Steel Industry

HC Deb 25 January 1982 vol 16 cc668-704 7.28 pm

Dr. John Cunningham (Whitehaven)

I beg to move, That this House calls upon Her Majesty's Government to give full support to the British Steel Corporation and its workers to ensure that jobs and production capacity are maintained at their present levels.

Mr. Speaker

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

Dr. Cunningham

We chose the subject for debate because of considerable concern about a number of problems facing the BSC. They were referred to by the chairman of the corporation, Mr. MacGregor, when he gave evidence to a Select Committee. In summary, he said that the uncertainties facing the corporation now were greater than at the time that he proposed his first survival plan for the BSC. We make no apology for asking the House to debate the problems this evening. These are also real problems for United Kingdom private steel makers.

Since the most important of the difficulties facing the corporation directly involve the Government, and, broadly speaking, are matters beyond the control of the corporation or its work force, we should have the opportunity of examining the Government's attitude to the problems and of asking questions in the hope that they will be able to reassure us. Of course, the best reassurance would be for the Government to accept the motion.

About six months have elapsed since we debated the EEC steel documents in July. Those agreements are at the centre of the present major international uncertainties facing the corporation. The problems within the EEC and the United States revolve around the EEC agreements on quotas and prices. There have also been problems about the recent severe weather, on which the corporation said something.

While, of course, it is serious for the corporation to incur significant operational losses—as no doubt it has done—we do not accept for a moment that the long-term strategy of the steel industry should be decided by the problems caused by four weeks of severe winter weather. I was surprised at some of the emphasis apparently given by those in the corporation to those problems. After all, steel industries are run in Pittsburgh, northern Germany, Japan, other parts of northern Europe and in the USSR where the weather is significantly more severe and certainly more prolonged than the bad weather that we have endured. There is no evidence to suppose that those countries determine the future of their steel industries according to the severity of their winters.

The Minister of State can be reassured, however, that whatever else I blame the Government for, I will not blame them for the weather problems. I hope that he will not accept that their outcome should be reason for criticising the corporation or for changing the present commitment to the MacGregor plan.

On behalf of my right hon. and hon. Friends, I praise the work force in the industry and, particularly, the workers in South Wales who did so much to try to ensure the safety and some output from the plant to the point where many of them—perhaps because they had no choice—stayed in the plant for several days, working to protect the major investment from which they earned their livelihood. It was appropriate that Mr. MacGregor should make similar comments on his recent visit to South Wales. Of course, similar praise is deserved throughout the corporation for the way that men and management faced up to the problems, and I associate all hon. Members on the Opposition side of the House with those comments.

The most important problem facing the corporation is the continuing deep domestic recession in the United Kingdom and the Government's abysmal record on the economy and British industry in general. That is at the heart of the BSC's dilemma.

Deliveries of finished steel products to United Kingdom suppliers and consumers have fallen by about 12 per cent. during the Government's period in office, doing very severe damage to the corporation's prospects and to the taxpayer's investments in our various modern and efficient plants. They are the issues for debate.

Mr. MacGregor is in no doubt about the seriousness of the problem because he recently referred in the steel industry's newspaper to the grim outlook for the corporation. He also said that there were no signs that the British economy, including the steel-using industry, would improve very much during the next two years. He was not very sanguine about the impact of the Government's policies on improving the lot of the industry that he runs. That is a pity because since the industry embarked on the present plan—indeed, in the first six months of the current financial year—progress has been fairly good and the plan was broadly on target. That is welcome news even though I reiterate that the Opposition had reservations about some aspects of it. There has been well over 90 per cent. utilisation of capacity and about 7 million tonnes of steel have been produced in the first six months. Therefore, why is progress now threatened?

We all know of the action proposed by United States steel producers against steel exports from the EEC and imports into the American economy from other parts of the world. Even if it were taken, it would not affect a major amount of the BSC's output.

The corporation's progress is no longer threatened by manning levels. Mr. MacGregor's forecast for manning in March 1982 was 107, 000. That figure was reached in November 1981 and it therefore seems that the corporation is well on schedule in improving manning levels. Nor is there much evidence, if any, to support the argument that the corporation's progress is being threatened by wage costs. They are among the lowest in Europe and in the overall cost implications of producing steel the total cost of production is important—not just wage costs, the cost per man-hour or however one refers to labour costs in the industry.

The corporation's prospects have been aggravated by action in the United States which, if carried through, would have an impact on the ability of the corporation to market its existing production levels. The United States action is strange for many reasons. America had a significant domestic steel production last year. It increased by about 8.3 per cent. EEC exports to America certainly do not appear to be particularly onerous in terms of total United States steel consumption.

My figures show that Belgium and Luxembourg export about 200, 000 tonnes, France 169, 000, West Germany 319, 000 to 320, 000, Italy just over 106, 000 and Britain just under 82, 000 tonnes. That is compared with Canada's exports of 800, 000 and Japan's almost 1.2 million tonnes. Therefore, whatever the problems of steel imports into the United States, there is not much evidence to support the argument that the imports are mainly European. If we add to that the fact that United Kingdom exports to America are now only about 30 per cent. of what they were in the peak years of the mid-1970s, it will be seen that our exports have decreased by roughly 60 per cent. in the past five years and are only about 3 per cent. of total American imports. That is a very small proportion. The Secretary of State spoke about that recently. The current edition of "British Business" reports on a meeting of Community Industry Ministers in Brussels to discuss the allegation of several major United States steel companies that the Community was selling steel below fair prices and states: These charges were rejected outright by the ministers who put the blame for United States producers' difficulties on the worsening economic situation in the United States". What an admission! The Opposition thought that "Reaganomics" was plagiarised Thatcherism. If the Secretary of State does not think that the President's policies are working and are damaging the prospects for his steel industry, he could have given the game away on the British Government's policies. Most people believe that the President's policies are closely allied to those of our Government. If they are damaging to the American industrial scene, it surely follows that they are equally damaging to our prospects, which is what we have argued for a long time.

I said earlier that many, if not all, of the problems were outside the control of the BSC, and the American attitude to imports certainly falls in that category. The corporation asserts that it is not causing a problem and is selling fairly into the American market. If the fault does not lie with the BSC, but the problem is a European one, who is responsible? The Secretary of State says that there in no European problem, but the Secretary of Commerce in the United States, Mr. Malcolm Baldridge, has no doubt that the EEC industries are failing to abide by the guidelines of the trigger price mechanism.

The mechanism was agreed in 1977–78 when problems last arose and it seems to have worked reasonably well, but Mr. Baldridge said in a press statement: The Communities' response has failed to convince the American industry that the TPM can continue to be an effective means of enforcing US trade laws. That is a fairly definite posture for America to take. If the difficulty is to be resolved it will need action by Governments within the EEC. There is considerable feeling in the public and private sectors in Britain that the problem can be laid at the door of the steel producers in some other EEC countries.

The major problem is not that of the closure of the American market. The threat is the collapse of the agreement on quotas, which would bring back confusion to steel production and pricing and the steel market in Europe. The prospects for our industry would be put at grave risk. Again, we argue that the Government have a responsibility to act on that problem.

We also believe that there should be no more closures of capacity in Britain while the problems are being resolved. I reiterate that forcefully. The sentiment was enshrined in the Opposition amendment in the July debate. We said that we declined to accept further reductions in steel manufacturing capacity in the United Kingdom, but the Government decided to vote against the amendment. They now have an opportunity to convince us and, more important, those in the industry, that they are willing to stand by them, the massive financial reconstruction of the industry that has recently taken place, and the taxpayers' major investment in modern plant and equipment. That is what we are asking for, and I hope that the Minister of State will give us that assurance.

It is not as though closing plants has solved the problem. There has been a string of closures, costing about £670 million in the past three years. The rate of closures and the loss of jobs in Britain have far outstripped anything that has taken place in the EEC. I am grateful to the Iron and Steel Trades Confederation for helping me in the collation of figures. In West Germany there has been a 4 per cent. cut in employment. In France there has been a 7 per cent. cut, in Italy a 1 per cent. cut and in Belgium a 2 per cent. cut. In the United Kingdom there has been a 21 per cent. reduction in employment, with an associated closure of capacity.

As we have said before, if there is to be a further reduction in steel capacity within the EEC it should not begin in the United Kingdom. Indeed, we go further and say that none of it should take place in the United Kingdom.

Mr. Frank Hooley (Sheffield, Heeley)

Is my hon. Friend aware that, far from reducing capacity, Spain and Italy have substantially increased their production capacity over the past few years?

Dr. Cunningham

That is so. Expansions of capacity have been taking place elsewhere and penetration of the United Kingdom market from within the EEC has been continuing apace. We have a large imbalance in steel trade with our EEC partners.

Our exports and imports are broadly in balance, which is not the case in a number of other EEC countries, including Belgium, Luxembourg and the Federal Republic of Germany. We should remind ourselves of the traumas that we have been through in connection with steel policy. There have been major closures, with whole towns being put out of work and massive sacrifices made by thousands of families.

We should resolve tonight to tackle the problems facing the BSC and to ensure that they are tackled on the basis of fairness and equity within the EEC, not on the basis of even more unjustifiable sacrifices having to be made by those in our steel making communities.

I return briefly to the subject of the weather. The BSC has said that it may lose up to about £100 million in the current financial year and perhaps significantly more in the next financial year if the United States action is confirmed. The latter statement was made to the Select Committee on Industry and Trade by the chairman of the corporation.

Against this we should set the Government's attitude to the external financing limit of the corporation, which in 1981–82 was £730 million. In December the Government suggested that in 1982–83 the figure should be £350 million—less than half the figure for the previous financial year. Mr. MacGregor suggested that it should be £70 million or £80 million more than that. Why has this change been made? If it is only under consideration, when can the corporation expect a final decision, which will remove some of the uncertainty about the future financial prospects?

The Conservative Party must not lay most of the uncertainties facing the BSC at the door of the workers and the trade unions in the industry, who have accepted a great deal, and a great deal of criticism. I hope that Conservative Members will avoid falling into their all too frequent habit of blaming the workers and the trade unions for the problems of the steel industry, especially as for some time the Government have refused to appoint two of the union nominees as worker directors. That is another question for the Government—why has that issue gone on for so long? It is obviously an irritant to the unions. There seems to be no explicit argument in favour of not making the appointments. The chairman seems to believe that he can exercise a sort of veto. The Labour Party objects to that. The places should be filled as quickly as possible and I hope that the Minister will give us an assurance this evening. This attitude causes irritation and leads to bad relationships within the corporation.

Mr. Stan Crowther (Rotherham)

No doubt my hon. Friend has read the minutes of evidence of the Select Committee on Industry and Trade, in which I question the Secretary of State on this matter. He will be aware that the Secretary of State has, in effect, abdicated his duty to make the appointment after consultation with the chairman. He has, for all practical purposes, handed over the responsibility for making the decision to the chairman of BSC. The chairman in turn has decided that he does not like one of the appointments offered to him and has turned it down.

Dr. Cunningham

The chairman of BSC is thus frustrating the intentions of the Act. What my hon. Friend has said is confirmed by correspondence between my right hon. Friend the Member for Salford, West (Mr. Orme), who has already raised the point, and the Secretary of State for Industry.

It is almost certain that total unemployment will be announced to be more than 3 million tomorrow. In steel areas such as Glasgow the total tops 20 per cent. In Workington, where major closures have taken place, unemployment is at 20 per cent. In Consett it is over 30 per cent. In parts of Teesside the figures are well in excess of 20 per cent. In Scunthorpe they are 19 per cent. and in parts of South Wales they are 20 to 21 per cent.

The Labour Party needs to advance no more arguments than those figures for saying that it is opposed to a further reduction in the capacity and scope of the corporation's activities. These communities cannot take any more unemployment. Against this background, why has there been no final decision yet on the corporate plan? Why have the Government not taken greater initiatives to help the industry on energy costs?

The chairman of the NEDO sector working party on iron and steel wrote to the Secretary of State recently to draw his attention to the fact that there was no evidence of any concerted attempt to help the various companies in the sector with energy problems, which have been well set out and thoroughly examined. Major international comparisons have been made and the Government can act in that direction, too, to help the corporation overcome one of its difficulties.

It is reported that Mr. MacGregor is calling for a complete review of the corporation's financial projections. He must be in something of a dilemma, given the Government's indecision over the external financing limit, given that he has had no final answer on his corporate plan and given the corporation's need to take advantage of a larger home market. The statement made by the Secretary of State on the private sector a few weeks ago implied some contraction in that area too. Is that contraction in capacity to be filled by more imports or is the corporation to be put into, or helped into, a position by the Government to take the opportunity of getting a greater share of the British market? I remind the House that imports are already almost 30 per cent. of the steel consumed in the United Kingdom.

I return to Mr. MacGregor's view about the future prospects of the economy as a whole. We have seen another year during which the fall in GDP has been between 2 per cent. and 3 per cent. Major capital investment programmes have been set aside, programmes that were vital to the well-being of so much of everyday life in Britain. The programmes that were set aside involved the railways and the gas-gathering pipeline. The latter would have gone a long way towards ensuring future gas supplies. There has been a collapse in the building and construction industries. All these factors have had a major impact on the prospects for British Steel and its production and output.

In the two years since the abolition of exchange controls Britains's financial institutions have invested £4, 500 million overseas. The scale of that outflow is best illustrated by the fact that the same institutions invested about the same amount in Britain. We are investing at least as much in our competitor countries and in industries overseas under this Administration as we are in our own industries. What a difference there would have been in our own economy and industry if even half of that money had been invested in Britain rather than abroad. That is a measure of the Government's failure to bring about the industrial regeneration that we need.

If the corporation fails to achieve its targets under the plan because of the uncertainties, the blame cannot really be laid at the door of the chairman. It cannot really be laid at the door of the unions. It will be laid where it rightly belongs, and that is at the door of this Administration.

7.59 pm

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

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof, this House calls upon Her Majesty's Government to continue to encourage the British steel industry to improve its efficiency and competitiveness in order to strengthen its overall health and profitability; and to pursue a successful privatisation programme for the British Steel Corporation. Although I cannot support the terms of the Opposition's motion, I make no complaint about the choice of subject. Indeed, I welcome it. During the previous Session, and especially during the passage of the Iron and Steel Bill, the House had many opportunities to discuss the state of the steel industry and its prospects. That has not been possible during this Session. There have been a number of recent and important developments affecting the steel industry, and this is a useful opportunity for the House to consider them.

I should like to deal with three broad areas. First, and primarily, there is the British Steel Corporation—its financial, commercial and market situation, and the main problems. Secondly, there are the international developments, about which the hon. Member for Whitehaven (Dr. Cunningham) spoke, the progress being made on the European Community's agreements on steel and the recent developments in the United States market. Thirdly, there is the position of the private sector steel producers, including the action that is, being taken to help them restructure their operations. Those are wide subjects, and I shall be unable to cover every aspect of them now, but with the leave of the House I shall of course seek, when winding up the debate, to deal with other points raised in the debate.

If I may deal with the British Steel Corporation first, perhaps I could remind the House of the background. At the beginning of last year Mr. MacGregor described his survival plan for 1981–82 as "optimistic". That word was echoed by my hon. Friend the Member for Leeds, North-East (Sir K. Joseph) when he approved the plan in February. The plan certainly set ambitious targets for reducing costs, improving productivity and regaining the corporation's depleted market share. The financial objective for 1981–82 was to reduce the previous year's record loss of £668 million by more than half, and to do that within an external financing limit of £730 million—about two-thirds of the previous year's level.

By last December the plan's targets looked realistic and the corporation well on the way to achieving them. There were cost reductions, including plant closures and redundancies which were referred to by the hon. Member for Whitehaven. I do not dissent from what he said about the hardship that was caused in many communities. Many of those closures and redundancies were achieved ahead of planned dates. Productivity had improved in virtually all parts of the business, with some of the major plants—notably Port Talbot and Llanwern—reaching levels actually equal to the best of their European competitors. The corporation had regained its market share, almost exclusively at the expense of imports.

That is not to say that there had been no problems to overcome. Costs for raw materials had continued to rise. Demand for steel in the United Kingdom lagged behind the plan, which meant that the corporation had to keep its plants running at optimum levels by exporting more steel than planned, and some of that was to relatively unremunerative markets. Nevertheless, the efforts of management and work force to achieve the internal efficiencies and economies which lay under their own control broadly offset those adverse factors. As a result, in the half-year to September 1981 the corporation reduced its losses after interest to £196 million compared to £279 million in the corresponding period of the previous year and the situation continued to improve. That was despite continuing low levels of steel prices for most of the period.

By December the European measures to increase steel prices had begun to take effect, and the corporation believed that for the year as a whole it was on target to achieve the planned reduction in losses within the original external financing limit. It stressed, however—this is one of the major points—that this forecast depended critically on the European steel regime being effectively implemented in all its aspects, particularly the programme of price increases and of measures to bring capacity into line with demand. I want to say more in detail about the European measures. The point that I wish to underline is that BSC entered 1982 in markedly better shape than a year earlier.

Building on the solid achievements of 1981, in December Mr. MacGregor presented the Government with his new plan for 1982ndash;85. At the same time, he made it clear that it had to be regarded as provisional because of the new danger that action might be taken to close or severely restrict the United States market against steel imports. The corporation's concerns were twofold. First, it could stand to lose a valuable market.

The hon. Member for Whitehaven referred to some figures. Provisional figures for 1981 show that the EEC as a whole sent about 6 million tonnes of steel to the United States of which BSC accounted, not for 80, 000 tonnes, as he suggested, but for between 400, 000 and 500, 000 tonnes.

Dr. John Cunningham

I realise that I was referring to figures for one quarter and not to annual figures. The Minister was right to correct me and I accept what he says.

Mr. Lamont

I did not wish to make a point against the hon. Gentleman, but it is extremely important that the House should be clear about the importance of the matter. It is not just a case of BSC losing access to a market. There is another fear, which is that the closure of the United States market, not just to BSC, but to other European steel producers, will disrupt and undermine the whole European price regime.

The fear was that protectionist measures would create even more surplus capacity in Europe and undermine the agreement on prices. In addition, third country exports could be diverted from the United States to Europe, so exacerbating the fundamental problem of surplus capacity. On 11 January a number of United States steel companies finally initiated anti-dumping and countervailing duty suits against West European producers. No one should doubt the seriousness of this development and the danger of creating a trade war from which no one will gain and everyone will lose.

Mr. Ian Wrigglesworth (Thornaby)

This is an important matter. Will the Minister clarify the figures? Is the figure of 400, 000 to 500, 000 tonnes a recently updated figure? The last figure that I saw was 300, 000 to 400, 000 tonnes.

Mr. Lamont

That is the figure for 1981.

Mr. Crowther

It would be serious if European steel exports to the United States were reduced dramatically, but does the Minister agree that if similar action were taken against third countries, from which exports to the United States have increased much more than those from Europe, a more serious problem would be created if those countries attempted to unload their surplus on the European Community?

Mr. Lamont

The hon. Gentleman is right. Unfortunately, some action has been initiated against some third country suppliers, such as Spain and Rumania.

Against that background, Mr. MacGregor informed the Government on 12 January that he had to reassess both the outlook for the corporation for the remainder of 1981–82 and the basis on which the new plan for 1982–85 had been constructed. That review will not be completed before the end of the month.

The details of the complex law suits by United States steel companies are only now being received and assessed. It is too early to say precisely which products are covered. Moreover, the United States Department of Commerce has yet to decide which of the cases it will accept for investigation. Contacts are continuing between the Community and the United States Administration in an attempt to reach an understanding that will minimise disruption to traditional trade.

In the meantime, however, Community Industry Ministers meeting in Brussels on 13 January agreed unanimously that it was the United States recession rather than the volume or price of European exports that lay at the root of the United States steel industry's problems. They therefore agreed that the Community would work together to mount a robust defence against those actions. While I very much hope that an amicable settlement can be reached with the United States, the Government and United Kingdom steel producers are prepared to fight those legal suits hard, in concert with our Community partners.

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

Is it not correct to suggest that the Americans are less likely to criticise our pricing policy if the subsidies go through the energy pricing system as against other subsidies which they may seek to identify in these actions? Is this not especially so as any subsidy that we may pay to help on energy costs would probably lead only to an energy price being paid by us which is no greater than that paid in the United States?

Mr. Lamont

I do not know whether the tactic that the hon. Gentleman suggests is the right one. Even if it were, I am not sure that it would be right for me to say. The United States Administration is not the only one that might cast its beady eye on subsidies which the hon. Gentleman suggests might be paid for energy prices.

In deciding to make a reassessment of his plan Mr. MacGregor also referred to other factors which have been reported in the press. The hon. Member for Whitehaven referred to the severe weather and to steel production in other countries. However, in other countries such weather conditions are not so exceptional as they are in this country. Arctic temperatures at Ravenscraig reduced output, while the plants, including the blast furnaces, at Port Talbot and Llanwern were literally buried in snow and came to a halt. As the hon. Gentleman knows, considerable costs are involved not just in the disruption but in the whole business of starting them up again.

The press has reported a range of figures for the losses. I cannot comment on those reports, because BSC has not yet completed its assessment of the cost to it of the weather. It is certainly premature to talk of increasing BSC's external financing limit for 1981–82 on the basis of the purely speculative figures that have appeared in the press, and BSC has made no such request to the Government.

Another extremely serious problem lies in the dispute at British Rail. BSC relies heavily on the railways to move raw materials into and finished steel out of its plants. There has also been a particular problem at Teesside. A docks strike at the port has been running since before Christmas. The dispute at British Rail has now compounded BSC's difficulty there. Stocks of finished steel are now at capacity levels, and this means that production has had to be reduced to keep running. This industrial action is already damaging BSC and, if continued, could lead to an increasing loss of output, which could mean markets lost and jobs put at risk.

I believe that the difficulties facing BSC, serious though they are, are capable of being resolved. The underlying position at BSC is now much stronger, given the great efforts, involving both management and unions, that have been made over the past 18 months to cut costs and improve productivity. Provided that this spirit of co-operation is maintained and that sensible solutions can be found for the current external problems facing BSC, there is every chance that BSC will become profitable by 1983.

Dr. Jeremy Bray (Motherwell and Wishaw)

The Minister says that BSC will become profitable "by 1983". Will he be more precise and specify a date or financial year?

Mr. Lamont

During the course of 1983—I do not think that I can be more precise than that.

I come now to the international scene. In Europe, the arrangements agreed last June have three main planks—a phased and simultaneous increase in European steel prices, the abolition of State aids to the steel industry by the end of 1985, and the closure of excess capacity.

Price increases are a crucial element in the package of measures. Without them, the other two elements would be insufficient to restore the European Steel industry to profitability. I know that steel users in the United Kingdom are concerned about the speed and scale of the planned rises. But, first, United Kingdom steel prices have only just returned to and begun to exceed the levels which they reached in 1979, whereas the prices charged by the main United Kingdom steel-using industries have risen steadily and substantially over the period. We could not allow steel to continue to act as a subsidised input for the rest of industry.

Secondly, United Kingdom steel users should not be put at a disadvantage compared with their overseas competitors. In Europe the price increases are being implemented by all steel producers under the supervision of the Commission, and in markets outside Europe—in, for example, both the United States and Japan—prices have been consistently higher over the last few years than those in Europe, including the United Kingdom. Finally, BSC has made considerable progress in closing excess production capacity, in reducing its workforce, and in improving productivity.

The costs of that as the hon. Gentleman said, have been heavy and have fallen on the public purse. The Government are determined that a streamlined BSC should cease to be such a burden on the taxpayer. An inescapable consequence is that BSC's prices, and those in the rest of Europe, will have to rise to levels that give a reasonable return to efficient steel producers.

On the second element of the European policy—the phasing out of aids by 1985—the objective is agreed, but it will depend for its ultimate success on the other elements in the policy being implemented successfully, so allowing European steel producers to return to profitability and to free themselves from reliance on subsidies.

The third element of the policy—the closure of excess capacity—relates very closely to the Opposition motion. The Community's decision on phasing out State aids by 1985 ties the granting of any aid in the meantime firmly to a programme of restructuring and capacity cutbacks in the member States concerned. That is a policy which we fully support. I agree with some of the points that the hon. Gentleman made, and I am happy to repeat what I know was the line taken by my predecessor—that the United Kingdom steel industry has already borne its share of cutbacks and we now look to others to make comparable sacrifices so as to bring total capacity into line with demand.

The major United Kingdom interest lies in ensuring that the European Commission applies the State aid rules effectively and that member States abide by them. The House will be interested and pleased to know that the Commission is currently taking action against three States for procedural infringements—non-notification of aid in advance of payment and the like—but on the whole it appears that member States are now facing the fact that they have no option but to cut capacity if they wish to give further aid. That does not mean that the future of every steelmaking plant currently operating in Britain can be guaranteed for ever. There will still be a need to maintain and improve competitiveness, because others do not stand still. Productivity and competitiveness are moving targets.

I should like to take the opportunity to deny some of the wild rumours that have been put around—for example, that the corporation has some secret plan to close Scunthorpe. This story has absolutely no foundation.

Mr. Michael Brown (Brigg and Scunthorpe)

I do not wish to detain the House, and I shall be seeking to catch your eye later, Mr. Deputy Speaker, but can my hon. Friend confirm that the story that appeared in The Guardian relating to the steelworks in my constituency was in no way a kite-flying exercise by the British Steel Corporation, as those inclined to believe the story have suggested?

Mr. Lamont

I can give my hon. Friend the assurance that he seeks. It was not kite-flying. The story in The Guardian has no foundation.

There have also been persistent claims that steel capacity reductions in the United Kingdom, especially those by BSC, have already been taken to the point where the United Kingdom steel industry will be unable to meet any upturn in demand. These claims have been examined by the Government and by a number of bodies, including the Select Committee on Industry and Trade and the iron and steel sector working party. We do not believe that they stand up under such examination, since the general range of forecasts indicate that steel consumption in the United Kingdom will be between 12 million and 13.5 million product tonnes in 1985. That is equivalent to a requirement for liquid steel of between 16 million and 18 million tonnes. Assuming that imports and exports continue to remain in broad balance, BSC's current manned capacity of 14.4 million tonnes, coupled with private sector capacity of about 4 million tonnes, will be adequate. Moreover, these capacity figures take no account of the fact that BSC retains over 3 million tonnes of reserve capacity, which could be brought back on stream in the event of a sustained increase in demand.

Mr. Crowther

Will the hon. Gentleman give way?

Mr. Lamont

I shall give way in a minute. As to claims that an unforeseen and permanent upsurge in demand would create a shortage, I refer the House to the fourth report of the Select Committee on Industry and Trade, of which the hon. Member for Rotherham (Mr. Crowther) is a member, which dealt with BSC's 1981–82 corporate plan. In paragraph 22 it concluded that we tend to discount the concern of those who fear that the corporation's capacity will be insufficient, either for the prospective demand or in the event of demand being higher still as a consequence of an upsurge in activity in the economy.

Mr. Crowther

How long does the Minister think that it will take to bring back into production the plants that have been mothballed?

Mr. Lamont

I understand that some plants could be brought back into production within months. There is no point in bringing them back into production when there is no demand. The corporation's policy must be to run the plants that are in operation at their maximum level of capacity.

Dr. Bray

Whether BSC will be able to meet capacity and demand depends upon the pattern of that demand. Does the Minister agree that there are types of demand, particularly for plate for gas pipelines or for the Channel bridge, which, if they came in a rush, could not be met? The capacity to meet such peaking of demand and the possible consequent loss to British industry and export opportunities worry us.

Mr. Lamont

That is right. Demand is not amorphous. It relates to particular products and means the taking of particular decisions. The corporation must judge. The corporation believes that it has adequate capacity to meet foreseeable demand and that some of the reserve could be brought back.

I deal next with the private sector of the industry, which is not mentioned in the Opposition motion. The Government are anxious to see it return to health and profitability. The private sector has a key role to play in the industry and must be encouraged—and helped—to overcome its present difficulties.

For the private sector, as for BSC, over-capacity has been one of the main problems. For this reason the Secretary of State announced last month a new £22 million scheme of assistance under section 8 of the Industry Act 1972. This will help not only with the costs of further closures, but with the costs of reorganising and making efficient the businesses of companies which have already reduced capacity or which now decide to do so.

We have already had preliminary discussions with a number of companies about possible applications under the scheme. The scheme, however, only supplements other measures which the Government have already taken or are actively promoting to help the private sector.

The Government, for example, continue to support the creation of joint ventures between the British Steel Corporation and the private sector, involving the merger of assets into new Phoenix companies, managed and financed as private companies. The first of these, Allied Steel and Wire Ltd., was created last July by combining the wire and rod interests of BSC and GKN. This measure of privatisation has been relatively little remarked upon although the new private sector company will be a significant force and is now one of the strongest wire and rod companies in Europe. We intend that there should be further companies of that kind. Active discussions are still in progress on a second Phoenix venture in the engineering steel sector which could involve the Round Oak steel works and GKN plant at Brymbo and Wrexham.

We recognise that Phoenix-type companies may not always provide the answer where there is an overlap between BSC and the private sector. The Government have recently commissioned an independent review of the cold-rolled narrow steel strip industry, in which both BSC and a number of independent producers are taking part. We would be prepared to carry out similar studies for other sectors of the industry, in order to assist rationalisation. The aim of such studies is not to impose a solution. The initiative for forming proposals will remain with the companies themselves.

The Government are, of course, always prepared to look at other ways of helping the private sector. For example, following Sir Frederick Warner's report on the special steels sector the Government, in conjunction with the British Independent Steel Producers Association, held discussions with the Commission last October. As a result of these discussions the Commission recognised the particular problems of the United Kingdom industry and subsequently recommended a 10 per cent. increase in special steel prices from the beginning of this year. Similarly, following complaints from the private sector about unfair price cutting by BSC, the Government took up the problem with BSC. As a result the chairman undertook to investigate personally every complaint. I understand that private steel makers have found this procedure useful.

We believe that with such financial and practical help from the Government, coupled with the other measures being taken at both national and Community level to promote restructuring of the steel industry and a more competitive environment, the British private sector will be able to reorganise itself so as to be able not only to survive but to prosper.

The United Kingdom steel industry certainly faces problems. There is no escape simply by setting our face adamantly against any closures or job losses or against co-operation with our Community partners. We all want the largest steel making industry that can efficiently supply markets at home and abroad. Management, work force and the Government have to work together to achieve that.

The history of BSC for too long has been one of political interference, of difficult decisions constantly deferred, with the consequences becoming graver, especially for the work forces. They have suffered most of all. We have had to learn the hard way, but at least we have made progress in the last year—more progress perhaps than anyone might have dared to hope. Parts of BSC are now equal to the best in Europe. The corporation now has some hope. Let us not throw it away by returning to precisely the mistakes that created the problem in the first place.

8.28 pm

Mr. Stan Crowther (Rotherham)

I was pleased to hear the Minister of State emphasise that the British Steel Corporation had recovered its market share at the expense of imports. Many hon. Members have become a little tired during the past 12 months of hearing Conservative Members constantly attributing all the problems of the private sector to allegedly unfair competition from the BSC. From an examination of the facts, it is clear that the real enemy of the private steel sector in Britain was the enormously high level of imports. In fact, the products on which, in recent years, the private sector has taken the hardest knocks in the market are precisely the products into which the level of import penetration has been highest. Therefore, I was pleased to hear what the Minister said.

The main problem for both the public and private sectors of the steel industry lies with the Government's policies. At the heart of the problem is the enormous reduction in demand within the United Kingdom because of the piling of deflation upon deflation, coupled with the burden of energy prices and the Government's failure to safeguard the interests of both the public and private steel industry against the considerably subsidised competition from foreign producers, especially the producers of various special steels and stainless steels.

When the Minister referred to the recent decision of the Council of Ministers to phase out State aids to steel, he omitted to mention that the Ministers had left out a variety of indirect State aids that European steel industries receive but which the British steel industry does not receive. I referred to this matter at some length during the debate on 28 July. I mentioned particularly the case of the West German railway subsidies which benefit the West German steel industry by almost £400 million a year. Those subsidies will continue. Therefore, the British steel industry will continue to be at a disadvantage against subsidised competitors in Europe. I am sorry that the Minister feels that everything from now on will be much smoother, because I am convinced that it will not be so.

I do not understand why the Government have tabled an amendment about denationalisation. The Minister did not offer any ways in which denationalisation would benefit that part of the steel industry which, at present. is controlled by the BSC. Denationalisation would do nothing to solve the present problems. There may well be a case for further rationalisation, but there is no merit in the new joint companies, the phoenix companies, being part of the private sector. It would lead to much greater order and efficiency in the industry if any new joint companies were part of the public rather than the private sector. The hiving off of valuable pieces of the BSC into the private sector will merely make the remaining parts of BSC more difficult to operate.

In any event, whatever happened in the way of rationalisation, the real problems cannot be tackled in that way because the heart of the difficulty is that Britain, alone among all developed countries, has a Government who are not prepared to lift a finger to create the conditions in which home industries are able to compete on equal terms with foreign producers. Until that happens and until we have a Government who will do something to look after their own industries, these problems will remain unsolved for both the private and public sectors.

I am sorry that there have been attempts on the Government side over the past year or two to create a totally artificial antagonism between people in the private steel sector and those working for BSC. The objective of the Labour Party and of the trade unions is to see both sectors of the steel industry restored to health.

I appreciate entirely the difficulties that face Mr. MacGregor, who, unlike his competitors in Europe, has to deal with a Government who are not only antagonistic to the whole concept of a publicly owned steel industry but doctrinally opposed to using the very considerable machinery at their disposal to create conditions which are helpful to their home-based industries. Not only Mr. MacGregor but the private sector, is faced with the problem created by the effects of deflation on the steel industry's main customers in Britain—for example, the motor car industry and other major steel users. Yet, at the same time, it gets no Government support against the intense international competition from countries whose Governments have a totally different attitude.

Therefore, it is against this background of sympathy and understanding of the problems of Mr. MacGregor that I shall now be somewhat critical of what has happened since the corporate plan was agreed.

When the corporate plan was first debated in the House in December 1980, I concluded my short contribution by saying Mr. MacGregor may find himself, at the end of the day, in the position of the surgeon who said 'The operation was a complete success, but unfortunately the patient died, '"— [Official Report, 16 December 1980; Vol. 996, c. 285.] I agree with the Minister to the extent that the patient is not yet dead but I am nothing like as optimistic as he is about the prognosis. It seems to me that the patient is at least suffering very severely from the fact that the surgery has been much too drastic. There is no doubt in my mind that the cuts have gone much too far. My hon. Friend the Member for Whitehaven (Dr. Cunningham) was right in that respect.

There was a long discussion about this point when Mr. MacGregor talked to the Select Committee on 11 March 1981. We discussed all the matters that had rendered the British steel industry uncompetitive. At the end, I put it to Mr. MacGregor: If there were substantial changes in all of these matters we have been talking about:. that is, exchange rates, energy prices, Government policies towards coking coal, R & D, et cetera would it not result in your becoming very considerably more competitive and also your customers becoming more competitive so that you can then expect a bigger share of a bigger United Kingdom market? Mr. MacGregor replied: Of course, that is true. I asked: And are you equipped to meet it if it happened? He replied, "Yes, sir." The events have proved that he is not equipped to meet it. There has been a very slight change from the point of view of improved British exports resulting from the rate of exchange of sterling. There has been a slight upturn in demand. It may be temporary but it has been an upturn. Immediately, however, the BSC is in difficulty. The corporation is already unable to meet all the orders that are available.

My hon. Friend the Member for Rother Valley (Mr. Hardy) and I have been involved in lengthy correspondence with Mr. MacGregor on the matter which hits particularly the Rotherham works. My hon. Friend has asked me to make it clear that what I say reflects his views as well as my own. The steel-making capacity of the BSC has been cut to the point where the potential for recovery has been seriously jeopardised.

It would take up far too much time to quote all the evidence that I possess. I shall cite just one example. hope that the Minister will respond. I wrote a letter to his right hon. Friend that I trust he has seen. Towards the end of last year, the Thrybergh bar mill at Rotheram works, a marvellous piece of advanced steel technology and a mill that has broken world records, was on short time, not because of lack of orders—there was a full order book—but because of a lack of billets.

The reason for the shortage was that the works had received an attractive and profitable order from an outside customer. The management had decided to meet the order and to keep the Thrybergh mill short of billets until the order was completed. I do not criticise the commercial decision that the management made. I criticise, however, the fact that it had to make that choice. The steel-making side of the works was not able to supply both an outside customer and its own mill because the capacity had been run down too far.

The Secretary of State has said three times, twice in this Chamber and once in the Select Committee, that the BSC can increase its output by up to 20 per cent. without any increase in capacity. If that had been so, the situation I have described would not have arisen. The fact is that the BSC cannot increase its output to meet the slightly increased demand. I could quote many cases of the BSC's own departments in Rotherham and elsewhere having to import steel because the billets or slabs that were formerly obtainable within BSC are no longer available as a result of steel-making capacity being reduced too far. I could give those examples if there was time.

I was given positive assurances on all those matters by Mr. MacGregor, who said that, at the end of the corporate plan reductions, capacity would be adequate to meet any increase in demand that might occur. As recently as 25 November, he said to the Select Committee that there was no increase in demand. He said, again in response to a question from me: We are not turning down orders. There has been no upturn in demand. The underlying demand is declining, if anything. A few days ago I received the steel industry's statistics issued by the British Steel Corporation and BISPA on 15 January. The document says: production in the last six months of 1981 at an average of 291, 200 tonnes a week, was 20.4 per cent. up on the figure for the corresponding period of 1980. That is the half year during which Mr. MacGregor was assuring the Select Committee that there was no increase in demand. A week or two later, the Secretary of State said very much the same thing. If that is not an increase in demand, I do not know what it is.

I accept that that is not decisive, because I admit that the half year with which it is compared—1980—was a period of exceptionally low demand. I understand that. However, even when there is a slight improvement in demand for BSC's products, the BSC has, because of the pressure imposed on it by the Government and the EEC Commission, deprived itself of the ability to meet even this modest improvement in the demand for its products without much serious difficulty.

In view of that, if we ever get a change of Government policy, for example, on energy pricing or on general economic measures, which improve the position of the steel industry's customers—the motor car industry, the construction industry or shipbuilding—there will be a substantial upturn in demand for British steel, and bearing in mind that the BSC, according to Mr. MacGregor's own figures, is already operating its manned capacity at 98 per cent. utilisation, that increase in demand will not help the BSC. It will go to foreign companies in Europe which, as the Minister himself agreed, and as my hon. Friend the Member for Whitehaven said, have not reduced capacity in the way that we have done and are able and ready to meet and respond to an increase in demand very quickly and efficiently.

I hope that we shall have fewer bland assurances from the Secretary of State and an acceptance of his own responsibility as the sole shareholder of this vital public industry, as the custodian of the public interest, because it is his job to ensure that the industry is kept or put into a more efficient condition, and that it is not allowed to be run into the ground, as is now happening.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. It may help the House if I say that 10 hon. Members are trying to catch my eye. We hope that the Minister will make his reply in under 80 minutes' time.

8.43 pm

Mr. Michael Marshall (Arundel)

I shall do my best to be brief. I am glad to follow the hon. Member for Rotherham (Mr. Crowther), who has been a regular attender at steel debates in recent years. As I look around, I see the regular cast, as it were, on parade. I am glad of that, because we can at least claim some continuity in the House in debating these great issues.

The motion is rather remarkable. It highlights the attitudes of the Opposition. I hope that if, the spokesman for the Social Democratic Party, the hon. Member for Thornaby (Mr. Wrigglesworth), catches your eye, Mr. Deputy Speaker, we shall hear what he has to say, because his party's amendment contains a point of view on which I shall express a view in a moment.

The remarkable aspect of the Opposition motion is that it betrays a certain industrial illiteracy. The notion that one could in any way talk about freezing capacity and manning levels does not bear examination. In fairness to the hon. Member for Whitehaven (Dr. Cunningham), he did not seek to pursue the terms of his own motion. To be fair, he said a word or two about manning levels and he said that slimming was on target, but at no stage in his speech did I detect any reference to the level of capacity, the anticipated market or anything relevant to the motion in that sense. However, the hon. Gentleman did us a service by raising the issue of capacity, because it leads us to reflect on the build-up and background of the British Steel Corporation.

Labour Members bear great responsibility, because the Labour Party brought the industry into State ownership. Labour Members will recall that at the time of nationalisation, the 13 largest companies, with a capacity of over 1 million tonnes, were brought into the State sector. There is not one Labour Member who would defend the industrial logic of that decision. It was transparent nonsense, because it used crude capacity and did not relate products where product rationalisation might have been effective. If I were a nationaliser—which heaven knows I am not—I could have made a better fist of it. No Labour Member would be foolish enough to defend the concept. It was a crude political move, taken without any study of the industry and we are living with the result.

What happened? The industry was not rationalised. However, if 13 companies with common services and, often, common market interests are brought together, rationalisation is essential. Instead, the arguments turned on centralisation, decentralisation, the interface with Government and all the resulting problems. The Conservative Government had to try to pick up the pieces in the 1972 plan for the industry. The closure review suggested by the Labour Party in 1973–74 when in Opposition was carried through when it came to office. The net result was no change. All the closures proposed in the 1972 review sadly had to be made. They were only delayed.

Therefore, the problems of today built up over all the years of constant political intervention, which made it more and more difficult for market realities to relate to capacity in that great industry. That is why we should remember, when relating capacity to known markets—my hon. Friend the Minister immediately put his finger on the problem—that it is difficult to make judgments and that we must have some faith in the abilities of management and trade unions to reach agreements that are relevant to the industry's needs.

The corporate plan was a high-risk strategy and the hon. Member for Whitehaven was right when he spoke about the European Community. That high-risk strategy is poised on a knife edge of continuing to get acceptance in Europe on prices and on balancing capacity. When the hon. Gentleman discussed the problems created by the situation in America he did the House a service. I hope and believe that we can join hands in expressing our concern about an important development that could once again, cast adrift the viability of international steel making.

When I last considered the figures—I do not suppose that the proportions have changed—the percentage of United Kingdom exports to American steel distributors was less than half of 1 per cent. In some important areas, such exports are traditional and significant business, but their level must he borne in mind. Therefore, it is nonsense to suggest that any of our steel suppliers' activities disturb trade in the United States of America. Over the years there has been a tendency to look at British Steel, because it is State-owned and to say that it is, by definition, being subsidised and is therefore an obvious target. Given all the changes in the past few years, we are in a strong position to say that that is not a fair charge. Given the background that I have tried to sketch in briefly, it is unreasonable for the American Administration to consider Britain as a target for attack in terms of its international steel trade.

The hon. Member for Whitehaven raised three points that need answering. He spoke about the rate of closure being faster in Britain than within the European Community as a whole. The reason was that we postponed closures that could have been carried through during the years when the industry was profitable. Instead, we continued with manning and capacity levels that were not justified by the market at the time, as a result of which the industry came under far greater pressure when we ran into recession in 1975.

The hon. Gentleman said that there was an imbalance in the steel trade with other EEC countries. Again, it is fair to ask why. He tried to suggest that no blame should be attached to the trade unions. It is not a question of blame, it is simply a matter of fact that once we had the steel strike, the bare obvious fact that we had a monopoly supplier came home to every steel user. Many users have now changed to second sourcing, and in a free society those markets are lost for ever. They will not return. The steel users have got used to the idea of an alternative source of supply.

The hon. Member for Whitehaven also referred to the competition between the public and private sectors. Once again, I remind him that this largely stems from excess capacity. Had the streamlining gone ahead at the time when the interface between public and private would have allowed it to do so on a more reasonable basis, I do not believe that the problem would be anything like as great as it is today.

While I welcome the fact that my right hon. and hon. Friends have done something to help the private sector, there is no question but that the private sector has faced unfair competition on rationalisation throughout these years because it had no effective recourse in bankruptcy, whereas the BSC was protected. Those are the facts of life when we talk about capacity, and that is the difficulty we still face today.

I assume that the amendment that has not been selected represents the SDP point of view. I welcome the fact that the SDP seems to be taking a line that is broadly consistent with the Government's view. Their amendment seems to support a more profitable industry that is in touch with likely and future demand, which is similar to the case that I am putting forward.

I am glad to see the hon. Member for Thornaby in his place. On some occasions I have heard him make noises about privatisation, of which the hon. Member for Rotherham spoke. I hope that the hon. Member for Thornaby will make his party's position plain. I urge him to think carefully about the merits of the so-called BP approach—Phoenix 1 that we have already seen developed. Surely that is a way of defusing part of the political argument. I would have thought that any mixed economy politician would be prepared to give that kind of activity a real opportunity, not just because of privatisation but also because it provides access to the capital market when public expenditure resources are finite.

To answer the point made by the hon. Member for Rotherham, I believe that such an approach enables us to create an environment of management and work force commitment in an internationally competitive manufacuturing industry. The hon. Gentleman and I may differ fundamentally over the purpose of nationalisation, but, given his experience, I am sure that he recognises the great difference between State enterprise that must compete internationally and others that compete in a purely domestic way. That is part of the argument that ought to be fairly examined.

We have a chance to make these comparisons and we shall see whether my words are borne out in practice. Having heard the hon. Gentleman on the radio and elsewhere, I urge him to set aside his natural gut reaction of saying "We shall not go further down this route". Let us see whether this argument finds favour across the House, because it would be helpful to those who work in the industry if there were a measure of continuity and stability.

I prefer the practical and pragmatic approach reflected in the Government's amendment. The Minister of State said that the liquid capacity of about 16 to 18 million tonnes—half that projected in the steel plan of 1972—contains a reasonable reserve capacity. If there were time, I should like to debate the reason for that capacity. There is, of course, finishing capacity and primary capacity and, if an upturn comes, an opportunity to drive the plant faster.

A great tragedy of the British steel industry in recent years, especially the British Steel Corporation, is that it has never been run at full capacity. Therefore, improvements in efficiency and the ability to earn have not been demonstrated. The industry has not shown what it can do. However, we are now seeing an industry much more in balance with demand. It has a chance. It is a tragedy that recent events and the weather have caused a hiccup. However, the balance is crucial and I am glad that the matter has been raised this evening.

It is always difficult to be angry with the hon. Member for Whitehaven. He does his homework and is always balanced and moderate. His right hon. Friend, the right hon. Member for Salford, West (Mr. Orme) is also likeable. However, they are both guilty men. They were members of an Administration that passed the buck on the question of capacity and that allowed the industry to reach a position where the problems have become much more traumatic and much greater for all who work in it and for any Government that must try to help. That is why I reject the motion and will go happily into the Lobby behind by right hon. and hon. Friends.

8.56 pm

Mr. Ian Wrigglesworth (Thornaby)

The hon. Member for Arundel (Mr. Marshall) tempts me, by the early part of his speech, to go down the road of reviewing the history of the British Steel Corporation, because he mentioned only the period from 1968 onwards. As he is a reasonable man, he will not claim that before 1968 there was no need for rationalisation in the private facilities that were available in the British steel industry. If time had permitted, I would have wished to say something about the history of the corporation, because no industry has been damaged more by being a political football. Some political lessons can be learned from studying the history of the iron and steel sector from 1949 onwards.

I do not want to take too much time in this short debate, so I shall refer to some of the immediate problems facing the steel industry. I begin by saying how much I welcome the opportunity to have the debate at such a crucial time, when the corporation must review the prognosis that it gave to the Government and the House in the corporate plan. It is disappointing that the plan must be reviewed in such a way. I wish to reiterate what other Opposition Members have said and place a substantial part of the blame for the review on the Government. The demand in the economy has been depressed for an unprecedented period at unprecedented post-war low levels. That has been sustained for some time. Not only has the British Steel Corporation been hit by that lack of demand, but an industry as basic as the steel industry inevitably is hit hard by it.

The future of the steel industry was dangerous when those forecasts were made. Narrow margins were involved and there was the possibility of its being buffeted off course by international action. Also, because of the low level demand in the economy, it is not surprising that developments in the United States of America and the Common Market and the recent weather conditions have led to the review.

However, one should not leave the current state of affairs, considering the past two years, without paying tribute to the success that the corporation management and staff have achieved. It has been achieved at a very high price.

I represent an area that has one of the largest iron and steel-making capacities in the country. We have had thousands upon thousands of workers made redundant in recent years. Hon. Members who represent steel areas that have experienced high unemployment know of the personal suffering caused in family after family. We should not discount that aspect when considering the need for increased productivity and for making our industries internationally competitive. A price has to be paid. I hope that the Government will take action about the general demand in the economy and will in the forthcoming Budget respond to pressures from hon. Members to overcome the problems by reflating the economy.

One such suggestion has come from the BSC. It is a bold and imaginative proposal for a Channel crossing. I hope that the Government will give it a fair wind. The proposal could also give an enormous boost to other sectors of British industry and so increase employment.

Mr. Campbell-Savours

The hon. Gentleman says that the BSC has put forward a proposal. Which scheme would his party support?

Mr. Wrigglesworth

All hon. Members will have seen the BSC proposition. I find it attractive. I believe that the Government should seriously consider it. I have not yet been able to give technical appraisal to my colleagues of the schemes on offer, but if the hon. Gentleman is patient he will learn of the policy proposals on which we are working and can debate them with us.

I wish to deal particularly with the problems from overseas facing the BSC. I agree with the comments made about the action of the United States steel producers. If the action succeeded, it would immensely damage world trade, way beyond the iron and steel industry. It might lead to repercussions and edge us closer to a trade war in a way most damaging to the world economy in its weak state. I hope that the United States Government and steel producers will consider the damage that could be done to their trade and to world trade if they proceed and succeed.

The United States should also understand the resentment on this side of the Atlantic. For a long time producers there have had the benefit of cheap energy, which particularly in this country we did not have. They criticise us for possible subsidies to our producers, but over a long period their cheaper energy prices have made it difficult for many industries fairly to compete with them.

I also agree with the comments about the need for fair treatment within the European Community. Existing capacity has been maintained and, indeed, increased in some other EEC countries. Belgium, Italy, Holland and Luxembourg are still increasing capacity, which is unacceptable when we have had to make massive reductions in a short time. Part of the reason for the reduction may have been that the massive over-capacity should have gone earlier, but it is unfair to put a greater burden on our industry when other EEC countries are obtaining aid and increasing their capacity. I hope that the Government will strongly press on the European Community the need for Belgium and other countries to match Britain's cuts in capacity and to bring the available capacity into equilibrium with the market.

In response to the hon. Member for Arundel, I shall say something about the amendments and the motion. The hon. Gentleman and the Minister said that it was impossible to freeze numbers and capacities as though world changes did not occur. The Minister commented that productivity was a moving target, and I believe that that is true. One cannot say that new capacity should not be put in and old taken out in order to modernise and that one should be unable to respond to the state of the market at any time. We should be looking for ways of increasing competitiveness and thereby assuring people of their jobs and reassuring industry that it will have a future. That can be done by looking ahead imaginatively and not resisting any change.

The Government's amendment is defective in its final sentence. I became even more worried about that when I heard the Secretary of State this afternoon. It is unnecessary to hark back to old, damaging, ding-dong debates between the two old parties by talking about the pursuit of a successful privatisation programme for the British Steel Corporation. Neither I nor my party has any objection to the sort of joint ventures that the hon. Member for Arundel referred to. Such ventures have already begun to make a considerable contribution, which is welcome. However, I do not know whether hon. Members noticed that the Secretary of State said, during Question Time, that there was no reason why the steel industry should be a public sector company. I wonder whether that remark and the Government amendment mean that it is their intention to denationalise the BSC when it again becomes profitable.

If that is the suggestion, we will return to the same dingdong battle as we have had in the past, with counter proposals from the Opposition Benches and uncertainty about the corporation's future. Equally, it is nice to have the assurance of the hon. Member for Rotherham (Mr. Crowther) that he supports the joint ventures—as does the ISTC. I am not in the least surprised to hear that, knowing the hon. Gentleman and the ISTC, but there are many others in the Labour Party who would not agree for one minute with that proposal. The question is what the Labour Party's policy will be at the next election. Will it be in favour of one thing or the other?

Mr. Campbell-Savours

rose—

Mr. Wrigglesworth

I shall not give way because many hon. Members wish to speak. That is exactly the sort of uncertainty that has so damaged the steel industry throughout its post-war history and I hope that the tone of this debate will be reflected in policy statements and actions from the two old parties in future.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Wrigglesworth

No, I shall not give way because I must draw my remarks to a close. Capacity and demand in the economy are two major problems facing the House and the country. It is worrying that the capacity of the steel corporation faces possibly even further reduction. I am horrified at the prospect of its being reduced from 14.4 million tonnes to the suggested 12.6 million tonnes.

Like other hon. Members, I wonder how small an industry we can maintain without losing the benefits of productivity and undermining the national asset that any major industrial country must have.

The second major factor is the level of demand in the economy, to which I referred earlier. I urge the Government to realise that the problems facing the management and workers of the BSC and many other industries could be relieved if the Government took the advice of their Back Benchers and other hon. Members and introduced a reflation on capital projects, partly in the public sector and partly in the private sector. That would aid not only the steel industry but the many unemployed, some of whom have been thrown on the dole queue by the reorganisation within the BSC over the past two years.

9.11 pm

Mr. Michael Brown (Brigg and Scunthorpe)

I cannot remember how many steel debates have taken place in the House since I became a Member, but there have been many, and it is pleasant to see what my hon. Friend the Member for Arundel (Mr. Marshall) referred to as the "regular cast" taking part.

It says something for my hon. Friend's knowledge of the industry that, even though he does not have the burdens that he once had, he can use his considerable knowledge and experience, not only as a Minister, but as a former active steel maker and producer, to help us in our debates.

The debate is unique for me, because I have agreed with nearly everything said by every hon. Member on both sides of the House. The hon. Member for Whitehaven (Dr. Cunningham) said that he had misgivings about recent reports that the corporate plan might need to be substantially reviewed because of recent weather conditions. Many of us, on both sides of the House, who represent steel constituencies would regard it as unacceptable for a significant review of capacity or manpower to be made on the excuse that the BSC had been knocked off balance by severe weather conditions in 1981–82. We should not determine the future of that national asset on the basis of poor weather over two or three weeks.

I was pleased to hear the Minister denounce the malicious and wild rumours about the BSC plant in my constituency. The House can imagine the horror and panic—I use those words deliberately—created in the steel community in my constituency when reports of the rumoured closure of the Scunthorpe plant appeared in The Guardian. That was the signal for wild and irresponsible people to take advantage of the fact that they have ready access to the columns of the influential local press, which added to the panic.

No good came of that incident. The plant has been doing extremely well in the past year. I have supported Mr. MacGregor and the Government in their efforts to bring demand and capacity into balance in the past two years. I have done so because the prospect of bringing the two into balance holds out the greatest possibility of a guaranteed future for steelmaking at Scunthorpe. It is because I believe that there is a future for steelmaking in Scunthorpe, and because I want to safeguard the remaining jobs and capacity, that I supported the measures that had to be taken in 1979, 1980 and 1981.

The recent rumour that so unnerved and unsteadied my constituents showed the depth of feeling in Scunthorpe. In a short period the town has lost about 8, 000 jobs, so that the level of manpower has been dramatically reduced., if not with the acceptance, with the tolerance Of the trade union movement, which has done its best to bring the new manpower figures into effect. Judging by the reaction of the Scunthorpe steel community, it would be intolerable if yet further burdens were imposed on the community, especially when the future for the steelworks has never been brighter, when measured by the profit and toss account for the works over the past few months.

The Minister and, if he is listening outside, the chairman of the British Steel Corporation, have both received my ready support in the past for ensuring that what had to be done was done as speedily as possible, notwithstanding the short-term social consequences in my constituency. I hope that they will recognise that my constituency could not accept any further burdens, such as a substantial reduction in capacity, of the sort that we have had in the past three years.

The recent scare was worsened by the irresponsible minority who have a vested interest in closing down the Scunthorpe steelworks. There are one or two people in Scunthorpe who claim to be trade unionist representatives, but they do not represent the vast, responsible body of trade union members that we have, not only in Scunthorpe, but throughout the whole steel industry. These people do not have the best interests of the Scunthorpe steelworks at heart. They want the plant to close, because that is the way in which their political careers will be furthered. As the Member of Parliament for Brigg and Scunthorpe, I am aware of their game. Sometimes the honest local people are taken in by what they say. When somebody who claims to be a trade union representative claims that the local steelworks will close and there are banner headlines in the local paper, people are bound to wonder. Therefore, I am grateful to my hon. Friend for his assurance.

I hope that that assurance will extend beyond the end of the month, when the Minister said that the Government would receive the completed corporate plan review. It would be intolerable if, having had the unqualified assurance which the Minister and Mr. MacGregor have given to Scunthorpe today and in the past week, we found that there was something untoward in the revised corporate plan. I hope that the assurances given today will hold water when we know the results of the revised plan.

I have seen the benefits to Scunthorpe of the strategy behind the corporate plan. To some extent I agree with some of the technical arguments advanced by the hon. Member for Rotherham (Mr. Crowther). He said that his local steelworks were suffering some difficulty because of the upturn in the market. The debate has shown an interesting situation. Fears are being expressed by the Opposition that the British Steel Corporation may not be in a position to respond to an increase in the market. It is a sign of their confidence in the Government's policies that they recognise that increased demand may be forthcoming.

As the hon. Member for Rotherham said, there are substantial orders coming the way of the Rotherham and Scunthorpe steel works. There are hiccups, as those works have to adjust to the new capacities. That shows—this applies to Rotherham and Scunthorpe and perhaps to South Wales—that the "Alamein line" of 14.4 million tonnes capacity, which has been referred to by Mr. MacGregor, has to be defended. All the indications are that the economy is likely to show a considerable upturn, notwithstanding the fact that demand for steel products is still sluggish. The half-yearly statistics for steel deliveries produced by the corporation and the British Independent Steel Producers Association show that there has been a substantial increse in demand for steel products over the past six months. The hon. Member for Rotherham referred to that in some detail. For that reason it is important to ensure that manpower in the steel industry and the level of capacity are defended.

It is generally recognised—I think that everyone in the House will accept that I was among the first to recognise this, having been prepared to support the corporation and the Government, even though there have been short-term adverse social consequences for my constituency—that the industry is chasing a moving target. We must ensure that it can always keep pace with that target. As the hon. Member for Thornaby (Mr. Wrigglesworth) rightly said, it is important, now that we have overcome the major problems that the industry faced in the 1970s, to try to think ahead, to read the market and to take advantage of new technologies.

I do not want to dwell on the United States market and the relationship between that and the European Economic Community. I can honestly say that I agree with every word that every other hon. Member has said on that issue.

As signatories to the European Economic Community agreement on the phasing out of steel aids by 1985, we all recognise that Britain has a responsibility. However, even if other EEC countries obey the agreement to the letter, they will still be at an advantage over the United Kingdom because of hidden subsidies, especially on energy and freight in certain countries. There is no doubt that that applies to freight in Germany. I hope that in the continuing negotiations on steel aids within the EEC my hon. Friend will recognise that some of us have to work as Members of Parliament in steel constituencies, where local managements are assiduous in drawing to our attention unfair hidden subsidies, which do not always get caught by agreements that are signed in the EEC.

9.24 pm

Mr. Roy Hughes (Newport)

I welcome the debate, although it is brief. I recall our last major steel debate. At that time the right hon. Member for Leeds, North-East (Sir K. Joseph) was casting a shadow over British industry, with all the despondency and gloom that resulted. One felt that at the time of the disastrous national steel strike a little statesmenship at an early stage from the Department of Industry could have averted that strike.

What both sides of the House can agree upon now is that the industry has been considerably slimmed down. Production capacity has been reduced to 14.4 million tonnes. One can only reflect that a decade ago it was approximately double that figure.

I agree with the point made by my hon. Friend the Member for Rotherham (Mr. Crowther) that if and when there is an upturn in the economy, we could be quickly importing large quantities of steel, with all the disastrous long-term consequences that that would have for British industry, particularly the steel industry.

We know that in recent years the work force has been reduced to just over 100, 000, with all the anguish and despair that that has caused to steel communities up and down the country. Now we know that BSC has plans to reduce the labour force by a further 12, 000. This afternoon the Minister of State, in reply to a parliamentary question that I asked, said that the investment plans of British Steel were to be reassessed. That will be worrying for steel workers and their families.

Steel was once a predominant industry in Britain, which was a major steel producer. Now the United Kingdom is reduced to producing less than 2 per cent. of total world output. That is the measure of the decline of that great British industry. Ours has been a dramatic decline, more so than in many other countries in Western Europe. Until recently Spain and Italy have been steadily increasing their capacity. Naturally, Britain and the steel industry are badly affected by the slump. The industry is also affected by the restrictionist and deflationary policies of the Government. There is now fresh anxiety in the steel industry.

We had the snow crisis. I am vividly aware of that because I am a South Wales Member. It badly disrupted production at three major plants, two in South Wales, at Port Talbot and Llanwern, and Ravenscraig in Scotland. Each day that those plants were out of action, losses were incurred by BSC, running to millions of pounds. However, at least the weather is a short-term problem. Major plants such as the ones that I have mentioned can recover output quickly.

The other threat that has been mentioned several times in the debate is the fact that eight steel companies in the United States are to file anti-dumping suits. The fines that could be imposed are worrying to British Steel. At least Mr. Ian MacGregor, the chairman of the British Steel Corporation knows the American situation well. This action in America could damage the export trade of the BSC.

Secondly, if the corporation and other European producers are denied the American market, the 6 million tonnes of steel now exported annually to America will be available on the European market, where it could further depress the industry and affect price levels.

Most significantly of all, these developments have a major effect on the finances of the BSC, which is desperately trying to break even in the financial year 1982–83. As a result of these new difficulties, a shadow has once again been cast over some of our major works. I know only too well that, for example, at Llanwern major strides have been made in the past 12 months. It has been a period in which all production and efficiency records have been broken. Only a few weeks ago, the Secretary of State for Wales said that Llanwern and Port Talbot were beginning to look like the secure base on which the future of BSC will hang. That is encouragement indeed from a Cabinet Minister.

Llanwern has certainly shown what it can do. It now requires new developments. What is known as a Con-cast plant is needed to streamline the production process. By May this year Port Talbot will have this facility. Other major plants already have it. I understand that the cost at Llanwern will be about £100 million. My impression from visits made by Mr. Ian MacGregor to South Wales is that he has every confidence in the future of the plant there and I believe that he supports the new development for which I am calling. It is now up to the Government to provide the wherewithal.

The Government should invest in success, in Llanwern, because that is the way forward not only for the BSC but for all sections of British industry.

9.33 pm

Mr. Hal Miller (Bromsgrove and Redditch)

The hon. Member for Newport (Mr. Hughes) will forgive me if, in the interests of brevity, I do not follow his remarks closely, beyond congratulating his constituents in Llanwern and Port Talbot on the strides that they have made. That is progress which was not possible or produced until a Conservative Government came into office, restored some reality to the steel industry and restored the need to earn a day's pay in that and other industries. The sad decline in the steel industry to which the hon. Gentleman referred might never have happened if that performance and standard had been called for earlier instead of being frustrated by a constant lack of decision by the Labour Government.

My purpose is to explore the Government's mind on the future of the European cartel, to put some views of steel users and a couple of points about private steel companies. I am grateful to the Government that private steel companies have at last been recognised as part of the steel industry.

The European cartel is based on limiting production, cutting capacity and raising prices. I should like to know from the Minister how far that process is intended to go and how long it is expected to endure. It seems to run counter to every trade and industrial policy that the Conservative Party has followed. If pursued to the extreme it might be highly injurious to Britain's interests.

Reference has been made to the American countervailing duties which are threatened because of subsidies to our production, but if our domestic prices are considerably higher than the prices at which we export we shall be subject to the normal GATT dumping charges and the consequent action. That is a real problem. I urge my hon. Friend not to rest comfortably on the assumption that the Government can solve their problems as shareholders in BSC by continually jacking up prices at the expense of users of British steel products.

I challenge the Minister on his too easy generalisation that the price of steel has lagged behind the prices of its end products as well as the rate of inflation. Such is the depression in markets that price rises for many items have been lower than steel price rises in the last few years. I shall give some examples.

Price rises have been accompanied by the withdrawal of discount. The effect in some cases has been a price rise in 10 months of about 40 per cent. A firm in my constituency makes use of steel for pipe fittings. Its productivity has increased by 50 per cent. in the past two years. That increase in productivity has nearly been offset by the steel price rise, which accounts for between 50 per cent. or 60 per cent. of the firm's costs, and by the energy price rises and other cost burdens imposed on industry by authorities, whether central or local.

About 15 times as many people are employed in the steel-consuming industries as in the steel-producing industries. Exports are in similar proportion. The interests of the steel consumers have not been adequately recognised. Their feelings have been ruffled by the cavalier attitude adopted to their representations by the EEC Commission in Brussels. Steel users need to compete not only with imports into this market but with products from third countries in the rest of the world. If we raise the basic raw material price out of line with raw material prices prevailing in the rest of the world, we are bound severely to damage our exports and competitiveness in world markets.

The rises in prices in the last six months have been severe, especially when considered with the depressed markets and foreign competition. I have already referred to a supplier in my constituency with a 50 per cent. increase in productivity. About 75 per cent. of that production is exported. The BSC's steel tube prices have risen from £320 to £410 per tonne in a year, but the Japanese prices to fittings makers are still held at £320. The difficulty faced in competition in markets can well be imagined. That firm takes 18, 000 tonnes of steel a year. The position is so greatly distorted in the markets that in the United States of America, the Japanese fittings sell below the actual tube price—that gives some idea of the distortion—with the result that the United States industry has been exterminated and our own industry is now under severe threat with two out of the four firms being unable to compete any longer. This may be another example of the typical Japanese laser-beam approach to attacking particular segments of industry.

I move quickly to the question of private steel makers. I repeat my thanks to my hon. Friend the Minister for all his efforts to restore a measure of justice under the EEC aid scheme to the private steel industry. I ask him to examine whether open die forgemasters should not be enabled to qualify for assistance under this scheme. Under the minimum list heading chosen, which is a recent change, they are disqualified, although they would have qualified under the previous heading and are threatened by the ending of the agreement on forgings between British Steel and Johnson Firth Brown. They wish to know how that development will now take place and why they should be excluded from the aid for reconstruction.

The second point about private steel is once more the shades of Duport, which company is still being asked to repay £3 million of Government regional grant. It would seem to me that that should also qualify under the aid scheme for the private steel industry as it was directed to South Wales at the insistence of the Government and was destroyed by the activities of British Steel. It seems totally wrong that it should be required to repay the development grant in those circumstances.

Therefore, I wish to explore the Government's mind on the future of the cartel. I have put forward some of the practical difficulties that it is causing. I am not expecting a detailed answer this evening but I hope to hear further from the Minister by correspondence. The position must be thought through, in the light of not only the Government's investment in British Steel but the far greater employment in exports by steel users who play such a large part, in particular, in the economy of the West Midlands.

9.43 pm

Mr. Bill Homewood (Kettering)

The hour is late and I shall make my comments brief. I had a speech prepared but I have put it aside. I shall concentrate on replying to some of the points that have been made, in the interests of the union that sponsors me, and to raise a parochial matter that I wish to bring to the Minister's notice.

When I tried to intervene during the Minister of State's opening speech, it was on the matter that my hon. Friend the Member for Rotherham (Mr. Crowther) pressed substantially in his speech—the constant assurances that we receive that British Steel can cope not only in respect of an upturn in trade but even when trade is on the same level. I have tried to obtain replies from the Minister concerning Corby. A substantial amount of bar and strip is being imported when levels of production are not on the increase but at the design levels that were being met when the steelworks were closed. Indeed, the replies that I receive locally are that this is caused by a hiccup in one of the big steel producing plants—Ravenscraig or Scunthorpe, or on Teesside—and that therefore steel has to be brought in from Sweden, Holland and God knows where else.

It is ludicrous to argue that the steel industry has 20 or 30 per cent. capacity in reserve that it can bring into production should the need arise if it cannot even satisfy the needs of normal levels of production. My hon. Friend the Member for Rotherham has made the same point in respect of the Thrybergh mill. I should like hon. Members to bring such instances to the notice of the Government. I believe that the Department has been seriously misled in respect of BSC's ability to meet even its current commitment let alone any increase in trade.

I was disappointed that my hon. Friend the Member for Whitehaven (Dr. Cunningham) did not mention levels of unemployment in Corby in reading his long list. I constantly point out that the level of unemployment within the inner area of Corby is 30 per cent. and that nowhere in the country, except perhaps Consett, is so badly affected.

The hon. Member for Arundel (Mr. Marshall) referred to the effects of the strike. I wish that hon. Members would talk about the justice of strikes and not always condemn the trade unions by making it appear that there is only one side to the argument. At the time of the strike, inflation was running at 12 per cent. and the Government were offering the steel workers nothing. If the hon. Gentleman believes that such a situation is justifiable and that the workers should not have gone on strike, I should like to know what he thinks trade unions are all about. If one does not strike in that situation, God knows when one does strike.

Mr. Michael Marshall

rose—

Mr. Homewood

I shall not give way because the Minister did not give way to me. There is not much time left for the debate.

The hon. Member for Thornaby (Mr. Wrigglesworth) pronounced on the trade union view of Phoenix. We have stated that we will go along with the Phoenix operation. I am surprised that the hon. Gentleman did not know that the Iron and Steel Act, which went through the House last year, contains a commitment by the Government that these operations should be private. We have stressed our belief that they should be in public ownership.

The parochial matter that I wish to raise relates to the new seamless tube mill being considered by the BSC. It will be a tragedy if this mill does not come to my constituency. The local newspaper stated that the Minister had implied that Corby was his kind of town. The Minister was reported as saying that he wished to pay tribute to the remarkable town of Corby and its people, who had set out with determination, imagination and energy to sell themselves and their town which had certain natural advantages and which had immediately started on the long haul of finding new business.

We shall not survive if that new investment does not come to Corby. I would impress upon the Minister that his admiration for Corby could disappear overnight if he does not give us the necessary investment to keep what is left of the steel industry there.

9.49 pm

Mr. John G. Blackburn (Dudley, West)

In the few moments that remain I should like to pay a warm and sincere tribute to the fine men who work in the steel industry, particularly the management, which has brought about such a change in the situation compared with 12 months ago. The figures produced show an upturn of over 20 per cent. in steel production in the last six months. Any increase the fortunes of this country will start in the basic industries. It is a source of encouragement to hear four hon. Members on the Opposition Benches speak of an upturn in the demand for steel.

I shall direct my comments to the steelworks that dominate my constituency. They are the finest steelworks in this country. I refer, of course, to the Round Oak steelworks at Brierley Hill. Although we have suffered the pain and anguish of many redundancies, with all the resultant social consequences, the Round Oak works have, nevertheless, a great contribution to make.

Let us never forget that no Government have ever given a greater vote of confidence to the steel industry than this Government did when they introduced the Iron and Steel Bill, which wrote off £3½ billion of debts. When we talk about encouraging industry and the avenues to be explored by the steel industry, we should not forget the £900 million that we gave to British Leyland to use the products of the steel industry.

I ask sincerely that information about the discussions on 12 January with Mr. MacGregor on the future of the steel industry and the possibility of further reductions be given to the men and women who work in the industry and to this House as a matter of urgency. We have reached the point at which the possibility of further jobs being put at risk is offensive to both sides of the House, bearing in mind the sacrifices that have been made by the employees in the steel industry.

It is encouraging to hear of the increased demand that we have all been seeking. However, that is not enough. The increased demand for steel products in this country must be met by home production. Introducing steels from abroad would import not only inflation but further unemployment for the people who work in the industry. There are now real signs of encouragement in the demand for steel. We have gone a long way to put the industry on a sound financial footing. We have invested authority in Mr. Ian MacGregor as chairman of the British Steel Corporation, and in my view it is not the role of the Government to run the industry. We were not elected to run industry, nor are we qualified to do so. Nevertheless, we have a solemn responsibility to create an environment in which industry can prosper.

With those comments on behalf of the steel workers of Round Oak, I conclude by expressing the view that the path down which the Government have travelled is being proved right.

9.53 pm

Mr. Norman Lamont

We have had a relatively quiet debate. Perhaps the most novel part of it was the intervention of the Social Democratic Party. I shall say a word about that party's amendment.

One of the points to which I did not reply when the hon. Member for Thornaby (Mr. Wrigglesworth) spoke concerned the employee directors. Much has been said on this subject, but I wish to put the facts on the record. Five worker directors were offered reappointment to the BSC board on the recommendation of Mr. MacGregor. Four of the five accepted. The fifth, a member of ISTC, has so far not been permitted by his union to accept. The four who accepted reappointment are members of craft unions within BSC. The ISTC decided—this is a matter entirely for that union; not for the BSC or the Government—to go through elaborate internal procedures to select its candidates for the board. As a result of those procedures, the ISTC put forward two new candidates. Mr. MacGregor wished to retain the team of five worker directors which had been on the board during the difficult period of closures and the survival plan. I understand that the ISTC member who was also offered reappointment is willing to accept, if the ISTC will agree to that. It is not entirely clear to me or, I suspect, to other hon. Members, why the ISTC is not prepared to accept the reappointment of its existing representative on the BSC board, as the other four unions have done.

Contrary to the suggestions that have been made, the Government and Mr. MacGregor are not overriding the terms of the Iron and Steel Acts. The legislation is clear. Before appointing any member to the British Steel board, the Secretary of State is required to consult the chairman. That procedure is clearly intended to ensure that members of the board are considered suitable and acceptable by the chairman, as well as the Secretary of State. The ISTC is not being denied a representative on the board. The offer to the retiring ISTC member still stands and it is open to him to accept it if his union agrees, as I hope it will.

Mr. Stanley Orme (Salford, West)

The trade union movement is concerned about this issue. Surely it is only democratic that the union should be allowed to make its own nomination.

Mr. Lamont

I have explained the position and I cannot add to what has been said. I hope that the ISTC will take up the offer of a board appointment.

Hon. Members spoke about electricity and energy prices. The Government are concerned that some heavy electricity users have to pay more than their foreign counterparts. That was demonstrated in the recent report on energy by the NEDO task force. The Secretary of State for Energy has received the review of the hulk supply tariff that was commissioned some months ago and is considering what action should be taken.

In the remaining four minutes of the debate I shall endeavour to answer the points raised. The hon. Member for Rotherham (Mr. Crowther) referred to his letter and he will receive a reply. I should point out that there are short-term fluctuations in capacity. For example, consumers may restock before price increases and currency fluctuations may alter the pattern of imports. However, it is impossible for British Steel always to run such a large business in line with short-term fluctuations. The chairman is satisfied that it can find the means to meet any increase in demand.

My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) asked how long prices would continue to rise. Unfortunately I am not in a position to answer his question. Price rises go hand in hand with the removal of State aids. I assure my hon. Friend that we do not adopt a cavalier attitude towards steel users. As he rightly said, there are 15 times as many steel users as producers. He raised an extremely important point and we shall pay great attention to the complaints and anxieties expressed.

It is interesting to note the SDP amendment. Like the Opposition amendment, it ignores the private sector's role and, surprisingly, implies that the BSC should produce every type of steel that home and overseas customers require. The Government firmly believe that it would be nonsense to impose that obligation on the corporation. Indeed, it was specifically removed from the statutory duties imposed on it. The hon. Member for Thornaby said that the cuts in the corporation were necessary because of the lack of demand in the economy. That is not what some SDP Members have said. Indeed, it is not what the right hon. Member for Plymouth, Devonport (Dr. Owen) said on 15 February 1981. He said that although it was a terrible thing to say, what Mrs. Thatcher was doing in the steel industry would have been inevitable under a Labour Government. He said that it was quite obvious when the Labour Party returned to office in 1974 that there would have to be a rationalisation of the British steel industry and that if it had been done earlier, there would have been fewer closures and less unemployment.

The right hon. Gentleman has changed his party, but I wonder whether he has changed his views. The hon. Member for Thornaby had the astonishing cheek to say that the two other parties should state their policies on the steel industry. Most of us are waiting for the SDP to state its policy. Its attitude is very much like that of the first prospectus of the South Sea, [...]ubble. Members of the public were invited to subscribe for an undertaking that would be shortly revealed to them. We want to know—

Dr. John Cunningham

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

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

The House divided: Ayes 208, Noes 313.

Division No. 47]	[10.00pm
AYES
Abse, Leo	Cook, Robin F.
Adams, Allen	Cowans, Harry
Allaun, Frank	Craigen, J. M. (G'gow, M'hill)
Anderson, Donald	Crowther, Stan
Archer, Rt Hon Peter	Cryer, Bob
Ashton, Joe	Cunningham, DrJ. (W'h'n)
Atkinson, N.(H'gey)	Dalyell, Tam
Bagier, GordonAT.	Davidson, Arthur
Barnett, Guy (Greenwich)	Davies, Rt Hon Denzil (L'lli)
Barnett, Rt Hon Joel (H'wd)	Davis, Clinton (Hackney C)
Benn, Rt Hon Tony	Davis, Terry (B'ham, Stechf'd
Bennett, Andrew (St'kp'tN)	Dean, Joseph (Leeds West)
Bidwell, Sydney	Dewar, Donald
Booth, RtHonAlbert	Dixon, Donald
Boothroyd, MissBetty	Dobson, Frank
Bottomley, RtHonA. (M'b'ro)	Dormand, Jack
Bray, Dr Jeremy	Douglas, Dick
Brown, Hugh D. (Provan)	Dubs, Alfred
Brown, R. C. (N'castle W)	Dunnett, Jack
Brown, Ron (E'burgh, Leith)	Dunwoody, Hon Mrs G.
Callaghan, Jim (Midd't'n&P)	Eadie, Alex
Campbell, Ian	Ellis, R. (NED'bysh're)
Campbell-Savours, Dale	English, Michael
Canavan, Dennis	Ennals, Rt Hon David
Cant, R. B.	Evans, loan (Aberdare)
Carmichael, Neil	Evans, John (Newton)
Carter-Jones, Lewis	Ewing, Harry
Clark, Dr David (S Shields)	Faulds, Andrew
Cocks, Rt Hon M. (B'stol S)	Field, Frank
Cohen, Stanley	Fitch, Alan
Coleman, Donald	Fitt, Gerard
Concannon, Rt Hon J. D.	Flannery, Martin
Conlan, Bernard	Foot, Rt Hon Michael

Ford, Ben	Newens, Stanley
Forrester, john	Oakes, Rt Hon Gordon
Foster, Derek	Orme, Rt Hon Stanley
Foulkes, George	Palmer, Arthur
Fraser, J. (Lamb'th, N'w'd)	Park, George
Freeson, Rt Hon Reginald	Parker, John
Garrett, John (NorwichS)	Parry, Robert
George, Bruce	Pendry, Tom
Golding, John	Powell, Raymond (Ogmore)
Graham, Ted	Prescott, John
Grant, George (Morpeth)	Price, C. (Lewisham W)
Hamilton, James(Bothwell)	Race, Reg
Hamilton, W. W. (C'tralFife)	Radice, Giles
Harrison, Rt Hon Walter	Rees, Rt Hon M (Leeds S)
Hart, Rt Hon Dame Judith	Richardson, jo
Haynes, Frank	Roberts, Albert (Normanton)
Heffer, Eric S.	Roberts, Allan(Bootle)
Hogg, N. (EDunb't'nshire)	Roberts, Ernest (Hackney N)
Holland, S.(L'b'th, Vauxh'll)	Roberts, Gwilym (Cannock)
HomeRobertson, John	Robinson, G. (Coventry NW)
Homewood, William	Rooker, J. W.
Hooley, Frank	Ross, Ernest (Dundee West)
Hoyle, Douglas	Rowlands, Ted
Huckfield, Les	Ryman, John
Hughes, Mark(Durham)	Sheerman, Barry
Hughes, Robert (Aberdeen N)	Sheldon, Rt Hon R.
Hughes, Roy (Newport)	Shore, Rt Hon Peter
Janner, HonGreville	Short, Mrs Renée
Jay, Rt Hon Douglas	Silkin, RtHonJ. (Deptford)
John, Brynmor	Silkin, Rt Hon S. C. (Dulwich)
Johnson, James (Hull West)	Silverman, Julius
Johnson, Walter (Derby S)	Skinner, Dennis
Jones, Rt Hon Alec (Rh'dda)	Smith, Rt Hon J.(N Lanark)
Jones, Barry (East Flint)	Snape, Peter
Jones, Dan (Burnley)	Soley, Clive
Kaufman, Rt Hon Gerald	Spearing, Nigel
Ket[...], Russell	Spriggs, Leslie
Kilroy-Silk, Robert	Stallard, A.W.
Lambie, David	Stoddart, David
Lamborn, Harry	Stott, Roger
Lamond, James	Straw, Jack
Leadbitter, Ted	Summerskill, HonDrShirley
Leighton, Ronald	Thomas, Dafydd (Merioneth)
Lestor, MissJoan	Thomas, Jeffrey(Abertillery)
Lewis, Arthur (N'ham N W)	Thomas, DrR. (Carmarthen)
Lewis, Ron (Carlisle)	Thorne, Stan (PrestonSouth)
Litherland, Robert	Tilley, John
Lofthouse, Geoffrey	Tinn, James
Lyon, Alexander(York)	Torney, Tom
McCartney, Hugh	Varley, Rt Hon Eric G.
McDonald, DrOonagh	Wainwright.E.(DearneV)
McElhone, Frank	Walker, Rt Hon H.(D'caster)
McKay, Allen (Penistone)	Watkins, David
McKelvey, William	Weetch, Ken
MacKenzie, Rt Hon Gregor	Welsh, Michael
McNamara, Kevin	White, Frank R.
McTaggart, Robert	White, J.(G'gowPollok)
McWilliam, John	Whitehead, Phillip
Marks, Kenneth	Whitlock, William
Marshall, D(G'gowS'ton)	Wigley, Dafydd
Marshall, DrEdmund(Goole)	Willey, RtHonFrederick
Marshall, Jim (LeicesterS)	Williams, Rt Hon A.(S'sea W)
Martin, M(G'gowS'bum)	Wilson, RtHon Sir H. (H'ton)
Mason, Rt Hon Roy	Wilson, William (C'trySE)
Maxton, John	Winnick, David
Maynard, MissJoan	Woodall, Alec
Meacher, Michael	Woolmer, Kenneth
Mellish, Rt Hon Robert	Wright, Sheila
Mikardo, lan	Young, David (BoltoriE)
Millan, RtHon Bruce
Morris, Rt Hon A. (W'shawe)	Tellers for the Ayes:
Morton, George	Mr. Lawrence Cunliffe and
Moyle, Rt Hon Roland	Mr. Austin Mitchell.
NOES
Adley, Robert	Amery, RtHon Julian
Aitken, Jonathan	Ancram, Michael
Alexander, Richard	Arnold, Tom
Alison, RtHon Michael	Aspinwall, Jack
Alton, David	Atkins, RtHonH.(S throne)

Atkins, Robert (PrestonN)	Fletcher, A. (Ed'nb'ghN)
Baker, Kenneth(St.M'bone)	Fletcher-Cooke, SirCharles
Baker, Nicholas (N Dorset)	Fookes, Miss Janet
Beaumont-Dark, Anthony	Forman, Nigel
Beith, A.J.	Fowler, Rt Hon Norman
Bell, SirRonald	Fox, Marcus
Bendall, Vivian	Fraser, Peter (South Angus)
Benyon, Thomas (A 'don)	Freud, Clement
Benyon, W. (Buckingham)	Gardiner, George(Reigate)
Best, Keith	Gardner, Edward (SFylde)
Bevan, David Gilroy	Garel-Jones, Tristan
Biffen, RtHon John	Gilmour, RtHonSirlan
Biggs-Davison, SirJohn	Ginsburg, David
Blackburn, John	Glyn, DrAlan
Blaker, Peter	Goodhew, SirVictor
Body, Richard	Goodlad, Alastair
Bonsor, SirNicholas	Gorst, John
Bottomley, Peter (W'wichW)	Gow, Ian
Bowden, Andrew	Gray, Hamish
Boyson, DrRhodes	Greenway, Harry
Bradley, Tom	Griffiths, E.(B'ySt.Edm'ds)
Braine, SirBernard	Griffiths, PeterPortsm'thN)
Bright, Graham	Grimond, RtHonJ.
Brinton, Tim	Grist, Ian
Brittan, Rt. Hon. Leon	Giylls, Michael
Brocklebank-Fowler.C.	Gummer, JohnSelwyn
Brooke, Hon Peter	Hamilton, HonA.
Brotherton, Michael	Hamilton, Michael (Salisbury)
Brown, Michael(Brigg&Sc'n)	Hampson, DrKeith
Browne, John(Winchester)	Hannam, John
Bruce-Gardyne, John	Haselhurst, Alan
Bryan, Sir Paul	Hastings, Stephen
Buck, Antony	Havers, RtHon Sir Michael
Budgen, Nick	Hawksley, Warren
Bulmer, Esmond	Hayhoe, Barney
Burden, SirFrederick	Heath, RtHon Edward
Butcher, John	Henderson, Barry
Cadbury, Jocelyn	Heseltine, RtHon Michael
Carlisle, John (LutonWest)	Hicks, Robert
Carlisle, Kenneth (Lincoln)	Higgins, Rt Hon Terence L.
Carlisle, Rt Hon M. (R'c'n)	Hogg, HonDouglas (Gr'th'm)
Cartwright, John	Holland, Philip(Carlton)
Chalker, Mrs. Lynda	Hooson, Tom
Channon, Rt. Hon. Paul	Horam, John
Churchill, W.S.	Hordern, Peter
Clark, Hon A. (Plym'th.S'n)	Howe, Rt Hon Sir Geoffrey
Clark, SirW. (CroydonS)	Howell, RtHon D.(G'ldf'd)
Clarke, Kenneth (Rushcliffe)	Howells, Geraint
Clegg, SirWalter	Hudson Davies, Gwilym E.
Cockeram, Eric	Hunt, David (Wirral)
Cope, John	Hunt, John (Ravensbourne)
Corrie, John	Irving, Charles(Cheltenham)
Costain, SirAlbert	Jenkin, RtHon Patrick
Cranborne, Viscount	JohnsonSmith, Geoffrey
Crawshaw, Richard	Johnston, Russell (Inverness)
Critchley, Julian	Jopling, RtHon Michael
Crouch, David	Kaberry, SirDonald
Dean, Paul (North Somerset)	Kellett-Bowman, MrsElaine
Dickens, Geoffrey	Kershaw, Sir Anthony
Dorrell, Stephen	King, RtHon Tom
Douglas-Hamilton, LordJ.	Knox, David
Douglas-Mann, Bruce	Lamont, Norman
Dover, Denshore	Lang, Ian
du Cann, Rt Hon Edward	Langford-Holt, SirJohn
Dunn, James A.	Latham, Michael
Dunn, Robert (Dartford)	Lawrence, Ivan
Eden, RtHon Sir John	Lawson, Rt Hon Nigel
Eggar, Tim	Lee, John
Elliott, SirWilliam	LeMerchant, Spencer
Ellis, Tom (Wrexham)	Lennox-Boyd, HonMark
Emery, Sir Peter	Lester, Jim (Beeston)
Eyre, Reginald	Lewis, Kenneth(Rutland)
Fairbairn, Nicholas	Lloyd, Ian (Havant & W'loo)
Fairgrieve, SirRussell	Loveridge, John
Faith, MrsSheila	Luce, Richard
Farr, John	Lyell, Nicholas
Fell, SirAnthony	Mabon, Rt Hon Dr J. Dickson
Fenner, Mrs Peggy	McCrindle, Robert
Finsberg, Geoffrey	Macfarlane, Neil
Fisher, SirNigel	MacGregor, John

MacKay, John (Argyll)	Ross, Stephen (Isle of Wight)
Maclennan, Robert	Rossi, Hugh
Macmillan, RtHon M.	Rost, Peter
McNair-Wilson, M.(N'bury)	Royle, SirAnthony
McNair-Wilson, P. (NewF'st)	Sainsbury, HonTimothy
McQuarrie, Albert	St. John-Stevas, Rt Hon N.
Madel, David	Sandelson, Neville
Major, John	Shaw, Giles (Pudsey)
Marland, Paul	Shaw, Michael (Scarborough)
Marlow, Antony	Shelton, William(Streatham)
Marshall, Michael (Arundel)	Shepherd, Colin(Hereford)
Marten, RtHon Neil	Shepherd, Richard
Mates, Michael	Shersby, Michael
Maude, Rt Hon Sir Angus	Silvester, Fred
Mawby, Ray	Sims, Roger
Mawhinney, DrBrian	Skeet, T. H. H.
Maxwell-Hyslop, Robin	Speed, Keith
Mayhew, Patrick	Speller, Tony
Mellor, David	Spence, John
Meyer, SirAnthony	Spicer, Jim (West Dorset)
Miller, Hal(B'grove)	Spicer, Michael (SWorcs)
Mills, lain(Meriden)	Squire, Robin
Mills, Peter (West Devon)	Stanbrook, Ivor
Miscampbell, Norman	Stanley, John
Mitchell, David(Basingstoke)	Stevens, Martin
Mitchell, R.C.(Soton lichen)	Stewart, A. (ERenfrewshire)
Monro, SirHector	Stokes, John
Montgomery, Fergus	Stradling Thomas, J.
Moore, John	Tapsell, Peter
Morgan, Geraint	Taylor, Teddy (S'end E)
Morris, M. (N'hamptonS)	Tebbit, RtHon Norman
Morrison, HonC. (Devizes)	Temple-Morris, Peter
Morrison, Hon P. (Chester)	Thatcher, Rt Hon Mrs M.
Mudd, David	Thomas, Mike (Newcastle E)
Murphy, Christopher	Thomas, Rt Hon Peter
Myles, David	Thompson, Donald
Neale, Gerrard	Thorne, Neil (llfordSoutn)
Needham, Richard	Thornton, Malcolm
Nelson, Anthony	Townend, John (Bridlington)
Neubert, Michael	Townsend, CyrilD, (B 'heath)
Newton, Tony	Trippier, David
Normanton, Tom	Trotter, Neville
Nott, RtHon John	van Straubenzee, Sir W
Ogden.Eric	Vaughan, DrGerard
O'Halloran, Michael	Viggers, Peter
Onslow.Cranley	Wainwright, R.(ColneV)
Oppenheim, Rt Hon Mrs S.	Wakeham.John
Page, Richard (SW Herts)	Waldegrave, Hon William
Parkinson, RtHonCecil	Walker, Rt Hon P.(W'cester)
Parris, Matthew	Walker-Smith, Rt Hon Sir D.
Patten, Christopher(Bath)	Waller, Gary
Pattie, Geoffrey	Walters, Dennis
Pawsey, James	Ward, John
Penhaligon, David	Watson, John
Percival, Sir Ian	Wells, Bowen
Pink, R.Bonner	Wells, John(Maidstone)
Pitt, William Henry	Wheeler, John
Pollock, Alexander	Whitelaw, RtHonWillian
Porter, Barry	Whitney, Raymond
Prentice, RtHon Reg	Wickenden, Keith
Proctor, K. Harvey	Wiggin, Jerry
Pym, RtHon Francis	Wilkinson, John
Raison, Timothy	Williams, D. (Montgomery)
Rathbone, Tim	Williams, Rt Hon Mrs (Crosby)
Rees-Davies, W. R.	Winterton, Nicholas
Renton, Tim	Wolfson, Mark
Rhodes James, Robert	Wrigglesworth, lan
RhysWilliams, SirBrandon	Young, SirGeorge(Acton)
Ridley, HonNicholas	Younger, RtHon George
Ridsdale, SirJulian
Rifkind, Malcolm	Tellers for the Noes:
Roberts, M. (Cardiff NW)	Mr. Anthony Berry and
Roberts, Wyn (Conway)	Mr. Robert Boscawen.
Roper, John

Question accordingly negatived.

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

Mr. SPEAKER forthwith declared the main Question, as amended, to be agreed to, pursuant to Standing Order No. 18 (Business of Supply).

Resolved, That this House calls upon Her Majesty's Government to continue to encourage the British steel industry to improve its efficiency and competitiveness in order to strengthen its overall health and profitability; and to pursue a successful privatisation programme for the British Steel Corporation.