HC Deb 16 July 1986 vol 101 cc997-9
15. Mr. Flannery

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

Mr. Peter Morrison

I welcome the profits recently announced by the British Steel Corporation, together with signs of growing profitability in the private sector. The industry still faces major challenges, but the progress made in recent years is most encouraging.

Mr. Flannery

Can we assume that no closures are likely in the steel industry in the near future and that any major closures are simply not on the stocks at all?

Mr. Morrison

I am surprised that the hon. Gentleman did not congratulate the British Steel Corporation on its outstanding success. The corporation will have to continue to run a competitive industry. How that arises will be a matter for the corporation, but its success to date has been outstanding. Jobs within the British Steel Corporation today are far more secure than they were six years ago.

Mr. Hickmet

Does my hon. Friend agree that the performance of the British Steel Corporation has been remarkable? The £76 million profit which has just been announced is the first bottom line profit since 1974–75. Output is now at 14 million tonnes, which is a significant increase. That is the first increase in output for four years. United Kingdom steel consumption has risen by 2 per cent., British Steel Corporation's exports have risen by 4 per cent. and the overall productivity of the corporation is now such that 1 tonne of liquid steel is produced with 6.3 man-hours as opposed to seven man-hours last year. When the Labour party was in office, the figure was 14 man hours. With the ending of state steel aids, is not the position of the British Steel Corporation the strongest that it has ever been in the lifetime of the Government?

Mr. Morrison

I agree with everything that my hon. Friend has said. I only wish that the Opposition could bring themselves to congratulate the management and unions in the British Steel Corporation.

Mr. James Hamilton

The Minister will no doubt be aware that no later than yesterday 310 men were made redundant at the Clydesdale Tubeworks in my constituency, and there could be further redundancies in those works. There is 22 per cent. unemployment in that area. Does the Minister agree that if the Government had used their muscle with the British Steel Corporation in relation to the extraction of gas these jobs could have been saved, as could many other jobs that have been lost? Will the Minister do something about this before there is a catastrophe?

Mr. Morrison

I assure the hon. Gentleman that the corporation took what was an unpleasant decision only after the most careful consideration. I also assure him, in relation to job security in the corporation and n the industry as a whole, that the industry and the corporation must be run on the most competitive basis, or orders, and more jobs, will be lost.

Mr. Michael Marshall

Does my hon. Friend agree that the excellent results that have just been announced are, we hope, the product of the difficult process of renationalisation following the overmanning and overproduction in the industry? Will he tell us what he thinks is happening in the Community, where it is fair to say that our European partners have been somewhat laggardly in following our example?

Mr. Morrison

I do not think that my hon. Friend is being entirely fair, as much rationalisation has been carried out throughout the European steel industry. As he is aware, further negotiation and discussion will take place in the autumn about aids and quotas. I assure my hon. Friend that I shall keep a close eye on that ball.

Mr. Crowther

Following the ending of state aids to steel throughout the European Community, what steps will the Minister take to ensure that the British steel industry, in the public and private sectors, does not continue in its present disadvantageous position, because of the indirect subsidies to steel in other European countries?

Mr. Morrison

As I said a moment ago, I agree entirely with what the hon. Gentleman is saying. All aid should be transparent and all steel-making capacity should be on an equal footing. I shall be doing everything that I can within the Council of Ministers to ensure that that is the case.

Mr. John Smith

Does the Minister understand that his talk about security of employment in the steel industry will have a hollow ring for the 310 workers to whom my hon. Friend the Member for Motherwell, North (Mr. Hamilton) referred, a substantial number of whom live in my constituency? The hon. Gentleman will recollect that it is only a matter of months since an even larger number of redundancies were announced in the context of a survival plan for Scottish Steel and Tubes division. Is it not now painfully clear that the failure to acquire orders in the North sea oil and gas fields arises to a large extent from the Government's decision not to proceed with the gas gathering pipeline system several years ago? If that were in place there would now he orders for our steel industry.

Mr. Morrison

I appreciate what the right hon. and learned Gentleman says about his constituents and those of the hon. Member for Motherwell, North (Mr. Hamilton). The decision was not pleasant to make, but, as I have said, it was made after the most careful consideration. It is important to realise, as I am sure the right hon. and learned Gentleman appreciates, that unless the corporation is run efficiently it will lose more orders and, therefore, more jobs.

Mr. Bruce

Will the Minister acknowledge that if an oil price of under $9 a barrel is sustained that will have serious implications for further development of the North sea and for steel orders, and that the threatened loss of jobs will be about 10,000 in Scotland, roughly equivalent to what a gas gathering system might have provided? If the Minister is not prepared to come forward with an initiative in that area—we have already lost the Sleipner contract — will he recognise that his Department and the Department of Energy must, as a matter of urgency, find some way of sustaining development projects in the North sea?

Mr. Morrison

The hon. Gentleman is apparently arguing for a cartel of oil prices, which may be rather more difficult to achieve than he thinks. The most important thing for steel is that we should have the most efficient company in the shape of BSC, which we have, and that will enable us to get markets, which will ensure jobs.