§ The Minister of State, Department of Trade and Industry (Mr. Peter Morrison)
I beg to move,
That this House takes note of European Community Documents Nos. 8293/85, a communication by the Commission to the Council concerning the organisation of the steel market after 1985; 9300/85, a communication by the Commission to the Council on the introduction of a system of production quotas under Article 58 of the Treaty establishing the European Coal and Steel Community after December 1985; 9301/85, a communication by the Commission to the Council concerning rules on aid and financial transfers to the Community Steel Industry after 1985; 8779/85, proposals for Council Decisions concerning contributions to the European Communities to finance measures connected with the restructuring of the coal and steel industries; 5194/84, a communication by the Commission to the Council on the General Objectives for Steel 1985; and 4493/86, a proposal by the Commission for a Council Regulation establishing quantitive restrictions on imports of certain products orginating in the United States of America; and welcomes the agreement by the Government in the Council of Ministers to a further limited period of European Coal and Steel Community market organisation measures beneficial to the United Kingdom, and to the ending of most forms of state aids to the Community steel industry.The purpose of the debate is to take note of the seven European Community documents relating to the steel industry as recommended by the Select Committee on European Legislation. I apologise to the House for the fact that it has proved necessary to agree to the adoption of two of the documents in Brussels before a debate could be arranged.
I informed the hon. Member for Newham, South (Mr. Spearing) about the October measures at the time and subsequently explained the reasons for my decision in my written replies on 11 November and 16 December 1985. My right hon. Friend the Secretary of State wrote to the hon. Member for Newham, South on 24 January about the Community retaliation measures against the United States. I should like to thank the hon. Gentleman for the understanding of his Committee in the special circumstances which I have explained. I assure him and his colleagues on the Committee that I was and am concerned to respect the resolution of the House of 30 October 1980.
The House last debated the international aspects of the steel industry in November 1983. Since then, a good deal of progress has been made towards solving the problems of overcapacity and weak markets, although much still remains to be done. Demand for steel in the Community in 1985 was about 4 per cent. higher than the depressed levels of 1983. Output has therefore risen and firmer prices have been possible. Coupled with major reductions in costs, this in turn has allowed steel firms both in the United Kingdom and in the Community generally to reduce losses or to move into profit.
The British Steel Corporation, having made £21 million of profit in the first half of this financial year, expects to be in profit for 1985–86 as a whole—the first overall profit it will have recorded since 1974. I hope that all hon. Members will agree that this is a major achievement for all of those who have worked at BSC. I should like to take this opportunity to pay tribute in particular to Sir Robert Haslam, who is about to leave the chairmanship of BSC, for his leadership of the corporation during the past three years. He is to be succeeded by the present deputy 1032 chairman, Mr. Bob Scholey, who has worked closely with Sir Robert and his predecessor to bring about the present improved performance.
The Government remain committed to further progress by the corporation towards sustained profitability. It has cost the taxpayer a great deal of money, and we want that dependence on the taxpayer to be left behind for good. The corporation expects to demonstrate that financial self-sufficiency can be achieved by the end of the present three-year plan.
Turning to the European scene, we can now see that the measures of the past five years have had an impact. Some 32 million tonnes of capacity have been closed since 1980, bringing the total down to about 140 million tonnes of hot rolled capacity. That achievement owes much to the Community regime on state aid. All Community members have contributed to this closure programme, contrary to what some hon. Members believe. The French have closed about 6 million tonnes of capacity, the Germans nearly 7 million tonnes and the Italians more than 5.5 million tonnes while the United Kingdom has closed just less than 5 million tonnes.
The document on general objectives for steel to 1985 has been superseded by a new document "General Objectives for Steel in 1990". In this new document the Commission estimates that steel production levels achieved in the Community in 1984—about 103 million tonnes of hot rolled products — are not likely to be exceeded between now and 1990, even if economic conditions are favourable. Production in 1990 is therefore estimated at 103 million tonnes on a best case assumption and 94 million tonnes on a worst case assumption. This picture of stable or declining steel output is reflected in all industrialised countries, and the United States and Japan face similar pressures.
Despite the closures that have already been made, the Commission concludes that an excess capacity of about 24 million tonnes still exists in the Community. Last October I attended two Council of Ministers meetings which discussed the Commission's proposals for the shape of the Community steel regime after 1985. As the House is aware, we have had for the last few years an elaborate system for production quotas and minimum prices to keep allowed supply in balance with demand. These largely succeeded in their objective of maintaining prices while excess capacity was cut out and the level of state aids cut back. The Commission proposes that this system should continue for a further three years because of the continued fragile nature of the steel market and the continued overhang of excess capacity.
The Commission also proposed the progressive liberalisation of the system to reflect the improvements now being seen in the market and designed to pave the way towards the return to a free market in 1988 or 1989. The Council of Ministers—
§ Mr. Teddy Taylor (Southend, East)
Will my hon. Friend tell me what he means by a free market? Will he confirm that the Commission will retain the guidance prices system which will ensure that any importers will have to charge a certain price? When my hon. Friend speaks of a free market, does he mean that imports which are not dumped will be allowed in at their market price?
§ Mr. Morrison
A free market means what it says. I am sure that my hon. Friend will accept that it is important to make sure that it is free in every sense of the word—that there is fair competition at the same time.
§ Mr. Morrison
It means precisely what it says. It is important to ensure that there are no hidden subsidies, because if there were such subsidies it would not be the free market which I hope my hon. Friend and I would want it to be.
§ Mr. Morrison
My hon. Friend will understand that it is a little early to say. We are speaking about two or three years hence and there will be significant negotiations and developments which will take place between now and then. I have listened carefully to what my hon. Friend says, and I have absolutely no doubt that he will keep me closely up to the mark on this issue as the situation develops.
§ Mr. Richard Hickmet (Glanford and Scunthorpe)
Whether there is a price guidance regime or not, will my hon. Friend accept that, with respect to European steel producers, the British Steel Corporation is best placed to produce steel competitively and cheaply and to succeed in every competitive free market which may be established following the phasing out of the quota regime?
§ Mr. Morrison
I agree with my hon. Friend. I know that he has a close interest in BSC and watches carefully what it does. I think that the achievements of BSC so far have been remarkable. It has made itself into a viable and competitive industry after starting, some 10 years ago, from a low base. I entirely accept what my hon. Friend says.
§ Mr. Stan Crowther (Rotherham)
Is the Minister giving the House a cast-iron assurance that the hidden subsidies which have operated for years in West Germany, for example, in the subsidisation of coking coal and of freight-rail transport, will be ended? It has been impossible to give such an assurance in the past.
§ Mr. Morrison
The assurance that I can give the hon. Gentleman is that nobody is keener than me, and during my time at the Department of Trade and Industry nobody has been keener than me, to rifle out unfair competition. I will chase it for all I am worth. If the hon. Gentleman or any other hon. Member has any specific evidence which he thinks may not be available to me, I hope that they will come to me fast and give me that evidence. I will take the appropriate action. I feel strongly that competition should be free and fair. The two go together. I hope that the hon. Gentleman will take me up on that as and when he has specific examples which I may put to the Commission so that it can do its job and rifle them out.
On 29 October, the Council of Ministers agreed to the Commission's proposals with some modification. The Council agreed to the suspension of the minimum price system, but it took a more cautious view than the Commission on the appropriate pace for liberalisation of the quota system. Only coated sheet and reinforcing bar were liberalised at the start of 1986, although the Commission may make proposals for further liberalisation in 1987. These are early days, but the initial moves do not 1034 seem to have led to any serious price weakness in the liberalised categories. We shall keep a close watch on developments this year and in the future.
§ Mr. Ian Wrigglesworth (Stockton, South)
Before the Minister leaves the question of excess capacity of 24 million tonnes which he mentioned, can he tell us what the Community is doing, as there is great anxiety about capacity in Third world countries such as Korea, where substantially increased capacity is being prepared or coming into production while we are apparently closing down capacity?
§ Mr. Morrison
The hon. Gentleman will appreciate that the Community watches these matters carefully, not least because it is important that there is a free market and fair trading. I am aware of the problems and will ensure that the Community is, too. I appreciate that the ramifications of what the hon. Gentleman said are potentially crucial to steel capacity and to employment in steel here and elsewhere in the Community.
§ Mr. Morrison
I am happy to go on giving way, but there is limited time for the debate and I want everyone else to have an opportunity to catch the Chair's eye.
§ Mr. Caborn
I am grateful to the Minister for giving way. At the meeting in Luxembourg on 29 October, was there any discussion about setting up an investigation into hidden subsidies, which my hon. Friend the Member for Rotherham (Mr. Crowther) mentioned? Which country initiated that move? Were the British supportive of setting up an investigation into hidden subsidies?
§ Mr. Morrison
The hon. Gentleman might have heard about that meeting. I arrived at 10 am, and the meeting did not finish until 3 am the following morning. He will appreciate that my recall will not be 100 per cent. accurate. I hesitate to say that I put in the point about watching matters carefully so that, if there were problems such as the hon. Gentleman mentioned, the Commission could operate immediately. I think that it was me, but I certainly supported it strongly when we discussed the matter at, I believe, 2 am. Hon. Members have my sympathy. More than that, I shall happily be nudged, goaded and a few other things by them to ensure that we achieve what they want. I hope that we can all agree on the general approach.
In October, the Commission also made proposals for the successor to the steel aids code, which expired at the end of 1985. For the next three years, the major forms of aid—operating aid, investment aid and regional aid—are banned. Aid for research and development and for environment protection will be allowed on broadly the same terms as for other industries. Limited closure aid is permitted, but only for redundancy payments or for firms leaving the steel industry altogether.
This restrictive approach to state aids should protect United Kingdom steel firms in both the public and private sectors against the threat of extensive subsidies to their continental competitors.
It is essential that other Community members do not try to block the further reduction in capacity that will be necessary to bring down the still substantial level of excess 1035 capacity. Only if this is done are we likely to succeed in returning to a more normal free market in steel in two or three years' time.
It is sometimes suggested that the problems of the steel industry could be solved if only exports outside the Community were increased. As the Community's general objectives paper makes clear, the problem will be to keep net Community exports up to present levels, let alone achieve an increase.
Exports to the United States of America have been subject to greatly increased restrictions over the last year. As the House knows, the EC/US steel arrangement, which limits exports to the United States and dates back to 1982 was recently extended and modified; 33 steel products are now restricted as against the 10 originally covered in 1982.
The major problem we and the Community faced in negotiating the new agreement related to exports of semi-finished steel. We were concerned to protect a major new long-term export contract which BSC had negotiated with Tuscaloosa Steel. The result was that last December the United States gave assurances to Tuscaloosa which substantially safeguarded the corporation's interests. However, the overall level of exports which the United States could accept was not enough to satisfy the Community as a whole. As a result, the United States restricted imports unilaterally. In consequence, the Commission made further proposals for retaliation. These proposals, for quotas on the import from the United States of coated paper, bovine fats and fertilisers, were agreed by the Council of Ministers and were introduced on 15 February 1986.
§ Mr. Teddy Taylor
Could my hon. Friend tell us what reasons the United States gave for imposing these restrictions? Is it not the case that we had come to a voluntary agreement with the United States on a specific tonnage and had in fact greatly exceeded that?
§ Mr. Morrison
It is not for me to comment on the specific reasons which the United States might give. I might be able to muse about them, but I think that my hon. Friend will appreciate that it is not for me to comment on what motivation the United States Government might have for any move they make.
Following the counter-retaliation by the United States against the Community, which included what we believe to be wholly unjustifiable discrimination against other United Kingdom exports of semis, contacts are taking place between the Commission and the United States to explore the possible scope for a negotiated settlement of the dispute about semis. The United Kingdom would, of course, welcome such a settlement, provided that the corporation's Tuscaloosa sales were not impaired and that discrimination against other United Kingdom semis was removed.
I turn to the social measures set up to deal with the problems caused by the restructuring of the steel industry. Two of the documents to be debated tonight cover Commission proposals in this area, and from my personal experience, living as I do a mile away and having a constituency interest, I am fully aware of the serious hardship which is created by steel closures.
One document notes the continuing restructuring process in both the coal and steel industries in the Community and the consequent unemployment and social hardship. It concludes that the programme of special social 1036 measures should continue. This involves payments to member states for schemes to finance early retirement and redundancy payments. In recent years, these measures have been financed by transfers from the general budget of the Communities to the European Coal and Steel Community, and the document recommends that this practice should continue.
There is no agreement at present among member states on the principle of these proposals, on the details, or indeed on the method and level of financing, and I will take careful note of any views expressed in the debate this evening.
The second document puts forward suggestions for stronger Community structural measures to assist steel areas. The Commission has proposed that there should be an integrated approach in a limited number of areas where losses in steel are most serious. The idea is that it might be possible to improve the effectiveness of Community and domestic resources by improving co-ordination. The Commission indicated that it intended to develop these proposals in consultation with the member states concerned and we stand ready to consider this further with the Commission.
I hope and trust that the House will welcome the support given by the Government for the measures taken by the Community towards the restoration of a free market in steel. We believe that the measures adopted last October provide a sound framework for the restoration of a viable and competitive steel industry in Britain and in western Europe generally. I commend the documents to the House.
§ Mr. Alan Williams (Swansea, West)
I do not intend to deal in detail with the individual documents, because I think that the essence of the package is that the Government have been sold a pup, and I do not think that they realise it yet. The only paper to which I shall refer is that which deals with sanctions against the United States. We, the Opposition, want to lend support to the action that has been taken in that regard.
When I consider the potential of the package of documents which is before us, I must warn the House that I regard the prospective impact on the steel industry as extremely serious, and possibly very damaging. The essence of the forward projection is that there is 25 million to 30 million tonnes of excess capacity in the industry in Europe. As we well know, and as we have often protested, over the past decade —a period when we have been cutting back on capacity — Italy, West Germany, Belgium and France have been building up capacity. They have been creating the surplus capacity problem and we have been carrying the cost and the cuts. After a decade of virtual attrition in the industry, West Germany has returned to the 40 million tonnes that it previously produced. It seems to be in a position to benefit from a shift in cuts from general capacity to hot-rolled capacity.
§ Mr. Hickmet
Does the right hon. Gentleman accept that over the five years since 1980 the Germans have cut capacity by nearly 7 million tonnes, the Italians by 5.5 million tonnes and the French by 6 million tonnes—these have been cuts from a similar level of that of the United Kingdom—and that United Kingdom cuts have amounted to less than 5 million tonnes? Where do these figures fit into the case that the right hon. Gentleman is presenting to the House, or does he not accept them?
§ Mr. Williams
The decade has to be taken as a whole if we are to see the true outturn. The Germans have been building up capacity—[Interruption.] I have no doubt that the hon. Gentleman will participate in the debate if he is fortunate enough—and we are unfortunate enough—to catch your eye, Mr. Deputy Speaker. I ask him to allow me to make my own speech while he is seated. If he wishes to intervene again and he rises to do so, I shall give way.
§ Mr. Teddy Taylor
Perhaps the right hon. Gentleman will agree that a helpful guide to hon. Members is the information that was published by the Department of Employment under one of its prominent Ministers, who has sinced moved to another Department. It shows that since 1979 the reductions in the numbers employed in steel in Britain have been double the average for the rest of the Common Market.
§ Mr. Williams
That is right. I shall be coming to figures for the decade, which show a similar pattern. I do not want to anticipate that part of my speech now.
§ Mr. Williams
The hon. Gentleman must remember that many hon. Members wish to contribute to the date. I have hardly done more than complete the first couple of sentences of my speech. I am glad, of course, to be followed so assiduously.
It is important that the Minister and the Government tell our EEC partners clearly and categorically that Britain has already had more than its share of cuts. If they are talking of further cuts in the next four or five years, tell them that they need not look in this direction. We have done more than our share. It has been suggested that as many as 80,000 jobs may go throughout the planning period. It would be interesting if the Minister would hazard a guess at the job loss in the United Kingdom under the cut in capacity that is intimated.
I fear the implications of the policy underlying the documents. At last the British Steel Corporation has become competitive with the rest of Europe and its great plants are now as efficient as those of any of its competitors throughout the EEC. Just as we can boast about that, the EEC is changing the rules, and, astonishingly, we are agreeing to that. As the Minister has indicated, there is no longer to be any direct as sistance. He put that as a defence of BSC's interests—a peculiar argument if one considers the pattern of assistance over recent years.
Document 9301 says:Aid to cover operating losses and aid for investment, even under regional aid schemes and even where the aid would not help to expand capacity, will no longer be permitted.That is clear; there will be no more direct aid. So BSC will have to compete without direct Government assistance.
What about indirect assistance? I raised that at Question Time earlier today. The Minister and his officials are well aware of a report by the National Economic Development Office.
On figures which are admitted to be slightly out of date and which are probably less unfavourable, whereas BSC receives an indirect subsidy of just over £1 a tonne, in Italy the subsidy is £6 a tonne, in West Germany it is £8 a tonne and in France it is £8.3 a tonne. Those are indirect subsidies which will still be available. BSC's continental competitors never received direct subsidies, but the 1038 subsidy to our industry helped to counterbalance the concealed benefits which our continental rivals were getting.
Concurrent with our industry receiving no assistance while its continental competitors still receive indirect assistance, the safety net of minimum pricing is being removed. Having put our continental competitors in the position of having a major subsidised cost advantage, we will maximise their opportunity to exploit that cost advantage by taking away the safety net.
Another element in the package to make absolutely sure that Britain gets it wrong is that at the same time we will phase out the quotas. So there will be no element of fair play left within the system.
§ Mr. Peter Morrison
I listened carefully to what the right hon. Gentleman said at Question time. He will not be surprised to hear that when I went back to my Deprtment I asked for a check to be made. So far as we know, there has been no complaint in regard to Italy or any other European country. As I said to his hon. Friends, I shall be happy to chase up specific complaints and wish to do so at the earliest possible opportunity. But since the Steel Council liberalisation to which I referred in my opening remarks, no complaints of the sort the hon. Gentleman is making have been received.
§ Mr. Williams
With respect, who does the Minister expect to make complaints other than Britain? What is wrong with the NEDO report? It specifies it. Just having got to a state of parity, BSC will be put at a major, artificial disadvantage. It will have to prune its margin so far to sustain its market share that it will have to trade at a low profit or at no profit. Even if it trades at a low profit, where is the self-sustaining investment to come from, which the Government said that in future BSC would be responsible for providing? They have actually signed a death warrant for BSC.
The Minister made a lengthy speech. He knew, from Question time today, that I was slightly agitated on this issue. No doubt he could have demolished me in his speech, had he had the evidence to do so. He says that there is no evidence. Let me take the article in the January edition of The Engineer. It gives examples from the report of the National Economic Development Office of the sort of subsidy enjoyed by our competitors. It claims that in 1983 the West German industry, which seems to enjoy the biggest indirect subsidies, received £245 million in indirect subsidies, offsetting labour and transport costs. By the way, £74 million of that was for labour in various forms of indirect subsidy. The corresponding figures for France were £120 million and for Italy £130 million. The report claims that evidence is now available to NEDO which suggests that Italy is offering electricity to its steel industry at 20 per cent. below the United Kingdom rate.
If the Minister does not know about these things, why is he not following up the reports, which are readily available to agencies that report directly to his Department? These indirect subsidies will inevitably distort trade. What is the EEC doing about it? What are the Government doing about it? They are doing nothing about it. They do not even admit that it is happening. They do not even seem to know what is going on. Not that that comes as a great surprise to most of us; it is just one more area in which they do not know what is happening.
What is the EEC doing about it? Absolutely nothing. Or if it is doing something, perhaps the Minister will tell 1039 us what it is doing and when it intends to take action. Those who wrote the article in The Engineer spoke to a senior member of the Commission's competition directorate, the people in charge of ensuring that there is equal and free competition between all member countries. What did this senior official say when confronted with the possibility of these indirect subsidies?If individual governments were to increase indirect aid it would indicate that those subsidies were becoming much more specific and they would then fall foul of the steel aids code. We would step in and stop it".Fine, that is wonderful. But it will apparently happen only if the subsidies are increased. As long as they are kept at £8 in France, £8 in Germany and £6 in Italy, it seems that the EEC, the competitions directorate and this Government's Ministers are perfectly happy to allow them to continue, regardless of the effect upon the British Steel Corporation.
If there are to be these 25 million to 30 million-tonne cuts, therefore, where will they fall? If the subsidies are taken from our industry, and if our continental colleagues are allowed to keep their subsidies, the answer must be absolutely clear: we are the people who are in line for the cuts. As the hon. Member for Southend, East (Mr. Taylor) said earlier, we have already done more than our share when it comes to accepting job losses.
In the decade to 1984, Britain took 37.9 per cent. of all the job losses throughout the EEC—nearly two-fifths—steel. We lost over that 10-year period 68 per cent. of our steel jobs. The corresponding figure on the continent was 44 per cent. So our steel areas have already been devastated. We already have the black spots, the high unemployment, the empty shells of the old steel works. Now, having suffered most, having had to endure most, with people in steel areas who have already been out of work for two, three or four years, we find that there is a new aid scheme coming in to help the areas of steel unemployment.
But what do we find? We find that under the new aid regime the United Kingdom is not expected to be a net beneficiary. Although the United Kingdom has already taken the lion's share of job losses in European steel, this country is expected yet again to take the lion's share of job losses and is not expected to be a net beneficiary. The United Kingdom's labour force is already in grave imbalance because we tried to accommodate so many job losses through premature retirement and voluntary redundancy. The result is that 70 per cent. of the work force is in the age band 25 to 50. This means that the scope for early retirement to accommodate further redundancies is limited.
Future redundancies will probably have to come from among the young and the younger middle-aged groups — from among those who will not want to have to regard themselves as redundant and forcibly retired at 35 or 40. We find that at the time when this age group will be hit we shall not, according to the aid regime, be net beneficiaries.
The Minister of State said that under the new aid regime the Community wants to adopt an integrated approach to unemployment and redundancy in the steel areas. That is great. Why, then, are the Government allowing British Steel Industries to be wound clown? It was set up in the 1970s to deal with the problem of unemployment in the steel areas, but MacGregor, having chopped the jobs, also chopped the job-creating agency. The axe came down in 1040 1984. British Steel Industries was told that it could continue to recycle the funds that it already had, but that it would get no new funds. Although we are trying to develop an integrated Community approach towards steel closures, British Steel Industries is being closed down and we shall not be net beneficiaries of the aid regime.
The projections upon which these documents are based have been invalidated by events. For example, it was presumed that there would be virtually no change in oil prices, but we have just seen the collapse of oil prices. Has the Department made an assessment of the impact that the change in oil prices will have on demand and the exchange rate and what effect both will have on sales of British steel? The estimate of future demand for British Steel Corporation steel is that it will be virtually static. MacGregor pointed out that two thirds of British steel goes into capital goods and that it directly reflects manufacturing investment. If the demand for BSC steel that is reflected in these documents is valid, it throws grave doubts on the Government's claim about their intention to achieve economic growth, since there is nothing in the documents to suggest that the Government will achieve the rate of economic growth in manufacturing investment to which they have referred. There is nothing to support their projections for steel demand in the United Kingdom.
The Government have been conned. The Europeans must be rolling about holding their stomachs, wondering how the Brits could be so daft yet again. The Government are turning a blind eye to indirect aid which will make BSC uncompetitive, concurring with the removal of the minimum price regime —the safety net to stop unfair competition — and phasing out quotas, intended to ensure a degree of fair shares all round. The outcome of that incredible incompetence is that the United Kingdom will lose, and we will be cheated of steel jobs and capacity.
We are about to enter a free-for-all in the steel market. The House will note that the Minister is falling about with laughter at that prospect. I trust it will be clearly recorded that he thinks that that is funny and does not understand what the Government have entered into. They have started on a European free-for-all steel, but he is unaware of it. His Government are so inept that they are not aware that, in that free-for-all, all the cards are stacked against the BSC.
§ Mr. Richard Hickmet (Glanford and Scunthorpe)
I imagine that my hon. Friend the Minister was falling about with laughter at the travesty of the truth that the right hon. Member for Swansea, West (Mr. Williams) has just given the House. The United Kingdom was required to lay off more steel workers than any other country because in 1980 it took 14.5 man hours per tonne of liquid steel whereas in Germany it took something over seven. The British Steel Corporation was overmanned and unproductive because the Government between 1974 and 1979 put the Beswick report on the shelf, and did not have the guts to walk into the steel towns and say, "Look boys, the party's over. We must get production to competitive levels."
During the past five years we have doubled productivity. We produce as much steel in my constituency today with 7,000 men and one steel works as we did in 1981 with 17,000 men and two steel works. That cannot be said of any other steel industry in Europe. I remind those who say that the United Kingdom has cut more steel capacity than any other European country that 1041 since 1980 the French have closed 6 million tonnes of capacity and the Germans 7 million tonnes. The Italians, who have been building capacity all the time, if we believe Opposition propaganda, have closed 5.5 million tonnes. We have closed just under 5 million tonnes. Those are the figures that the right hon. Gentleman failed to give. I do not suppose that my hon. Friend the Minister shouts this when he attends steel councils, but we have capacity in the system to produce as much steel as we did in 1979–80, if we manned up to the appropriate levels.
One of the Government's great success stories has been the recovery of the BSC. In 15 years, the BSC has received 12,000 million good English pounds. In 1980–81, it lost £660 million. Today, it has brought in a £21 million profit in the first half year. That is the first profit since 1972, but we did not hear a word of commendation or congratulations. The right hon. Gentleman merely said that that was all history and that we should not examine it — yes, the previous Labour Government's history. That Government were responsible for those losses. It was not only one of the least profitable and efficient of the major steel industries in Europe, it was one of the least efficient in the world. It was incapable of producing a product of the right quality, on time, at a price which customers were prepared to pay. As I have said, the BSC has more than doubled its productivity in five years.
When one bears in mind the miners' strike and the fact that the cornerstone of Scargill's policy was to close Scunthorpe, Ravenscraig and Llanwern, putting 30,000 steelmen out of work, it is even more remarkable that the BSC has arrived at that position.
Where was the concern of Labour Members then, when Scargill had 10,000 men at Ravenscraig? Did they condemn the attempts to close down the steel industry? Did they say that Scargill's policies would put all those men out of work? No. Why not? Because they did not have the guts so say that. At that time the right hon. Gentleman and his party were in hock to Mr. Scargill. They did not have time for the steel workers then. It cost my constituency £1 million a week to move that coke and ore into Scunthorpe—3 million lorry movements. Yet still it made a profit.
The consequences of the Government's policies and the management of Black Bob, one of the finest steel men in the world, and Bob Haslam, is that we have not only one of the most efficient steel industries in Europe—the right hon. Gentleman did not mention that—but in the world. What other European country produces cheaper steel?
As for the Americans, they have a few lessons to learn about restructuring an inefficient and out-dated steel industry. I suggest that they get in touch with my hon. Friend the Minister of State. Perhaps the President will have him over and he can tell him how to do it.
I welcome the European Commission's decision to promote imports of certain semi-finished steel products. [Interruption.] I can tell my hon. Friend the Member for Southend, East (Mr. Taylor) that the Americans have stopped our steel going in because they cannot compete. They have one of the lousiest steel industries in the world today and they are in breach of their GATT obligations. That is why the European Commission has taken the steps that it has. I am pleased that my hon. Friend and the European Commission are taking reciprocal action.
§ Mr. Teddy Taylor
I shall be glad if I have the opportunity to say something about the American situation, but meantime will my hon. Friend explain something that I do not understand and he, with his knowledge of steel, obviously does? If we are so much more efficient and better than the continentals, why are we importing more and more steel from the continent?
§ Mr. Hickmet
When we get rid of the quota system, perhaps that will not be necessary. One reason why we are in this position is the quota system. My hon. Friend the Minister was not congratulated on bringing home a quote of 385,000 tonnes for the British steel industry. Who got that? [Laughter.] The hon. Member for Sheffield, Central (Mr. Caborn) may laugh, but my hon. Friend went to the Steel Council and obtained a quota of 385,000 tonnes. Perhaps, in passing, my hon. Friend will tell me where that quota will be allocated.
§ Mr. Hickmet
I must move on.
The first battle, that for survival, has been won, but the corporation must still achieve full viability. That performance is all the more important as the first phase of the manifest crisis comes to an end. The documents make it clear that state aids are being phased out and that the Commission will watch all state aids, whether direct or indirect. Only those corporations which are viable will survive, and the viable corporation in Europe today is the BSC.
I join hon. Members in commending my hon. Friend for the close attention that he is paying to hidden subsidies and I urge him to keep that matter under particular observation. I also remind hon. Members that it is only as the quota regime is phased out that those efficient steel producers will survive. Five years ago, the vultures of Europe were picking over the bones of the BSC which the Labour Government left to us when they were removed from office, and were hungrily eyeing its decaying carcase. Today, they are threatened by the corporation's success.
Efficiency requires investment. The right hon. Gentleman did not mention the fact that, last year, £194 million was invested in BSC. In 1986, £50 million will be spent in my constituency on a new sinter plant—the largest single scheme approved for 12 years — which will result in higher productivity, lower energy and maintenance costs and improved blast furnace operations. The quality of sinter produced by the new strands will equal the best in the world.
The improvement in the corporation's performance has resulted in substantial redundancies, for the reasons which I have outlined, and I urge my hon. Friend the Minister to ensure that state aid continues to steel closure areas to alleviate the social problems caused. My hon. Friend will know that, since 1983, my constituency has reduced unemployment by more than almost any other: The aid is a vital element in doing that. Will my hon. Friend ensure that non-quota European regional development fund moneys go to steel closure areas such as Scunthorpe, not to Hull, Grimsby or Bridlington, for which other Community funds are available? It is our money. Please let us have it. The social policy is essential to steel closure areas, which have lost many jobs.
I hope that we can knock on its head the myth that Britain has closed more steel capacity than any other 1043 country. 1 should be interested to hear the right hon. Gentleman's answer to the point that I put to him in an intervention. His suggestion is simply not true.
§ 11.6 pm
§ Mr. Ian Wrigglesworth (Stockton, South)
I am pleased to join the hon. Member for Glanford and Scunthorpe (Mr. Hickmet) in paying tribute to the British Steel Corporation's achievements in recent years. But the hon. Gentleman did not pay enough attention to the damage caused to many people's lives by the shedding of labour in steel areas, which he knows well from his constituency experience. His constituency has had the good fortune, due in part to the state aids to which he referred, to find other employment for former steel workers. In Teesside and other parts of the north, it has been impossible to find alternative employment. The hon. Gentleman should have mentioned the impact of the enormous shedding of labour on people's lives while he paid tribute to the corporation.
§ Mr. James Tinn (Redcar)
Does the hon. Gentleman agree that it is a pity that the hon. Member for Glanford and Scunthorpe (Mr. Hickmet), who lavishly handed out bouquets to past and present chairmen of the BSC, the Minister and everyone in sight for contributing to the improved position of the BSC, did not say something about the workers, who seem to be blamed for all the previous ills of the industry?
§ Mr. Wrigglesworth
I am pleased to concur with the hon. Gentleman. The staff of the BSC at all levels—management, middle management and the shop floor—paid an enormous price and made an enormous contribution to the success of the corporation. Since 1980, productivity has doubled from 14.5 man hours to produce a tonne of steel to 6.7 man hours today. That is a remarkable achievement in a short period. Losses of £660 million in 1980–81 have been turned into profit in a short period. Production is 14.6 per cent. higher than it was in 1982.
However, those achievements must be put into perspective. Output is still 30 per cent. below the 1976 level, compared with an average decline in European Community countries of only 10 per cent. British steel output and consumption has suffered from the contraction of our manufacturing base. During the past decade, United Kingdom manufacturing output has decreased by 4.1 per cent., whereas in the EC manufacturing output has increased by 8.3 per cent.
It is not surprising that the demand for the products of British Steel has declined in the way that it has.
I agree with the hon. Member for Glanford and Scunthorpe that the outlook for the corporation in its competitive posture is favourable. It has benefited from the recent fall of the pound against the deutschmark and from the rise of the pound against the dollar. Some 35 per cent. of its raw material costs are dollar-related, so that change will be a double advantage.
However, there are a number of reasons why any proposals to withdraw state aid should be treated with much greater caution than the Government appear to be treating them. First, the exchange rates cannot be relied upon to remain favourable if the dollar's slide ends and the Budget next week results in a return to the discredited sterling M3 strategy, which has been forecast in the papers 1044 in the past few days. When measured against purchasing power parities, sterling is still overvalued against the deutschmark, and my view and that of my right hon. and hon. Friends is that entry into the European monetary system would bring benefit, particularly to BSC, by giving rise to a more competitive position and more stability for the corporation.
Secondly, the fall of about one fifth in the manufacturing capacity has wiped out BSC's customers in many spheres. Falling oil prices, which will halve the contribution of the oil surplus to the balance of payments in the next two years, mean that strategy for industrial competitiveness throughout the whole of the economy is absolutely vital. We all knew that oil would first decline and then run out in the contribution that it was making to the balance of payments. That decline has been brought forward by the recent 40 per cent. decrease in oil prices, and the balance of payments problem is coming down the track at us much more rapidly as a result of the loss of value in oil. That will mean a much greater imbalance in our industry, which has been devastated in recent years. If steel demand and output is to retain its recovery, much higher levels of manufacturing investment in this and future years will be required, and measures must be taken to secure this.
Thirdly, more state aid may be required to ensure that BSC can continue to renew and modernise its equipment and plant, and particularly to concentrate on smaller scale, higher value added and more profitable products. Otherwise, the further threat posed to capacity by the Commission, which wants capacity reduced by a further 24 million tonnes in the next five years, will continue to put pressure on BSC. This may be accentuated by the much higher subsidies given to coal and electricity producers, railways and suppliers in West Germany and France in particular. As the right hon. Member for Swansea, West (Mr. Williams) pointed out, the EEC report shows that subsidies amount to £8 per tonne in West Germany and France, and to £6 per tonne in Italy, but to only £1 per tonne in the United Kingdom. I am not arguing for our subsidies to the industry to be brought up to that level. We need tough action to ensure that all such subsidies are removed, and that we have not only free but fair trade between European countries.
Fourthly, the Community has not spelt out the form of extra social measures for areas affected by steel and coal closures. It has been suggested that the United Kingdom might cease to be a substantial net beneficiary from social measures on steel closures. This would be disastrous in some areas. We hope that it might be because we have borne a considerable brunt of the closures within the Community, and that there are no more to be carried out. It could also imply that the redrawing of the regional assistance map might have affected the eligibility of some areas. Unfortunately, with their usual negative attitude, the Government have objected to multi-annual programmes.
The work of bodies such as British Steel Industries and NCB (Enterprise) needs to be underpinned, consolidated and supported, along with the job creation agencies in those stricken regions that reed to be replaced by proper regional development agencies with the necessary powers and resources to do the job. When the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) was the Secretary of State, that appeared to receive a higher 1045 priority in the Department of Trade and Industry. One wonders whether with his departure it is being returned to the end of the queue again.
The ending of state aids and the phasing out of quotas means that the British Steel Corporation will have to take advantage of marketing opportunities in Europe. As the Minister has said, the corporation is equipped to do that and I would agree with that statement. However, there will have to be new investment in such areas as continuous casting, replacement of old rolling mills, the development of flexible steel making and greater automation. It will mean breaking into the European stock holding operations which on the continent are usually owned by the steel makers themselves. It could mean greater collaboration with European steel makers and it would mean a much greater awareness of the consumer dimension with greater attention given to selling techniques in marketing and product design and innovation.
That is an enormous task for the corporation and it should receive the backing of the Government. I hope that the Minister, in any further remarks that he might make, will give us more reassurance than he has done so far that it will have the full backing of the Government in carrying through what will be a back-breaking task on top of the already back-breaking task that the corporation has carried out.
§ Mr. Teddy Taylor (Southend, East)
We have been given so many complicated papers to discuss in the debate that all we can really do is ask some questions about them. However, as the Minister has rightly said, these proposals have already been approved so there is really not much point in us saying anything at all.
I hope that the Minister will not mind me asking a few questions about what has already happened and on which our views are now being sought.
Bearing in mind that the Government very honestly accepted today that they were alarmed at the decline in our manufacturing industry, does the Minister think that there may be a clue to this decline in the measures that we are discussing on the future of the steel industry? He must know that that is not only a problem in Britain but that it exists on the continent in the EC. Unemployment and job losses are now so horrific that I do not know of any other nation or group of nations in the world where there is such a desert in job creation, with the possible exception of E1 Salvador and Tibet, which do not publish figures.
Does the reason for that fact lie in the steel regime? It is not a question of moving towards free trade or even fair trade but rather of having a protectionist wall provided by guidance prices, strict quotas on oil imports with a specified price for import and a high internal price. The whole principle of high basic internal prices in the EC is a job-destroyer as we find, for example, from the extra £7 a week for food that the average British consumer has to pay as a result of the CAP, which is far more than the Chancellor could possibly offer in his Budget by way of tax relief. We must realise that a basic high-cost economy is not good for Britain.
§ Mr. Hickmet
Does my hon. Friend not appreciate that the major problem of European steel producers is obtaining a price that is profitable? There is not a high artificial price for steel in Europe.
§ Mr. Taylor
That is the argument used by the farmers. They say that they find it very difficult to make a living by producing food and selling it at five times the market price. Trying to survive in an economy by taking in each other's washing is not a good basis for job growth. I hope that my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet) will speak up for his steel workers, as other hon. Members spoke up for their farmers on Monday. Is there not a danger that we are working ourselves into the type of economy that will be a sure recipe for destroying jobs, exports and growth?
Will the Minister accept that there is a danger, once again, of the unfulfilled promise? I remember in recent EC debates that the House was told that our problems would be solved by strict budgetary controls. Now, sadly, after eight weeks of the first year of budgetary control, we find that these controls are being abandoned. Does the Minister recall that in previous steel debates we were told that 1985 was the last year for steel aid? The aid would cease at the beginning of 1985, and then it was the end of 1985. Now we find, as the Minister is well aware, that one of the documents describes what is—the Commission's first ideas on the shape of a new Community steel aids code after 31 December 1985.My hon. Friend the Minister is well aware that some of these measures will involve the pumping of substantial additional funds into aids for the steel industry.
What does my hon. Friend the Minister mean by a free market? My understanding was that a free market was a market in which there was no dumping and that dumping meant that goods were exported at a lower price than the price at which they were sold at home. My hon. Friend must be well aware that the tradition, and the whole point of our steel policy, is that we dump steel outside the EEC at well below cost.
What is the real objection of the Minister to the attitude of the United States? Does he object to quotas? If so, what the blazes are we doing applying to every other country strict quotas linked to a guidance price by which we tell those countries the price at which they can sell the product? Does my hon. Friend accept that the Americans, with a surplus capacity, had what they regarded as a voluntary restraint agreement with the Common Market and that the Common Market not only disregarded but broke the agreement, and exported much more steel than it had promised?
Does my hon. Friend not think that there is a danger of Britain being a mug, even within the EEC? If we are so much more efficient than the continent, why is so much steel coming in from the continent? Is it purely because of quota? My friends in the steel industry say that it is nothing of the sort.
May I ask the Minister for his thoughts, or the thoughts of the Steel Corporation or, indeed, of anyone on how to achieve the reduction of 24 million tonnes, to which my hon. Friend referred, or of 25 million tonnes, to which the Commission referred? I am not sure which is the correct figure. It seems that 25 million more tonnes of steel capacity must go. Will my hon. Friend give his, or the Commission's, or the BSC's or anyone else's thoughts or expectations, on what part of the 25 million tonne reduction should come from the United Kingdom?
As someone who spent most of his life representing a Scottish constituency, I am afraid that our share of the reduction will mean the closure of the Ravenscraig steelworks, which will have a devastating effect on the 1047 Scottish economy, for which every English and Welsh Member has responsibility. I am sad that tonight, when we are discussing the steel industry, I do not see one Scottish Labour, Liberal or SDP Member. I can forgive the absence of Conservative Members because they do not represent steel industries. Surely the Minister has a duty to tell us where he feels the cut will fall.
I am afraid that, when we look at EEC policies, we see a movement not towards free markets or efficiency but towards more and more protectionism and a guarantee of artificial prices for manufacturing industry. If hon. Members would question this, they would ask themselves why the Common Market, almost uniquely in the world, is not only a jobs desert but a place in which the number of people working is continuing to decline year after year. We want a breath of the low costs, the free competition and the movement towards free trade which helped this country, with 50 million people, to prosper in the past. I am afraid that, so long as we follow this route of bureaucracy, controls, quotas, restrictions and subsidies, which are inherent parts of every aspect of the EEC—whether it is steel, regional or agricultural policy—this nation will continue to decline.
§ Mr. Richard Caborn (Sheffield, Central)
I should like to deal with a matter of great concern to the private steel sector. It involves the operation of the iron and steel employees readaptation benefits scheme in the European Coal and Steel Community. For a considerable time, we have been making representations to the Department of Trade and Industry on the application of readaptation benefits for private steel sector workers. We have had little or no joy from the Department. While BSC has had the agency agreement—I am led to believe that it has been working satisfactorily—many hundreds, if not thousands, of people in the private sector have been unable to take advantage of the readaptation benefit because of the manner in which the Department has interpreted the treaty.
An industrial tribunal document was presented in one case in which a redundant steel worker did not obtain satisfaction from the Department of Trade and Industry. I shall quote some of the correspondence between the Department and the person involved. The tribunal accepted that it did not have the competence to deal with the problem, but some of its findings are interesting.
When Mr. Lewis, my constituent, applied for readaptation money through the company, it contacted the Department of Trade and Industry. The Department sent the company a letter in which it said:Eligibility for readaptation aid under the Scheme is determined by criteria laid down in the European Coal and Steel Community Treaty. In essence this means that a person is eligible for scheme benefits provided he has lost his job in the steel industry as a result of a permanent closure or reduction in activity in the iron and steel industry…the reduction is one for which the European Commission has agreed to contribute funds. The Scheme is administered by the Department of Trade and Industry and jointly funded by the United Kingdom Government and the European Coal and Steel Community. Since Mr. Lewis was declared redundant as a result of rationalisation within your Company and not linked to any permanent reduction in activity, which is crucial if an application is to be successful, I regret that on the basis of the circumstances outlined in your letter there can be no possibility whatsoever of Mr. Lewis being eligible for benefit under the Scheme.The tribunal concluded:It is not, however, for this tribunal to comment further as to the rights of an individual stemming from a European 1048 Community Directive as applied by the United Kingdom legislation, and it may be evident to the advisers to the panics to this case that other remedies may exist. It is, however, within the knowledge of the tribunal that companies are failing to draw fully upon the relevant resources .made available to the United Kingdom under European Community legislation.Unfortunately, that was one case in which the person did not receive readaptation money.
I wish to quote two other cases, one of which was successful after a long period of discussion with the Department of Trade and Industry. The first case concerned a holding company whose maintenance workers were paid through the holding company but who were servicing the subsidiary companies. All fell clearly within the treaty of Paris. Because these people were being paid by the holding company which technically did not produce steel, they were not allowed to get readaption money. However, after a long correspondence over 18 months between the company, the Department, myself and the EEC, those people were paid.
Five hundred workers are being declared redundant at Phoenix 3 and the argument is that there has been a reduction in capacity. A letter from the Department speaks of that, but its definition in terms of readaptation must be plant taken out of production. That is not the criterion that has been applied in other member states and the private sector employees have lost out.
Of the 500 workers at the Forge masters complex, 150 fall clearly within the scope of the readaptation, but their claims have been rejected because of the Department's advice.
Because the private sector will not fund readaptation courses, those who work in the industry have to wait three or four months before clearance is given by Brussels and then the DTI. That creates serious anxiety, especially for the education service in my area, which has put on special courses for redundant steel workers and is not being paid until three or four months after it takes students on. I hope that the Minister will take that serious problem on board, as it still applies. There are still difficulties at several further education colleges in Sheffield because of the Departmemt's attitude.
I shall go further. Impediments are now being put in the way of redundant steel workers who want to follow courses. It seems that the Department does not want to develop readaptation moneys that are available from the EEC. I accept that the Government have to do some of the funding, but it seems that whenever possible it will turn people down.
The Minister referred to welders in my constituency. We produced and presented to the Department several advertisements for a specific welding skill, but people who had applied for courses in that type of welding were denied a place on grounds of insufficient evidence of reasonable prospects of employment after the course had been completed. There is no right of appeal in that regard. It seems that the Department's decision is final and binding, so there is no recourse for those who think that they should have received readaptation money.
I should like to draw attention to the lack of publicity for readaptation courses. There is little or no coordination. It is only when local authorities, especially education authorities, take the matter on board, as they have in Sheffield, which has involved expenditure in getting advice out to companies and counselling, that 1049 advantage can be taken of the scheme. Even an industrial tribunal is expressing some concern about how the United Kingdom is operating the scheme.
It is very convenient to take the reference period that the hon. Member for Glanford and Scunthorpe (Mr. Hickmet) took. About two fifths of employees in the steel industry have lost their jobs. If we argue on grounds of productivity, however, we should compare like with like. Many of the continentals buy in their services such as a maintenance, whereas the BSC did not. When talking of production per man, we should compare like with like. On that basis, the hon. Gentleman would find that, as before, we compare very favourably. It is clear that more capacity has been cut in the United Kingdom than in any other EEC country.
§ Mr. Caborn
Very well. We have had a 68.2 per cent. reduction in the work force. That is 20 per cent. higher than in any other member state's steel industry. Those are not my figures but those of the Financial Times for Wednesday 16 October 1985. The article shows the cuts in capacity as well.
§ Mr. Tinn
As for the contractors who do essential work but are excluded from our competitors' productivity figures, has my hon. Friend found that there is a growing tendency for the black economy to affect the terms and conditions of those employed by contractors? Does he agree that the matter would bear investigation?
§ Mr. Caborn
I agree with my hon. Friend. That is very true and it is a serious situation, particularly as regards the conditions. Unit labour costs can be reduced by using the black economy effectively as well.
It is astonishing that the Minister should come to the House and say that there is no evidence, or that he has no evidence, on hidden subsidies by our major competitors within the EC. Either he has not read the files or he has been badly advised by his advisers. Major submissions have been made jointly by the British Steel Corporation and the British Independent Steel Producers Association on energy costs, comparing the United Kingdom with our major competitors within the EC. This has been done not once but several times. Representations have been made on research and development costs and on training costs, especially as far as Germany is concerned. A mass of evidence has been submitted in documentation from all sections of the steel industry in the United Kingdom. Yet the Minister says he wants more evidence. I suggest that he looks at his files. He will find that there is ample evidence, besides the reports and the references that have been made this evening.
I believe that over the latest period the British Steel Corporation has done a first-class job, particularly the employees, and the manner in which Ministers are now approaching the restructuring of our steel industries through the Phoenix development concept is an absolute, utter disaster. Sheffield Forgemasters, which is in my constituency, has unfortunately just gone through a 14-week strike because of sheer incompetent management —and that is not just my opinion but the opinion of a lot of industrialists in Sheffield. That situation has been manipulated by the present Government to take the 1050 running of the industry out of the hands of the BSC, which is a 50 per cent. shareholder and Johnson and Firth Brown, which is the private sector part of the Phoenix development. The Government intervened and forced a management upon that sector and have now created one of the longest strikes in Sheffield on the question of trade union representation. If the Minister allows that to continue, it will lead to disaster for a very important sector of our steel industry—the special steels and the open die forging.
It is hoped that the Phoenix 2 venture which will be launched in April this year will be more successful than Sheffield Forgemasters, but I give this warning: if the Minister treats that Phoenix development with the same contempt as he has shown to Phoenix 3, it is bound to fail. If he does not pay some attention to the financial structure of that development there will be serious trouble. We are talking about the engineering steel sector, which is extremely important.
What is being done is contrary to everything that is going on in Europe and the rest of the world in the development of steel industries to get economies of scale. We are doing the reverse and breaking these down into small sectors. I believe that this is industrially unsound and could well lead to a number of job losses and the loss of major sectors of our steel industry which will be needed if the British manufacturing base is to be revitalised, as we hope, in the not-too-distant future.
§ 11 .40 pm
§ Mr. Peter Morrison
I can assure the hon. Member for Sheffield, Central (Mr. Caborn) that if there are any iron and steel employees readaptation benefits scheme cases that he wishes me to re-examine, I shall happily do so. I am as concerned as he is to ensure that everything is right.
The hon. Gentleman and I will agree, I think, with all hon. Members who have participated in the debate, apparently with the exception of the right hon. Member for Swansea, West (Mr. Williams), who spoke from the Opposition Front Bench, that the work force and the management of the British Steel Corporation have made enormous strides during the past six or seven years to get themselves in a viable and competitive state that will allow them to have a far better future than might otherwise be the case. I hope that the right hon. Gentleman will want to pay that compliment to them too.
§ Mr. Morrison
I am grateful to the right hon. Gentleman. Although we may disagree on many other matters, I think that it must be recognised that there has been a significant achievement by the work force and the management. I hope that the all-party message that will issue from the House will be a compliment to the corporation as a whole.
§ Mr. Williams
I have indicated from a sedentary position that I support that sentiment. The Opposition congratulate the industry on the progress that it has made. I said earlier that it has made itself competitive with the rest of Europe. My purpose was to show that what has been achieved might be thrown away by what I regard as inept handling of negotiations and not to denigrate what has been achieved.
§ Mr. Morrison
I understand that the right hon. Gentleman would wish to make political points, but I am glad that we can agree on what has been achieved by the corporation.
The hon. Member for Sheffield, Central referred to the phoenix projects. I would not expect him always to agree with the course on which we have been proceeding, but I listened carefully to his remarks and I assure him that I wish to see them succeed every bit as much as he does.
My hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet) made many positive points in his contribution. He described the industry as competitive and viable and said that that would ensure the jobs of the future. If the markets so turn out, there may be an expansion of the number of jobs in the industry in future. That is precisely the aim and ambition of the Government and the corporation. We wish to ensure that we have as successful a steel industry as it is possible to have.
My hon. Friend the Member for Glanford and Scunthorpe referred to ERDF funds, which may be made available to his constituency. I listened carefully to what he had to say and I hope that I shall have more definite news in the near future.
The hon. Member for Stockton, South (Mr. Wrigglesworth) paid tribute, like the hon. Member for Sheffield, Central, to the workers and management of the corporation. I agreed when he said that the task ahead of them, despite the solid foundations that have been built, was a demanding one and a major challenge to the corporation. He asked whether we had considered the effect of the reduction in oil prices, as did the right hon. Member for Swansea, West. The answer is that we have. We think that it will be good news, but I should not like to over-estimate that. Our current estimate is that the result will be rather more on the margin than a surge. We shall have to see what happens in the oil price market. I think that the outcome will be on the plus side rather than the minus side.
1052 The hon. Member for Stockton, South referred also to regional policy. I can assure him that my right hon. Friend the Secretary of State puts as much emphasis on regional policy as his predecessor, my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan). I know that the Secretary of State is planning to visit the north-east shortly. Of course, my right hon. and learned Friend had the advantage of having a constituency in the north-east, which, of course, he continues to represent.
The point which the right hon. Member for Swansea, West made about subsidies—
§ It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
§ It was agreed to.
That this House takes note of European Community Documents Nos. 8293/85, a communication by the Commission to the Council concerning the organisation of the steel market after 1985; 9300/85, a communication by the Commission to the Council on the introduction of a system of production quotas under Article 58 of the Treaty establishing the European Coal and Steel community after December 1985; 9301/85, a communication by the Commission to the Council concerning rules on aid and financial transfers to the Community Steel Industry after 1985; 8779/85, proposals for Council Decisions concerning contributions to the European Communities to finance measures connected with the restructuring of the coal and steel industries; 5194/84, a communication by the Commission to the Council on the General Objectives for Steel 1985; and 4493/86, a proposal by the Commission for a Council Regulation establishing quantitative restrictions on imports of certain products originating in the United States of America; and welcomes the agreement by the Government in the Council of Ministers to a further limited period of European Coal and Steel Community market organisation measures beneficial to the United Kingdom and to the ending of most forms of state aid to the Community steel industry.