 million, which is not much different from the £16 million. It is one thing to do that for one year in special circumstances and quite another to do it for 20 years. I accept that, but my point is that the £16 million has been presented as new money, and that is highly misleading. I do not think that the Secretary of State has ever denied my assertion on that.

Mr. Johnston

I am most grateful to the right hon. Gentleman for that intervention. It is of great interest to the House to know that, on a previous occasion, the level of subsidy was touching £15 million, when the figure of £16 million was thought to be intolerable.

Mr. Younger

Let us not make a mystery where none exists. I have never suggested that the £16 million was all new money. It was perfectly clear that it was the annual subsidy that would be needed if the contract were to carry through every year until 2000. We have enough mysteries already without creating new ones.

Mr. Johnston

I can see that the Secretary of State and the shadow Secretary of State wish to use me as a means of getting at each other.

Mr. Millan

I do not wish to intervene on an intervention, but it is not true to say that the matter has always been made clear. I doubt whether it was made clear to many hon. Members until I made the point this afternoon. I have now been able to check the figure, and the deficit refunded in 1979–80 was, as I had thought, £15 million.

Mr. Johnston

That is a basic point and I do not wish to labour it, as time is against us. What emerges from the exchanges via the right hon. Member for Craigton and the Secretary of State is that there was recently a time when the Government paid a subsidy that was only £1 million short of what the Government have presently shied away from. That is of interest.

I should also like to press the Secretary of State on the figures that were produced by the right hon. Member for Craigton showing the differences between the power costs in Alcan, Rio Tinto-Zinc and BACO. They go up from 1p for Alcan to 1.3p for RTZ and 1.7p for BACO. I am still not at all clear how Anglesey and Lynemouth are subsidised or on what basis it is done, and why, if it is done in those cases it is not thought appropriate to recast the arrangement for Invergordon and do it there too.

It seems to be evident from what I have been told that the proposition that I originally put with regard to hydro power is not possible as a complete solution, because it would, as the Secretary of State said, involve between 55 per cent. and 60 per cent. of the total hydro capacity. That would have a corresponding impact on the general tariff of the hydro hoard, because it would be taking out the low-cost element. That would inevitably have the effect of leaving only the high cost element, which would have to be put up still higher in order to make the company operate economically.

There is, however, no doubt that a hydro solution could provide a significant part of the full solution, and I should like to know the Government's view about it. It is essential to the possibility of having any new tenant at Invergordon that some arrangement should be made, and it is clearly essential to the future of the plant.

Thirdly, I should like to hear the Government's considered prognosis on aluminium demand. The company says that it is affected by the general recession and that it cannot sell aluminium. Figures have been quoted showing that in the United States of America there is under 60 per cent. capacity, that there is stockpiling, and that half the plants that were planned in Australia are not now going ahead, so that we are in a bad general situation. At the same time, the Highlands and Islands Development Board has produced a report that says that things look good. Who is right? I am in no position to say who is right. What do the Government think?

Fourthly, it seems clear that a significant factor in terms of carrying the losses was the size of British Aluminium. In other words, it seems fair to say that, if BACO had been larger, it could have faced its plight better than it did. It seems fair to suggest that Alcan or RTZ could have done better.

Particularly given the remarks of the right hon. Member for Craigton about Falkirk, it is most important that the Government should be able to give some assurance as to the position in Fort William and Kinlochleven. The Secretary of State must know that the position at Fort William is still very raw after the pulp mill experience. The right hon. Member for Craigton mentioned that Wiggins Teape might be dismantling before the Elias Robertson proposals go through the Scottish Development Agency. I saw Mr. Elias last weekend and was in touch with the Scottish Office on Monday on the matter. I know that this is not directly relevant, but if the Minister is able to mention it in his reply, I shall be most grateful to him.

Fifthly and lastly, it is clear that British Aluminium will not go back to Invergordon. There will have to be a new company. That means that a solution to the power cost must be found. We have not yet heard a clear view about plant cost, but that will also be necessary.

The hon. Member for Aberdeenshire, East referred to the article in the Financial Times. It would be of value if the Minister were to make some reference to it. I still find it irksome, as a Member of Parliament, that journalists appear to be able, at the drop of a hat, to learn much more than we are ever able to discover or are ever told. I should like to lay stress upon the statement in the article that, because of the severity of the closure's impact on the region, the Highlands and Islands Development Board is believed to be ready to use £10 million over three years promised to the area in order to assist a rescue operation, rather than directing the money into promoting new industry. That is not a proposition that I am opposing in any way, but I should like to know a little more about the progress being made by the Government and the HIBD towards producing a package for a new tenant. That matter is most important. The Secretary of State has said that he wishes to speak clearly. I hope that the Minister, in his reply, will be willing to do that.

A great many hon. Members have said that this is a tragedy. That was said on Tuesday night, when my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) raised it on the Adjournment. All hon. Members in all parts of the House are deeply concerned about it. I do not think that any of us will give the Government much rest until we are assured that everything possible is done. Many of us believe that it is possible to save the smelter, and that somehow that must be achieved.

7.27 pm

Mr. Alex Pollock (Moray and Nairn)

I am pleased to follow the thoughtful speech from the hon. Member for Inverness (Mr. Johnston), and to give another viewpoint from the Highlands. Although many harsh winds were blowing through the Highlands over new year, none was as cold as the awful news about the closure of the smelter.

Living as I do on the other side of the Moray Firth, I can confirm that the implications are seen to affect not merely Easter Ross but the whole of the north of Scotland. It seems incredible that a plant that was built to give security and industrial success to the Highlands could close so suddenly and with such little warning.

I should like to add my voice to that of my hon. Friend the Minister of State, Department of Energy, who, of course, cannot take part in the debate tonight. From my personal knowledge, I confirm the keen sense of tragedy that he felt when faced by the closure. He spent many anxious days, subsequent to the news, in trying to do what he could to co-operate with his colleagues in the Government to find a solution, and I pay tribute to him for that.

In the debate, hon. Members have chosen to deal with various aspects. Some have chosen to discuss the history of the energy contract. Others have concentrated their remarks on the behaviour of British Aluminium's management and the timing of the announcement. I shall examine in a more general way the social and economic implications for the north of Scotland.

We have to accept that BACO has decided to quit Invergordon and leave the work force to its own fate, so the Government must concentrate their energy on two options. They can encourage a new consortium to go in and take over the plant. I urge the Government to ensure that the early promises by BACO of co-operation over the transfer of the necessary land and plant will be carried out. The company appears to have undertaken co-operation and I trust that it will co-operate, particularly in the light of what we have been told by the Secretary of State about the financial arrangements agreed between the Government and the company so far. The least that we can expect of BACO management now is to make available as quickly, fairly and reasonably as possible the necessary land and plant.

I also trust that the Government will work extremely closely with the Highland board in exploring the possibility of new purchasers for the plant. One key ingredient must be any future energy price package. One of the disputes that has been aired in the press this week has been that between the chairman of the Highland board and Lord Kirkhill, chairman of the North of Scotland Hydro-Electric Board. Each takes a different view of the statutory duties and obligations of the hydro-electric board. I hope that the Minister can confirm that his officials are working as hard as possible to try to bring this dialogue to a conclusion with an authoritative view of exactly what the powers of the hydro-electric board are in that regard.

If no new consortium or single operator can be found to succeed British Aluminium, then every effort must be made to try to find other industrial uses for the plant. When the Government carry out such studies, I hope that they will bear in mind not just the plant and the equipment but, the fact that the type of industry must be relevant to the skills of the work force which is already there.

The Government have already said that the Highland board is working on a parallel inquiry and that other Government agencies are involved. Can the Minister assure us that if it is found that the extra injection of £10 million is not sufficient for the full completion of these inquiries they will not hesitate to make such funds available as may be required to ensure an industrial future for Easter Ross? Can the Minister also confirm that the £10 million additional funds so far made available are not to be applied throughout the Highlands but are specifically identified to help industrial regeneration in Easter Ross?

I have mentioned two options and I do not believe that any others can be considered. We can argue about whether the smelter should have gone there in the first place and we can debate the wisdom of the energy price contract that was attempted, but the important fact now is to remember not just the presence of the plant but the presence of the work force with no other obvious place to go.

In addition, let us remember the huge investment in the Highlands infrastructure. I have not seen any accurate costing of infrastructure but it must be substantial. The most obvious items are roads, schools and houses. It is estimated that to cope with the workers, 50 per cent. of whom were local and 50 per cent. of whom came from outside, about 600 or 700 houses had to be built. Huge costs are involved in improving relevant roads and ancillary facilities. We must not allow them to have been created for no good purpose.

Let us also remember the industrial ramifications beyond Easter Ross. In my constituency I see the implications beginning to reveal themselves. One engineering company has already laid off its specialist work force committed to the maintenance of the BACO plant. The management of a sawmill is contemplating laying off some of its work force because of the specialist equipment that it supplied to the plant. Shop retailers with branches in Inverness are already redoing their sums in the knowledge that spending power will not be available in the area. The investment is so colossal that we cannot be allowed to abandon it now.

I add my tributes to those which have been made to the local work force for the way in which it has behaved. The right hon. Member for Western Isles (Mr. Stewart) spoke about the work record there. My information confirms his. Only one and half days were lost in two and a half years. That is not a bad example to set the rest of the country.

A typical member of that work force provides the best illustration of the human problem. I refer to a local man who is a time-served welder. He worked in England for about eight years but then the smelter provided him with a chance to return home. He built his house and his wife and four children live there with him. At the beginning of December he had security and pride. By the end of the month he had lost both.

I am trying to convey to the House that we must accept that the Government of the day believed that the smelter would provide long-term prosperity and employment for Easter Ross and for the Highlands in general. We must now live with the inheritance of those expectations. Above all, the work force at Invergordon must be given real hope. The workers now look to the Government to sustain that hope. I trust that in the anxious days ahead they will not be let down.

7.38 pm

Mr. Gavin Strang (Edinburgh, East)

I am happy to speak after the hon. Member for Moray and Nairn (Mr. Pollock). Government Members have made a number of interesting speeches on the issue. I hope that they will face the fact that the Tory Party's credibility in Scotland is on the line tonight. It is all very well for hon. Members to pay compliments to the Minister of State, Department of Energy, but he will be judged on the basis of whether the smelter reopens. When somebody can sit for a constituency and lose the gas gathering system and then lose a smelter one must ask "When will Scottish Tories stand up and fight?" I hope that a number of Scottish Tories will at least abstain tonight.

The issue goes much wider than simply the immediate impact on the Highlands. It is a major disaster for the Scottish economy, and the Scottish electricity and coal industries.

The Minister referred to Torness, but I wish that he had said a little more about the Scottish coal industry. It is not enough to say that the National Coal Board in Scotland is successfully finding export outlets for coal. We are considering here miners' jobs and a tremendous blow to the Scottish energy industries. I hope that the Minister will respond more fully on that.

Let us consider the matter not on social considerations, but on the most objective economic appraisal. We do not have much evidence from the avoidance of closures in Scotland that social considerations figure prominently in the Government's consideration of these matters.

Therefore, let us consider the issue in terms of hard economics. The hon. Member for Moray and Nairn, to his credit, brought out some of the hard economics, although I do not suggest that he is insensitive to the social implications.

We are considering a massive reduction in the Exchequer's net income not only through the payment of unemployment or supplementary benefits, but through a loss of income tax and value added tax. As regards the surplus energy capacity to which my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) referred, what is the sense of creating an energy capacity and not using it? What prices are put in the equation for that, for the unemployed miners' and the jobs of electricity supply workers?

It is all very well for the Secretary of State to talk about an astronomical sum, but I hope that the HIDB study will not simply consider smelters on the Continent or elsewhere in the world. I hope that both the board and the Public Accounts Committee will consider the whole economic cost to the Exchequer of all the smelters.

The issue is when the Government will secure the reopening of the smelter. I read with considerable interest, as did other hon. Members, reports in the press this morning. However, British Aluminium owns the smelter and why on earth the Government allowed themsleves to make a deal—that great pay-off to British Aluminium—without acquiring or at least taking an option on the smelter, I do not know. Is someone going to tell me that British Aluminium does not have an interest in the new power contract to be made available? I understand the common sense of my right hon. Friend the Member for Craigton and the attitude of the work force towards British Aluminium, but the obvious company to reopen the smelter is British Aluminium.

Given the mess that the Government have made, it seems unlikely that British Aluminium will be prepared to transfer the assets at a knock-down price to another company or consortium to operate with a much bigger subsidy than BACO has been offered by the Government. I hope that the Minister will face up to the issues. It would be great if the Highlands and Islands Development Board could acquire the smelter and establish a consortium, perhaps with a British Aluminium stake. However, the real issue is how much money the Government will put on the line.

I notice that the Government are very reticent when informing us about the cost to the Exchequer of the Alcan and Rio Tinto-Zinc smelters. I hope that the Minister will face up to the issues because it is irrelevant whether the National Coal Board or the Central Electricity Generating Board carries the subsidy. The Government have a responsibility to secure the reopening of the Invergordon smelter.

7.44 pm

Mr. John MacKay (Argyll)

This is a sorry day for the Highlands and, especially, Easter Ross and the constituents of my hon. Friend the Member for Ross and Cromarty (Mr. Gray). My hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) explained that the road began in the white heat of the technological revolution started by the right hon. Member for Huyton (Sir H. Wilson). Smelters were to be built and fuelled by electricity competitively priced with nuclear electricity.

The determination towards nuclear electricity persuaded Alcan, which was interested in going to Invergordon at that time, to move away because it preferred a coal-fired power station, as it now has in the North of England, to taking electricity from the grid.

I recently read a report which stated that somebody might be interested in Invergordon on the basis of returning to the Alcan idea of a coal-fired power station. The economics of that are a bit puzzling, but I ask whether that might be a possibility. If Mr. Gordon Drummond arid those considering the matter found someone who did not want an electricity supply because, bearing in mind the objections made in 1968, they were doubtful about today's electricity projections, would the Government be prepared to give the necessary financial support for a coal-fired station?

The hon. Member for Edinburgh, East (Mr. Strang) mentioned the details of the all-important contracts, but they were not made public. I was surprised at the way the right hon. Member for Glasgow, Craigton (Mr. Millan) went on at the Minister about the contracts of the other two smelters because he was in the Government in 1968. He knew that those contracts were kept secret. On 24 July 1968, when asked to give details of the contracts, the President of the Board of Trade said: I cannot tell him the price. It is never revealed in contracts of this kind."—[Official Report, 24 July 1968; Vol. 769, c. 586.] However, we know that the Invergordon contract was tied to Hunterston. By 1976 the Labour Government faced the problem of taking powers to protect the consumers of the North of Scotland board from the losses made in the smelter contract. Indeed, the right hon. Member for Rutherglen (Mr. MacKenzie) had a part to play in that. He said then that, on the gloomiest forecast, the nation would pay about £200 million to the end of the century. Fortunately for the right hon. Gentleman he said that it gave him "no pleasure" to think that it might be much higher. After five years, we have already paid £113 million. Therefore, the taxpayer will have paid an enormous sum by the end of the century.

I do not suggest that the 1968 Government alone had the wrong crystal ball. On the face of it, it appears that Alcan had a better crystal ball but, as I have read in the Hansard debates of that time, the House was united in wanting smelters powered by electricity. The smallest doubt crept in during the questions put by my hon. Friend who is now the Member for Southend, East (Mr. Taylor). In answer to one of his questions the present Lord Ross of Marnock said that the contractual arrangements had been carefully designed to ensure that the smelter would bear the full cost of the power and that no burden would fall on other consumers. That idea was carefully designed around an assumption based on a hopelessly optimistic assumption of nuclear costs. Projections assumed that by this time nuclear costs would be less than hydro costs. The reality, of course, is that the costs are 1.9p for nuclear and 0.8p per unit for hydro power.

Some critics seem to think that the cost of nuclear power per unit is more than that of other systems. It is not; it is below the cost of coal and oil. It has proved to be uncompetitive not against coal and oil, but against hydro power.

In the 1980 debate on the smelter order, the hon. Member for Edinburgh, Central (Mr. Cook), who has taken a keen interest from his stand on nuclear power, said that it was not Invergordon's fault that the rash expectations about the cheapness of nuclear electricity 10 years before had not come to fruition. While accepting that the power contract was fatally flawed, we must consider how we can help the men at Invergordon.

I read with interest the proposals of Admiral Dunbar Naismith of the HIDB, which were taken up by the hon. Member for Inverness (Mr. Johnston), that hydro power could be earmarked for Invergordon. I have had a superficial look at the suggestion and its consequences and I listened with interest to the Secretary of State's comments. As the hon. Member for Inverness said, Invergordon would take more than half the hydro output of the North board—1, 765 million of its 3, 234 million units. There would be the added problem that the hydro power that we can get, given the geography of the Highlands, is not geared to the 24-hour day after day generation needed by Invergordon. Fortunately, the plants at Kinlochleven and Fort William, which are smaller, can cope, except in the driest of summers, by using electricity from their own hydro station in the hills.

However, the earmarking of hydro does not necessarily involve a hydro unit having to move to the Invergordon smelter. I think that it could be done on an accounting basis. There is no doubt that if the hydro board were to lose cheap hydro by supplying the Invergordon smelter at 0.8 pence per unit, there would be an effect on other consumers. I suspect that electricity charges in the North board's area would rise to an unacceptable level. Certainly this customer of the board would view the increase as unacceptable and I believe that others would share my view.

However, spreading the loss among all customers in Scotland might produce different calculations. I was not able to come to a firm conclusion with the use of my pocket calculator, but perhaps my hon. Friend the Under-Secretary could suggest what would be the consequences of spreading the loss among other consumers.

I am surprised that some Labour Members who were in the House in 1968 are still asking what goes on at Anglesey. With little research, I discovered from Hansard that the CEGB spreads the loss on that contract among other consumers. There is a precedent for my suggestion. The CEGB consumers rather than the Government pay out in Anglesey.

If my suggestion were feasible, I would not want the system to stop at Invergordon. It could be an attraction to industry in the Highlands if some hydro power were earmarked for industrial purposes. For example, the only way that we will get a pulp mill in the Highlands is to go for a mechanical process and the problem there is the same as the Invergordon problem—the unit cost of electricity.

I was a little surprised that Lord Kirkhill tried to shrug off the 1943 Act which set up the board to exploit the water power resources of the Highlands by producing cheap electricity which would help to regenerate the local economy. The hydro board has done a splendid job in the domestic market, which helps to regenerate the local economy because it gives people the sort of standard of living that others have in the rest of the country.

However, perhaps we should respond more directly to the original obligation and consider the suggestion that I have made. I do not expect my hon. Friend the Under-Secretary to give answers tonight, because I am sure that it is a long and complex matter, but I ask him for an assurance that the Scottish Office is looking at the possibility and its consequences, both to North board and South board consumers. Indeed, I go further and ask whether there is a possibility of a marriage between help from the Government and help from the generating boards along the lines of the Anglesey contract.

It would be wrong to concentrate only on the smelter. We have to look at other possibilities. I should like to mention another source of employment in the Highlands that the Government ought to be considering. Exciting work has been done at Dounreay on the fast breeder reactor and we need the next stage of that development. I know that the SNP would close Dounreay because it does not approve of nuclear energy, but I do not agree. We should move on to the next stage of building a prototype fast reactor at Dounreay.

If we have learned anything about the AGR programme, it is that one should move slowly to big stations. It is time for a prototype fast breeder reactor, which would give a boost to the economy of the Highlands and the confidence of the area. The HIDB has been given £10 million for the next three years specifically to help in Easter Ross. If the board uses that sum within three years and believes that it can profitably use more, will the Scottish Office be prepared to add to the £10 million?

It is disappointing that British Aluminium showed no interest in a short-term arrangement. The offer to write off £47 million and to give an annual subsidy of £16 million for three years was fair to the company, the work people and the taxpayer. Nothing that I have seen or heard in the past two or three weeks has removed my distinct impression that the company wanted out of Invergordon. Its demands were of such a size and on such a long time scale that it must have known that no Government would accept them.

I know that there are critics of the financial arrangements made between the Government and the company for the ending of the contract. But contracts are contracts and Governments, like everybody else—indeed, perhaps especially Governments—are obliged to honour contracts that they or, with their knowledge, public authorities enter into.

Some seem to feel that the Government should have demanded the £20 million left with the company—an understandable desire to have the full pound of flesh. I cannot agree with that. If the Government had done that, I would not have supported them and nor would the hon. Member for Inverness or the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), because we three have a considerable interest in the company's continuing in business. I would not have approved of anything that endangered jobs at Falkirk, Fort William or Kinlochleven. I do not go along with Labour Members who feel that the full pound of flesh should have been extracted, regardless of the consequences at other plants.

I regret that my right hon. Friend the Secretary of State did not seek assurances from the company about the other plants. If he did so, I hope that he will tell me. I accept that we could not expect assurances up to the end of the century, but the Government could reasonably have asked for assurances in the shorter term. If they did not do that, they should do so now.

I pay tribute to the responsible attitude of the work force at Invergordon—an attitude which has been stressed by my hon. Friend the Member for Ross and Cromarty. The men are allowing alumina to leave Invergordon for Kinlochleven and Fort William, thus ensuring the continuation of those plants and the jobs there.

The Government have my full support and encouragement in the search for a single user or a consortium of users for the smelter. It is important that in the near future the Government should start negotiations, or complete them if they have been begun, about the availability and price of the site at Ivergordon. 1 assume that the plant is written off in British Aluminium's accounts at scrap value and the company should be prepared to sell it at that price.

Hon. Members have rightly stressed that we should be able to talk to anyone interested in a power contract. My right hon. Friend will have my support in coming to the House or going to the Government with the sort of power contract that may be needed for the plant to reopen.

As all hon. Members who have spoken today have said, the plant was set up to bring a new industrial future to Easter Ross. It is a tragedy that this has happened to it after only 10 years of operation. It is an equal tragedy that during those 10 years it made a profit in only one year and that the optimism that was shown in the original power contract—an optimism that was shared by all hon. Members—was so unfounded and hopelessly optimistic. While it is easy for the Opposition to blame the Government tonight, the blame is much wider and has a great connection with what has happened to power prices over the last 12 years. The House and Conservative Back Benchers will blame the Government if they do not show actively that they are seeking another company to reopen the plant. I am sure that they will do so, and they have my complete support in that search.

8.1 pm

Dr. Jeremy Bray (Motherwell and Wishaw)

The hon. Member for Argyll (Mr. MacKay) has turned his mind, as have all other Conservative Members, to ways and means of keeping the smelter open. I am sure that that is the wish of the whole House, and that the Government alone accept the closure. To make their case, Conservative Members should start at the first thumbnail and make the calculations on the cost of the job. The Secretary of State gave his estimate of the cost of the energy contract as £15 million to £20 million a year. That is the outside limit. There are 1, 000 jobs directly involved in the smelter, 1, 500 jobs locally, 1, 000 mining jobs and 500 jobs in the power stations and other plants in Scotland—a total of 4, 000. That means that £5, 000 per job is saved per annum.

The figures quoted by the Secretary of State on the electricity contract were the costs involved in bringing down the total supply costs to make the smelter economic, but the capital costs of that have already been incurred. Where do we draw the ring? Geography draws the line around hydro and smelter in Norway. The Secretary of State mentioned Switzerland and France, but in neither of those countries does geography draw the boundary around hydro and smelter. In those countries, long-term contracts override the cost of electricity supplies to consumers. This pursuit of the doctrine of fuel prices takes no account of what is on the ground and of the matching time scales that have got Invergordon and our fuel policy into the mess that it is in today.

Under the contract, British Aluminium has the right to receive 200 MWs at operating cost until the year 2000. But at what cost? The Secretary of State could not understand my question on that. Presumably it is based on the cost of generating it from Hunterston B, but on what basis of estimation? Will it be on the cost that was estimated at the time at which the contract was drawn up, at present-day costs, or on what? The realistic basis of an electricity supply contract must surely be at the marginal cost of supply of electricity, but the marginal cost to whom? The heavy capital costs that have been incurred have been incurred right down the line, not just at the smelter or at the power station, but at the pits, in the transport system, and so on. There must be a cost-benefit study to the community as a whole—not the sort of thing that the Government have been used to, but the sort of thing that they will have to get used to as the election approaches.

The Government's time scale of three years was obviously based on tiding them over until the next election. That period is far too short. Serious contracts for aluminium supply of the sort that any serious producer would want cannot be made over a three-year period. A period up to the year 2000 would have been good, but the Government could at least have tried a 10-year period. However and whenever the smelter is saved, the pressure for further industrial development in the Highlands must be maintained.

The question to which we should turn our attention is one that concerns me as representing the sole surviving jumbo project in Scotland—the Ravenscraig works. We are anxious to see higher quality of thought in dealing with the problems of industrial relations in Scotland, about which this Government have shown little understanding.

There are lessons to be learnt from the closure of the smelter. My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and my hon. Friend the Member for Aberdeen, North (Mr. Hughes) were perhaps, in the interests of the workers in Invergordon, a little shortsighted in not wishing to examine the origins of the smelter project. An account was given not only by my right hon. Friend the Member for Huyton (Sir H. Wilson) in a report to the Labour Party conference in 1967, but more fully in the book by Mr. Edmund Dell, the former Member for Birkenhead, who was a Minister in the 1960s and 1970s when the original contract was negotiated.

When Rio Tinto-Zinc put forward its proposal to the Government in 1966 for a smelter linked to an advance gas-cooled reactor, I was a Minister at the Ministry of Power and the proposal came to me. I thought that it was hazardous, to say the least, and a highly inefficient way in which to create jobs in development areas. First, there was the enormous delay in the construction, and, secondly, it was a capital-intensive project. Given the same money, the hydro-electric board could have created many more jobs. Thirdly, there was the enormous uncertainty of the metal crisis and, fourthly, the large margin of spare electricity generating capacity that was already emerging in 1967 and which has been a feature of the electricity supply industry since.

I attended the first meeting on the proposal, which was called by the Prime Minister of the day at No. 10. I voiced those misgivings, which were not popular. I put forward instead a suggestion for three downstream electrochemical plants which could have acted as the nucleus for a major petrochemical complex. Those three plants were needed at the time, gas had been discovered in the North Sea, we had oil in prospect and we needed to build up the downstream demand in petrochemicals, which even now Scotland has failed to develop. There was also the prospect of a gross excess ethylene capacity, which is causing problems at Grangemouth at present. That approach was not popular with the Prime Minister, and the negotiations were transferred to my colleague, Mr. Edmund Dell, then to the Ministry of Technology, and later to the Ministry of Trade.

I do not need to go into the details of the negotiations, because they are fully spelt out in Edmund Dell's book. It is clear that the British Aluminium contract has proved disastrous—for the company, for the country and for the workers at Invergordon. I suspect that the reason why we have not had the same difficulties at Anglesey is that RTZ is better and more experienced at negotiating the contracts involved in highly capital-intensive industrial and mining projects.

During the late 1960s RTZ was developing the iron ore fields in Western Australia and entered into a contract with the Japanese Government to supply virtually the whole of Japan's iron ore requirement for 25 years, with, of course, periodic renegotiations to take account of changes in world prices and costs. It was a highly protective contract, and it is protecting the interests of RTZ against all the vagaries and uncertainties of world steel demand today. If that could be done for steel, it could certainly be done for aluminium, and I trust that it has been done in Anglesey. I hope that there will not be the problems in that area because there has been a solid commitment there.

As for the future, a good case has been made on both sides of the House, bearing in mind that the capital costs have been incurred. Whatever the original wisdom may have been, the costs having been incurred, the present wisdom is undoubtedly to keep the smelter going. For the future, I hope that not only Conservative but Labour Members will learn the wisdom of not running after the first industrialist who comes along with enormous capital-intensive projects and uses them as a basis for exploiting unemployed people in development areas who do not deserve to be exploited in that way. Let us have development areas, and let us have industries in Lanarkshire and Motherwell, as well as in Invergordon, which will provide security for the future, which are protected from world makets, and which are subject to properly negotiated long-term safeguards. That is what the Government have failed to understand.

8.11 pm

Sir Hector Monro (Dumfries)

It is always a pleasure to follow the hon. Member for Motherwell and Wishaw (Dr. Bray) who, in his concluding remarks, sowed seeds that many of us would accept.

We have heard a sad story today. One of the great companies of this country, British Aluminium—involved, as it is, with Tube Investments—has had to admit failure of its plant at Invergordon. Years ago, when I lived in Inverness, I used to go to Foyers in the 1930s to see the original British Aluminium plant there. It worked extremely well. It is sad to know that that plant is now shut, and that now the great plant at Invergordon is in the same position.

The Opposition's attack on the Government, in my view, is inexplicable. After all, the Labour Government of the late 1960s advised British Aluminium to go to Invergordon, and that Government negotiated the power contract. The failure of that contract is the reason for the failure of the plant at Invergordon. The then Secretary of State for Scotland, Lord Ross of Marnock, and the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), who is not in the Chamber at present, answered questions in the House in the 1960s. I looked at some of them yesterday, and there is no doubt that at that time hon. Members on both sides questioned deeply the importance of the power contract.

In Scottish terms, Invergordon is about as far from my constituency as any place could be. Nevertheless, it is an area that I know particularly well, not only because I served there in the war, but because I have many family connections there. It is an area that many of us have long thought should be a centre of major industrial development. It is sad that it has not turned out as we had hoped.

From today's Front Bench statement, some parts of the story are somewhat more clear, and others are even less clear than they were before the debate started. One is reminded of the old Irish saying that the man who is not confused simply is not well informed. We are reaching the stage in this country where, unless everything in negotiations is written down and signed the day that it is discussed, it will be repudiated subsequently. The lack of trust between the Government and the leaders of industry is a sorry trend.

It was clear throughout the 1960s and 1970s that every effort was being made to bring industry to Easter Ross. It has all the natural advantages of a fine harbour at Invergordon, which should be the centre of an industrial complex. It provides the opportunity of bringing raw materials ashore easily, and its vast hinterland of flat ground could be developed for industrial use. At that time, Parliament—certainly my right hon. Friend the Secretary of State, myself, and others—actively supported all attempts to bring development to the area, as did the local authority. No one did more than the Member of Parliament, my hon. Friend the Member for Ross and Cromarty (Mr. Gray). It is sad today that many of his constituents criticise him personally, when no one could have done more to maintain the smelter in operation.

Mr. Canavan

The hon. Member for Ross and Cromarty (Mr. Gray) was not knighted—unlike the hon. Gentleman.

Sir Hector Monro

The hon. Member for West Stirlingshire (Mr. Canavan) is a sorry disgrace to the House most of the time.

Parliament, all parties, and the Highlands and Islands Development Board put great effort into promoting Invergordon. It is tragic that the smelter, the major cog in the whole operation, failed, not because of strikes or technical difficulties, but because of the power contract. That is what made it unviable. The contract itself was hopelessly optimistic when it was drawn up in the late 1960s. That is why British Aluminium has abandoned the smelter.

All of us are gravely concerned at the impact on the labour force which was given no notice by British Aluminium of the impending doom. However, I ask those workers to take heart. It is not a unique situation in the history of Scotland. In my constituency, in Upper Nithsdale, when the pits were worked out in the 1960s and had to be closed virtually overnight, an enormous number of men were made idle. It was the same story. Unemployment there jumped from about 10 per cent. to 25 per cent. However, they buckled to, and joined together constructively to overcome the disaster. With the help of the Government of the day, the local authorities, and particularly the borough of Sanquhar, dramatic changes took place. Factories were built and unemployment dropped to a lower level than during the pit closures. So those who are unemployed or who are likely to be unemployed in the near future in Invergordon should take heart, because the situation can change as dramatically to the right direction as it has changed to the wrong direction.

It is astonishing that British Aluminium did not go to its Member of Parliament and to the Secretary of State a year ago. That was the time to fly danger signals—not last October or November. That was the time to bring home to the Government the immediate consequences. I should be very disappointed if a firm in my constituency which was heading for disaster did not contact me at the earliest possible moment so that I might transmit its problems to the Secretary of State. One can therefore criticise British Aluminium for not approaching the hon. Member for Ross and Cromarty a long time ago to tell him how dangerous the situation was becoming.

No Government or company can organise a rescue operation in a few weeks. As soon as my right hon. Friend the Secretary of State knew about the problem, he called Mr. Utiger to his office on 2 December to discuss the matter at the earliest opportunity, and four weeks before the announcement of the closure. It is almost impossible for any Government or Minister to resolve such a problem in that time.

Worse, despite the Government's extreme concern about the plant's probable closure, British Aluminium made it abundantly clear that it wished to abandon Invergordon at virtually any price. The company would not consider an interim three-year agreement while the issue was being reconsidered. If we had had a three-year breathing space, a satisfactory solution might have been reached. I believe that the company put a pistol to the Government's head and said "Bail us out of our problem at Invergordon, or we shall close our operations in Falkirk and, perhaps"—even worse—"at Fort William and Kinlochleven." That is no way for an industry in desperate need of assistance to approach a Government. As we have spent so much time highlighting the problems of the power contract, we have underestimated the Secretary of State's efforts to alleviate the immediate disaster at Invergordon.

Today, press comment implies that some companies are interested. However, unless the Secretary of State tells us that that is so, I shall discount such rumours. I wonder whether a new operator would not prefer to build his own coal-fired power station. I ask a lot of my right hon. Friend, but I hope that he will obtain a definite commitment from British Aluminium that it will not stand in the way of another company that wishes to take over the smelter and that it will leave—at an agreed valuation—all the plant at Invergordon. I have some experience of the aluminium industry and we must not be too optimistic. It would be unfair to the work force if we were. An upturn in the economy would help and would have a fairly sharp impact on consumer durables—on which the aluminium industry largely depends—such as double glazing and many other easily manufactured items involving aluminium extrusion and other uses of the metal.

I hope that the economy is over the hump. A pick-up in the economy would encourage a company that might take over the smelter to take that important step. Great responsibility lies with the Government, the Highlands and Islands Development Board and the local authority arid they will have the complete backing of my right hon. Friend the Secretary of State for Industry and my hon. Friend the Minister of State, Department of Energy. I know that they will all work together in unison, constructively and with the substantial sum of £10 million behind them for promotion. Hon. Members seem to think that £10 million is all that is involved. However, if £10 million attracts a company, all the regional grants will come into play. The economic planning department of the Government and of the Department of Industry can give immense support to a company that decides to go to the Easter Ross area. Therefore, £10 million is purely a pruner to help attract industry. It is not a complete sum in itself because all the other grants under the Industry Act will come into play. Those grants could be substantial.

My right hon. Friend the Secretary of State will be wondering how else he can help the infrastructure of the area in the interim period by continuing the substantial development made on the A9 and how he can help with environmental schemes for towns such as Cromarty. Such developments could greatly help the construction industry. There is much that my right hon. Friend can and will do to reduce unemployment.

The recriminations that we have heard today get us nowhere. Good will will resolve the problem. However frustrated Opposition and Conservative Members may feel that, because of high unemployment, we are far more likely to achieve the required result if we act together constructively than if we niggle away, fight each other and blame each other for the past. As my right hon. Friend the Secretary of State said, the disaster has been terrible for Invergordon, Cromarty Firth and for far further afield. If we are to succeed—as we must—we must have absolute faith in my right hon. Friends the Secretaries of State for Scotland and Industry, and in the local Member of Parliament, my hon. Friend the Minister of State, Department of Energy, to do everything possible to alleviate that disaster. If we go further positively and constructively, we are far more likely to succeed.

8.26 pm

Mr. Michael Martin (Glasgow, Springburn)

I do not share the sentiments expressed by the hon. Member for Dumfries (Sir H. Munro) that the workers should take heart because, despite redundancies and closures, there is the possibility of other jobs.

I represent a constituency that is 250 miles away from Invergordon. Over the years, there have been closures. I am old enough to remember Springburn when it was a thriving railway community, employing about 8, 000 workers. The closures have had a disastrous effect on the community. People got on well with one another and the crime rate was much lower than it is now. In addition, there was much less deprivation than there is today. People felt that it was a joy just to walk down the High Street in Springburn, but that is not so now.

If the smelter at Invergordon closes, it will not be a good omen for those in the area. I sympathise and identify with them. I know their worries. I have been unemployed and know what it is to leave a factory because of pay-offs and closure.

I shall devote some of the time at my disposal to the effect that the closure of Invergordon will have on the railways. When I heard about the proposed closure, I thought that it was in another part of Scotland and that it would not directly affect me or my constituency, although I had every sympathy with the people of Invergordon. However, there is no doubt that every part of Scotland will suffer because of the closure.

British Rail tells me that there is a possibility that it will lose an annual income of £3 million because of the closure of Invergordon. British Rail derives an income of £420, 000 from bringing in raw materials. The loss of finished products which British Rail takes out will cost it £432, 000. British Rail was required to move three-quarters of a million tonnes of coal from the coalfields to the power stations. That movement represented £1.5 million.

The carriage of bulk alumina from the silos in Invergordon to Fort William will be lost to British Rail if the closure takes place. It will be taken directly to Fort William from abroad. That carriage represented an annual income to British Rail of £300, 000.

Another factor is that unemployment in Invergordon will mean the loss of passenger traffic in the area. People will not take Golden Rail holidays or other holidays to other parts of the country and British Rail will suffer. My constituents will suffer accordingly.

I hope that I am wrong, but I believe that these consequences must result in redundancies in British Rail. They will result also in redundancies in the private sector because the freight wagons and the passenger trains that are manufactured by private companies on orders given to them by British Rail will not be needed. Therefore, the effects will be catastrophic for the Highlands and the whole of the Scottish economy.

The fall in population in my constituency means that excellent schools and community facilities—buildings that could last easily for another 100 years or more—are lying empty. As the local authorities are suffering from Government cuts they are not able properly to maintain the buildings. At least one school in my constituency has been set fire to by vandals. I do not think that that fire or others would have taken place if the school had been fully occupied and properly cared for.

I hope that the Secretary of State for Scotland has meaningful negotiations with the local authorities to compensate them for the revenue that they have allocated for housing and infrastructure. If they want to see what happens when there is high unemployment, the Secretary of State and his officials have only to come to Springburn to witness the dereliction that is caused when Governments fail to recognise the need to pump capital into projects that are not unprofitable but which need help at difficult times.

8.34 pm

Mr. David Myles (Banff)

I am pleased to follow the thoughtful speech of the hon. Member for Glasgow, Springburn (Mr. Martin). It was in contrast to some of the speeches that we have heard from Opposition Members.

Mr. Canavan

The hon. Gentleman has not heard me yet.

Mr. Myles

I agree with a number of the remarks made by the hon. Member for Motherwell and Wishaw (Dr. Bray) and by my hon. Friend the Member for Dumfries (Sir H. Monro).

The intricacies of this issue have now been extremely deeply and well argued. I do not propose to rehearse them in parrot fashion or to repeat all the arguments that have been advanced. Blame has been apportioned and the Opposition have pointed at the Government Benches. I commend my right hon. and hon. Friends for not sending that blame back when they could have done so. It is only with hindsight that we would now apportion blame to the Government of 1968, who encouraged the project to go ahead. [Interruption.] There is no need for the hon. Member for West Stirlingshire (Mr. Canavan) to gabble on from a sedentary position. I shall give way if he wishes to intervene.

Mr. Canavan

But for the Labour Government the smelter would never have existed.

Mr. Myles

That may be so, but they used other people's money, created by the skills of other people.

Mr. Canavan

The Tories are using public money to close it down.

Mr. Myles

I know that an enormous amount of taxpayers' money has gone into this enterprise. I say immediately that I shall back the Government in keeping the smelter going if it is at all possible—but with an expert operator, not with a bunch of amateurs who do not know what they are doing. British Aluminium made commercial mistakes all the time. It is extraordinary for Labour Members to say that the Government should have obtained assurances that it would, with any shadow of doubt, carry on the other enterprise, if it received this subsidy. There is no benefit whatever in such assurances from a company on the slippery slope to bankruptcy.

Without seeking vague assurances amounting in reality to nothing, the Government had to make a judgment on whether to give this long-term assistance. Let us quantify the amount involved—£17, 000 per job at today's prices until the end of the century. If the Government gave Banffshire half that sum per job, we should certainly find the jobs.

I have talked enough about blame and raking over the ashes. Let us hope that the phoenix will rise from those ashes. As the hon. Member for Motherwell and Wishaw said, let us all learn some of the lessons that can be learnt from this experience.

There is no doubt that a democracy such as ours—to which, thank God, we owe our freedom—has deficiencies. There is the one-man, one-vote pressure on any Government to prove their virility, to prove that they can attract jobs better than anyone else and to pour taxpayers' money into jobs in an amateurish way. Such action is continually being pressed on all Governments.

We have an extremely difficult argument to put in this debate. The Opposition say that they will solve all the problems by taking over the factory, nationalising it and running the whole thing centrally, but what kind of debacle has there been in countries that have followed that path? We have seen the tragedy of that in Poland. Despite the terrible problems being faced by the workers in Invergordon, they are nothing compared with the problems of the workers in Poland, who have been oppressed by the kind of society that the hon. Gentleman would like to promote.

Mr. Canavan

Just for the record, hon. Members should know that I am appearing on a public platform in Glasgow on Sunday in support of the Solidarity trade union movement in Poland.

Mr. Myles

I am very pleased to hear at this late hour that the hon. Gentleman has been converted and is seeing the weaknesses, the tragedy, the dangers and the evils of that centrally controlled society, because that is what they are advocating. We are saying that a free company can go to Invergordon.

We must be aware of the facts. I must be slightly critical of the Government, in that because of the democratic pressure to which I have referred they have not encouraged the employment that could be found in very small businesses. There are a number of one-man businesses, that would take on an employee—I am sure that there are more than 1 million of them—if it were not for the disincentives, the centralised regulations, the controls, the amount of their own money that they have to pay out, whether they make a profit or not, immediately they start employing someone, unlike the big companies, which receive that scarce money, the small businesses' money. It is time that we turned back the clock and started to encourage the real wealth-producers in this country instead of using political expediency to gain votes.

8.41 pm

Mr. Dick Douglas (Dunfermline)

I shall try to be very brief indeed because the Secretary of State, among others, admonished me for so many sedentary interruptions.

Let me just turn to some of the crucial points. In commercial dealings. I would love to negotiate with such a ham-handed lot. They go to a company and at the end of the day they say "We will write off £21 million but do not bother to tell us the written-down value of this plant." Having written off a loan of £21 million, this Government do not say to the company "We will do a deal with you so that we can take over in the future, if someone else comes along, at X value lower than the value in your books." That never occurs to them, but it is a key issue in terms of getting someone else in: who owns the company's assets and what their value is.

In relation to the power contract, the Secretary of State gave a lot of figures and I hope that I have them right. In 1980 to 1982 the proposition was, if we had gone the way we were negotiating, about 1.5 pence per unit, but this is still greatly in excess of the notional figure for Anglesey. Therefore, anyone coming in will want to get a power contract that relates to the Anglesey long-term price. The Secretary of State has to make very clear the way in which that will be spread. The deficiency in the contract here relates to having to make it quite clear how it is being subvented. The CEGB in England and Wales can hide the price over a large number of consumers.

There is no way, with Dungeness B being delayed for 11 to 14 years, that Dungeness B power notionally can be cheaper to the CEGB than Hunterston B. If there is, let us be told. We all want to know.

I am in some difficulty here because I am a member of the Public Accounts Committee and the Comptroller and Auditor General is looking into this. I hope that no one is going to say that these contracts now, after all this, are a matter of great secrecy and that the Comptroller and Auditor General cannot take a look at them.

The other thing that is mysterious is that we have heard a statement that we should now say we want a smelter in Invergordon related to a coal price. What a joke! The coal industry is a vital aspect. The asset is there. I wish we could stop being tied up with accountants. I say that with respect to some hon. Members who are accountants. If we had had discounted cash flow sums in the eighteenth century and the nineteenth century, we should have built nothing. The people then did not do the calculations.

Another crucial fact is that the company was tied up because of its annual balance sheet. It had to make its annual balance sheet look good, and the Government caved in to that.

In some ways I start by being sympathetic to the company and the Government. In 1980 the company came to the Government about a power contract. I know some of the officials in the Scottish Office. I cannot believe that people of their competence did not go through that company wholeheartedly and in some detail and get to know it. The company was disputing in February 1980 the power charges and what the long work position would be. In October 1981 the company went to the Department of Industry. I cannot believe that no Scottish Office official was there and that a full report was not given to the Secretary of State. The Under-Secretary must answer that point.

The hon. Member for Dumfries (Sir H. Monro), who happily left the Chamber touching his forelock, perhaps hoping to secure a lordship, argues that one should approach the Government when one has problems. In my constituency today Monotype International, a leading company in advanced technology, announced that it would close in a few months' time. I shall be going to see the Government, because it is a high technology company, and we are not losing those jobs in Dunfermline if I can help it. The company is an asset that we want there.

The closing of the smelter will have a knock-on effect in the coal and electricity supply industries. The Secretary of State mentioned the Kincardine power station, which has been refurbished on the basis of an expected demand for electricity.

The crucial factor in the whole matter is whether we are telling the people of Scotland that we have abandoned regional policies. The message is that the only industries that we can get are flexible, small industries that can be attracted because a private entrepreneur wants to come. In a modern House of Commons we have no responsibility to tell that to the people of Scotland, particularly to the people of Ross and Cromarty.

I shall not go over the history of the smelter contract, but there are many matters that we could examine. The smelter is where it is because of balance of payments considerations and the fact that it represents modern and forward-looking industry. One can be critical of the company, but the responsibility for closure ultimately falls on the Government. Modern Governments are elected to take that responsibility, not to be the plaything of economic forces. Otherwise, we get back to blaming every recession on sunspots. We are not the plaything of economic forces. We must intervene. I admit that there are difficulties in that.

Mr. Alexander Fletcher

That is the economics of King Canute.

Mr. Douglas

King Canute's problem was timing. He got his timing wrong. The Government have obviously got their timing wrong, because it was related to the company's annual balance sheet. Companies behave in that way because they must protect the shareholders. Governments should not behave in that way, because they have to protect the citizens and workers. That is why we are elected—not to be the playthings of companies but to oppose them and if necessary to take them over. We should not at the end of the day subvent them and then not be able to create a situation in which we can bring in someone else, in the public or private sector, at a price and under conditions acceptable to us, if not to the company itself.

8.49 pm

Mr. Michael Ancram (Edinburgh, South)

I find it extremely disappointing that a man of the obvious ability of the hon. Member for Dunfermline (Mr. Douglas) should speak on a subject such as that before the House without offering one constructive idea. He indulged in a series of recriminations. It is an insult to those whose jobs have been lost and who are suffering at present in the constituency of my hon. Friend the Member for Ross and Cromarty (Mr. Gray) that so many Opposition speeches have not offered constructive answers but have sought only to hit the Government.

In view of the time, I wish only to ask two questions of my hon. Friend who will be answering the debate. We must accept that British Aluminium is no longer at Invergordon. As the Government's amendment suggests, hon. Members on this side of the House seek to give support to finding someone else to take over the plant. When I look at the economics of the price of energy to the plant, I wonder whether the Government have considered in sufficient depth its energy efficiency. I am a member of the Energy Select Committee, and when we looked at energy prices to industry we found that many energy-intensive industries, given the spending of a little capital, could become much more energy-efficient and, therefore, would need to use less energy.

When a company comes forward and the Government are discussing with it the possible takeover of the plant, they should insist that the company looks at an investment of £10 million to £20 million to try to reduce electricity consumption. A way out of the problems in all energy-intensive industries, given the price of energy, is to use less rather than to try to subsidise our way out of the high prices.

My second point is more general and affects the whole of Scotland. My hon. Friend knows my views on Torness. I am not going to refer to them tonight, nor am I going to suggest, because it is now impractical, that Torness should be stopped. But my hon. Friend is aware that the South of Scotland Electricity Board has in its area an over-capacity which, in terms of any other business, would be not only staggering but unbusinesslike and uncommercial.

A public utility which is producing almost double the amount of a product which anybody is going to buy, with an over-capacity of some 70 per cent., is not only inefficient but also more costly than it should he. If a business was producing twice as many goods as there were customers to buy, the overheads would inevitably put up the price of the goods which were being sold. In the discussions which he inevitably will have with the SSEB, I hope that my hon. Friend will talk to them about the over-capacity which was encouraged by the right hon. Member for Bristol, South-East (Mr. Benn), when he was Secretary of State for Energy, and which is now hitting industry and domestic consumers.

If the Government were to take these two constructive approaches—first, to look for greater energy efficiency at Invergordon and, secondly, to look for a more efficient way of producing energy than the SSEB has been capable of over the last two years—we might at least be able in the future to give hope to companies which might either take over Invergordon or come into Scotland in energy-intensive industries.

8.53 pm

Mr. George Foulkes (South Ayrshire)

I am glad that the Secretary of State for Scotland is here, because, as a Member for Ayrshire, I want to warn people not to be fooled by his disarming manner. I know him only too well. When he talks of this closure as a profound disaster and when we hear hon. Members opposite bemoaning it, it is ridiculous. One would think, from what they say, that it had been caused by someone from outer space, whereas all of us know, as I am sure everyone outside the Chamber knows, that it is a direct result of Government policy. It is a direct result of the high energy costs that the Government have deliberately forced up. It is a cruel irony that it is the Minister of State, Department of Energy whose constituency is suffering from that policy. It is a direct result of unrestricted imports of aluminium, which I will come to in a moment, and of the economic slump that has been engineered by the Government.

It is no use all the Conservative Back and Front Benchers putting up a smokescreen and saying that the closure is the fault of the 1968 Government and that power contract. It is a deliberate smokescreen to take away the blame from where it should be—with the Conservative Government and their policies.

The real reason why the smelter is closing is that the proposal that seemed to be agreed between the Scottish Office and British Aluminium was vetoed. The cost to keep the smelter open was not £16 million per annum but £16 million less the costs that are now being paid, which are perhaps over £8 million. It was for that amount of less than £8 million per annum that the smelter had to close yet, as some of my hon. Friends have said, the real cost of closing the smelter has not been assessed. It was a false economy to close it. One can see that when considering the cost of unemployment benefit and the loss of revenue from the 1, 500 people who worked in the area, but who will be unemployed? The cost could be over £4, 000 per person, which is a modest estimate. In total, the bill would be about £6 million.

My hon. Friend the Member for Glasgow, Springburn (Mr. Martin) has already said that the closure will cost British Rail £3 million per annum. The cost to the Government of subsidising the smelter would have been about £9 million. Those are the figures before one considers the possible costs to the National Coal Board for coal, to the South of Scotland Electricity Board, to local government and the £10 million that the Scottish Office is contributing in its attempt to find alternative jobs. It is a false economy. The Government's decision is ridiculous for that reason.

It is frustrating, annoying and appalling to come to Westminster and hear the Prime Minister on Tuesdays and Thursdays preaching and shouting shrilly that everything is okay, that the recession has bottomed out and that we are on the way up, and then to return to our constituencies on Fridays to find that yet another closure is announced. The Invergordon smelter has closed, but, as the Minister knows, there has also been a closure at Laporte in my constituency. Closure after closure is being announced.

It is galling that the Government knew about the Invergordon closure as far back as at least 6 October, yet at Scottish Question Time on 9 December the Secretary of State and his Ministers said that everything was wonderful and rosy, and that things were on the up and up in Scotland. At the same time they knew secretly that the closure was imminent.

Why did British Aluminium put a pistol at the heads of the Government? A threat was made to the jobs in Falkirk, Kinlochleven, and elsewhere. Why was the end of the financial year set as a limit? Why was that arbitrarily chosen as a date? There is no valid reason why the end of the financial year should be chosen. That was a peculiar thing to do, as if the Government were forced into their decision and did not have the guts to stand up to British Aluminium.

I should also like to ask about imports. I drew the Government's attention to the fact that for the three months to the end of November 1981 £61 million worth of worked aluminium and aluminium alloy was imported. That is £240 million worth per year. For those three months some £33½ million of that was in plate, sheet and strip aluminium and £11½ million of that was from East Germany. Some £45 million worth is imported from East Germany per annum. Why are the Government accepting such an import from East Germany? Why does the hon. Member for Ross and Cromarty (Mr. Gray) accept such imports from East Germany while the smelter in his constituency is being allowed to close? We have not had an answer to that question. I hope that the Minister will give an answer today.

As yet no one has called for an inquiry into the closure, but I should like such an inquiry. The first priority must be to find some way to ensure that the smelter continues. There are, however, a number of disquieting aspects—the lack of consultation with the work force and the fact that a number of people knew in advance about the closure and that it was kept secret from those who mattered most—the people working in the smelter. Those working in the smelter have been cheated of their earnings-related benefit by the timing of the closure. There is also the real cost of the option put to the Government and rejected by them. All these matters, and many more, need to be investigated. Why did the company and the Government put the interests of the Stock Exchange before the interests of those working in the smelter? I hope that there will be an inquiry, possibly by the Public Accounts Committee, the Select Committee on Scottish Affairs or some kind of public inquiry. Many people have told me that something about the closure smells. I share that view.

Hon. Members have been discussing the supply of power. I have the horrible prospect of a nuclear power station in my constituency. It will be completely unnecessary because of the manner in which power demand in Scotland is developing. The costing of nuclear power does not take account of the full cost of its production. It does not take account of the decommissioning of nuclear power stations. In talking about the decommissioning of nuclear power stations that have progressed beyond their useful life, I can only say that if this Government ever had a useful life, they have now gone beyond it and should be decommissioned immediately.

9.3 pm

Mr. Bill Walker (Perth and East Perthshire)

I shall not take the paths and byways followed by the hon. Membor for South Ayrshire (Mr. Foulkes). His speech shows that he is probably well read but has little experience of negotiating anything.

What we face is a matter of regional policy. We tend to treat individual cases in isolation. Naturally, all hon. Members feel depressed. This matter cannot be other than depressing. Regional policy pursued since the war presents the House today with the cumulative effect of many well-intentioned acts. Some were generated by the balance of payments problems at the time. It is easy with hindsight to pick flaws in the 1968 contract. Hon. Members, however, were not making the decisions within the constraints and parameters faced at that time.

Hon. Members must not overlook the human tragedy for those facing redundancy. Nevertheless, we must not allow our emotions to cloud our objective judgments and out objective thinking. We must face the challenge of change and find the best possible viable answers. What is interesting about the 1968 contract is the manner in which the Government of the day committed the country and future Governments to a contract in which the electricity generating board had its position underwritten. There was no pressure on the board to achieve the optimistic targets for the price of electricity that it claimed would come to pass. None of the normal commercial pressures were brought to bear on the management of the generating board to see that it got near these figures.

There are three reasons for the closure of Invergordon. The first is the low price of aluminium world-wide. The second is the lack of United Kingdom demand for the products. The third—and the one we cannot run away from—is the power contract that was negotiated in 1968.

When there is a substantial fall in demand for products of any kind on a world-wide market, producers cut prices to keep their plant and factories operating. This means that all the other producers in the same field find pressures building up on them. If they wish to maintain their share of the diminishing market, they also cut their prices.

Can the Minister confirm that the loss at Invergordon was running at about £500 per week? If that is so, however we juggle with the price of electricity, it does not overcome that loss, as I calculate it. Therefore, there is more than just the price of electricity behind the problems at Invergordon.

What is important is the price that the end product will fetch on the market. Despite all the delightful theories, in the end it is customers who keep jobs, not Governments or the price of electricity. If we cannot persuade the customers to pay the viable price, and if there is not a market, jobs cannot be kept. If other producers are cutting prices and we wish to keep our share of the market, we have to cut our prices. It means that many firms with a proud reputation are forced into a position of extreme financial difficulty; in some cases they face bankruptcy.

I remind the theorists on the Labour Benches that assurances entered into, or documents signed in these circumstances, are not worth the paper on which they are written. When a company goes into insolvency it does not protect jobs and it does not produce anything.

Is there a demand for aluminium in the United Kingdom at present? Will there be a demand in the future? If so, how far into the future will that be? Can we produce the goods from the smelter at a price that the customers will pay? What price will the future operators of the smelter be prepared to pay for electricity?

When we have the answers to those questions and know whether electricity can be produced at the right price, and when we can determine which source of energy the boards will use—hydro, coal or whatever it is—we shall know whether there is ever likely to be an operational smelter at Invergordon. I pray that the answers will come out right, but we must not allow our judgment to be influenced by our sad feelings for the people of Invergordon.

9.7 pm

Mr. Dennis Canavan (West Stirlingshire)

During the Christmas Recess I had the pleasure of visiting the Invergordon area. I do not know whether "pleasure" is the appropriate word. It was a very sad community and, justifiably, a very angry community. Nevertheless my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and I received a warm reception, which is more than can be said of the Minister, who arrived on the same day and was pelted with snowballs. He should not have been surprised, because the shabby treatment meted out to the work force by the Government and by the company is an absolute disgrace.

There was virtually no consultation with the work force. There was less than 48 hours' notice of closure. The timing was deliberately chosen to cheat the work force out of the earnings-related supplement. The company walked off with over £20 million profit out of the closure. It is probably the first time in the industrial history of Scotland that any Secretary of State has handed out taxpayers' money to a private company in order to close it down.

I am sure that hon. Members on each side of the House have seen closures in their own constituencies and elsewhere, but I have never seen anything like this closure in my life, and I hope never to see a repetition of it. The whole affair stinks. It is a sad story of deceit, duplicity and downright dishonesty, but perhaps we should not be too surprised when we look at one of the main characters in the story, the hon. Member for Edinburgh, North (Mr. Fletcher).

Everything that the Under-Secretary of State has touched in industry, in education, or anywhere else, has ended up an absolute disaster—Callandar Park, Hampden Park, Linwood, Corpach, and now Invergordon, the biggest economic disaster to face the Highlands, with repercussions throughout the whole of the Scottish economy. We are not concerned simply with the 900 jobs immediately at stake. There are more than double that number of jobs involved in that area of Scotland, and hundreds—indeed, thousands—more jobs elsewhere in Scotland. Jobs in the mining industry, the railways, the road haulage industry and the electricity generation industry are all at risk. Electricity consumers elsewhere in Scotland will be left carrying part of the bill, despite what was said by the Secretary of State.

The Secretary of State's speech was largely concerned with part events from 1968 to 1981. That may be interesting, but it is water under the bridge, and some of it very murky water at that. We should now be looking ahead constructively to see how we can get the smelter reopened. We must ask ourselves what is still there to use to achieve that objective.

There are three things available—the plant itself, the work force, and a market. There is a need for aluminium, despite what the Government say, and despite the depression in the market, which has been made worse by the Government's economic policies. It is up to the Government, who have made things worse instead of better, to effect some stimulus in the market for aluminium, or for anything else. Nobody can tell me that people do not need the aluminium produced by the smelter.

The Secretary of State said barely a word about the work force, which is skilled and responsible and has an excellent record in industrial relations. That record was so good that perhaps the BACO and the Government thought that they had on their hands a docile work force which, when the closure was announced, would go along, cap in hand, touch the forelock and gratefully accept the redundancy money before going home to cry.

The workers did not do that. To the surprise of many people, at a mass meeting the day after my visit, the workers took what may turn out to be a historic decision—the occupation of the plant. That is an example of responsible trade unionism at the highest level. At this minute many of them are working, keeping the plant in working condition for the reopening that they hope will come.

The BACO have said that it would cost a company well over £100 million to purchase or to build such a plant from scratch. The BACO has already walked away with enough public money. If ever there was a case for public ownership without a penny of further compensation, this is one. That is backed up by Grampian region council and Ross and Cromarty district council. The hon. Member for Aberdeenshire, East (Mr. McQuarrie) seemed to agree to that as well. I hope that he will vote with us tonight and perhaps persuade some of his hon. Friends to do the same.

Often when people cry out for public ownership it is said that another lame duck may be involved. This is not another lame duck and it can be turned into a viable enterprise. Two things are required—a power contract and an operator. There does not seem to be any shortage of power in Scotland. In fact, there is over-capacity. If a subsidy package were put forward by the Government it would surely not be beyond the bounds of possibility to have a suitable power contract to reopen the smelter.

An operator is needed, and it is clear that the British Aluminium Company is not interested. It has opted out, and it is clear from some of the discussions that Labour Members including myself have had with the company that there is virtually no likelihood of the British Aluminium Company restarting its operations there.

Reference has been made to a few nibbles here and there by operators who might be interested in the plant. If the private sector is not interested, it is up to the Government to ensure that some Government agency such as the Scottish Development Agency or the Highlands and Islands Development Board steps in to operate the smelter on its own or in partnership with some other body. If the Government do that, they should not repeat the mistake of handing out money to a private operator without public control. The best way to ensure public control is by public ownership, either in whole or in part. If that means the SDA or the HIDB taking equity in a new venture, it would be a better deal than that which emerged before. Only by Government action and intervention will the smelter be saved and reopened.

I repeat what I said at the mass public meeting at Alness. A decade ago an intransigent, Right-wing, doctrinaire Tory Government were hell-bent on pursuing an economic and industrial strategy based on non-intervention, whatever the cost in economic and human terms. The historic decision by the workers of Clydeside helped to bring about a significant change in that Government's industrial strategy. Eventually, because the Government intervened and changed their minds too late, the workers helped to bring about the downfall of the Government.

What the workers of Clydeside were able to do a decade ago the workers of Cromarty Firth can do in 1982. I warn the Government to remember the mistake made by the former Tory Prime Minister, the right hon. Member for Sidcup (Mr. Heath). He changed his mind too late. The Government had better act now and quickly, otherwise they, too, will be out on their necks and many of them, including the Minister of State, Department of Energy, the hon. Member for Ross and Cromarty (Mr. Gray), will be lucky if they ever return to the House.

9.17 pm

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

The debate has been interesting. Other events in the House today have also been interesting. I say that because of the importance of this debate. I hope that other events will not overshadow in the press the importance of these matters to the people of Easter Ross and the rest of Scotland. We are discussing lifelines for the men and women who are to lose their jobs as a result of the company's decision and the Government's activities.

As so often happens in such debates right at the end we receive some information that could give hope for the future. I say what I am about to say at the beginning of my remarks so that the Minister has time to obtain information from his officials. I understand that the Highlands and Islands Development Board today held a press conference at which it was said that an American company is interested in taking over the factory. That announcement has been made on television and in the media in Scotland tonight. I hope that I have given the Minister and his officials sufficient time to respond to those comments when he replies.

Many hon. Members have paid tribute to the work force. Before I discuss Falkirk I add my tribute to the work force at Invergordon. Some of them will make the round trip of nearly 1, 200 miles to come to the House to lobby Members of Parliament in the firm belief that the House of Commons will do something positive to support them in their hour of need. I say that deliberately, because if we fail we and, particularly, the Government will be responsible for spreading disillusion and despair in the area surrounding Easter Ross.

Many hon. Members commented that the work force is reasonable. A reasonable work force has been met by a highly unreasonable company and a very unsympathetic Government. I doubt whether there has been an example of worse industrial relations.

Constant reference has significantly been made to the British Aluminium plant in Falkirk. I shall say nothing in the House that I have not already said to the company. The company has a disgraceful industrial relations record. During the 11 years that I have been a Member of Parliament for the Falkirk area, I have on many occasions sharply conflicted with the company because of its conduct of industrial relations. I am rather shattered that the Government obtained no assurances from the company about the future of the Falkirk operation. There is nothing to give encouragement for the future because the Government did not even obtain assurances, despite the massive amounts of public money given to the company.

Let me put it on record that the four trade unions at the Falkirk plant have all accepted a nil wage award for the whole of next year. Do not let anyone tell me that that work force is not co-operating in seeking to preserve the company, and do not let anyone from the Government or the company tell me that the entire future of the Falkirk plant is in the hands of the work force. It has made its contribution. It has agreed not to take any wage increases this year. If the company fails it will be through monumental mismanagement and incompetence.

Because of the deal set up for the company by the Government, it has been transformed from a net seller of primary aluminium to a net purchaser of it. That has put it in a very favourable position. That aspect has almost gone unnoticed. For the benefit of the hon. Member for Perth and East Perthshire (Mr. Walker), I should say that it is in primary aluminium that the market is low.

I found it astonishing that the Secretary of State should tell us that his first meeting with the company was in December, because when I and colleagues met the company on Wednesday it told us that it had gone to the Department of Industry on 6 October. At that time, the Department asked permission to call in the Scottish Office and the Treasury. The company assured us that it had told the Department that it favoured the Scottish Office and the Treasury being called in. Yet the Secretary of State said that his first meeting with the company was in early December—at the most, four weeks before the closure was announced. That is rather strange.

If the problem's urgency was appreciated, it was incumbent on the Secretary of State to meet the company in October, or certainly in early November. It appears that that did not happen, and I hope that the Minister will tell us whether the Department of Industry called in the Scottish Office and the Treasury in early October or whether that was not done until the beginning of December. It is important for us to know that.

The Secretary of State gives us figures for the cost of preserving jobs at Invergordon and talks in terms of 16 million per annum until the year 2000, but, as my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) pointed out, £8 million is already being paid and we are talking about another £8 million of new money.

The Secretary of State breaks the cost down to £ 17, 000 per job per annum until 2000. He fails to appreciate that the £17, 000 relates only to the 900 jobs at the Invergordon smelter. On his own figures there will be a job loss of at least 1, 500 in that area and we should add to that the job loss in the mining industry—my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) pointed out that 750, 000 tons of coal from the Scottish coalfield is involved—road haulage and railways. Some jobs have already been lost in the constituency of the hon. Member for Moray and Nairn (Mr. Pollock) and the Invergordon smelter was the main customer of the BSC tar distillation plant in my constituency. The corporation has already said that it will close that plant.

If all those job losses are included in the figure, the £17, 000 per job is reduced to about £3, 500—much less than the cost of keeping someone unemployed. It is the economics of the madhouse for the Secretary of State to resile from the possibility of preserving the smelter because it would cost £17, 000 per job involved. I accept that the figures break down to £17, 000 per job at the smelter, but if we add all the job losses to which I have referred the sum involved is reduced to £3, 500 per job, which is about £2, 000 less than it costs to keep a man unemployed. I do not believe that the Government have thought the thing through

As my hon. Friend the Member for West Stirlingshire (Mr. Canavan) said, the work force reacted in a way which the Government did not expect. They expected workers to queue for redundancy, cry in their beer and forget about it. As the Under-Secretary knows to his bitter cost, Ministers have had a hard kick in the pants and that is one reason why we are working so hard to save the plant. The Government have been made to understand that the work force will not accept the closure.

The Secretary of State tells us that he had to agree to the deal because otherwise the whole company would have been in danger. We have still not been told why the Government rejected British Aluminium's package of proposals, which included a profit-sharing clause. The company had grounds to believe up to 17 December that the package would be accepted. It was only on 18 December, when the Secretary of State had lost yet another Cabinet battle, that the company was "shocked" to be told that the package was not accepted.

The Secretary of State said that if he had not agreed to the deal the other 2, 700 British Aluminium jobs in Scotland would have been put at risk. I took careful note of his words when he said that it was clear that if the Government had not agreed to the arrangement and even one job had been lost at Falkirk I would have been on the right hon. Gentleman's neck.

It is equally clear that if the Secretary of State had agreed to the deal there would not have been one job lost at Invergordon, Falkirk, in the mines, on the railway or in road haulage, in engineering, in the sawmill to which one of his hon. Friends referred, or the BSC tar distillation plant at Falkirk. There are two ways of looking at the Secretary of State's argument. As a result of the Government's incompetence, we are left with the worst of all possible worlds—the closure of Invergordon and uncertainly about the other 2, 700 jobs. No Minister has given us any assurance about the security of those jobs in British Aluminium in Scotland. All the talk about a deal being set up to preserve the 2, 700 jobs is pure eyewash. There will be job losses in British Aluminium in Scotland and in my constituency at Falkirk.

I come now to the search for a new operator. At present, we have to live with the fact, rightly or wrongly, and whether we like it or not, that British Aluminium still owns the plant. When I spoke to the chairman and his fellow directors, I found it surprising that no one had told them the names of the two nibblers—as the Secretary of State describes them. No one has asked the company for its assistance in finding a new tenant for the factory. The company says that it is willing to help the Government in securing a new tenant but there has been no contact between the Government and the company regarding assistance. I recognise the expertise of Gordon Drummond—who used to be the manager at British Aluminium at Invergordon—in the aluminium world, but the company itself has world-wide contacts and it may be able to give assistance in finding a new tenant. I go on record, together with my right hon. and hon. Friends, in saying that British Aluminium is under an obligation to make it as easy as possible for a new company to operate the smelter.

The Highlands regional council, in conjuncion with Ross and Cromarty distict council, has written to every Scottish Member of Parliament about the position. The Highlands regional council, which is hardly Left-wing dominated, has passed a vote of no confidence in the Government over their handling of the issue. Both those authorities will have their industrial promotion powers restricted under the Local Government and Planning Bill. Far from the Highlands regional council and Ross and Cromarty district council being able to expand industrial promotion, their powers are to be restricted under that Bill.

The Secretary of State tells us that the Highlands and Islands Development Board is engaged in a study of the aluminium industry in relation to the Highlands. We can paper the walls of every house in Ross and Cromarty with studies about the Highlands. We do not need any more. We need action to save the smelter—to reopen it, to get the men back to work and to bring hope back to the area.

As some of my hon. friends have pointed out, this is not the only failure in the Ross and Cromarty area. There is now a catalogue of failures as a result of the Government's decision to abandon the gas-gathering system, right through to the Invergordon smelter. If the Government had been serious in their intention to do something for the area, the Cabinet would immediately have taken back its decision to abandon the gas-gathering system and would have decided in favour of financing it.

Will the Minister say whether the sum of £10 million that is supposed to be available over three years can be made available in one tranche in order to help any new tenant to operate the Invergordon smelter? That would be a test of the Government's sincerity.

I have listened with interest to the speeches today, particularly those of Conservative Members such as the hon. Members for Aberdeenshire, East (Mr. McQuarrie) and Banff (Mr. Myles). I understand that there is great competition in the north-east of Scotland between two hon. Members for the new parliamentary constituency which will be formed there as a result of the decision of the Boundary Commission. If I were asked to make the choice, I should have no difficulty, because the speech of the hon. Member for Aberdeenshire, East should point him towards our Lobby this evening.

It is not enough for Conservative Members to mouth the platitudes that they have mouthed in this debate and give sympathy to the work force whom they met in the Lobby this morning. That is not enough. They have to back it up with firm and positive action in the Lobby tonight. My right hon. and hon. Friends and I will be voting tonight in favour of the work force, and those who find themselves in the other Lobby will be voting to shatter the dream that was created 10 years ago, turning it into a nightmare for the people in Easter Ross and the whole Scottish economy. I have no hesitation in inviting my right hon. and hon. Friends to join me in the Lobby and vote in favour of our motion.

9.37 pm

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

The only thing that may command agreement across the Floor of the House tonight is that every speaker in the debate, and, I am sure, every Member of the House. deeply regrets the closure at Invergordon. It is not simply another industrial closure. After all, all closures are serious. Its impact is far more serious in a remote part of the Highlands than it would be in the industrial belt of Scotland, the Midlands of England, or anywhere else. It is particularly serious because the operation was backed so firmly and enthusiastically by the Government of the day, subsequent Governments and hon. Members of all parties. It is a bitter disappointment to all of us who believe in a strong regional policy and in trying to develop the natural resources of all parts of the United Kingdom to find ourselves faced with this sad problem.

That may be the only point of agreement across the Floor, although I hope not, but it may help us to understand one thing: there is no problem, no matter how much good will is involved, that can be resolved, and no industrial regeneration. no matter how keen successive Governments may be, that can be achieved by throwing money at it. In the past decade, Invergordon has received £113 million of taxpayers' money to reduce the cost of electricity to the smelter. It has received the usual development grants, allowances and loans to set it up and keep it going. Despite that, Invergordon has gone out of business as an aluminium smelter. It should be a sobering thought to all of us to realise that money is not the answer to industrial problems at Invergordon, Linwood, or any other part of the United Kingdom. It does not matter which Government writes the cheques—the problem is not resolved.

The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and his hon. Friend the Member for West Stirlingshire (Mr. Canavan) complained bitterly that the Government acted to save the jobs of their constituents at the British Aluminium rolling mill in Falkirk. That is the only construction that can be put on their speeches tonight. They made the silly point that there was no guarantee of jobs. The Labour Party was unable to give a guarantee about the jobs at Invergordon or anywhere else. It is impossible for any Government to say that they are guaranteeing jobs in a commercial organisation. I should have thought that the Labour Government's experience of unemployment would have taught them that lesson, if nothing else.

We have not, with the benefit of hindsight, criticised the 1968 contract—that would be all too easy—but we should remind ourselves that one thing that has altered tremendously since the power contract was signed in 1968 is that the world price of energy has exploded far more violently than anyone might have thought at the time. That has had an impact on energy costs in every industry, not least in an industry as energy-intensive as aluminium smelting.

My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) was right to quote from the joint statement by the chairman of British Aluminium and myself following our meeting in London on 7 January. I hope that Opposition Members will pay some attention to the simple fact that that statement proves beyond doubt—a point raised by almost every Opposition Member who spoke—that the Government made every effort to keel) the smelter in operation, although admittedly at a cost of £16 million a year in the short term.

We did that on the basis that if agreement could have been reached the smelter would have survived for another three years or more, after which the aluminium market can be expected to be in a stronger state than at present. The purpose of the joint statement was to clarify the position, because some confusing comments had been made. Theme is no confusion between the company and the Government in that respect.

My hon. Friend the Member for Edinburgh, South (Mr. Ancram) asked about the energy efficiency of the Invergordon smelter. British Aluminium agreed that micro-electronic controls were required at Invergordon, and the first batch was on the point of installation when the decision was made to close the plant. I accept my hon. Friend's point about the over-capacity of electricity in Scotland. That is a matter that I shall be discussing with the South of Scotland Electricity Board next week.

The right hon. Member for Glasgow, Craigton (Mr. Millan) asked whether the power price offered to British Aluminium was in line with the prices at Anglesey and Lynemouth. The price that British Aluminium said was the highest price consistent with enabling the smelter to continue was well below the price being charged to the company on 1981. That was the forward price that we discussed with it. Therefore, it was well below half that being charged to other industrial consumers in Scotland.

The right hon. Gentleman will know that it would have been necessary for the taxpayer to pay at least £16 million a year until the year 2000. That was the content of the discussion that took place with British Aluminium on the forward price. Therefore, the comparison with other smelters is not relevant. [HON. MEMBERS: "It is."] It is not relevant, because British Aluminium's Fort William smelter gets its power at 0–2 per unit, which is less than 10 per cent. of the price paid by industry in Scotland. The North of Scotland Hydro-Electric Board could not be expected to match that price.

What matters—this was my initial point—is the price and terms acceptable to British Aluminium to keep the smelter in operation. The Government and the company disagreed, not so much on the price, but on the period over which that price would have to be directly subsidised by the taxpayer. The difference between three years and 18 years was, in the Government's view, too long to give a blank cheque to any company.

Mr. Millan

The hon. Gentleman has not answered the question that I put to him and earlier to the Secretary of State. The issue of Fort William is irrelevant, but it is relevant that Invergordon, Anglesey and Lynemouth were all established at the same time. Was a power price offered to British Aluminium during these negotiations that was similar and fair compared with the prices at present charged in Anglesey and Lynemouth?

Mr. Fletcher

The Government and the company understood that a future price would have to he competitive with other aluminium smelters. That applies not only to British Aluminium but to any company that takes over the site. Therefore, the right hon. Gentleman's point is not relevant to the discussion. We are discussing whether the price would be internationally competitive. The right hon. Gentleman does not need me or British Aluminium to tell him that the company could not operate at Invergordon unless the price was internationally competitive. However, we are discussing not the price at Anglesey and Lynemouth but that at Invergordon.

Mr. Millan

rose—

Mr. Fletcher

I shall not give way, because there is nothing to be gained from pressing the point.

The hon. Member for Inverness (Mr. Johnston) said that the smelter had not suffered from an absence of support from Governments, both past and present. He regretted the apparent misunderstanding between the Government and British Aluminium. I hope that my repetition of the joint statement by the chairman and myself at the beginning of the month will clarify that. If not, I hope that the hon. Gentleman will re-read the joint statement, because it is clear. There is nothing technical or complex about it. It is written in plain English and I commend it to the hon. Gentleman.

The hon. Member for Aberdeen, North (Mr. Hughes) said that the closure called regional policy generally into question, and particularly as it affects remote parts of the United Kingdom, such as the Highlands. Some people are trying to be wise after the event and after the disappointments that have occurred not only in the Highlands but in other parts of Scotland. I refer mainly to writers living comfortably in the South-East, who give us the benefit of their advice.

The smelter did not fail because it happened to be located in the Highlands. Transport costs and freight charges were not the difficulty. It was not industrial relations or the shortage of good quality skilled labour that caused the closure, but the terms of the power contract made in 1968. The disputed charges alone amounted to £47 million and were a severe financial embarrassment to the company. The Government's best legal advice was that the hydro-electric board had to sue the company in court for the £47 million, because of the construction of the 1968 contract. In addition, there were operating losses at the smelter, and the depressed state of world markets led to low aluminium prices.

It is wrong that hon. Members and people from the Highlands should think that there is something the matter with that part of the world and that industry cannot survive there. Under the same conditions, and governed by the same contractual arrangements, the smelter would have become unstuck anywhere in the United Kingdom. I hope that Opposition Members will at least have the decency to recognise that.

My hon. Friend the Member for Moray and Nairn (Mr. Pollock) asked the Government to pursue the commitment to the Highlands and Islands Development Board to develop the area of Easter Ross, whatever the outcome of the search for a new operator. We intend to do that. He also asked whether the £10 million was specifically for the Invergordon area, and I confirm that. He will know that the board has power to provide grants and loans to industry in Easter Ross, which is a development area. He will also know that, although the work force must, as my hon. Friend said, be given real hope, it must not be given false hopes about the future.

As has been mentioned, a report today—which I have not seen—implies that a company is coming close to serious discussions and a possible negotiating position. My right hon. Friend was asked who were the nibblers. It is not our purpose to release the names of companies that have expressed an interest. I wish the House to be clear about that. Interest in the smelter has been expressed by one or two companies, but the interest is still distant. No serious discussions or negotiations have taken place, especially about the all-important matter of a long-term power contract.

The Government are as anxious as anybody to bring glad tidings to the people of Invergordon, but it would be utterly wrong, on the basis of the interest that has been shown so far, for anyone to get excited about the prospects of a new operator. We hope that one will emerge, but nothing has happened so far to make anyone in the House or elsewhere think that a deal has been clinched.

Mr. Harry Ewing

The matter is more specific than that. It appears that the Highlands and Islands Development Board held a press conference today, during which it announced that an American company was interested in taking over the aluminium smelter. That goes much further than the Minister has ever gone. We owe it to the people of Invergordon to have this announcement confirmed or denied. Will the Minister deal with that?

Mr. Fletcher

The fact that a company has expressed interest—I shall not repeat what I said about this being the very beginning of negotiations and about it being wrong for anyone to throw his hat into the air—should not be taken as anything more than that. A press conference was held today by the HIDB. It saw fit to hold a press conference to announce that a company was interested. That interest is no warmer because a press conference was held. There is no cause for celebration now, because serious negotiations have still to take place. I hope that the House will understand.

Mr. Ewing

rose—

Mr. Fletcher

I shall not give way again. The position is clear. A company has expressed interest and a press conference was held. The negotiations can only be at the earliest stage and it would be wrong to spend any more time—

Mr. Ewing

rose—

Mr. Canavan

The hon. Gentleman should give way.

Mr. Fletcher

If Opposition hon. Members wish to spend more time on this matter, they are confirming my opinion that they are only causing mischief to the people of the Highlands.

Mr. Ewing

rose—

Mr. Fletcher

My hon. Friend the Member for Argyll (Mr. Mackay) asked about an operator. He will have heard what I said. He asked also about press reports. What is important—and it was mentioned by the hon. Member for Inverness and by my hon. Friends the Members for Moray and Nairn and for Argyll—is the use of hydropower in the Highlands. We have always acknowledged that there would be formidable difficulties in drawing up a new power contract. That alone is reason enough for the remarks that I have made about not getting too excited because someone has expressed interest in perhaps becoming an operator of the smelter.

Mr. Robert Hughes

rose—

Mr. Fletcher

British Aluminium was receiving its power at roughly half the price paid by other industrial consumers in Scotland. Nevertheless, we are prepared to consider any approach that will produce power at the right price. As my right hon. Friend the Secretary of State for Scotland said earlier today, if the smelter is to receive power at the right price, either the taxpayer must meet the board's losses or other electricity consumers must be prepared to pay more. I hope that that is a matter to which Opposition Members will address their minds.

Mr. Robert Hughes

rose—

Mr. Fletcher

For other United Kingdom smelters the difference in price is being met by other consumers in England and Wales. We are not of the opinion that a new company corning in would wish to become involved in another contract whereby the Government provide what was described in 1968 as a letter of comfort.

We believe that it is highly likely that a new company coming in would wish to have a source of electricity generation—be it coal, nuclear or hydro power or whatever—that would give it confidence in the long-term pricing arrangements of that source of power, because we are obviously talking not about a short-term arrangement but about a long-term arrangement, whoever the new operator may be.

It is important to realise that if we wished to set aside cheap power for the smelter from hydro-electric sources in the Highlands we should have to bring the matter before the House, because we should have to amend the long-standing provision in the hydro board's statutes which prevents it from showing "undue preference" to any consumer or class of consumers. The Government would wish to consider any such change extremely carefully, as indeed would the Opposition. It would require primary legislation, so it would be for the House to decide, taking all of the factors into account.

From the experience at Invergordon, we consider that the additional cost for other Scottish consumers of a hydro arrangement of that kind would be between £15 million and £20 million per year, depending upon the prices charged to the new operator. The sum of £20 million is broadly equivalent to an increase of 2 per cent. in electricity prices for all Scottish consumers, including industrial consumers, who might well have something to say about that. If the additional price were charged only to domestic consumers, it would amount to an increase of about 4 per cent. That is the type of matter that the House would he required to discuss in the event of it being considered possible that hydro power could be made available in that way.

A number of points were raised by hon. Members on both sides, including the situation in the aluminium market, which is highly cyclical. At present, there is surplus capacity in the Western world and, as my right hon. Friend said, countries such as Japan are closing down smelting plant and capacity. We must therefore be realistic, not just with regard to the power contract, but with regard to the world market price for aluminium and when it may improve.

After listening to the speeches from the Opposition, I asked myself just what is the charge against the Government.

Mr. Foulkes

Negligence.

Mr. Fletcher

The charges seem to be that the Government were conned and that we should have disbelieved British Aluminium's claim that unless the 1968 contract was terminated on terms that left the company in balance it was in danger of going out of business altogether, with the loss of a further 2, 700 jobs in Scotland. The company made that clear to us in the closing months of last year.

Apart from the view that Ministers and officials took of that, hon. Members will appreciate that independent advice was taken from outside sources. Yet we are told that we should have disbelieved the company. According to most of the Opposition speeches, having disbelieved that the company was in financial difficulty and losing money at Invergordon, we should then have written off £47 million of disputed charges and given the company a blank cheque, which would have cost at least £16 million in the first year and would have run until the year 2000.

Multiplying £16 million by the 18 years to the turn of the century, and adding £47 million, one finds that, having disbelieved the company, the. Government are still being asked by the Opposition to provide it with £335 million. That is the charge that the Opposition have sought to level in the debate and outside the House. What they are saying is that we should have disbelieved the BACO, yet we should have paid it this sum of money. That is the economics of the madhouse and we on this side of the House will not accept it.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 234, Noes 303.

Division No. 43]	[10.00 pm
AYES
Abse, Leo	Douglas, Dick
Adams, Allen	Dunnett, Jack
Allaun, Frank	Dunwoody, Hon Mrs G.
Alton, David	Eadie, Alex
Anderson, Donald	Eastham, Ken
Archer, Rt Hon Peter	Ellis, R. (NE D'bysh're)
Ashton, Joe	Ellis, Tom (Wrexham)
Atkinson, N.(H'gey)	English, Michael
Bagier, Gordon A.T.	Evans, loan (Aberdare)
Barnett, Guy(Greenwich)	Evans, John (Newton)
Benn, Rt Hon Tony	Ewing, Harry
Bennett, Andrew(St'kp'tN)	Faulds, Andrew
Bidwell, Sydney	Field, Frank
Booth, Rt Hon Albert	Flannery, Martin
Bottomley, Rt Hon A.(M'b'ro)	Fletcher, L. R. (llkeston)
Bradley, Tom	Fletcher, Ted (Darlington)
Bray, Dr Jeremy	Foot, Rt Hon Michael
Brocklebank-Fowler, C.	Ford, Ben
Brown, Hugh D. (Provan)	Forrester, John
Brown, R. C. (N'castle W)	Foster, Derek
Brown, Ronald W. (H'ckn'yS)	Foulkes, George
Brown, Ron (E'burgh, Leith)	Fraser, J. (Lamb'th, N'w'd)
Buchan, Norman	Freeson, Rt Hon Reginald
Callaghan, Jim (Midd't'n & P)	Garrett, John (Norwich S)
Campbell, lan	Garrett, W. E. (Wallsend)
Campbell-Savours, Dale	George, Bruce
Canavan, Dennis	Ginsburg, David
Carmichael, Neil	Golding, John
Carter-Jones, Lewis	Graham, Ted
Cartwright, John	Grant, George(Morpeth)
Clark, Dr David (S Shields)	Grant, John (Islington C)
Cocks, Rt Hon M. (B'stol S)	Hamilton, James(Bothwell)
Coleman, Donald	Hamilton, W. W. (C'tral Fife)
Concannon, Rt Hon J. D.	Hardy, Peter
Conlan, Bernard	Harrison, Rt Hon Walter
Cook, Robin F.	Hart, Rt Hon Dame Judith
Cowans, Harry	Hattersley, Rt Hon Roy
Cox, T. (W'dsw'th, Toot'g)	Haynes, Frank
Craigen, J. M. (G'gow, M'hill)	Healey, Rt Hon Denis
Crawshaw, Richard	Heffer, Eric S.
Crowther, Stan	Holland, S.(L 'b'th, Vauxh'll)
Cryer, Bob	HomeRobertson, John
Dalyell, Tam	Homewood, William
Davidson, Arthur	Hooley, Frank
Davies, Rt Hon Denzil (L'lli)	Horam, John
Davies, Ifor (Gower)	Howell, Rt Hon D.
Davis, Terry (B'ham, Stechf'd)	Howells, Geraint
Deakins, Eric	Hoyle, Douglas
Dean, Joseph (Leeds West)	Huckfield, Les
Dewar, Donald	Hudson Davies, Gwilym E.
Dixon, Donald	Hughes, Mark(Durham)
Dobson, Frank	Hughes, Robert (Aberdeen N)
Dormand, Jack	Hughes, Roy (Newport)

Janner, HonGreville	Rathbone, Tim
Jay, Rt Hon Douglas	Rees, Rt Hon M (Leeds S)
John, Brynmor	Richardson, Jo
Johnson, James (Hull West)	Roberts, Albert(Normanton)
Johnson, Walter (Derby S)	Roberts, Allan(Bootle)
Johnston, Russell(lnverness)	Roberts, Ernest (Hackney N)
Jones, Rt Hon Alec (Rh'dda)	Roberts, Gwilym (Cannock)
Jones, Barry (East Flint)	Robertson, George
Kaufman, Rt Hon Gerald	Robinson, G. (Coventry NW)
Kerr, Russell	Rooker, J. W.
Kilfedder, James A.	Roper, John
Kilroy-Silk, Robert	Ross, Ernest (Dundee West)
Lambie, David	Rowlands, Ted
Lamborn, Harry	Ryman, John
Lamond, James	Sever, John
Leadbitter, Ted	Sheerman, Barry
Leighton, Ronald	Sheldon, Rt Hon R.
Lewis, Arthur (N'ham NW)	Shore, Rt Hon Peter
Lewis, Ron (Carlisle)	Short, Mrs Renée
Litherland, Robert	Silkin, Rt Hon J. (Deptford)
Lofthouse, Geoffrey	Silkin, Rt Hon S. C. (Dulwich)
Lyons, Edward (Bradf'd W)	Silverman, Julius
Mabon, Rt Hon Dr J. Dickson	Skinner, Dennis
McDonald, DrOonagh	Smith, Rt Hon J. (N Lanark)
McKay, Allen (Penistone)	Snape, Peter
McKelvey, William	Soley, Clive
MacKenzie, Rt Hon Gregor	Spearing, Nigel
Maclennan, Robert	Spriggs, Leslie
McNally, Thomas	Stallard, A. W.
McNamara, Kevin	Steel, Rt Hon David
McTaggart, Robert	Stewart, Rt Hon D. (W Isles)
McWilliam, John	Stoddart, David
Marshall, D(G'gowS'ton)	Stott, Roger
Marshall, DrEdmund (Goole)	Strang, Gavin
Marshall, Jim (Leicester S)	Straw, Jack
Martin, M (G'gowS'burn)	Summerskill, HonDrShirley
Mason, Rt Hon Roy	Thomas, Jeffrey (Abertillery)
Maxton, John	Thomas, Mike (Newcastle E)
Maynard, Miss Joan	Thomas, Dr R. (Carmarthen)
Meacher, Michael	Thorne, Stan (Preston South)
Mellish, Rt Hon Robert	Tilley, John
Mikardo, Ian	Tinn, James
Millan, Rt Hon Bruce	Torney, Tom
Miller, Dr M. S. (E Kilbride)	Urwin, Rt Hon Tom
Mitchell, R. C. (Soton Itchen)	Varley, Rt Hon Eric G.
Morris, Rt Hon A. (W'shawe)	Wainwright, E. (Dearne V)
Morris, Rt Hon C. (O'shaw)	Walker, Rt Hon H. (D'caster)
Morris, Rt Hon J. (Aberavon)	Watkins, David
Morton, George	Weetch, Ken
Moyle, Rt Hon Roland	Welsh, Michael
Mulley, Rt Hon Frederick	White, J. (G'gow Pollok)
Newens, Stanley	Whitehead, Phillip
Oakes, Rt Hon Gordon	Whitlock, William
Ogden, Eric	Willey, Rt Hon Frederick
O'Halloran, Michael	Williams, Rt Hon A. (S'sea W)
O'Neill, Martin	Williams, Rt Hon Mrs (Crosby)
Orme, Rt Hon Stanley	Wilson, Gordon (Dundee E)
Palmer, Arthur	Wilson, Rt Hon Sir H. (H'ton)
Park, George	Wilson, William (C'try SE)
Parker, John	Winnick, David
Parry, Robert	Woodall, Alec
Pavitt, Laurie	Woolmer, Kenneth
Pendry, Tom
Pitt, WilliamHenry	Tellers for the Ayes:
Powell, Raymond (Ogmore)	Mr. Lawrence Cunliffe and Mr.
Price, C. (Lewisham W)	Hugh McCartney.
Race, Reg
NOES
Adley, Robert	Baker, Nicholas (N Dorset)
Aitken, Jonathan	Beaumont-Dark, Anthony
Alexander, Richard	Bell, Sir Ronald
Alison, Rt Hon Michael	Bendall, Vivian
Amery, Rt Hon Julian	Bennett, Sir Frederic (T'bay)
Ancram, Michael	Benyon, Thomas (A'don)
Arnold, Tom	Benyon, W. (Buckingham)
Aspinwall, Jack	Best, Keith
Atkins, Rt Hon H. (S'throne)	Bevan, David Gilroy
Atkins, Robert (Presnon N)	Biffen, Rt Hon John
Atkinson, David (B'm'th, E)	Biggs-Davison, Sir John

Blackburn, John	Gorst, John
Blaker, Peter	Gow, Ian
Body, Richard	Grant, Anthony (Harrow C)
Bonsor, Sir Nicholas	Gray, Hamish
Bottomley, Peter (W'wich W)	Greenway, Harry
Bowden, Andrew	Grieve, Percy
Boyson, Dr Rhodes	Griffiths, E. (B'ySt. Edm'ds)
Braine, Sir Bernard	Griffiths, Peter (Portsm 'th N)
Bright, Graham	Grist, Ian
Brinton, Tim	Grylls, Michael
Brittan, Rt. Hon. Leon	Gummer, John Selwyn
Brooke, Hon Peter	Hamilton, Hon A.
Brotherton, Michael	Hamilton, Michael (Salisbury)
Brown, Michael (Brigg&Sc'n)	Hampson, Dr Keith
Browne, John (Winchester)	Hannam, John
Bruce-Gardyne, John	Haselhurst, Alan
Bryan, Sir Paul	Hastings, Stephen
Buchanan-Smith, Rt. Hon. A.	Havers, Rt Hon Sir Michael
Buck, Antony	Hawkins, Paul
Budgen, Nick	Hawksley, Warren
Bulmer, Esmond	Hayhoe, Barney
Burden, Sir Frederick	Heath, Rt Hon Edward
Butcher, John	Heddle, John
Butler, Hon Adam	Henderson, Barry
Cadbury, Jocelyn	Heseltine, Rt Hon Michael
Carlisle, John (Luton West)	Hicks, Robert
Carlisle, Kenneth (Lincoln)	Higgins, Rt Hon Terence L.
Chalker, Mrs. Lynda	Hill, James
Channon, Rt. Hon. Paul	Hogg, Hon Douglas (Gr'th'm)
Chapman, Sydney	Holland, Philip (Carlton)
Churchill, W. S.	Hooson, Tom
Clark, Hon A. (Plym'th, S'n)	Hordern, Peter
Clark, Sir W. (Croydon S)	Howe, Rt Hon Sir Geoffrey
Clarke, Kenneth (Rushcliffe)	Howell, Rt Hon D. (G'ldf'd)
Clegg, Sir Walter	Howell, Ralph (NNorfolk)
Cockeram, Eric	Hunt, David (Wirral)
Colvin, Michael	Hurd, Hon Douglas
Cope, John	Irving, Charles (Cheltenham)
Cormack, Patrick	Jenkin, Rt Hon Patrick
Corrie, John	Jessel, Toby
Costain, Sir Albert	JohnsonSmith, Geoffrey
Cranborne, Viscount	Jopling, Rt Hon Michael
Critchley, Julian	Joseph, Rt Hon Sir Keith
Crouch, David	Kaberry, Sir Donald
Dean, Paul (North Somerset)	Kershaw, Sir Anthony
Dickens, Geoffrey	Kimball, Sir Marcus
Dorrell, Stephen	King, Rt Hon Tom
Douglas-Hamilton, Lord J.	Knight, Mrs Jill
Dover, Denshore	Knox, David
du Cann, Rt Hon Edward	Lamont, Norman
Dunn, Robert (Dartford)	Langford-Holt, Sir John
Durant, Tony	Latham, Michael
Dykes, Hugh	Lawrence, Ivan
Eden, Rt Hon Sir John	Lawson, Rt Hon Nigel
Edwards, Rt Hon N. (P'broke)	Lee, John
Eggar, Tim	LeMarchant, Spencer
Elliott, Sir William	Lennox-Boyd, Hon Mark
Emery, Sir Peter	Lester, Jim (Beeston)
Eyre, Reginald	Lewis, Kenneth (Rutland)
Fairgrieve, Sir Russell	Lloyd, Ian (Havant & W'loo)
Faith, Mrs Sheila	Lloyd, Peter (Fareham)
Farr, John	Loveridge, John
Fell, Sir Anthony	Lyell, Nicholas
Finsberg, Geoffrey	McCrindle, Robert
Fisher, Sir Nigel	Macfarlane, Neil
Fletcher, A. (Ed'nb'gh N)	MacGregor, John
Fletcher-Cooke, Sir Charles	MacKay, John(Argyll)
Fookes, Miss Janet	Macmillan, Rt Hon M.
Forman, Nigel	McNair-Wilson, M. (N'bury)
Fowler, Rt Hon Norman	McNair-Wilson, P. (NewF'st)
Fox, Marcus	McQuarrie, Albert
Fraser, Peter (South Angus)	Madel, David
Fry, Peter	Major, John
Gardiner, George (Reigate)	Marland, Paul
Gardner, Edward (S Fylde)	Marlow, Antony
Garel-Jones, Tristan	Marshall, Michael (Arundel)
Gilmour, Rt Hon Sir Ian	Marten, Rt Hon Neil
Glyn, Dr Alan	Mates, Michael
Goodhew, Sir Victor	Maude, Rt Hon Sir Angus
Goodlad, Alastair	Mawby, Ray

Mawhinney, Dr Brian	Shelton, William (Streatham)
Maxwell-Hyslop, Robin	Shepherd, Colin (Hereford)
May hew, Patrick	Shepherd, Richard
Meyer, Sir Anthony	Shersby, Michael
Miller, Hal (B'grove)	Silvester, Fred
Mills, Iain (Meriden)	Sims, Roger
Mills, Peter (West Devon)	Skeet, T. H. H.
Miscampbell, Norman	Smith, Dudley
Mitchell, David (Basingstoke)	Speed, Keith
Moate, Roger	Spence, John
Monro, Sir Hector	Spicer, Jim (West Dorset)
Montgomery, Fergus	Spicer, Michael (S Worcs)
Moore, John	Sproat, Iain
Morris, M. (N'hampton S)	Squire, Robin
Morrison, Hon C. (Devizes)	Stainton, Keith
Mudd, David	Stanbrook, Ivor
Murphy, Christopher	Stanley, John
Myles, David	Steen, Anthony
Neale, Gerrard	Stevens, Martin
Needham, Richard	Stewart, A. (E Renfrewshire)
Nelson, Anthony	Stewart, Ian (Hitchin)
Neubert, Michael	Stokes, John
Newton, Tony	Stradling Thomas, J.
Normanton, Tom	Tapsell, Peter
Nott, Rt Hon John	Taylor, Teddy (S'end E)
Onslow, Cranley	Temple-Morris, Peter
Oppenheim, Rt Hon Mrs S.	Thomas, Rt Hon Peter
Osborn, John	Thompson, Donald
Page, John (Harrow, West)	Thorne, Neil(IIford South)
Page, Richard (SW Herts)	Thornton, Malcolm
Parkinson, Rt Hon Cecil	Townsend, Cyril D, (B'heath)
Parris, Matthew	Trippier, David
Patten, Christopher (Bath)	Trotter, Neville
Pattie, Geoffrey	van Straubenzee, Sir W.
Pawsey, James	Vaughan, Dr Gerard
Percival, Sir Ian	Viggers, Peter
Peyton, Rt Hon John	Waddington, David
Pink, R. Bonner	Wakeham, John
Pollock, Alexander	Waldegrave, Hon William
Porter, Barry	Walker, Rt Hon P. (W'cester)
Prentice, Rt Hon Reg	Walker, B. (Perth)
Price, Sir David (Eastleigh)	Walker-Smith, Rt Hon Sir D.
Prior, Rt Hon James	Waller, Gary
Proctor, K. Harvey	Walters, Dennis
Pym, Rt Hon Francis	Ward, John
Raison, Timothy	Warren, Kenneth
Rathbone, Tim	Watson, John
Rees, Peter (Dover and Deal)	Wells, Bowen
Renton, Tim	Wells, John (Maidstone)
Rhodes James, Robert	Whitelaw, Rt Hon William
Rhys Williams, Sir Brandon	Whitney, Raymond
Ridley, Hon Nicholas	Wickenden, Keith
Ridsdale, Sir Julian	Wiggin, Jerry
Rifkind, Malcolm	Wilkinson, John
Roberts, M. (Cardiff NW)	Williams, D. (Montgomery)
Roberts, Wyn (Conway)	Winterton, Nicholas
Rossi, Hugh	Wolfson, Mark
Rost, Peter	Young, Sir George (Acton)
Royle, Sir Anthony	Younger, Rt Hon George
Sainsbury, Hon Timothy
St. John-Stevas, Rt Hon N.	Tellers for the Noes:
Shaw, Giles (Pudsey)	Mr. Anthony Berry and
Shaw, Michael (Scarborough)	Mr. Carol Mather.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments):

The House divided: Ayes 292, Noes 231.

Division No. 44]	[10.14 pm
AYES
Adley, Robert	Atkins, Rt Hon H. (S'thorne)
Aitken, Jonathan	Atkins, Robert (Preston N)
Alexander, Richard	Atkinson, David (B'm'th, E)
Alison, Rt Hon Michael	Baker, Nicholas (N Dorset)
Amery, Rt Hon Julian	Beaumont-Dark, Anthony
Ancram, Michael	Bell, Sir Ronald
Aspinwall, Jack	Bendall, Vivian

Bennett, Sir Frederic (T'bay)	Goodhew, Sir Victor
Benyon, Thomas (A'don)	Goodlad, Alastair
Benyon.W. (Buckingham)	Gorst, John
Best, Keith	Gow, Ian
Sevan, David Gilroy	Grant, Anthony (Harrow C)
Blackburn, John	Gray, Hamish
Blaker, Peter	Greenway, Harry
Body, Richard	Grieve, Percy
Bonsor, Sir Nicholas	Griffiths, E. (B'ySt.Edm'ds)
Bottomley, Peter (W'wich W)	Griffiths, Peter (Portsm'th N)
Bowden, Andrew	Grist, Ian
Boyson, Dr Rhodes	Grylls, Michael
Braine, Sir Bernard	Gummer, JohnSelwyn
Bright, Graham	Hamilton, Hon A.
Brinton, Tim	Hamilton, Michael (Salisbury)
Brittan, Rt. Hon. Leon	Hampson, Dr Keith
Brooke, Hon Peter	Hannam, John
Brotherton, Michael	Haselhurst, Alan
Brown, Michael (Brigg&Sc'n)	Hastings, Stephen
Browne, John (Winchtester)	Havers, Rt Hon Sir Michael
Bruce-Gardyne, John	Hawkins, Paul
Bryan, Sir Paul	Hawksley, Warren
Buchanan-Smith, Rt. Hon. A.	Hayhoe, Barney
Buck, Antony	Heddle, John
Budgen, Nick	Henderson, Barry
Bulmer, Esmond	Heseltine, Rt Hon Michael
Burden, Sir Frederick	Hicks, Robert
Butcher, John	Higgins, Rt HonTerence L.
Butler, Hon Adam	Hill, James
Cadbury, Jocelyn	Hogg, Hon Douglas (Gr'th'm)
Carlisle, John (Luton West)	Holland, Philip (Carlton)
Carlisle, Kenneth (Lincoln)	Hooson, Tom
Chalker, Mrs. Lynda	Hordern, Peter
Channon, Rt. Hon. Paul	Howe, Rt Hon Sir Geoffrey
Chapman, Sydney	Howell, Rt Hon D. (G'ldf'd)
Churchill, W. S.	Howell, Ralph (N Norfolk)
Clark, Hon A. (Plym'th, S'n)	Hunt, David (Wirral)
Clark, Sir W. (Croydon S)	Hurd, Hon Douglas
Clarke, Kenneth (Rushcliffe)	Irving, Charles (Cheltenham)
Clegg, Sir Walter	Jessel, Toby
Cockeram, Eric	JohnsonSmith, Geoffrey
Colvin, Michael	Jopling, Rt Hon Michael
Cope, John	Joseph, Rt Hon Sir Keith
Cormack, Patrick	Kaberry, Sir Donald
Corrie, John	Kershaw, Sir Anthony
Costain, Sir Albert	Kimball, Sir Marcus
Cranborne, Viscount	King, Rt Hon Tom
Crouch, David	Knox, David
Dean, Paul (North Somerset)	Lamont, Norman
Dickens, Geoffrey	Langford-Holt, Sir John
Dorrell, Stephen	Latham, Michael
Doug las-Hamilton, Lord J.	Lawrence, Ivan
Dover, Denshore	Lawson, Rt Hon Nigel
du Cann, Rt Hon Edward	Lee, John
Dunn, Robert (Dartford)	Lennox-Boyd, Hon Mark
Durant, Tony	Lester, Jim (Beeston)
Dykes, Hugh	Lewis, Kenneth (Rutlad)
Eden, Rt Hon Sir John	Lloyd, Ian (Havant & W'loo)
Eggar, Tim	Lloyd, Peter (Fareham)
Elliott, Sir William	Loveridge, John
Emery, Sir Peter	Lyell, Nicholas
Eyre, Reginald	McCrindle, Robert
Fairgrieve, Sir Russell	Macfarlane, Neil
Faith, Mrs Sheila	MacGregor, John
Farr, John	MacKay, John (Argyll)
Fell, Sir Anthony	Macmillan, Rt Hon M.
Finsberg, Geoffrey	McNair-Wilson, M. (N'bury)
Fisher, Sir Nigel	McNair-Wilson, P. (New F'st)
Fletcher, A. (Ed'nb'gh N)	McQuarrie, Albert
Fletcher-Cooke, Sir Charles	Madel, David
Fookes, Miss Janet	Major, John
Forman, Nigel	Marland, Paul
Fowler, Rt Hon Norman	Marlow, Antony
Fox, Marcus	Marshall, Michael (Arundel)
Fraser, Peter (South Angus)	Marten, Rt Hon Neil
Fry, Peter	Mates, Michael
Gardner, Edward (S Fylde)	Maude, Rt Hon Sir Angus
Garel-Jones, Tristan	Mawby, Ray
Gilmour, Rt Hon Sir Ian	Mawhinney, Dr Brian
Glyn, Dr Alan	Maxwell-Hyslop, Robin

Mayhew, Patrick	Shepherd, Colin (Hereford)
Meyer, Sir Anthony	Shepherd, Richard
Miller, Hal (B'grove)	Shersby, Michael
Mills, Iain (Meriden)	Silvester, Fred
Mills, Peter (West Devon)	Sims, Roger
Miscampbell, Norman	Skeet, T. H. H.
Moate, Roger	Smith, Dudley
Monro, Sir Hector	Speed, Keith
Montgomery, Fergus	Spence, John
Moore, John	Spicer, Jim (West Dorset)
Morris, M. (N'hampton S)	Spicer, Michael (S Worcs)
Morrison, Hon C. (Devizes)	Sproat, Iain
Mudd, David	Squire, Robin
Murphy, Christopher	Stainton, Keith
Myles, David	Stanbrook, Ivor
Neale, Gerrard	Stanley, John
Needham, Richard	Steen, Anthony
Nelson, Anthony	Stevens, Martin
Neubert, Michael	Stewart, A. (E Renfrewshire)
Newton, Tony	Stewart, Ian (Hitchin)
Normanton, Tom	Stokes, John
Nott, Rt Hon John	Stradling Thomas, J.
Onslow, Cranley	Tapsell, Peter
Oppenheim, Rt Hon Mrs S.	Taylor, Teddy (S'end E)
Osborn, John	Temple-Morris, Peter
Page, John (Harrow, West)	Thomas, Rt Hon Peter
Page, Richard (SW Herts)	Thompson, Donald
Parkinson, Rt Hon Cecil	Thorne, Neil (IIford South)
Parris, Matthew	Thornton, Malcolm
Patten, Christopher (Bath)	Townsend, CyrilD, (B'heath)
Pattie, Geoffrey	Trippier, David
Pawsey, James	Trotter, Neville
Percival, Sir Ian	van Straubenzee, Sir W.
Peyton, Rt Hon John	Vaughan, Dr Gerard
Pink, R. Bonner	Viggers, Peter
Pollock, Alexander	Waddington, David
Porter, Barry	Wakeham, John
Prentice, Rt Hon Reg	Waldegrave, Hon William
Price, Sir David (Eastleigh)	Walker, B. (Perth)
Prior, Rt Hon James	Walker-Smith, Rt Hon Sir D.
Proctor, K. Harvey	Waller, Gary
Pym, Rt Hon Francis	Ward, John
Raison, Timothy	Warren, Kenneth
Rathbone, Tim	Watson, John
Rees, Peter (Dover and Deal)	Wells, Bowen
Renton, Tim	Wells, John (Maidstone)
Rhodes James, Robert	Whitelaw, Rt Hon William
Rhys Williams, Sir Brandon	Whitney, Raymond
Ridley, Hon Nicholas	Wickenden, Keith
Ridsdale, Sir Julian	Wiggin, Jerry
Rifkind, Malcolm	Wilkinson, John
Roberts, M. (Cardiff NW)	Williams, D. (Montgomery)
Roberts, Wyn (Conway)	Winterton, Nicholas
Rossi, Hugh	Wolfson, Mark
Rost, Peter	Young, Sir George (Acton)
Royle, Sir Anthony	Younger, Rt Hon George
Sainsbury, Hon Timothy
St. John-Stevas, Rt Hon N.	Tellers for the Ayes:
Shaw, Giles (Pudsey)	Mr. Anthony Berry and
Shaw, Michael (Scarborough)	Mr. Carol Mather.
Shelton, William (Streatham)
NOES
Abse, Leo	Brocklebank-Fowler, C.
Adams, Allen	Brown, Hugh D. (Provan)
Allaun, Frank	Brown, R. C. (N'castle W)
Alton, David	Brown, Ronald W. (H'ckn'yS)
Anderson, Donald	Brown, Ron (E'burgh, Leith)
Archer, Rt Hon Peter	Buchan, Norman
Ashton, Joe	Callaghan, Jim (Midd't'n & P)
Atkinson, N.(H'gey)	Campbell, Ian
Bagier, Gordon A.T.	Campbell-Savours, Dale
Barnett, Guy (Greenwich)	Canavan, Dennis
Benn, Rt Hon Tony	Carmichael, Neil
Bennett, Andrew (St'kp'tN)	Carter-Jones, Lewis
Bidwell, Sydney	Cartwright, John
Booth, Rt Hon Albert	Clark, Dr David (S Shields)
Bottomley, Rt Hon A.(M'b'ro)	Cocks, Rt Hon M. (B'stol S)
Bradley, Tom	Coleman, Donald
Bray, Dr Jeremy	Concannon, Rt Hon J. D.

Conlan, Bernard	Kerr, Russell
Cook, Robin F.	Kilfedder, James A.
Cowans, Harry	Kilroy-Silk, Robert
Cox, T. (W'dsw'th, Toot'g)	Lambie, David
Craigen, J. M. (G'gow, M'hill)	Lamborn, Harry
Crawshaw, Richard	Lamond, James
Crowther, Stan	Leadbitter, Ted
Cryer, Bob	Leighton, Ronald
Cunliffe, Lawrence	Lewis, Arthur (N'ham NW)
Dalyell, Tam	Lewis, Ron (Carlisle)
Davidson, Arthur	Litherland, Robert
Davies, Rt Hon Denzil (L'lli)	Lofthouse, Geoffrey
Davies, Ifor (Gower)	Lyons, Edward (Bradf'dW)
Davis, Terry (B'ham, Stechf'd)	Mabon, Rt Hon Dr J. Dickson
Deakins, Eric	McCartney, Hugh
Dean, Joseph (Leeds West)	McDonald, Dr Oonagh
Dewar, Donald	McKay, Allen (Penistone)
Dixon, Donald	McKelvey, William
Dobson, Frank	MacKenzie, Rt Hon Gregor
Dormand, Jack	Maclennan, Robert
Douglas, Dick	McNamara, Kevin
Dunnett, Jack	McTaggart, Robert
Dunwoody, Hon Mrs G.	McWilliam, John
Eadie, Alex	Marshall, D (G'gowS'ton)
Eastham, Ken	Marshall, Dr Edmund (Goole)
Ellis, R. (NED'bysh're)	Marshall, Jim (Leicester S)
Ellis, Tom (Wrexham)	Martin, M (G'gowS'burn)
English, Michael	Mason, Rt Hon Roy
Evans, loan (Aberdare)	Maxton, John
Evans, John (Newton)	Maynard, Miss Joan
Ewing, Harry	Meacher, Michael
Faulds, Andrew	Mellish, Rt Hon Robert
Field, Frank	Mikardo, Ian
Flannery, Martin	Millan, Rt Hon Bruce
Fletcher, L. R. (IIkeston)	Miller, Dr M.S. (E Kilbride)
Fletcher, Ted (Darlington)	Mitchell, R. C. (Soton Itchen)
Foot, Rt Hon Michael	Morris, Rt Hon A. (W'shawe)
Ford, Ben	Morris, Rt Hon C. (O'shaw)
Forrester, John	Morris, Rt Hon J. (Aberavon)
Foster, Derek	Moyle, Rt Hon Roland
Foulkes, George	Mulley, Rt Hon Frederick
Fraser, J. (Lamb'th, N'w'd)	Newens, Stanley
Freeson, Rt Hon Reginald	Oakes, Rt Hon Gordon
Garrett, John (Norwich S)	Ogden, Eric
Garrett, W. E. (Wallsend)	O'Halloran, Michael
George, Bruce	O'Neill, Martin
Ginsburg, David	Orme, Rt Hon Stanley
Golding, John	Palmer, Arthur
Graham, Ted	Park, George
Grant, George (Morpeth)	Parker, John
Grant, John (Islington C)	Parry, Robert
Hamilton, James (Bothwell)	Pavitt, Laurie
Hamilton, W. W. (C'tral Fife)	Pendry, Tom
Hardy, Peter	Pitt, William Henry
Harrison, Rt Hon Walter	Powell, Raymond (Ogmore)
Hart, Rt Hon Dame Judith	Price, C. (Lewisham W)
Hattersley, Rt Hon Roy	Race, Reg
Healey, Rt Hon Denis	Rees, Rt Hon M (Leeds S)
Heffer, Eric S.	Richardson, Jo
Holland, S. (L'b'th, Vauxh'll)	Roberts, Albert (Normanton)
Home Robertson, John	Roberts, Allan (Bootle)
Homewood, William	Roberts, Ernest (Hackney N)
Horam, John	Roberts, Gwilym (Cannock)
Howell, Rt Hon D.	Robertson, George
Howells, Geraint	Robinson, G. (Coventry NW)
Hoyle, Douglas	Rooker, J. W.
Huckfield, Les	Roper, John
Hudson Davies, Gwilym E.	Ross, Ernest (Dundee West)
Hughes, Mark (Durham)	Rowlands, Ted
Hughes, Robert (Aberdeen N)	Ryman, John
Hughes, Roy (Newport)	Sever, John
Janner, Hon Greville	Sheerman, Barry
Jay, Rt Hon Douglas	Sheldon, Rt Hon R.
John, Brynmor	Shore, Rt Hon Peter
Johnson, James (Hull West)	Short, Mrs Renée
Johnson, Walter (Derby S)	Silkin, Rt Hon J. (Deptford)
Johnston, Russell (Inverness)	Silkin, Rt Hon S. C. (Dulwich)
Jones, Rt Hon Alec (Rh'dda)	Silverman, Julius
Jones, Barry (East Flint)	Skinner, Dennis
Kaufman, Rt Hon Gerald	Smith, Rt Hon J. (N Lanark)

Snape, Peter	Walker, Rt Hon H. (D'caster)
Soley, Clive	Watkins, David
Spearing, Nigel	Weetch, Ken
Spriggs, Leslie	Welsh, Michael
Stallard, A. W.	White, J. (G'gow Pollok)
Steel, Rt Hon David	Whitehead, Phillip
Stewart, Rt Hon D. (W Isles)	Whitlock, William
Stoddart, David	Willey, Rt Hon Frederick
Stott, Roger	Williams, Rt Hon A. (S'sea W)
Strang, Gavin	Williams, Rt Hon Mrs (Crosby)
Straw, Jack	Wilson, Gordon (Dundee E)
Summerskill, Hon Dr Shirley	Wilson, Rt Hon Sir H. (H'ton)
Thomas, Mike (Newcastle E)	Wilson, William (C'try SE)
Thomas, Dr R. (Carmarthen)	Winnick, David
Thorne, Stan (Preston South)	Woodall, Alec
Tilley, John	Woolmer, Kenneth
Tinn, James
Torney, Tom	Tellers for the Noes:
Urwin, Rt Hon Tom	Mr. George Morton and
Varley, Rt Hon EricG.	Mr. Frank Haynes.
Wainwright. E (Dearne V)

Question accordingly agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House deeply regrets the closure of the smelter at Invergordon with the loss of 890 jobs; notes that the power contract between the British Aluminium Company and the North of Scotland Hydro-Electric Board signed in 1968 became the major factor threatening the future of the entire British Aluminium Company; recognises the need for the prompt action taken by Her Majesty's Government to assist the retention of the remaining 2, 700 jobs in Scotland; and supports Her Majesty's Government in its efforts to find a new operator for the smelter and to attract new industry to the area.

c514
1. STATUTORY INSTRUMENTS, &c. 39 words
c514
1. TERMS AND CONDITIONS OF EMPLOYMENT 47 words