HC Deb 25 February 1987 vol 111 cc251-3
3. Mr. Hardy

asked the Secretary of State for Trade and Industry what is his estimate of the likely reduction in the capacity of the steel industry in the United Kingdom during 1987 and 1988; and what measures he plans to adopt to meet European Economic Community proposals during or after 1989.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

I have made no such estimates. There are no European Community proposals concerning steel capacity for 1989 or beyond.

Mr. Hardy

Has not Britain borne, since 1979, a most unfair share of the cuts in Community steel capacity while we have watched other member states pursuing policies and making arrangements which are clearly unfair? Does he accept that there is an obligation that Britain shall maintain its present capacity in steel and special steels industries, and will he offer the House a firm commitment that the Government accept that obligation?

Mr. Channon

I agree with part of what the hon. Gentleman has said. Any reductions that ever took place would have to be within the context of statements that have been made within the framework of a strategy agreed with the Government and announced in August 1985.

Mr. Holt

Is not the way to increase and maintain our share of steel capacity the way that it is being done in Redcar and Skinningrove, in my constituency, where there is record output? Would that not be much helped by proceeding with the Channel tunnel, which will bring work to the steel industry for many years ahead?

Mr. Channon

I entirely agree with my hon. Friend on both those points.

Mr. Crowther

Is the Secretary of State aware that in recent weeks a study by Anthony Bird Associates came to the conclusion that demand for steel in Europe is likely to increase up to 1990 at least? Another study by the American analyst Payne Webber reached the conclusion that the BSC is now producing the cheapest steel in Europe. In view of that, would not further capacity cuts in Britain be nonsense? Is A not in our interest for the quota system to be ended so that British industry can use its competitive strength?

Mr. Channon

I am not sure about the hon. Gentleman's last point, but I agree that the British Steel Corporation is highly competitive. As I said, any future reductions must be within the framework of that strategy.

Mr. Hickmet

Is not the BSC the most profitable steel business in Europe? In that context, if there have to be capacity cuts, to pursue the point made by the hon. Member for Rotherham (Mr. Crowther), are we not the best placed in Europe to compete against the European steel producers? Accordingly, we should not go along the lines of the Eurofer proposals. Let us do away with quotas and price restraints. We are more competitive than the European steel producers and we can beat the pants off them. Why should we cut capacity when the Italian, French and German industries are almost bankrupt and are inefficient?

Mr. Channon

My hon. Friend makes many important points. The Eurofer proposals have not yet been presented in their final form. There is an advantage to the United Kingdom having as stable a market as possible, and I agree with my hon. Friend about the great success of the BSC over the past years. I am grateful for his robust support.

Mr. Williams

Will the Secretary of State bear in mind that it is no reassurance for him to say that anything done will be done within the context of the strategy already agreed, because within that we have Ravenscraig, which has a guarantee that runs out next year? Therefore, if there were to be cuts on the scale that is envisaged, Ravenscraig would be vulnerable. Will he give us an assurance here and now, so that it can be understood in Brussels, that if figures of the magnitude being talked about in the press and in Brussels come forward, they will have to be without any co-operation from this country and we shall not accept any share of them?

Mr. Channon

I have already tried to explain that Eurofer has not yet put forward proposals. It has been invited to submit more detailed proposals by the beginning of March, in co-operation with the independent producers, as appropriate. Any contribution that the BSC has to make would have to be consistent with the present strategy, and it cannot prejudice any subsequent strategy agreed between it and the Government.