§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
2.30 pm§ Mr. Tom Clarke (Monklands, West)I am sure that my right hon. Friend the Member for Glasgow, Rutherglen (Mr. Mackenzie) and my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) will appreciate what I mean when I say that Friday is not the best possible day for Scottish Members to be here, and therefore I thank those who are present. I know that my hon. Friend the Member for Motherwell, South (Dr. Bray), n whose constituency Ravenscraig is located, and who has done so much in the interests of the steel industry, will wish to be associated with the concern that I am expressing today about Ravenscraig and about Gartcosh, which is in my constituency.
The debate is about the future of jobs in both of those places, a concern which has been with the Scottish people for some time. On 29 June I pointed out in a supplementary question to a parliamentary question that I regarded the Minister's reply as unsatisfactory, and in the light of events since then I feel that it was even more unsatisfactory than I then judged it to be. The Minister replied:
The British Steel Corporation has put no proposition to the Government, and it remains to be seen whether such a proposition will be made. We are not just predicting an upturn in steel production — it has already happened. Steel production has increased." —[Official Report, 29 June 1983; Vo,. 44, c. 571.]It seemed astonishing that what the Minister had told the House — a House that was deeply interested in Ravenscraig and Gartcosh and in all the speculation we had heard about an American deal—did not seem to coincide with what we had read at the weekend about a press conference that was addressed by the chairman of British Steel, Mr. Ian MacGregor. That press conference was widely reported and I shall quote only from the report in The Scotsman, which said:In an interview to mark the end of his term of office—he quits on August 31 — Mr. MacGregor also brushed aside suggestions that Ministers have not been kept informed of the Ravenscraig deal.Mr. Cecil Parkinson, the Trade and Industry secretary, had a member of staff on the BS board. In addition: 'My colleagues are in constant communication with his staff so they are totally familiar with all we are about.' So was this also true of the Scottish Secretary, Mr. George Younger, and his staff? 'I have not talked to Mr. Younger nor has he asked me. He has not been curious,' Mr. MacGregor said.The House will regard that as totally unsatisfactory. The Secretary of State for Scotland and the Minister have a clear responsibility to find out what is going on in British Steel. They also have a responsibility to report to the House, which is worried about these matters and is entitled to know about them. The conflict between the Minister's reply and Mr. MacGregor's statement shows that the Government, who, we are told, are committed to the resolute approach, have set aside the attitude of "Yes Minister" for "Guess Minister". Neither the Secretary of State nor the Minister should be guessing about the future of that important sector of British Steel.It is right that there is enormous anxiety about jobs at Ravenscraig and Gartcosh and the future of those plants. I have asked for the debate so that the Minister may have 577 an opportunity to come clean. People are entitled to know the facts. It is wrong that they should be given the impression that Mr. MacGregor has the exclusive right to decide the future of those plants. Right hon. and hon. Members, especially those who represent Scotland, have an obligation in that regard which they intend to discharge. The Opposition and the people of Scotland have great confidence in the ability of the Ravenscraig and Gartcosh plants not merely to flourish but to expand and capture markets if only the Government and the chairman share the work force's confidence in the plants' capabilities.
In the past few years, Ravenscraig has been transformed. It is one of the most modern plants in Europe. I understand that production levels are the best in Europe. Many managers in the steel industry have said that it is the jewel in the British steel industry's crown. That is a proud boast and it is well justified. The plant is beating all records for quality, price and delivery. It is outrageous that there should be any speculation about its future and that the Government should fail to take the opportunity to tell those who are responsible for the speculation that it is high time they recognised the achievements of Ravenscraig and Gartcosh. Public relations in those plants should be given the confidence that the work force and the people want to hear about. Without Ravenscraig, BSC could not meet even the present level of demand at this early stage in the recovery from the recession.
Mr. MacGregor said more in the rather infamous press conference that I have already referred to. On the proposed deal with the Americans, The Scotsman reported:
But on this side of the Atlantic the BS chairman was certain he was home and thy. 'I think it would be difficult for the Government to turn aside what is essentially an order for something like £3,000 million of steel a year,' he said. 'It would have a very dramatic improving effect on the finances of British Steel' …It would, it is thought, enable British Steel to load up their four other major plants to cater for the British domestic market and, while this is not officially admitted, about 1,000 jobs would be created outside Scotland, particularly at Redcar.I should not have thought that those sentiments would give rise to a feeling of great unity in the nation. If the Government have succeeded in dividing large sections of the population, they should recognise that there are grave dangers in the steel industry if that type of speculation continues. They are deliberately creating divisions between one plant and another. British industry can well do without that.What does the proposed American deal mean? It means that the British Steel Corporation will supply to the Fairless works near Philadelphia several million tonnes of steel a year for a period that has not been made clear. It has been made clear. It has been reported that it could involve—the proposition has never been denied—the closure of the strip processing mills at Ravenscraig and Gartcosh and the loss of about 2,000 jobs. The work force on both sides of the Atlantic are opposed to the deal because it would mean job losses not just in Scotland but in America. Therefore, far from being encouraging at this time in our economic and industrial history, it creates insecurity on both sides of the Atlantic. Ravenscraig would be dependent upon one customer, and when the American steel industry modernises its plants, which is inevitable, even that temporary market could dry up. I am sure that the Minister noted yesterday that the Prime 578 Minister complained bitterly about the fact that the Americans are imposing import restrictions on steel. What right has Mr. MacGregor to imply that the same attitude will not apply if the House and the British people accepted the deal that he is pursuing?
We are told that the American Congress has been made aware of the background to the proposals, in which case the House is entitled to no less information. We are entitled to the facts. I gave the Minister the opportunity to put the facts to the House, and Mr. MacGregor says that the facts are available, so it is time for the Minister to tell us what is going on. Why is there a suggestion, despite its enormous success, that Ravenscraig should be written off? The British Steel Corporation is making predictions, but I must say in all candour that the corporation has been wrong before. It was wrong last year, and had even this Government accepted its advice we would have one fewer major plant than we have at present. Mr. MacGregor's forecasts have been consistently more pessimistic than even those of the Department of Industry.
I refer the Minister to the recent report commissioned by Strathclyde regional council after the Cambridge econometrics model, which is widely used by Departments and by large public and private corporations, which again made it clear on the basis of research that Ravenscraig and Gartcosh have a future, that there are markets, and that it is time to stop listening to the dismal Johnnies, if not to the dismal Ians, and allow the industries to look forward to the future to which they are entitled. The research programme took into account the increase in domestic demand to which the Minister referred in reply to me, the prospects for manufacturing output, and the consequences of a falling exchange rate. Has the Department of Industry considered the problem of forecasts and taken into account future orders and markets?
It is important that that information should be given to the House because we are all committed to the future of the steel industry as an essential part of the growth of British industry. It is vital to our recovery and can do much to provide jobs for our people. It is not enough to claim it for what happens in Europe. Many people would say that that is fine, but it is hardly a success to prevent intrusion by the EC into our steel industry, with those countries' job forecasts and market opportunities, while there is a suggestion that the American deal might seriously be considered. If the Government are predicting day after day that there is an upturn in the market, they should resist any further reduction in our capacity, particularly in the form of the deal proposed by Mr. MacGregor.
Ravenscraig and Gartcosh call for confidence and for the declared support of the Government in the job that they seek to do and, indeed, the United Kingdom. They are geared to an expanding home market and to exporting. The essence of the discussion is the amount of faith the Government have in the United Kingdom market. Are we thinking seriously of any real prospect of economic recovery? The Secretary of State for Trade and Industry has said that Ravenscraig is not politically or economically negotiable. In the recent election, the Scottish people made it clear that not only do they take that view; they expect the Government not simply to say what they will do but to act as though they mean it. Ravenscraig was a major issue in the election not just in Lanarkshire but throughout Scotland. The Government will ignore the deep feelings of the Scottish people on this issue at their peril.
579 I am grateful for the fact that the debate for which I asked has taken place. I believe that it is time for the death warrant to be withdrawn from Ravenscraig and Gartcosh, and I invite the Minister to do that. The Government have not only failed to keep the House informed of their thinking but have shunned the task of telling Mr. MacGregor that accountability matters and that British Steel belongs to the British people, not to him. The sooner the Government do both, the better. I ask the Minister to take the opportunity which is extended by the debate.
§ Mr. Deputy Speaker (Mr. Paul Dean)Order. Does the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) have the agreement of the hon. Member for Monklands, West (Mr. Clarke) and the Minister to intervene?
§ Mr. HirstI have, Mr. Deputy Speaker. I am grateful for the opportunity to make a short contribution to the debate because a significant number of my constituents derive their living, either directly or indirectly, from the Ravenscraig and Gartcosh complex. Speculation over the future of the plant has caused deep worry to them. My constituents and I welcome the statement by my right hon. Friend the former Secretary of State for Industry last September, in which he outlined the Government's support for the retention of five integrated steel plants in the United Kingdom, including Ravenscraig. In the meantime, as the hon. Member for Monklands, West (Mr. Clarke) said, there have been impressive strides forward on the output, quality, new order position, and productivity at Ravenscraig.
The Scottish Conservative party recognises the importance of the retention of the steel plant to underpin the manufacturing base in Scotland and to provide a magnet to attract new industry. Therefore, I hope that the Minister of State will reiterate this afternoon the Government's support for the retention of Ravenscraig as a steel-making plant.
§ The Minister of State, Department of Trade and Industry (Mr. Norman Lamont)I congratulate the hon. Member for Monklands, West (Mr. Clarke) on securing the Adjournment debate. In the year that he has been a Member of the House he has always paid very close attention to the steel industry. Today he has focused in particular on the integrated steel works at Ravenscraig, including the associated cold-rolling mill 12 miles away at Gartcosh.
The Government's policy on the British Steel Corporation's plant configuration, including Ravenscraig, was the subject of a major review last winter which culminated in the statement made to the House on 20 December by my right hon. Friend the then Secretary of State for Industry, which was referred to by my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) today. I confirm that what my right hon. Friend said on that occasion stands and remind the House of the background to those developments.
Last summer the steel market in the United States and the rest of Europe had turned sharply downwards. BSC sales had fallen sharply and production had been cut back 580 progressively In the second half of the year. As a result, losses rose significantly from £500,000 a week in March to an average of £9 million a week in the last three months of the year.
To stem the decline the corporation had to implement a range of urgent cost-cutting measures, but, beyond that, there arose a fundamental question which the Government and the corporation had to assess jointly — whether BSC's performance and prospects had deteriorated so severely that steel making at all five of the major integrated steelworks could no longer be sustained. The decision was of strategic importance to BSC's future configuration and had to be based on a cool assessment of a range of factors, many of them by their nature unpredictable.
The Government's conclusions were announced to the House on 20 December. We decided that BSC should be asked to prepare its new corporate plan for 1983–86 on the basis that steel making would continue at the five integrated sites. We took the view that it would be wrong to take irrevocable decisions on plant closures on The basis of steel demand forecasts made in the trough of a recession a point similar to that made by the hon. Gentleman, and before the European Community's state aids rules had had a chance to bite on the excess capacity of other member states. The decision did not, however, mean that BSC's manned capacity would remain at its current level of 14.4 million tonnes or that all the facilities within each of the five integrated plants would necessarily remain in operation. We made it clear that BSC management would remain free to take action to cut costs where necessary and that the future of all sites would depend on its performing effectively as well as upon future steel demand and output.
As regards Ravenscraig specifically, the announcement foreshadowed one example of management action to reduce costs which BSC was considering at the time—closure of the slabbing mill at the plant, necessary because it was both old-fashioned and energy-inefficient, and there was customer preference for the lower cost, higher quality material. BSC management carried out a careful examination of the prospects for the mill and concluded that is should close. I mention this decision not only because it concerns Ravenscraig directly but also because it illustrates the important distinction between strategic questions about the continuation of steel making at the five integrated plants, in which the Government are inevitably involved, and issues relating to the most efficient means of operating at these sites, which must remain the responsibility of the corporation's management.
Since the Government's announcement on 20 December, there have been three broader developments, first, BSC's corporate plan for 1983–86 has been approved by the Government. Secondly, there has been some strengthening in the steel market and real improvements in BSC's performance. Thirdly, progress has beer, made in the implementation of the European Community's policy to restructure the steel industry.
The corporate plan has been drawn up on the basis of last December's statement.
As regards the steel market and BSC's commercial and financial performance, developments since January give grounds for cautious optimism. Demand has picked up since the low point in :he second half of last year—a point to which I was referring in my answer, quoted by the hon. Gentleman—though it still remains below the level 581 recorded in the comparable period a year ago. Imports have declined, BSC's market share has improved, and the corporation has stepped up steel production significantly.
At the same time—and this is remarkable—productivity has increased considerably. In 1979 BSC produced only 141 tonnes of crude steel per man-year compared with 236 tonnes in west Germany. In the first quarter of 1983 the position was reversed for the first time ever, with BSC's figure of 230 tonnes exceeding the west German level by 15 tonnes. This combination of factors has been reflected in the corporation's financial results, which show a reduction in losses from £9 million a week in December last year to £2–2 million a week in May. I do not mean that a continuation of loss at that level is anything other than serious, and Mr. MacGregor has stressed that progress must continue.
As a result of restructuring, BSC has been able to lower production to a level equal to the break-even level. As Mr. MacGregor has said recently:
The lower the level of orders needed to make BSC profitable, the safer we are from the effects of weak markets.Market prospects are crucial. The hon. Gentleman referred to that and, in particular, to the study carried out recently for the Strathclyde regional council. Some people have argued from that that the whole basis of the corporation's forecasting is suspect and that the problem of overcapacity is a mirage. I reject that. Forecasts can never, by definition, disprove other forecasts. Only the unfolding of events can do that.While it is right that planning should take account of the full range of predictions from reputable sources, it is an unfortunate fact that steel demand forecasts over the past decade have proved consistently optimistic rather than the other way round.
As the hon. Gentleman knows, the basis of the decision that we announced, and that I have confirmed today, about the integrated steel making plants was that we wanted the corporation to take a medium-term view of the likely demand for steel. In one sense, we were accepting the point made by the hon. Gentleman today.
A further development has been the progress towards restructuring in the steel industries of other EC countries. The outcome so far has been rather good and it is recognised that the burden of restructuring must fall on other contries. This country has so far taken the heat of restructuring but now the Commission's plans show that it recognises and accepts that it is for other countries to 582 undertake restructuring comparable with ours. The hon. Gentleman referred to improvements at Ravenscraig and, of course, there have been significant improvements in its performance. Porductivity has improved remarkably, but it must be measured over a period. It must be for the corporation's management to take a view about the relevant strengths of different plants.
The hon. Gentleman criticised the answer that I gave him at Question Time some weeks ago. He has spoken strongly against any arrangement which might restrict Ravenscraig to the role of slab supplier to an American steel company. He has pressed the Government to preempt any such move. What I told him before in the House was absolutely correct. The corporation has put no firm proposal to the Government. That does not mean that Mr. MacGregor does not keep the Government in his confidence or tell us about talks that he may have with companies in other parts of the world.
I repeat the assurance for which my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) asked. Any such deal would have to be put to the Government and no such deal has so far been put to us formally. The Government would have to share in the decision because it would be extremely important for all the reasons given by the hon. Gentleman. It is not a decision that could be made by the British Steel Corporation management alone.
If a proposition were put to us, we would have to assess it carefully. It would be wrong for us to shut the door in advance against any developments which might promise new markets for BSC because it is only by selling steel that the corporation can stay in business. Neither the Government nor the House can pre-empt the right and functions of management. However, the House and the Government are involved in those decisions. In that sense, everything in the statement made by my right hon. Friend the Secretary of State is confirmed.
The steel market is difficult and is likely to remain so for some time. In those circumstances, there is no getting away from some uncertainty about the future. The drive for efficiency and markets must continue. There have been solid achievements which give ground for the cautious optimism to which I have referred. Mr. MacGregor has praised the
excellent co-operation of the management and work forcewhich has contributed to those achievements. I welcome the chance to endorse it.Question put and agreed to.
Adjourned accordingly at Three o'clock.