HC Deb 16 March 1987 vol 112 cc698-701 3.48 pm
Mr. John Smith (Monklands, East) (by private notice)

asked the Secretary of State for Trade and Industry if he will make a statement oil European Commission proposals to reduce steelmaking capacity within the European Community.

The Minister of State, Department of Trade and Industry (Mr. Giles Shaw)

The European Commission's view, which is generally shared by the member states, is that substantial excess steelmaking capacity remains in the European Community. This excess capacity is generally estimated to be in the range of 20 million to 25 million tonnes per annum of hot rolled capacity.

Against this background, the European Steel Producers Federation, Eurofer, put forward proposals to the Commission on 1 March for reducing capacity in a number of steelmaking sectors. These proposals were presented to the Commission on 1 March. No capacity reductions from the British Steel Corporation were included in the Eurofer proposals.

At a meeting of the Council of Ministers on Thursday 19 March, which I will attend, the Commission will, I understand, make an oral statement of its views of the Eurofer proposals in relation to the excess capacity in Europe. I shall, of course, be reporting to the House following that Council of Ministers in accordance with normal practice.

Mr. John Smith

Is the Minister aware of the alarm that spread rapidly throughout the British steelmaking communities when news was received of possible proposals by the European Commission to reduce steelmaking capacity, particularly in hot-rolled coil and strip production? Can the Minister give a categorical assurance that the pledge given to maintain the five integrated steel plants will be maintained absolutely until 1988 and that no proposals will be agreed to take effect thereafter or to prejudice decisions for the future?

Is the Minister aware that the United Kingdom has already borne a severe reduction in the steel industry and there is just no room for any more? Can the Minister confirm that no proposals—I believe that he said this in his statement, but it is so important that I hope he will confirm it—to reduce capacity have been made by the British Steel Corporation, through the mechanism of Eurofer, in discussions with the Commission? Will the Minister make clear at the Council of Ministers meeting on Thursday a view that I believe is fairly widespread throughout the House, that the British Government will not agree to any further reduction in steel capacity, particularly in hot-rolled coil and strip production, either now or in the future?

Mr. Shaw

I unequivocally give the right hon. and learned Gentleman the assurance that he wishes in connection with the maintenance of the five integrated plants strategy as agreed in August 1985 and to which the Government are fully committed.

In relation to the Eurofer proposals, I assure the right hon. and learned Gentleman that no step will be taken which in any way prejudices the future of that strategy after the particular date. I can give him the assurance that there is no element in the Eurofer proposals than has been submitted by the British Steel Corporation.

Thirdly, in relation to the Eurofer initiative, the right hon. and learned Gentleman will be aware, as I am aware, that initial rounds were put together in the Peat, Marwick, Mitchell and Co. report, which became public.

I can assure the right hon. and learned Gentleman that in the discussions that I have had, particularly with Vice-President Navjes, in relation to the reports that appeared in the press last weekend, there is absolutely nothing which in any way weakens or undermines the assurances that I have given the right hon. and learned Gentleman.

Sir Alex Fletcher (Edinburgh, Central)

The maintenance of the five integrated steel plants is a tribute to the Government's persistence, but, to ensure that they achieve viability, the future of those steel works should not be endangered by the current talks taking place in Europe.

Mr. Shaw

That is absolutely correct. It should be borne in mind that the position in the United Kingdom today is that we have a steel corporation and a steel industry which are infinitely more competitive than they have been since the war. The British Steel Corporation is actively seeking to increase the sales of many of its steel products, to the advantage of the United Kingdom, and against European competition. That is a major sea change in steel production.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

We welcome the assurances that the Minister has given to the right hon. and learned Member for Monklands, East (Mr. Smith). However, the Minister must be aware from his recent visit to Scotland that many fear that the BSC might be making the European Community an excuse for advancing the closure of Ravenscraig. When the Danish Commissioner, Mr. Petersen, recently visited Strathclyde, he agreed with those who pointed out that Britain had already taken more than its share of cuts and that in the next round the brunt should be borne by the French, the Italians and the West Germans.

Mr. Shaw

I take note of what the hon. Gentleman said. He will be aware that that is all the more reason why the BSC has not offered volume reductions in relation to the Eurofer proposals. As regards the Government's view, whatever the Commission may say, it is a political decision by the Council of Ministers that will determine the issue.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my hon. Friend remember that it is not sufficient to state important truths once, and that the facts of the extent to which Britain slimmed its steel industry before the other members of the European iron and steel community did so, bear repeating in public over and over again?

Mr. Shaw

I entirely agree with my hon. Friend, and I expect that that fact needs to be repeated several times.

Dr. Jeremy Bray (Motherwell, South)

Did the BSC propose to Peat, Marwick, Mitchell and Co. the closure of any capacity, and were any such proposals subsequently withdrawn before the report was submitted to the Commission? Further, can the Minister give an assurance that nothing that the BSC is allowed to incorporate in its own plans will be based on the assumption of any major plant closure after 1988?

Mr. Shaw

I have already given the right hon. and learned Member for Monklands, East (Mr. Smith) the assurance that the hon. Member for Motherwell, South (Dr. Bray) would wish me to give. The BSC position in relation to Eurofer is that no volume of BSC capacity is involved therein. On the first part of the hon. Gentleman's question, I must make it clear to him that Peat, Marwick, Mitchell and Co. was free to conduct its own assessment of what would be required. The Eurofer meeting determined which proposition should be placed before the Commission. Those proposals, which are the only proposals that have been made by Eurofer, were deposited with the Commission on 1 March and they will form the basis of the Council meeting on 19 March.

Sir Peter Emery (Honiton)

My hon. Friend may return to Brussels with the knowledge that he has the backing of the whole House. Is he aware that he must make it clear to the Commission that not only the BSC but the Government would find it unacceptable that there should be any cut in British steel production, and that he should continue to point out that although we have reduced production, other nations have increased their production and have not slimmed down? There can be no question of Britain making further reductions until the rest of Europe is in line.

Mr. Shaw

I very much endorse what my hon. Friend has said. He is correct to point out that the capacity exists elsewhere in the Community.

Mr. Tam Dalyell (Linlithgow)

Following the question of my hon. Friend the Member for Motherwell, South (Dr. Bray), may I ask whether Peat, Marwick, Mitchell and Co. put forward proposals for shrinkage? Is it not a fact that the company could have done so only if such proposals were put forward by the BSC?

Mr. Shaw

I do not think that the hon. Member can be right. Peat, Marwick, Mitchell and Co. made propositions to Eurofer, but the British Government and the Government of all other member states did not know what those proposals would involve, because that was the basis on which Eurofer approached Peat, Marwick, Mitchell and Co. for an exchange of views. As I understand it, the only formal propositions made by Eurofer were those delivered to the Commission on 1 March.

Mr. Teddy Taylor (Southend, East)

No one doubts the Government's determination to fight in the Council of Ministers for the retention of five integrated steel works, but will my hon. Friend say clearly to the House whether steel capacity is an area in which Britain has the right of veto, or whether it is likely that other members could make decisions, by a majority vote, on the steel capacities of member states, including the possible future closure of a plant?

Mr. Shaw

I think my hon. Friend will recognise that there can be no more important issue than discussion in the Council of Ministers of such an important matter. I would not wish to prejudge how that discussion will end.

Mr. Dennis Skinner (Bolsover)

Why does the Minister not answer the question that he has just been asked? He has been asked a straightforward question by one of his hon. Friends about whether Britain would use the veto to stop further steel closures. Why does the Minister not have the guts to stand up to those people in the Common Market instead of continually giving in, as the rest of the Tory Ministers have done over the past five years?

Is the Minister not aware that countless thousands of people throughout the country have been scattered around by the lethal combination of the Common Market and this Tory Government over the past eight years? It is time that we put a stop to it. Get across there and tell them that we are having no more of it.

Mr. Shaw

I understand the hon. Member's strong views on this matter. He will know that the whole of the steel regime is bound up with such matters as quotas, quota liberalisation, increases in quotas, capacity and many other issues. The United Kingdom wishes to secure the best possible solution in relation to its European capacity, and that is a matter for negotiation.

Mr. Michael Shersby (Uxbridge)

Is my hon. Friend aware that the sea change in the fortunes of the British steel industry to which he has referred is a source of considerable pride to people in this country and that any robust action that he takes in relation to the European proposals will have the widest support in all parts of the House?

Mr. Shaw

I am pleased to have my hon. Friend's support. I am grateful to know that hon. Members on both sides of the House recognise the strong position of the United Kingdom steel industry.