HC Deb 16 April 1986 vol 95 cc860-2
4. Mr. Michie

asked the Secretary of State for Trade and Industry if he will make a statement on the current performance of the steel industry.

The Minister of State, Department of Trade and Industry (Mr. Peter Morrison)

I am greatly encouraged by the improvements in performance achieved by the steel industry, which is now among the most efficient in Europe.

Mr. Michie

Will the Minister accept that there have been about 40 per cent. of job losses in the United Kingdom as compared with the EEC? The new Phoenix 3 in Sheffield has shed 50 per cent. of its jobs. This morning the Sheffield city council reported 24 per cent. unemployment in Sheffield. Is the Minister satisfied with that? Will he assure us that the industry will no longer be subject either to the EEC regime or to the Government's policy?

Mr. Morrison

I accept what the hon. Gentleman says. However, if he considers the alternative, I hope that he will commend to the country the enourmous increase in productivity that has taken place in the steel industry. Productivity has increased by nearly 100 per cent. since 1979. That ensures jobs rather than the reverse. That is how we should view the position.

Mr. Michael Brown

With reference to the latter point, will my hon. Friend contrast the current performance of the steel industry with its performance in 1979?

Mr. Morrison

As my hon. Friend probably knows, in 1979–80 the steel industry lost about £538 million, and today it is in profit. That is a remarkable achievement, for which I pay tribute to the work force and the management.

Mr. Crowther

Does the Minister recall that during the long Phoenix 2 negotiations some engineering companies, which then had two choices of supplier, said that they would probably have to look overseas for second sourcing if a United Kingdom monopoly were established? Now that this has happened in the form of United Engineering Steels Ltd, will his Department monitor the position to establish whether there is any loss of orders to overseas companies?

Mr. Morrison

I gladly concede the hon. Gentleman's point. Equally, I hope he will accept that it is important that United Engineering Steels Ltd. is as competitive as possible so that the dilemma which may be faced does not arise.

Mr. McQuarrie

Does my hon. Friend agree that the labour force at Ravenscraig steel works has continued to carry out its work efficiently and effectively in the light of the loss of Gartcosh? Will he assure the labour force at Ravenscraig of the Government's confidence and of their guarantee that the steel works will continue to exist beyond the two years which the British Steel Corporation has guaranteed?

Mr. Morrison

I accept what my hon. Friend said about the labour force at Ravenscraig. As he knows, the future of the Ravenscraig works is secured unitl 1988. That is the present position.

Mr. Williams

Obviously, the Opposition welcome the improvement in the steel industry. The Minister has just said that the industry must be as competitive as possible. How does he reconcile that objective with the fact that the Government have endorsed the new EEC steel regime, under which the British Steel Corporation loses its direct state assistance, but Continental countries will continue their indirect subsidy? As the BSC gets only £1 for every £6 received by the Italian steelmakers, and for every £8 received by the French and the Germans, he must accept that that makes the corporation immediately less competitive. At the same time, the Minister has agreed to the removal of minimum pricing, so removing the safety net. On the eve of Brussels pressing for even more cuts in steel capacity, what are the prospects for British Steel as a result of his action?

Mr. Morrison

I am surprised at the right hon. Gentleman's question, not least because the British Steel Corporation would tell him that the deal which was secured in Europe was successful and satisfactory to the corporation. Having said that, I agree with him that it is important to ensure—the Commission agrees with this—that there is fair trading.