HC Deb 12 February 1986 vol 91 cc943-5
6. Mr. Lightbown

asked the Secretary of State for Trade and Industry what was the profit or loss made by the British Steel Corporation in 1979–80 and in 1984–85, respectively; and if he will make a statement.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)

Excluding the costs of the miners' strike, the corporation made a profit in 1984–85, after interest and before exceptional items, of £40 million. The comparable figure for 1979–80 was a loss of £538 million. This is an impressive recovery, and the strategy announced last August points the way to sustained profitability for the BSC.

I am now able to inform the House that the BSC's external financing limit for 1985–86 is being increased from £360 million to £414 million. This will enable the corporation to implement the decisions announced last August.

Mr. Lightbown

I welcome those figures and congratulate the industry on this remarkable turnround. I also congratulate the management on achieving that without confrontation, but with discussion and negotiation. Does my hon. Friend agree that there should be an early return of the industry to the private sector, where it rightly belongs?

Mr. Butcher

My hon. Friend is absolutely right. The Government's objective is to return the BSC to the private sector as soon as circumstances allow, not least involving the liability of the corporation. I am grateful for my hon. Friend's comments—we have them very much in mind.

Mr. MacKenzie

Is the Minister aware that anybody can reduce the losses of any big company simply by shutting down plant? That is how we see it in Scotland. How many jobs do we now have in the BSC as compared with 1979–80?

Mr. Butcher

I quite understand the right hon. Gentleman's anxiety about jobs. As for the core activity and the maintenance of the five integrated steel making plants, it is in the corporation's interests to note market conditions and reduce the amount of subsidy necessary to keep those plants and the downstream plants in operation.

Mr. Bill Walker

Does my hon. Friend agree that the decisions taken by the Conservative Government to keep Ravenscraig in production and the results that have been achieved show how wise those decisions were and that all the other decisions taken to close non-productive plants were equally wise, which is why the corporation is now beginning to show profits?

Mr. Butcher

Yes, Mr. Speaker. I am sure that my hon. Friend has the Ravenscraig plant much in mind. I hope that he will be encouraged by the three-year projections that have now come forward, as approved by the Commission under the steel regime. The plant's future is more assured and it will benefit, for example, from reallocations of quota, not least the reallocation of quota from Alpha steel.

Mr. Crowther

As the Minister apparently could not answer the question from my right hon. Friend the Member for Glasgow, Rutherglen (Mr. MacKenzie) about the number of jobs lost, will he take it from me that in the process of returning to profitability the BSC has got rid of 120,000 jobs, few of which have been replaced by other employment in the steel-making areas? Will he guess, if nothing else, how much it costs taxpayers to keep 120,000 people out of work?

Mr. Butcher

Considerations about the steel industry are a function of two parameters. One is the need to reduce taxpayers' exposure to continuing losses, and the other is to continue to supply steel to British industry. Important though the steelworkers' constituency is, there is a much bigger constituency to address—the effect on all engineering industries and steel users of the competitiveness of BSC, its improvement and the prices that it charges its customers.

Mr. Hickmet

Does my hon. Friend agree that the position in 1979 was that the British steel industry was massively overmanned and was producing steel at a cost that exceeded nearly every other competitor? Today, we are producing steel efficiently, effectively and, most important, competitively. The BSC is the lowest-cost producer in Europe. Right hon. and hon. Members must acknowledge that achievement.

Mr. Butcher

I hope the House will celebrate the fact that, as we come to the end of the steel aid regime in Europe, our industry is in the best competitive shape to face true competition. That is a tribute to the BSC's managers and comprehensively vindicates the Government's policy.

Mr. James Hamilton

In view of the closures that are taking place, will the Minister concede that serious consideration should be given to the social consequences and the loss of human dignity? Will he say what the Government intend to do about Ravenscraig, bearing in mind that they have consistently told us that it is a matter for the Government? What do the Government intend to do to give the people of Lanarkshire and Scotland some hope for the future of the steel industry?

Mr. Butcher

One of the more distressing aspects of my job in the Department of Trade and Industry is considering the cases that come through under the ISERBS regime—retraining and the requests for help from various people, which hon. Members bring forward. The Government have maintained an aid regime which helps with training and helps former employees to graft on new skills. That, with the work done by the BSC in closure areas, amounts to living up to the responsibilities that major corporations and Governments have.