Commons Sitting of 17 May 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS

  SOUTHERN WATER AUTHORITY [Money]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act resulting from the Southern Water Authority Bill, it is expedient to authorise any increase attributable to that Act in the sums payable out of money provided by Parliament under section 90 of the Land Drainage Act 1976.—[Mr. Durant.]

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Primary Teachers
    Mr. Evennett: To ask the Secretary of State for Education and Science what representations he has received from local education authorities concerning difficulties in recruiting primary school teachers.
    The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): None recently. There are sufficient primary teachers nationally. However, the high cost of housing in particular has led to recruitment difficulties in some parts of London and the south-east.
    Mr. Evennett: I thank my hon. Friend for her reply. I am sure that most LEAs welcome the Government's initiative in teacher recruitment. However, in Erith and Crayford there is a considerable shortage of primary teachers and housing is, of course, a major consideration. Will my hon. Friend consider further initiatives to encourage married women to come back into primary school teaching, perhaps on a part-time basis?
    Mrs. Rumbold: I thank my hon. Friend for his question. I recognise that there are some difficulties in his constituency. I understand that all but three of the teaching vacancies in the borough of Bexley have been filled this term and, indeed, all but one in the school in which I believe he is particularly interested, Southlake primary school.
    We are doing everything in our power to recruit teachers and to encourage part-time teachers; and the borough of Bexley is taking an initiative in encouraging married women to come back into the teaching profession part-time.
    Mrs. Clwyd: Is it not a fact that the Government have no published targets for overall teacher numbers? The Secretary of State's recent report of 31 March, which criticised the lack of objective data available, makes it
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    impossible to state whether recruitment, retention, motivation and quality are satisfactory. How can the Minister expect us to take anything that she says on this matter as being definitive?
    Mrs. Rumbold: The hon. Lady will no doubt therefore be glad to hear that the demand for teachers rises as primary school pupil numbers rise and, to cope with the future demand, target entry into initial teacher training for primary pupils has increased from almost 7,000 in 1983 to 11,000 in 1989. To date, we have more than 17,600 applications for almost 10,000 places. That is 77 per cent. over target, and I am sure that the hon. Lady will welcome that.
    Mr. Pawsey: To bring those figures into perspective, will my hon. Friend give the House details about the number of teachers employed in the profession and about the recruitment of teachers? Is she satisfied with both the quantity and quality of recruits coming forward for the profession?
    Mrs. Rumbold: Yes, Sir. We have almost 500,000 teachers in primary and secondary schools at present. We are very happy about our programmes for recruitment of teachers through our task Force, particularly in London through the Islington recruitment fair, which has been extremely successful in attracting 3,400 people who showed an interest in primary school teaching.

    Free Milk
    Mr. Janner: To ask the Secretary of State for Education and Science if he will make a statement concerning the removal of the discretionary power of local authorities to provide free milk for children in special schools.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): Children whose families are in receipt of income support continue to receive free milk. Nothing in the Social Security Act 1986 prevents a local education authority from providing subsidised milk at lunch time to other children attending special schools, provided that milk offered to children attending mainstream schools receives the same level of subsidy.
    Mr. Janner: Is the Minister aware that, as a result of the Government's recent mean and miserly measures, free school meals have been removed from a majority of children in special schools, and, with them, the right to free school milk? Is not taking the milk from the mouths of children with special needs a thoroughly nasty and disgraceful act which has caused enormous harm and ill-will among thousands of children and to those who teach them, not least in Greenacres school for special needs children in my constituency?
    Mr. Dunn: The hon. and learned Gentleman uses intemperate language. I must remind him and the House that the latest survey showed that before the implementation of the Social Security Act 1986, 39 of the 97 authorities in England did not exercise their discretion to provide free milk to children attending special schools. Of those authorities, 13 were Conservative-controlled, one was Liberal—heaven forbid—16 were hung councils and nine were controlled by the Labour party.
    Mr. Harry Greenway: Will my hon. Friend confirm that not only do 100,000 more children in special and ordinary schools receive an allowance through their parents for free school meals than formerly, but that the allowance covers free school meals throughout the year, not simply during term time, as under the previous Labour Government?
    Mr. Dunn: My hon. Friend the is absolutely right in his interpretation. I remind the House that it was always our intention that financial benefits should be concentrated on those in financial need. That is right and proper.
    Mr. Campbell-Savours: Is the Minister aware that he can play around with statistics, but he will never convince the people who live in Kent who are very angry about the fact that in excess of 4,000 children will lose free school meals? Does his conscience not prick him—
    Mr. Speaker: Order. There is a question about meals later. This is about milk.
    Mr. Dunn: I should like to know by what authority the hon. Gentleman seeks to speak for the county of Kent.
    Mr. Tony Banks: He speaks for England.
    Mr. Speaker: Order. I am not responsible for what the hon. Member for Workington (Mr. Campbell-Savours) says.
    Mr. Dunn: If the hon. Member for Workington (Mr. Campbell-Savours) speaks for England, heaven help the country.

    Teachers (Pay and Conditions)
    Mr. Buckley: To ask the Secretary of State for Education and Science what representations he has received on the report of the interim advisory committee on teachers' pay and conditions; and if he will make a statement.
    The Secretary of State for Education and Science (Mr. Kenneth Baker): I have received written and oral representations from the teacher unions and the local authority associations.
    Mr. Buckley: Does the Secretary of State accept that morale in the teaching profession is pretty low because of pay? Does he also accept that the interim advisory committee report recommends that teachers should have an equal salary increase across the board and also considers the £300 million allocated to be a restraint on the wage increase for the teaching profession, which is well below the average increase in earnings of 8 per cent. recently awarded to other workers, such as nurses and doctors, and others in industry? Will the Secretary of State comment on that?
    Mr. Baker: Teachers will receive 4·25 per cent. from 1 April on top of the 8·2 per cent. last October. Teachers on the main scale will, on average, receive a further 4 per cent. in September as a result of increments. Increases for individual teachers during this year will range from 4·25 to 14·5 per cent., when allowance is made for the increased value and number of allowances.
    Mr. Madel: As the administration and teaching of GCSE has a lot to do with teachers' conditions of service,
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    will the advisory committee on pay and conditions publish some of its conclusions and opinions on how this first year of GCSE has worked out?
    Mr. Baker: That goes rather beyond the remit of the interim advisory committee, but I pay tribute to the work of teachers across the country to make the introduction of GCSE so successful, which I am sure it is and will be.
    Ms. Armstrong: Does the Secretary of State recognise that many teachers are looking to the Government for some response to the work that they have been putting in to improve GCSE and to cope with the many changes that he is suggesting? Is it not disgraceful that the Government are suggesting offering them just over 4 per cent., when other average earnings are increasing by more than 8 per cent., and when the Government gave in to pressure from the nurses to improve their pay and conditions? Why will the Secretary of State not respond to the teachers?
    Mr. Baker: There was a major restructuring for the teachers last year, just as there is a major restructuring for the nurses this year. I do not know whether the hon. Lady heard my reply earlier, but I said that teachers would receive 4·25 per cent. in April and the great majority of teachers on the main scale will receive another 4 per cent. in September. If they qualify for incentive allowances, some teachers will get infinitely more than that.
    Mr. Paice: Does my right hon. Friend agree that the extra increase in incentive payments in the latest award—well above the basic 4·5 per cent.—means that there is ample opportunity for the better teachers to improve themselves and be better rewarded?
    Mr. Baker: I agree with my hon. Friend. That is one of the features of the IAC report and the structure of teachers' salaries introduced last year. There are now five different grades of allowances which permit good teachers, teachers with more responsibility and teachers in shortage subjects to be rewarded. That structure was given tremendous impetus by the IAC report.
    Mr. Fatchett: As the Press Association tapes report that the Secretary of State is having to cancel meetings because of the
    "pressures of the Education Reform Bill",
    we are delighted to see him here this afternoon. Will he note that the interim report paints a worrying picture of low morale among teachers, of key shortages of teachers of important subjects, and states that there is real doubt about the ability of teachers to deliver the national curriculum? What action will he take on the interim advisory committee's suggestion that none of those problems can be satisfactorily resolved if the £300 million ceiling is maintained?
    Mr. Baker: To answer the hon. Gentleman's last point, although there was a cost envelope of £300 million, the cost of the report's full recommendations came to £332 million, and I have accepted the extra allowances. My hon. Friend the Minister of State has already emphasised the impetus that we are putting into increased teacher training. I agree with the hon. Gentleman that we shall need more teachers, particularly in certain shortage subjects, to implement the national curriculum. We have several schemes in hand, and there was a good increase in recruitment last year. I hope that there will be an increase this year as well.
    Mr. Flannery: To ask the Secretary of State for Education and Science when he next proposes to discuss the restoration of negotiating rights with the teachers' unions.
    Mr. Kenneth Baker: I expect to discuss the Green Paper on future pay determination machinery with representatives of teacher unions over the next few months.
    Mr. Flannery: Is it not a fact that the Minister has now got himself into such a mess about the Education Reform Bill and the education system that he does not know where he is and is having to cancel all his speeches in order to be here? Does he realise that free negotiation is fundamental to the democratic rights of any group of working people, not only teachers? For the right hon. Gentleman to take that right away from teachers and then start boasting of how much he is giving them is no way of doing what the International Labour Organisation has asked him to do, which is to restore teachers' negotiating rights. It is not enough for the right hon. Gentleman to say that teachers are getting this, that and the other. That is insufficient, and he should restore teachers' negotiating rights in a democratic manner, straight away.
    Mr. Baker: The ILO committee on freedom of association will be meeting later this month to report to the committee of experts, but it has no formal standing in itself. If in due course, the ILO makes representations to the Government, we will carefully consider them. However, I have already met the six teaching unions during the course of the past few days. We have discussed only briefly the future machinery for the determination of teachers' pay and conditions, but I will meet all the unions again later this year. The Government have put forward certain proposals in the Green Paper, as the hon. Gentleman knows. There is still a wide difference of opinion between the unions about the machinery that they would like.
    Mr. Anthony Coombs: Will my right hon. Friend reflect upon the appalling fact that, of the five teacher associations, the NAS/UWT has already decided that it will take industrial action, which is against the interests of the children in the classrooms? Does he agree that it is not just a coincidence that the fastest-growing teachers' association is constitutionally committed against any kind of industrial action?
    Mr. Baker: I agree with my hon. Friend that the Professional Association of Teachers is totally committed against taking any kind of industrial action, and its membership is growing. I saw representatives of the NAS/UWT last Friday morning and made it clear to them that I was shocked and appalled that, of all the unions, it advocated a half-day teachers' strike. Such action will be highly damaging to the children affected—and only the children will suffer. It is a completely unnecessary and purely token strike. I hope very much that that union will think again.
    Mr. Straw: Is the Secretary of State committed to the restoration of negotiating rights for teaching unions?
    Mr. Baker: I clearly stated that we have put forward our proposals for a teachers' negotiating group, and I shall be discussing that with the teaching unions in the coming
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    months. I am surprised that the hon. Gentleman has not taken this opportunity to condemn utterly the proposed half-day strike by the NAS/UWT.

    Village Primary Schools
    Mr. Hicks: To ask the Secretary of State for Education and Science what proposals he has to ensure the future of village primary schools; and if he will make a statement.
    Mr. Dunn: It is the responsibility of local education authorities to provide a proper service to villages and rural areas as well as to other areas that they serve. My right hon. Friend the Secretary of State is currently supporting a number of projects, including one in Cornwall, designed to identify ways of enriching the curriculum of rural primary schools. Any proposal for the closure of a village school which comes before us is considered very carefully in the light of the criteria set out in the Department's circular 3/87, which makes it clear that size is not a criterion for closure.
    Mr. Hicks: Does my hon. Friend agree that, to ensure the future of our village primary schools, it is esential that adequate resources are made available for vital improvements and extensions? Is he aware that in Cornwall alone over 50 major and minor primary school projects are awaiting attention, which is particularly worrying as by 1993 Cornwall will have 40,000 children of primary school age, the highest ever?
    Mr. Dunn: My hon. Friend is right, but I must point out that allocations for capital works are made annually. Cornwall's allocation for schools and for further and higher education in 1988–89 was £6·4 million, which represented an increase of 14 per cent. over the figure for 1987–88. Of course, it is the duty of local authorities to look at their demographic situation and to decide whether to build new schools.
    Mr. Matthew Taylor: Hon. Members will be aware that I represent and take particular interest in what the Minister has had to say about Cornwall's education system. The Minister will be aware of the particular difficulties that the county faces. I welcome the county's increase in its capital spending programme this year, but, with the new assessment arrangements, particular costs, in terms of teaching time, will hit primary schools. Has the Minister made any assessment of that impact, and has he any plans to help local authorities to overcome it?
    Mr. Dunn: I congratulate the hon. Gentleman on being appointed to his new post.
    I must remind him that in allocating resources for capital expenditure the Department of Education and Science will continue to give priority to projects which provide places in areas of population growth. That answers the hon. Gentleman's point and refers to the earlier point made by my hon. Friend the Member for Cornwall, South-East (Mr. Hicks).
    Mr. Key: Will my hon. Friend give special consideration to education support grants for rural primary schools' curriculum enrichment projects, such as that in Wiltshire, whose term is coming to a natural end?

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    It would be disastrous if such projects were cut off at this stage. Will he do his best to ensure that those projects continue?
    Mr. Dunn: My hon. Friend will be aware that the projects are in their mid-term phase and are being evaluated at local level. My right hon. Friend the Secretary of State is considering the possibility of a research project to evaluate the projects on a national basis, with the intention of disseminating to local education authorities examples of successful practice. I undertake to bring my hon. Friend's remarks to my right hon. Friend's attention.
    Mrs. Clwyd: Will the Minister admit that there are serious anxieties that open admissions could lead to some schools bursting at the seams and accelerated closures of other schools, with a reduction of parental choice, especially in rural areas? How will he protect such schools?
    Mr. Dunn: The hon. Lady falls into the trap that Opposition spokesmen fall into every time they appear at the Dispatch Box. They seek, as ever, to deny choice to parents whenever and in whatever situation they can possibly contrive to do so. We stand for sensible choice for parents wherever and whenever possible.
    Dame Elaine Kellett-Bowman: My constituents are more than grateful for the unwavering support that my hon. Friend has always given to village schools and their excellent varied curriculum. They are glad to hear him reiterate that size alone will not be the criterion for closure, but they are worried about what will happen when the new building regulations come into effect in 1991. Will he ensure that there is sufficient money to enable our village schools to continue to serve the rural areas?
    Mr. Dunn: We have always made it clear that many other factors bear upon the life and long-term survival of village schools. I have always recognised that many small village schools have to be retained because of the geographical isolation of the communities that they serve, so my hon. Friend's remarks are well received by me.

    Mr. Paul Gray (Letters)
    Mrs. Fyfe: To ask the Secretary of State for Education and Science whether he has any further information about the inquiry into the leak of the letter of 21 January from Paul Gray, in the Prime Minister's Office, to Tom Jeffrey in his private office; and if he will make a statement.
    Mr. Dalyell: To ask the Secretary of State for Education and Science if he will make a statement on the progress of the leak investigation into the improper disclosure of correspondence between Mr. Paul Gray of 10 Downing street, and Mr. Tom Jeffrey, relating to educational testing.
    Mr. Kenneth Baker: No, Sir. It is not the usual practice to give information on such matters.
    Mrs. Fyfe: I do not know whether to thank the Minister for that abbreviated answer. Which does he think is the worse crime—that a mole should leak a letter, or that a Prime Minister should oppose the diagnostic testing of children on the ground that the remedial action that would necessarily follow would cost too much?
    Mr. Baker: The Prime Minister does not oppose the diagnostic testing of children. If the hon. Lady reads the task group on assessment and testing report carefully she will find considerable criticism of diagnostic testing and its misuse. I remind the hon. Lady that not only has TGAT been published, but that on the substantive issue I have received three supplementary reports. We shall be publishing those, together with our responses, in the near future. We shall also be publishing our views on the system of assessment and testing.
    Mr. Dalyell: What does the Secretary of State think would occur if he confronted the Prime Minister with the truth, namely, that the leak was authorised on the Prime Minister's behalf from Downing street?
    Mr. Baker: The hon. Gentleman's paranoid preoccupation with plots is one of his most enduring and, indeed, endearing characteristics. I am afraid that yet again he has let his imagination run wild, and his imagination is one of the most unpredictable elements of British politics.
    Mr. Dickens: Is it not a fact that over the years the Opposition have had so little to contribute to debates that they are pleased to find leaks of letters to act as a diversion to cover up their inadequacies and failure to contribute to debates on education and on every other subject?
    Mr. Baker: I could not have put it better myself. My hon. Friend is absolutely right. We are still waiting to hear from the Opposition—[interruption.] I know that my hon. Friend is very popular, so I must mind my Ps and Qs. We are still waiting to hear from the Opposition their ideas and policies on a whole range of education matters, particularly assessment and testing.
    Mr. Straw rose—
    Mr. Skinner: Is the Secretary of State on the Chancellor of the Exchequer's side?
    Mr. Straw: I was just about to ask that.
    We have read not only the TGAT report but the letter that passed between the Prime Minister's private secretary and the right hon. Gentleman's private secretary. The Secretary of State must know that there is a major difference of opinion between the Prime Minister and himself. Now that the Chancellor has beaten the Prime Minister so roundly over the issue of sterling, will the Secretary of State follow his example, find his courage, and beat the Prime Minister, who wishes to introduce a system of competitive testing that will damage the education of the nation's children?
    Mr. Baker: The Prime Minister and I were at one in welcoming the report. The questions raised by the Prime Minister were precisely the same as those raised in Committee, namely, that any system must avoid being too elaborate to be understood, too difficult to implement and too expensive to be practicable. The hon. Gentleman overlooks the fact that the TGAT report came out in favour of age-related testing at seven, 11, 14 and 16 and the publication of results and records of pupil achievements—all opposed by the Labour party in the past. Are Labour Members going to agree with those recommendations now, or not?
    Mr. Dalyell: In view of that unsatisfactory reply, I give notice that I shall seek to raise once again on the Adjournment the conduct of the Prime Minister's Office.

    Rating Reform
    Mrs. Mahon: To ask the Secretary of State for Education and Science whether he has any plans to meet the National Union of Students to discuss the arrangements for the introduction of the community charge; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson): No. My right hon. Friend is aware of the views of the National Union of Students on the community charge. Arrangements for the introduction of the community charge are a matter for my right hon. Friend the Secretary of State for the Environment.
    Mrs. Mahon: Does the Minister accept that there are often good security reasons why women and overseas students do not want their addresses made public? What guarantee will he give as to their safety when the new system is introduced?
    Mr. Jackson: This matter will, of course, have to be considered by my right hon. Friend the Secretary of State for the Environment. I believe that he has made it clear that it will not be necessary to publish the names of certain categories of people, including those to which the hon. Lady referred, in the published list of those who are to pay the community charge.
    Mr. Cormack: How does my hon. Friend defend the imposition of the community charge for students? How will he ensure that they all pay?
    Mr. Jackson: All students have a vote. They have a vote in local elections. They benefit from the services provided by local authorities. That is why my right hon. Friend the Secretary of State for the Environment and the Government are introducing their proposals. More than 60 per cent. of students already contribute to the domestic rates. We discovered from our recent survey that they contribute some £70 to £80 per head.
    Rev. Martin Smyth: Does the Minister understand the position of students from Northern Ireland, whose parents will pay the full rate, while those studying in Great Britain will be liable for the community charge?
    Mr. Jackson: Whether and to what extent students will be further compensated for their obligation to pay the community charge are matters being considered in the Department's review of student support. No decisions have yet been made.
    Mr. Rhodes James: Will my hon. Friend and my right hon. Friend the Secretary of State consider discussing with the Royal College of Nursing the particular position of student nurses under the new provisions?
    Mr. Jackson: I repeat that the eligibility of all students, including nurses, will be considered in the context of the review.
    Mr. Andrew F. Bennett: I am sure the House understands why the Minister wants to put the blame and responsibility on the Department of the Environment for the implementation of the poll tax for students. The reason is that it will cause many problems. Will the student have
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    a vote at home and pay the poll tax where his college is situated, so that there is not a link for students between the vote and the poll tax?
    Mr. Jackson: It is a matter of electoral law as to where students cast their vote. This is a matter for the Home Office. Students have a choice as to where they register to vote and where they vote. I shall come back to the hon. Gentleman on that point.
    Mr. Brandon-Bravo: Reverting to the original question, is my hon. Friend aware of the number of students registered with phoney colleges who are illegally in this country? If this system identifies those people, that will be right and proper.
    Mr. Jackson: The Department has recently tabled amendments against bogus degrees in the House of Lords. We hope that this will be a way of tackling this problem.

    Inner London
    Mr. Sedgemore: To ask the Secretary of State for Education and Science what recent representations he has received about the future of education in inner London; and if he will make a statement.
    Mr. Kenneth Baker: Since my announcement on 4 February my Department has received many comments from many sources.
    Mr. Sedgemore: Can the Secretary of State give the House an assurance that, if the House of Lords stiffens its spine and decides that there should be a review of ILEA before any decision on abolition, he will recommend that the House accepts that decision? Can the right hon. Gentleman confirm the message on the tapes today that he is running so scared, and so frit, and is sweating so profusely with fear, that he has cancelled all his engagements and left them to the office boy?
    Mr. Baker: I do not appear at the Dispatch Box as a trembling, blushing violet. I understand that the House of Lords has just started, or will shortly start, a debate on ILEA. We shall all watch the outcome with great interest.
    Sir Geoffrey Finsberg: Will my right hon. Friend bear in mind that there are 20 times as many residents in inner London as those who took part in the so-called phoney parents' ballot? Will he also disregard the jaundiced remarks of ex-Prime Ministers, however eminent they may think they are?
    Mr. Baker: Yes, as to the last, most certainly I will. As regards the parental ballot, decisions to transfer education responsibility from one sphere of government to another have always been taken by Parliament. That is the constitutional position. It is for Parliament to weigh up all the arguments, taking account of the views, not only of parents, but, as my hon. Friend says, of all those ratepayers who have to bear any consequences. As regards the ILEA ballot, the method chosen for the organisation of the ballot makes it next to impossible to determine how many parents actually voted.
    Mr. Tony Banks: Does the Secretary of State remember those days when he was the PPS to the then Prime Minister? Does he not pay any attention whatsoever to his right hon. Friend's wise words these days over the future of the Inner London education authority?

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    With regard to that parents' ballot, does the Secretary of State say that that ballot is completely invalid and was fixed? Is that what he is telling the House?
    Mr. Baker: All I am saying is that it was impossible to determine how many parents voted in that ballot. As regards the views of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), I think that he was wrong about ILEA while he was in office, and he is wrong now.
    Mr. Bowis: My right hon. Friend will have seen the Gallup poll, which shows that the majority of parents in inner London have no worries about the transfer of education to the local boroughs. However, will he confirm that those who do have anxieties will not have their interests served by a delay in the implementation of the Education Reform Bill?
    Mr. Baker: As I have said, this is being debated by the House of Lords. I have considerable sympathy with what my hon. Friend has said. I confirm that I saw a poll yesterday which declared that 62 per cent. of London parents said that they were not at all concerned about the abolition of ILEA. When it came to the inner London parents, 49 per cent. said that they were not concerned.
    Mr. Andrew F. Bennett: To help the debate, what can the Secretary of State tell us to allay the fears of all those who enjoy adult education within ILEA and take part in access courses? Will they be able to continue? Can he assure us that there will not be major problems with cross-borough transfers?
    Mr. Baker: I have made it clear that we want to ensure that the good things being done by ILEA are retained. My hon. Friend the Under-Secretary of State in the other House will be referring to this is a speech which she will be making shortly.
    Mr. Ashby: As someone who has been a governor of ILEA schools, who has served on the Inner London education authority for four years and seen at first hand the high cost of ILEA as against the poor responses and the bad education that children receive, may I ask my right hon. Friend to ensure that ILEA is abolished? The children of London will then have the opportunity to have a decent education.
    Mr. Baker: I can assure my hon. Friend that his facts are right. ILEA accounts for some 4 per cent. of the school population of the country and 8 per cent. of the national school budget. It is a very extravagant spender. The new arrangements will ensure that money is better spent, to the benefit of the children of London.

    English Teaching
    Mr. Tim Smith: To ask the Secretary of State for Education and Science what further proposals he has to improve the teaching of English in schools, in the light of the responses received to the Kingman report.
    Mr. Harry Greenway: To ask the Secretary of State for Education and Science what further action he proposes to take in the light of the responses received to the Kingman report, on the teaching of English in schools; and if he will make a statement.
    Mrs. Rumbold: My right hon. Friend has asked the new English working group to take account of relevant Kingman report recommendations in its work on attainment targets and programmes of study for English as a whole. He will consider the other Kingman recommendations in due course in the light of public reaction and the English working group's advice.
    Mr. Smith: Does my hon. Friend agree that the traditional method of teaching English in schools, with its emphasis on grammar, on construction and on spelling, has many virtues? Will she ensure that, as far as possible, these basic elements are retained as part of the national curriculum?
    Mrs. Rumbold: I can assure my hon. Friend that we are asking the English working group to recommend attainment targets covering the grammatical structure of the English language, building on the Kingman targets.
    Mr. Greenway: Does my hon. Friend agree that children develop their imagination and skill in writing from having freedom to write without too much grammatical constraint, but will she bear in mind that the English language has its cement in its grammar and that that is English language at its greatest and its best? Will she ensure that grammar teaching is preserved?
    Mrs. Rumbold: We are most anxious that the English working group should build on the recommendations of the Kingman report and look at the structure of grammar. We certainly expect our children to be able to read, write and speak English, and to enjoy literature.
    Mr. Hardy: Does the Minister not accept that the curbing of expenditure on books for schools and public libraries over recent years has scarcely assisted attainments in both the teaching of English and reading? Does he not accept that during the previous period substantial attainments were made?
    Mrs. Rumbold: I always accept that there has been progress in teaching in our schools, because, of course, there has. However, there have been considerable advances during the past two years in the amounts of money that have been allocated for schools, especially for books. Indeed, there has been an 8 per cent. increase in the allocation for books and equipment in the current year.
    Mr. Sackville: Does my hon. Friend agree that parents expect—[Interruption.]
    Mr. Speaker: Order. Private conversations should cease while we are on questions.
    Mr. Sackville: Does my hon. Friend agree that parents expect their children to acquire at least the basic skills at school, of which the use of English must be one of the most important? Does she agree that an alarming difference has grown up between the teaching profession on the one hand, and parents and employers on the other as to what exactly constitutes education?
    Mrs. Rumbold: My hon. Friend will be reassured by the fact that for our core subjects in the national curriculum we have chosen English, mathematics and science. It is perfectly true that many employers have complained that some of the children leaving school do not have the

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    adequate literacy and numeracy that they believe necessary. That is the reason for the introduction of the national curriculum.

    Provision Quality
    Mr. Allen McKay: To ask the Secretary of State for Education and Science when he expects to publish the annual report of Her Majesty's inspectors on the quality of provision in schools.
    Mrs. Rumbold: My right hon. Friend hopes to publish the report for the 1987–88 academic year next January.
    Mr. McKay: As previous reports from Her Majesty's inspectors have spelt out the truth about the Government's neglect of our education system, will the Minister ask her right hon. Friend to ensure that the report receives maximum promotion and publicity, as do his reports and statements from the Department of Education and Science?
    Mrs. Rumbold: As I have just said, my right hon. Friend will publish the report. I remind the hon. Gentleman that the last expenditure report from Her Majesty's inspectors showed that in just over half the schools visited there was a need for improved teaching styles, better perception of pupils' needs and higher expectations of pupils. The report stated:
    "unsatisfactory standards of provision are more often related to ineffective deployment of people and resources than to shortages of the resources".
    Mr. Ian Bruce: When the report is published, will my hon. Friend comment that it is clear that the amount of money that is spent per pupil varies widely throughout local authority areas and that, unfortunately, we do not get quality for pounds spent in many of those areas, especially in ILEA? Will she highlight the fact that areas such as Dorset, which spend far less per pupil, get a better quality of education for the money spent?
    Mrs. Rumbold: I thank my hon. Friend for that question. Reports by Her Majesty's inspectors take an overall look at what happens in all our schools. While they take into account expenditure, they also take into account the quality of the education that is delivered. That is easily identifiable and will be recognised in the report.
    Mr. Cryer: Following the disgraceful attack by the Secretary of State on the right hon. Member for Old Bexley and Sidcup (Mr. Heath), I draw the Minister's attention to the fact that the inspectors will be concerned about the standard of buildings in constituencies such as mine of Bradford, South, where the Government are neglecting the construction of the schools. Many schools in my constituency exist almost entirely in temporary classrooms. When will the Government make adequate provision in cities such as Bradford, with expanding school rolls, for which they are not now providing sufficient money?
    Mrs. Rumbold: In the local government elections in the hon. Gentleman's constituency the Labour party lost control, so clearly there cannot necessarily have been such wonderful expenditure on buildings there. The public expenditure plans for this year contain considerable increases, as I have said earlier, for additional building work.

    Education Authorities
    Mr. Barry Field: To ask the Secretary of State for Education and Science how many education authorities have a primary, and middle and high school system.
    Mr. Dunn: In January 1987 there were 44 local education authorities in England operating a three-tier primary, middle and secondary school system.
    Mr. Field: Can my hon. Friend confirm that the three-tier system is every bit as good as the two-tier system?
    Mr. Dunn: I have no evidence to the contrary.

  PRIME MINISTER

    Engagements
    Mr. Jacques Arnold: To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty The Queen.
    Mr. Arnold: Has my right hon. Friend noted the widespread public support for our education reforms? Has she further noted the Gallup poll results in yesterday's Daily Telegraph, which noted that two out of three Londoners would not be worried by the loss of ILEA and that three out of four of them support the national curriculum, testing and parent power to opt out of local authority control?
    The Prime Minister: Yes. My hon. Friend makes his point very effectively. I believe that most parents want the chance to opt out, to get their children out of the grip of some of the fanatical Left-wing authorities. I believe that the reforms to which my hon. Friend refers will lead to much better education. That is why the Labour party is fighting them, but parents will be very pleased with them.
    Mr. Kinnock: May I warmly welcome today's cut in interest rates and the Chancellor's victory over the Prime Minister? Does this cut mean that the Prime Minister has changed her position and now wholeheartedly agrees with the Chancellor that further rises in the pound would be unsustainable and would damage British business and industry?
    The Prime Minister: I am glad that the right hon. Gentleman welcomes the cut in interest rates. He will note that we have taken interest rates down three times in the last two months. I am sure that he would like a detailed reply.
    My right hon. Friend and I entirely agree—[HON. MEMBERS: "Reading."]
    Mr. Kinnock: We want to listen.
    The Prime Minister: I thank the right hon. Gentleman very much. I hope that he will listen to the next reply too. My right hon. Friend and I entirely agree that we must maintain a firm monetary policy and a downward pull on

    799
    inflation. I agree completely with all my right hon. Friend's Budget speech, every bit of it, which is more than the right hon. Gentleman the Leader of the Opposition does.
    The right hon. Gentleman asked about exchange rate policy. It is a part of overall economic policy. As I indicated a moment ago, he will note that we have taken interest rates down three times in the last two months. That was clearly intended to affect the exchange rate. We use the available levers, both interest rates and intervention, as seems right in the circumstances and—[Interruption.]—I hope that right hon. and hon. Gentlemen will listen very carefully to the last sentence—it would be a great mistake for any speculator to think at any time that sterling was a one-way bet.
    Mr. Kinnock: I am, and I am sure everybody else is, interested to hear the Prime Minister draw attention to the three cuts in interest rates in the past two months. Two months ago I asked her whether she would intervene or use interest rates to bring down the pound and she said that intervention "would lead to inflation" and interest rate action could not deal with the matter because it would not be in the "interests of inflation" to do so. Is she now saying—[Interruption.]
    Mr. Speaker: Order. These are important matters.
    Mr. Kinnock rose—[Interruption.]
    Mr. Speaker: Order. The whole House wants to hear the question.
    Mr. Kinnock: This is of general interest. Is the Prime Minister now saying that she was wrong about the inflationary implications of interest rate reductions?
    The Prime Minister: I do not think that the right hon. Gentleman is entirely the master of his subject. [Interruption.] I gave the right hon. Gentleman the same reply when I was asked the same question on either the last or the previous occasion when the interest rate was taken down ½ per cent. The reply was this: As the value of sterling has risen, that is the exchange rate has risen, that has tightened money supply, which enables us to reduce the interest rate without having any adverse effect on inflation.
    Mr. Kinnock: Between the Prime Minister and the Chancellor of the Exchequer we at least know who the master is at present. Did the Prime Minister's last answer imply that if the pound rises above DM 3·18, which is where it is now, the Government will use interest rates again?
    The Prime Minister: Anyone who is asking to know precisely what will happen is the friend of the speculator and aiding and abetting him.
    Sir William Clark: Does my right hon. Friend agree that today's reduction in the base rate, and the two previous ones, give the lie to media and Opposition Members' accusations and hysteria to the effect that there is a rift between herself and the Chancellor of the Exchequer in the management of the economy? Does she agree that managing a successful economy, which is the envy of the whole world, means the control not only of inflation and public expenditure and a sound fiscal policy, but of the exchange rate? Does not today's reduction prove
    800
    beyond peradventure that there is complete and utter unanimity in the management of our economy under the capable management of the Chancellor?
    The Prime Minister: Yes.
    Mr. Steel: Will the Prime Minister clarify the Government's policy towards the exchange rate mechanism of the European monetary system? Is it still that we will join when the conditions are right? As that has been the position for the last eight years and the pound has varied against the deutschmark from DM 4·79 to DM 2·86, how have the conditions never been right?
    The Prime Minister: It has been a very consistent position. We shall join when the conditions are right. It remains a consistent position.
    Sir Hugh Rossi: To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Sir Hugh Rossi: Does my right hon. Friend agree that the decision to withdraw from Afghanistan may well represent the high-tide mark in Russian expansionism and that it augurs well for glasnost and future peace between East and West? Does she further agree that the world is indebted to the Afghan people for their courage, tenacity and suffering, which has brought this about?
    The Prime Minister: Yes, I agree with my hon. Friend. We welcome the Russian withdrawal from Afghanistan, which has now begun to take place. We also believe that it was due to the tenacious fighting by the Afghan people against the occupation, with the support of many people throughout the world. We believe that it will improve East-West relations and hope that it will be followed by other withdrawals, for example, by Cuban troops from Angola and by Vietnamese troops from Cambodia.
    Mr. Robert Sheldon: Is it not clear that the difference between the Prime Minister and the Chancellor of the Exchequer is simply that the Chancellor of the Exchequer learnt about the problems of the DM 2·40 pound and the way in which it damaged so much of our manufacturing and other industries, and the Prime Minister did not? Will she learn that it is unwise to quarrel with the Chancellor of the Exchequer, but it is extremely foolish to do so in public?
    The Prime Minister: I wish that right hon. and hon. Gentlemen on the Opposition Benches could go further and say that they totally endorse the Chancellor's policy, they totally endorse his Budget and they agree with the reductions in tax, instead of trying to take away in increased taxation from the nurses and the doctors some of their increases in wages. That is what the Labour party wants.
    Mr. Patrick McNair-Wilson: Does my right hon. Friend recall that 10 years ago, in the last year of the Labour Government, we had a combination of a weak pound, rampant inflation and goods pouring in from countries with strong currencies, such as Germany and Japan? Does she agree that, in industry's interests, as one of the component factors that it has to take into account is raw material prices, a buoyant currency is an essential concomitant of a successful economy?
    The Prime Minister: I hear what my hon. Friend says, and I well remember the way in which the economy was handled by right hon. and hon. Gentlemen on the Labour Benches. The reserves of this country dropped to only $4 billion and no one in the world would lend us a dollar or a penny piece. The reserves now are $48 billion because of the way in which the economy is run by the Chancellor.
    Mr. Bidwell: To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Bidwell: In view of the right hon. Lady's recently published list of achievements, would it be her intention to add to it the widening gap between the rich and the poor, which is occurring throughout the nation?
    The Prime Minister: Everyone in the nation has benefited from the increased prosperity—everyone. The amount spent on social security is well up. The fact is that Labour Members would rather have the poor worse off, provided that those who create the wealth did not earn so much. It is because we have encouraged those who are enterprising that we now have increased wealth to give in greater amounts to the Health Service and social security.
    Mr. Beaumont-Dark: Will my right hon. Friend accept that her total endorsement of the Chancellor of the Exchequer's policy is a great comfort to her friends, as it is an annoyance to her enemies?
    The Prime Minister: I endorse once again my right hon. Friend the Chancellor's most excellent policy. I hope that my hon. Friend who has asked the question will never cease to extol the virtues of a successful economy, which has been built up over the past nine years.
    Mr. Healey: Was there not a contradiction in the remarks that the right hon. Lady made earlier in Question Time? As I understood it, she said she had agreed that the Chancellor should cut interest rates to bring down the value of the pound, and that that was the appropriate level for bucking the market at this time. But a moment later she said she had agreed earlier to cut interest rates because the high pound made it safe to do so without damaging the control of the money supply.
    The cut in interest rates this morning has already led to a big fall in the pound. Does that mean that the right hon. Lady will now insist on an increase in interest rates in order to tighten the money supply, or is she not entirely the mistress of her subject or of the Chancellor?
    The Prime Minister: If we were going to take lessons we would take them from someone who was the master of his subject and not from the right hon. Gentleman, who reduced this country's reserves to their lowest level ever. No one would lend him a penny piece. I do not wonder why.
    Mr. Cartwright: To ask the Prime Minister if she will list her official engagements for Tuesday 17 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Cartwright: As the right hon. Lady reminded her supporters yesterday of her manifesto's commitments, will she assure the House that she will honour the manifesto commitment that child benefit would continue to be paid as now, and that there is no truth in press suggestions that child benefit is to be cut, taxed, frozen or abolished?
    The Prime Minister: I agree with the hon. Gentleman that the manifesto clearly stated:
    "Child benefit will continue to be paid as now, and direct to the mother."
    That commitment will be honoured.

Embankment Station (Fire)
3.30 pm
Mr. Tony Lloyd: On a point of order, Mr. Speaker. You will be aware that there was a fire this morning at Embankment Underground station. Given the sensitivity of the matter and the proximity to the King's Cross inquiry, would it be in order for the Secretary of State for Transport to make a statement in the House today on this important matter?
Mr. Speaker: I have had no request for that.

Embankment Station (Fire)

  Associated British Ports (No. 2) Bill
  3.31 pm
  Mr. Kevin Barron: On a point of order, Mr. Speaker. You will recall that last week the House attempted to give a Second Reading to a private Member's Bill—the Associated British Ports (No. 2) Bill. During that debate I asked the Minister for Public Transport whether the rumour that there had been a meeting between a member of his ministerial office and the promoter of the Bill was true. He said, as reported at column 397 of the Official Report, that, to his knowledge, there had been no such meeting.
  It has come to light from a written parliamentary answer that I received last night that the Secretary of State for Transport had met the promoter of the Bill, the chairman of Associated British Ports, in February this year, at a time when many hon. Members had put a blocking motion on the Bill and were waiting to debate it. As the Minister for Public Transport promoted the Bill and asked us to support it last Wednesday, would it be in order for you to clarify the position about the meeting of the chairman of Associated British Ports and the Secretary of State? Is it right that such a meeting should take place when the House has yet to consider a private Bill? Is that private business, or is it another way of getting Government business through the back door?
  Mr. Speaker: I have no knowledge of meetings outside the House. I have seen the answer to that question and I think the whole House will agree that it is highly commendable for any Minister or Back Bencher who inadvertently says something to the House that turns out subsequently to be untrue to put it right, and the Minister for Public Transport has done that.
  Mr. Dennis Skinner: Further to the point of order raised by my hon. Friend the Member for Rother Valley (Mr. Barron), Mr. Speaker, in which he pointed out to the House that the Minister had stated in his reply that he had met someone connected with the promoters of the Associated British Ports (No. 2) Bill, would it be in order, as it used to be, for the Minister concerned to make a personal statement, instead of dealing with the matter by a written answer?
  Mr. Speaker: I think the whole House will agree that sometimes inadvertently things are stated in the House that turn out to be incorrect. I think that the Minister of State has taken the honourable and correct course in answering a question that was put down by the hon. Member for Rother Valley (Mr. Barron). I do not think that any point of order arises for me. I am not responsible for meetings that take place outside the House.

Oral Questions
3.33 pm
Mr. Harry Ewing: On a point of order, Mr. Speaker. In no sense do I question your selection of the hon. Members whom you call to ask questions, but would it be possible to explain the criteria on which you base that selection? I have tried kicking up a row to get called and I have tried behaving myself to get called. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) stormed out on Thursday last week in a temper and returned today only to be called immediately. Perhaps I should storm out now and come back to be called.
Mr. Speaker: Let me clarify the position. Bad behaviour certainly does not earn any good marks from the Chair. Today, we only—just—reached Question No. 4, and I seek to call hon. Members to put a question to the Prime Minister if they have not asked a question before.

Oral Questions
  BILL PRESENTED
    ELECTRICITY (FINANCIAL PROVISIONS) (SCOTLAND)
    Mr. Secretary Rifkind, supported by Mr. Ian Lang and Mr. Norman Lamont, presented (under Standing Order No. 48 (Procedure upon Bills whose main object is to create a charge upon the public reserve)) a Bill to raise the financial limit imposed by, and by virtue of, section 29(1) of the Electricity (Scotland) Act 1979: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 169.]

Working Life (Reduction in Hours)
3.35 pm
Mr. Bruce Grocott: I beg to move,
That leave be given to bring in a Bill to provide for a shorter working week, a shorter working year, earlier retirement and for connected purposes.
I introduce the Bill against an economic climate that shows a stark contrast. On the one hand, even on the Government's figures, over 2·5 million people are out of work, although we all know that the real figure is much higher. On the other hand, many people have to work excessively long hours, with shorter holiday entitlements than most of their European contemporaries and, in the case of men, having to work to age 65, whether or not they want to. That is why the main provisions of my Bill, which are in line with a long-standing TUC campaign and with European trade union objectives, are, first, to provide for a 35-hour week, secondly, to provide for six weeks' annual holiday, and, thirdly, to give men the choice to retire at age 60. All this would give enormous benefit both to those at work, by improving substantially their quality of life, and to those out of work, by providing the opportunity for the creation of new jobs to fill the vacancies that would result from my proposals.
Dealing first with the 35-hour basic week, at present the average for people in manual occupations is 39 hours a week before overtime, and the average for people in non-manual occupations is 37 hours a week. I can see no reason for a difference between manual and non-manual occupations. A year ago last January legislation was introduced in Norway to reduce the working week of people in manual occupations by two and a half hours to bring their hours into line with those of non-manual workers.
If we add overtime to the basic working week, the figures are worse. It might surprise the House to know that the average working week has increased since 1983 because of the greater tendency of employers, instead of taking on additional workers, to require more and more overtime. There are also great pressures for overtime from people on low wages. I look for a substantial reduction in overtime. I tell my friends in the trade union movement that where they find large amounts of overtime being worked they should start negotiating a reduction in working hours and the employment of more people.
I have chosen a 35-hour week because it opens the exciting prospect of trade unionists being able to negotiate a four-day week for their members. This is happening in limited cases at present. Many people, given the choice of a five-day week of seven hours a day or a four-day week of nine hours or thereabouts a day, would opt for a four-day week. It would make great sense in terms of travel expenses and the wear and tear of commuting. It would lead to a substantial improvement in quality of life for many of our fellow citizens.
The second provision in the Bill is for six weeks' annual holiday. Most German workers get six weeks' annual leave, but in this country the norm is 22 days for people in manual occupations, which is just over four weeks. In recent years there have been moves in the annual pay round to improve holiday entitlements, but the very
806
minimum that we should require is six weeks' holiday entitlement. This is strongly in line with what happens in many European countries and with the TUC campaign.
No doubt we will be told by employers that they cannot afford to grant such leave but, of course, they have said that in response to every improvement in people's working conditions, ever since we stopped sending children up chimneys. They said exactly the same thing when it was suggested that there should be equal pay for men and women. It is a simple statistical fact that an additional week's annual holiday would add no more than 2 per cent. to the annual wages bill of a company, and it is well within the capacity of most companies to meet that. Six weeks' holiday is a perfectly reasonable request.
Finally, I should like to deal with the matter of earlier retirement. My proposal is that men who want to do so should be allowed to retire at 60. We know that 676,000 men between the ages of 60 and 65 are at work. We also know, from repeated Treasury estimates, that it would cost £3 billion to achieve this reduction in the retirement age. I do not know how that calculation can be substantiated, when we realise that many of the vacancies created by those who would be offered a pension would be filled by people in the dole queue, with dependent relatives. Many people have written to me to say that they are 60 years of age and have already worked for 45 years in a heavy manual occupation. They say, "I think that that is long enough for anyone." I think so too. We should adopt the common sense approach and give early retirement to men who want it, because the vacancies thus created could be filled by people in the dole queue.
My Bill contains the enigmatic phrase, "and for connected purposes." I see this merely as a start. There are many other things in the best practice of good employers that we should seek to introduce. Increasingly, sabbatical years are being offered to workers in mid life, but that is much more in evidence abroad than it is here. I commend that practice. There is also increasing evidence that employers are having the sense to prepare people for retirement by putting them on a four-day week during the six months prior to retirement. That is another example of best practice which I strongly commend.
There is much humbug about the dignity of work and about the desirability of more people working longer hours. I have long been of the opinion that if work were such a splendid thing the rich would have kept more of it for themselves. The Bill offers the prospect of substantial improvement in the quality of life of many of our fellow citizens and the substantial possibility of creating jobs for those in the dole queues who are currently searching for work. It is an enlightened Bill and I hope that it is far-sighted. I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bruce Grocott, Mr. Harry Cohen, Mr. Ron Davies, Mr. Don Dixon, Mr. John Garrett, Mr. Sean Hughes, Mr. James Lamond, Miss Joan Lestor, Mr. George Robertson, Mr. Jeff Rooker, Mr. Ernie Ross and Mr. Dennis Skinner.

Working Life (Reduction in Hours)
  WORKING LIFE (REDUCTION IN HOURS) BILL
  Mr. Bruce Grocott accordingly presented a Bill to provide for a shorter working week, a shorter working year, earlier retirement and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 8 July and to be printed. [Bill 167].
Orders of the Day
  British Steel Bill
  As amended (in the Standing Committee), considered.
  British Steel Bill
    New clause 1

      SINGLE ENTITY
      'Before the appointed day the Secretary of State shall lay before Parliament a report giving quantitative estimates of the advantages and disadvantages to the Exchequer, to the Corporation, to the customers and the employees of the whole and of the several parts of the Corporation, of the disposal of the successor company and its subsidiaries as a single entity or as more than one entity.'.—[Dr. Bray.]
      Brought up, and read the First time.
      3.45 pm
      Dr. Jeremy Bray: I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to take the following amendments: No. 31, in clause 1, page 1, line 10, after 'section', insert '1(5A) and section'.
      No. 32, in clause 1, page 2, line 11, at end insert—
      '(5A) On the appointed day the stake held by the Corporation in Allied Steel and Wire shall not be vested in the successor company but shall be vested in an employees' trust fund to be held for the benefit of the employees of Allied Steel and Wire.'.
      Dr. Bray: The Bill comes back from Committee very much as it went in, with the Committee able to inform the House of little more about the plans of either the Government or of the British Steel Corporation for privatising the industry. However, if the industry is to be privatised, its future shape, size, efficiency and behaviour will be very much influenced by the form in which it is privatised.
      The Government have gone to great lengths in other privatisations, notably of the electricity supply industry, which is the most obvious of natural monopolies, to break up an industry so that it embodies in its future structure a degree of competition. However, when the steel industry was last in private hands and consisted of 14 separate companies, it needed an act of nationalisation to create a rational structure of a single entity.
      The behaviour of a private enterprise is, of course, guided principally by the purpose of maximising its worth to shareholders. The company is able to exploit every bit of market power that it can, within the law of the land. Indeed, it is expected to do so. It is by the Government ensuring that the rules of competition are made and observed that the profit-seeking behaviour of the company in the market place becomes such that the health of the whole community is maximised. The Government argue that with the wealth go employment and people's incomes, and I do not disagree with them on that. Those are the Government's principles and their rules.
      The Government are now proposing to privatise the British Steel Corporation as a monopoly within the meaning of the Act. The Fair Trading Act 1973, in section 6(1) states:
      "For the purposes of this Act a monopoly situation shall be taken to exist in relation to the supply of goods of any description in the following cases, that is to say, if …
      808
      (b) at least one-quarter of all the goods of that description which are supplied in the United Kingdom are supplied by members of one and the same group of interconnected bodies corporate".
      Furthermore, the chairman of the British Steel Corporation is on record as favouring "peak lopping", that is, restricting capacity so that, at the peaks in the cycle, customers are forced to go abroad and the amplitude of the cycle is made yet greater for other suppliers, with the expectation that, when demand falls, the customers will come back. It is nice if one can do it, but it is a recipe for losing market share and for ensuring the continuing decline of capacity and output, because other suppliers will become established in the market and the customers who have deliberately been turned away will not come back. The British Steel Corporation should have learnt that lesson in 1980–81, but it does not appear to have done so.
      Likewise, the chairman of the British Steel Corporation advocates spheres of influence within Europe to reduce the amount of steel crossing borders. Those monopolistic tendencies are inherent in the nature of the industry. There is already a case before the European Commission about the alleged restrictive practices of the steel industry in special steels. While steel is in the public sector, the industry is constrained in many ways. For example, there has been formidable competition between works simply to survive because the Government have prevented BSC from closing any major works so long as they have remained competitive. That was the clear policy of the Conservative Government in 1982 and 1985.
      The chairman and customers may speak to Ministers and officials about competition from Europe, which is very important on the demand side. However, it is a fact of life in the works that it is not just the demand side that matters. That may affect the price, but the level of resources required to produce a tonne of steel are conditioned by the absolutely formidable competition between works in recent years simply to survive and to maintain that viability and profitability which, within the understanding and terms of reference given by the Government, it has been necessary to maintain to continue the Government's commitment. That balance between ensuring competition within the industry and maintaining its basic capacity intact and developing it has been highly successful and has produced what is now the most profitable industry in Europe. However, it is threatened by the complete change of regime that the Government are deliberately bringing about.
      An example of competition between works working with formidable and, to many of my colleagues questionable, efficiency was shown during the miners' strike. With the support of the unions locally, inside and outside the steel industry, and with the collaboration of local leaders of the National Union of Mineworkers, it was understood that it was essential to keep ore and coal supplies going to the steel works. If supplies had been interrupted the steel works would have closed, perhaps for ever, because of the loss of the blast furnaces. Neither Ministers nor the top management of the British Steel Corporation had any part in the negotiations. Often they simply did not know what was going on. Indeed, the top management of BSC at Ravenscraig did its best to sabotage the agreement between the unions that kept the works going.

      809
      Another example of the way in which the monopolistic tendencies operate can be found in BSC's attitude towards technological innovation. The BSC has made good use of short-term process improvements of a kind which during my days at ICI we used to call "process investigation work". However, the corporation is cool to the point of hostility to major technological advance. It is a rough, tough industry and the Government are handing over to it a degree of monopoly power which in the past steel tycoons would have found quite unimaginable. The whole commodity steel capacity of this country is to be handed over to a single private company.
      On 3 May in Committee I moved a new clause allowing the Secretary of State for Trade and Industry to privatise a part of BSC separately from the rest. The proposal came from people with a great deal of experience of the steel industry. A former works director at Ravenscraig put the suggestion to me in its most logically developed form, Motherwell district council had the proposal examined by the largest consulting firm in Scotland, and the accountants who worked on it were former BSC accountants.
      In reply to the examination made in the report initiated by Motherwell district council, the Government have offered only debating points. They have offered no detailed examination of or justification for alternative structures for the industry, including the single entity. The Government have not even been able to produce evidence that they ever seriously considered any alternative structure for the industry. Instead, they have been hiding in the most extraordinary way behind the skirts of Welsh trade unionists. That is not an entirely honourable course for Ministers to take. There is an understandable sentiment in Shotton and in south Wales about the future structure of the industry, but we are concerned with the survival of jobs in Scotland, not about the sentiment and trading relationships between particular works. Any Government worth their salt and taking a decent, economic and, in the last resort, human view of the position would not be swayed by inevitably short-term sentiments in an untried situation.
      The Ravenscraig, Shotton and Dalzell proposal, by which Ravenscraig would be associated with the plants that it principally supplies as a separate trading entity, is not a solution that the Opposition would prefer. We would prefer the industry to remain in public hands. We would prefer the industry to continue operating and developing as efficiently as it has done up to the present. However, if the Government are to privatise the industry, to do so in the manner that they propose would subject neither the public interest nor the interest of Ravenscraig itself to a fair test of the market, which is a concept that Ministers espouse.
      The decision to privatise it is also an extraordinary demonstration of Ministers' political and economic short-sightedness. The birds will come home to roost on this issue well within the lifetime of this Parliament. Indeed, it is likely that in the course of the next year the British Steel Corporation will announce the intended closure of the hot mill at Ravenscraig. At present, BSC needs all its liquid steel capacity. In my last discussion with the chairman of the British Steel Corporation, in the company of my hon. Friend, I heard him say so himself. However, he made it clear that his comments related to liquid steel capacity. It was clear also that he understood that we understood that the need for capacity did not
      810
      relate to the mill. Indeed, the announcement by the Chancellor of the Duchy of Lancaster refers specifically to the fact that there is no expectation or likelihood of the hot mill at Ravenscraig remaining open beyond 1989.
      The closure of the hot mill at Ravenscraig would seal the long-term future of the works, as it would reduce it to the position of being just a slab supplier. Also, any steel works has a limited life without the replacement and modernisation of coke ovens and the relining of blast furnaces, which wear out rapidly with time. Also needed is the modernisation of the mill control systems, finishing processes, and so on, which are necessary to maintain the competitiveness of the product compared with that available from other mills which have been modernised.
      The most important current development in the area in which Ravenscraig is engaged is probably thin slab casting, but BSC is not proposing to install that process anywhere in the corporation. The new plant for continuous thin slab casting being installed in the United States has no parallel in this country. The reason is that BSC has cut back its own research and development by 40 per cent. in real terms since 1979. Although it is investigating new processes in a small way with heavy percentage grants from the European Steel Community, simply to keep employed the experts it has to maintain in different sections of steel processing, it has no serious expectation that its modest investment in research into new processes will lead to fresh investment.
      The much-quoted remark made by Sir Robert Scholey,
      "I don't need an"
      Effing—
      "physicist to tell me how to run a steel mill"—
      Mr. Austin Mitchell: Call for Sir William Rees-Mogg.
      Dr. Bray: I am sure that I was not as explicit as my hon. Friend would be. However, that remark, much quoted within the British Steel Corporation, set the attitude for too much of BSC's management. It was echoed to me by Shotton shop stewards when I was discussing the possible developments there. Indeed, I hope that Sir Robert does not need a physicist to run any of his existing steel mills, but one certainly needs a physicist to design a sensible plant to replace one's present mills. That kind of person is not being recruited today. Of the 40 new graduates that BSC recruited into its research department last year, only two had first-class honours degrees of any kind—only two out of 40, for the whole of the commodity steel industry in this country. In those circumstances, there is no way in which an industry cultivating the kind of technological image which the British steel industry needs can remain technologically competitive.
      Looking at the kind of competition that the Ravenscraig, Shotton and Dalzell group constitutes, there would be a strong incentive to develop the new materials and processes which would keep it technologically competitive. A competitive situation would be created which would not exist in the steel industry in the form proposed by the Government.
      The Arthur Young report shows that, for a wide range of demand variations in the future, it would pay BSC progressively to close Ravenscraig; not to close it next year or the year after, but progressively to close it as new plant is rounded off elsewhere in the corporation and old plant fails to be modernised at Ravenscraig.

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      The Arthur Young report also shows that, even with the continued competitive pressures created by the formation of the Ravenscraig-Shotton-Dalzell group, its setting up would reduce BSC's profits, income and output, at least for a few years. That is why BSC is flatly opposed to the hiving off of the Ravenscraig-Shotton-Dalzell group.
      The arguments are spelt out in detail in the Arthur Young report. They show that it is necessary to maintain the present pressures for competitive improvement for the extra capacity that would be achieved by keeping Ravenscraig operating, to build up the total profits, income and output from present BSC plants to as high a level, with Ravenscraig continuing to operate, as BSC would be able to achieve by the lazy man's way of simply closing Ravenscraig.
      The short-term results of closing Ravenscraig would be a short-term improvement in BSC's profits, but with an immediate reduction of national income and national output and, within a short time, a reduction of total national profits from the present assets. It is a classic demonstration of the abuse of monopoly power.
      If Ministers are not prepared to look more seriously at the Ravenscraig-Shotton-Dalzell proposals, it must be because they have been advised that BSC is only marginally viable and believe that it would be gravely threatened by the loss of profits from the Ravenscraig-Shotton-Dalzell group. The Arthur Young report looked at that, and my best advice is that that is not the case. The rest of BSC, just as the Ravenscraig-Shotton-Dalzell group, would be fully commercially viable. In all likelihood both parts of the corporation would develop further links.
      BSC has already made it clear that it would look to European links, and no doubt Ravenscraig-Shotton-Dalzell would do likewise. It must be clear to Ministers that it simply is not possible to explore such a link without at least the Government's assent. It must also be clear to Ministers that their opposition effectively blocks any serious consideration of any international linkage for the parts of BSC that they are separating.
      In response to the new clause that I moved in Committee, Ministers said that the Bill already allows them to sell the Ravenscraig-Shotton-Dalzell group separately, and I accept that that is so. There is nothing in the Bill, and there is nothing in the powers that the Secretary of State will have over the successor company, to prevent the Government's implementing the course proposed in the Arthur Young report—the setting up of a separate Ravenscraig-Shotton-Dalzell group. In new clause 1 we are asking Ministers properly to quantify the alternative option for the structure of the industry. They have not done that. I doubt whether they have done it for themselves. They have certainly not done it for the market place or for the House. It simply is not true that the new clause prejudices the commercial interests of BSC. It does in the narrow sense that BSC's profits would be less if Ravenscriag, Shotton and Dalzell were separately privatised. The Chancellor does not need his advisers to tell him that. He can work that out for himself. But that is not the commercial interest about which the Chancellor of the Duchy of Lancaster should be concerned. The commercial interest about which he should be concerned is
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      the overall profits, output and income generated for Britain. It is those factors that he has in no way put before the House.
      The viability of alternative options is not just a matter for study. Without financial backers prepared to go through with the deal, all the studies in the world would mean nothing. No financial backers can emerge if they are faced with Ministers' political hostility and statements in the House that the Government's intention is to privatise BSC as a single entity, with Ministers concealing the evidence on which any serious alternative proposal, which goes beyond the scope of the Arthur Young report, could be put forward.
      I and my hon. Friends are not in the political point-scoring game. We recognise that the proposal that we put forward here is not an easy one for the Opposition. It is a marvellous opportunity to give Scotland a chance to help itself, to demonstrate its enterprise culture, but instead of that the Government are just giving Scotland a slap in the face.
      If Ministers do not follow their own principles and give Ravenscraig a chance, I warn them, and the Prime Minister, in the words of Adam Smith—whom the right hon. Lady quoted in Perth last weekend—in his book "The Theory of Moral Sentiments", which preceded and laid the foundations of "The Wealth of Nations", where he said:
      "We do not originally approve or condemn particular actions, because they appear to be agreeable or inconsistent with a general rule. The general rule on the contrary is formed by finding from experience, that all actions of a certain kind are approved or disapproved of … it is chiefly from this regard to the sentiments of mankind that we pursue riches and avoid poverty. For to what purpose is all the toil and bustle of this world? What is the end of avarice and ambition, of the pursuit of wealth, of power and pre-eminence? In the race for wealth, and honours and preferments … [a man] may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should jostle or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of."
      It is that violation that the Government are committing today in relation to Scotland's steel industry. It is not BSC or Bob Scholey who will face the reaction when Ravenscraig is closed. They will merely be playing to the rules set by the Government. It is Ministers and the Tory party who will be seen to have cheated by their own lights and to have closed down Scotland's largest and fully competitive industrial unit.
      My Scottish colleagues and I are simply concerned with some 10,000 jobs in our constituencies. We shall fight all the way to preserve them. But we are also concerned with the survival of a substantial piece of viable industrial capital which, with a deteriorating balance of payments, Britain will continue to need.
      We ask the Minister to think again, or at least to keep an open mind.
      Mr. Bryan Gould: Opposition Members welcome the terms in which my hon. Friend the Member for Motherwell, South (Dr. Bray) has moved his new clause. All those who heard him speak during the Second Reading debate and, more particularly, in Committee will understand the depth of his expertise on and commitment to the future of the Scottish steel industry. We share his concern about the future of that industry, and in particular that of the Ravenscraig plant. We take on board the conclusions of the study that was commissioned by Motherwell district council, to which my hon. Friend

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      referred. That study was carried out by Arthur Young, accountants. It concluded that 11,000 jobs would be at stake if Ravenscraig were to close, and that, of course, the immense contribution that Ravenscraig makes to the Scottish economy would also be lost. We are entitled to be concerned because of the political history of the issue.
      We know that the Government have made earlier unavailing efforts to close Ravenscraig. We know that, on those occasions, their political nerve failed them, that leading members of the Cabinet threatened resignation if that step were taken, and that, faced with that pressure, the Government backed down. We conclude also that the Government remain, if not committed to, at least persuaded of, that course and that there is still in the Government's mind the possibility—indeed, the likelihood—that, in the interests of a privatised British steel industry, Ravenscraig might be closed.
      Of course, in the present situation, our concern is greatly intensified. Throughout the debates on the privatisation of this great industry, it has been perfectly clear that one of the Government's overriding considerations has been to get the best possible price for the industry. It has been quite clear that the industry should be made to look as attractive as possible to potential private investors. For that reason, great emphasis has been placed on British Steel's admittedly short track record of profitability.
      Most commentators agree that the price that will be obtained will largely be a function of the level of profitability, either current or expected. Most people believe that profits will have to be about 20 per cent. of the capital price paid. Any factor that either pushes up or pushes down the likely level of profitability becomes of intense interest to the Government, as it is quite clear that it will strongly influence market sentiment in terms of what the market is prepared to offer to British Steel.
      The interesting aspect of the Arthur Young report is its conclusion that a privatised British Steel that decides to close Ravenscraig—although doing great damage to the overall viability of the British steel industry and to the national economic interest—and getting rid of a substantial body of costs could nevertheless increase profits by up to £100 million a year. Interestingly, to my knowledge, whenever that point is raised—it was frequently raised in Committee—no Conservative Member contested it.
      If the closure of Ravenscraig will produce an improvement of £100 million—at least in the short and accounting term in which the markets are likely to judge these matters—it becomes a matter of great interest to the Government. It might lead them to the conclusion that it will mean a £500 million increase in the price for which they might sell British Steel.
      Those are the reasons that we fear that the Government have it in mind to sell British Steel, not only in its present monopoly form but with the right to close Ravenscraig. In other words, they cannot afford to sell British Steel if Ravenscraig and perhaps other parts of the corporation have already been divested and already exist and are able to trade independently. Quite clearly, that would substantially reduce the market value of British Steel. They are selling the right to close Ravenscraig.
      That suits the Government from two viewpoints. First, as I have suggested, it might lead them to hope for a much better price on strictly commercial grounds. Secondly, it enables them also to argue that the political objective of
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      which they have long been advocates—that is, the political objective of closing Ravenscraig, without the political odium that would normally go with that—could be achieved by shuffling off the responsibility and placing it in the hands of private owners.
      The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): It seems that the hon. Gentleman is walking around the periphery of the amendment and touching on various aspects of the Arthur Young report without coming to the point. I am interested to see where he is going. The point of the amendment is to press the case for British Steel being privatised as a single entity or remaining in state hands as a single entity. The hon. Member for Dagenham (Mr. Gould) disagrees with me on the main point and would like to see the company remain state owned. Will he say whether the Opposition say that BSC should remain a single entity? Does he support the arguments of his hon. Friend the Member for Motherwell, South (Dr. Bray)? [Interruption.] Of course I say "single entity". Do Opposition Members support the hon. Member for Motherwell, South, who thinks that it should not be a monopoly, as he put it, but should be fragmented?
      4.15 pm
      Mr. Gould: I am flattered that the Chancellor could not contain his impatience and was unwilling to wait for my speech to unfold. I am somewhat disturbed—it may have been a slip of the tongue or an oversight—that he managed comprehensively to express the thrust, sense and meaning of my hon. Friend's new clause in exactly the wrong direction. My hon. Friend's new clause is designed to open the possibility of the corporation being sold other than as a single entity.
      The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): That is what he said.
      Mr. Gould: That is not what the Chancellor of the Duchy said. He may have intended to say that.
      Of course we are extremely concerned about the Government's intentions, but having made the point in support of the real concern expressed by my hon. Friend the Member for Motherwell, South and other hon. Friends, particularly those representing Scottish interests, I invite the Chancellor's attention to the terms of my hon. Friend's new clause. It does riot press the Government to do anything but lay before Parliament, before the relevant date, a report setting out the arguments for one course as opposed to another. That proposal is extremely moderate and restrained. Therefore, it is extremely difficult to see why, for any reason, the Government could oppose it. We shall listen with great interest. After all, the Government have the power of disposal in these matters. I hope that they will enlighten us about their attitude to the new clause. It is their view that matters.
      I am sorry to say that I have just heard a sotto voce comment from Conservative Benches to the effect that the Government are opposed to it. That increases my puzzlement. On what grounds could they be opposed to it? It is a permissive measure. It commits the Government to nothing except a procedural step. It is a time-limited provision. In other words, once the relevant date has passed, the provision loses its force and cannot be revived by a successor Government.

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      It is hard to see why the Government should be so nervous about such a provision. It is almost as though they are startled, frightened and shying away from ghosts and shadows. I fully appreciate that the history of the Committee proceedings shows how frightened they are of ghosts.
      Mr. Atkins: Shadows.
      Mr. Gould: Exactly—shadow spokesmen, among others. It is extraordinary that the Government are not prepared simply to fulfil the limited obligation that would be imposed upon them by the new clause.
      The Government are not prepared to accept the new clause, not because they are unwilling to go through this procedural step—they may be prepared to do so, although I am confident that so far they have not informed themselves on these matters—but because they are determined, according to their lights, not to give the wrong signals to the market. They are afraid that, if they accept the new clause and raise even the remotest glimmer of a possibility that the corporation will be divided into separate entities, it will affect its marketability. The Government are concerned, as they approach the market, to preserve the corporation's monopoly position. They do not want the slightest cloud of suspicion to sully that pristine position.
      That is an extremely objectionable attitude for the Government to take. As the Chancellor of the Duchy of Lancaster and the Under-Secretary of State will confirm, we have written several times to ask for the evidence to which they have referred which has persuaded them that the corporation should be sold off as a single entity. We have been told that these are matters of commercial confidentiality. My hon. Friend the Member for Motherwell, South dealt more than adequately with that objection.
      If the Government are not prepared—we think that they act on specious grounds—to tell us what advice they have received and from whom, and even if they say that they have little possibility of influencing these matters, they should give us some guidance as to their preferences on the shape that the industry should take under private ownership.
      Mr. Michael Fallon: I hope that, at some stage, the hon. Gentleman will say what shape he would like the industry to be in. Given his distrust of monopoly—which we accept—and the strong possibility that the legislation will be passed, does he favour a Scottish steel company competing against an English steel company?
      Mr. Gould: The hon. Gentleman must accept that his right hon. Friends are responsible for the legislation. This is not our Bill. As we have said, if this monopoly is to be maintained, it is clear that, on this and other grounds, the right answer for the British steel industry is for it to remain in public ownership. Let us be clear about that. Any other question is hypothetical. [Interruption.] That may not suit the Government.
      Dr. Bray: Perhaps we would come up with a firm answer if Ministers assured us that, if the Opposition voted in favour of the Ravenscraig-Shotton-Dalzell solution, they would accept it. If Ministers merely say that they will
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      pursue this for political purposes, to muddy the waters, they will be treated in Scotland with the scorn that they deserve.
      Mr. Gould: My hon. Friend points out that, having revealed informally that they are opposed to the new clause, Ministers are left with the difficulty of explaining how what is to all intents and purposes a monopoly should be handed over to private owners without any adequate protection against abuse of that monopoly power. Whenever we have raised this objection, in Committee and elsewhere, we have been left with the fatuous argument that British Steel is hardly to be regarded as a monopoly, since 40 per cent. of the domestic market is taken by imports. That certainly casts a novel light on the immense increase in import penetration under this Government across the board in manufactured goods.
      We have always assumed that this might be something that the Government regretted and something that they recognised had a connection with the slumps in manufacturing output, manufacturing investment, manufacturing employment, our manufacturing trade deficit and the trade position generally. But not a bit of it; we now hear that the surging imports in steel and other industries are all part of a carefully structured strategy and that this is that very illusory creature—the Government's competition policy. We should be delighted to hear from the Chancellor of the Duchy of Lancaster, if he intervenes further in the debate, or from one of his ministerial colleagues, whether that is so.
      Is 40 per cent. import penetration to be held up as an objective to be desired, supported and argued for on the ground that it imposes welcome competition on domestic suppliers? It is a fatuous argument because, even on British Steel's own terms, it is content to accept a monopoly in the parts of the market with which it is principally concerned and to leave it to the value of imports to make up supplies when and where there is a surge of demand which it is unwilling to meet.
      We are left with a familiar situation. The language is that of liberalisation and competition and of subjecting, through the pressure of market forces, operations like this to all sorts of commercial pressures so that efficiency is improved. All that is a complete charade. It falls down because there is no liberalisation or competition and market forces are not suddenly being introduced. Indeed, the reverse applies. The purpose of this "privatisation", to give it its proper name, is carefully to preserve the monopoly in order to maximise the price which can be obtained for the industry.
      We have seen this happen with British Telecom and many other privatisations. We are familiar with the gaping hole in the arguments. That does not stop us—perhaps optimism never quite dies—from looking in vain through the Bill for a sign that the Government are prepared to match, even with the smallest step, the rhetoric of their apparent commitment to liberalisation and competition.
      Where is there in the Bill any measure to prevent a privatised steel company from abusing the monopoly power that it will be handed on a plate? What do the Government propose to do to prevent abuse of that power? Where is the "Ofsteel", an organisation like the one that the Government felt it necessary to introduce for British Telecom, in the form of Oftel? Where is the ombudsman, or some means by which steel consumers and

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      customers can be protected? Where are the mechanisms to inhibit the abuse and exploitation of the monopoly position?
      Mr. Tim Devlin: Is it not right that the mechanism to control the industry will exist in the form of foreign competition? Already parts of the project at Canary Wharf will he built and bought overseas. There is nothing in the Bill to prevent someone from buying steel from an outside producer.
      Mr. Gould: I was under the illusion that the hon. Gentleman was present when I spoke on precisely that topic. Although he may have been here physically, I suspect that his mind had wandered elsewhere. I dealt at length—I felt extremely convincingly—with exactly that point. If the hon. Gentleman is advancing, yet again, the theory that a high level of foreign imports is the Government's competition policy and therefore to be much applauded, a great deal of what has happened to British industry and to our trade balance can be explained in those extraordinary and unsatisfactory terms.
      I reiterate Labour's concern for the future of Ravenscraig. I make it clear, as I did on Second Reading and in Committee, that, if the Government intend to slide out from under any responsibility for Ravenscraig's future and respond to its closure by private owners—for the reasons outlined by Arthur Young—by saying, "It is now a commercial matter for the private owners and nothing to do with us," we shall not let them off the hook.
      We put the Government on notice that they will be held politically responsible for the future of Ravenscraig. We are completely committed to that future. As my hon. Friend the Member for Motherwell, South has said, we intend to fight tooth and nail for as long as it takes to ensure that future. My hon. Friend's new clause gives the Chancellor of the Duchy, or his ministerial colleagues, a renewed opportunity to tell us that our fears are groundless. We shall be listening carefully, not for weasel words like "market forces" and "commercial considerations", but for a commitment to the future of Ravenscraig. It is an integral part of the sort of steel industry which the British economy desperately needs.
      4.30 pm
      Mr. Fallon: We have listened many times to the hon. Member for Dagenham (Mr. Gould), but I wonder whether we have ever before heard him give such unconvincing and uncertain support as he has for the new clause moved by his hon. Friend the Member for Motherwell, South (Dr. Bray).
      On the one hand, the hon. Member for Dagenham asked my right hon. and hon. Freinds to reiterate, to replicate or to demonstrate their anxiety for Ravenscraig. On the other hand, of course, he advocates all the usual arguments against monopoly. It is no wonder that the English Labour Front Bench is so uncertain about the policies for devolution advocated by the hon. Member for Glasgow, Garscadden (Mr. Dewar) and his hon. Friends. It is no wonder that the red rose of England is such an unsuitable symbol for the Labour party in Scotland, when we have that ambivalent approach advocated by the hon. Member for Glasgow, Cathcart (Mr. Maxton).
      Mr. John Maxton: Perhaps the hon. Member could explain why the so-called red rose, as he calls it, managed to sweep Scotland in the general election.
      Mr. Fallon: I was just arguing the point that the red rose is not the most suitable symbol for a party that distrusts monopoly, but is unprepared to advocate devolution in Scottish industrial policy. Had the hon. Member for Cathcart believed that the red rose was a Scottish red rose, he would argue—as his colleagues have done on the privatisation of electricity—for a Scottish steel company that was prepared to take on an English steel company, a Welsh steel company or other regional divisions of British Steel. That was the lacuna in the speech of the hon. Member for Dagenham. There was a total absence of faith in the ability of the Scottish division of British Steel and of Ravenscraig to stand up to the forces of competition and the commercial play inside the domestic United Kingdom economy—let alone within the European Community.
      This new clause is a Ravenscraig protection clause, but it is none the worse for that. If it is a clause simply to protect Ravenscraig, it might have been more honest if those hon. Members advocating it from the Opposition Benches had said, "We want to protect Ravenscraig for ever," or, "We want to protect it for 20 years, 40 years or 60 years." To dress it up in this special report, in terms of their distrust of monopoly and uncertainty whether the privatisation should be entire or partial, is completely bogus.
      Of all the things that the Opposition could have argued this afternoon, they cannot argue that the Ministers have not taken seriously the arguments for preserving Ravenscraig. I am delighted to see the Minister of State, Scottish Office here. Since 1979, Ministers have done little else in the Scottish Office but take the arguments for Ravenscraig seriously. Had they not done so, had they absolved themselves of any social responsibility in that area of Scotland, Ravenscraig would have been closed some years ago.
      The Scottish Office and Industry Ministers have bent over backwards seriously to consider the problems of Ravenscraig. This does not come easily from my lips, but they have taken a balanced approach to these matters. They have looked at all the social and economic consequences of closing such a large plant. They have looked at the dependence of the local economy upon it and they have drawn quite the opposite conclusion from that inferred by the hon. Member for Motherwell, South (Dr. Bray). The Scottish Office and the Department of Industry have protected Ravenscraig for nine years. Further, they laid out clearly before the House on Second Reading and in Committee the prospect of Ravenscraig surviving for some years ahead. The argument that the Scottish Office or the Industry Department have not taken Ravenscraig seriously does not stand up to serious examination.
      Mr. Stan Crowther: Will the hon. Member accept that I largely agree with what he is saying about political decisions having kept Ravenscraig open? However, what he has not mentioned is that, for the past five years, Robert Scholey has been wanting to close it. Does the hon. Member expect Sir Robert to keep it open when he will no longer be subject to the scrutiny of a

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      Minister in the Scottish Office and he can make up his own mind? What does the hon. Member expect the future of Ravenscraig to be with Sir Robert in charge?
      Mr. Fallon: That is an interesting intervention, which I shall answer. I have slightly more faith in the observation of the hon. Member for Motherwell, South in moving this new clause than in that of his hon. Friend the Member for Rotherham (Mr. Crowther). The hon. Member for Motherwell, South has assured us that Ravenscraig is "fully competitive". If Ravenscraig is fully competitive, I have no doubt that the markets, the future shareholders of the British Steel Corporation and the board of the British Steel Company plc will fully endorse the view of the hon. Member for Motherwell, South. There will probably be no question of Ravenscraig being closed.
      Dr. Bray: It was as a north-east Member of Parliament that I first visited Ravenscraig and involved myself in these arguments. The hon. Member for Darlington (Mr. Fallon) has not understood the argument. While Ravenscraig is viable and is justified as contributing a net addition to the income of the country, BSC—when constituted as a private monopoly—would still find it in its interest to close Ravenscraig. That is a typical monopolistic action. If the hon. Member would like to see the figures spelt out in detail, I shall be happy to give him the Arthur Young report.
      Mr. Fallon: The market, the research analysts and those who follow steel pricing will be disappointed with that intervention, because they already see the faith of the hon. Member for Motherwell, South slipping a little. In his first speech, he said that Ravenscraig was "fully competitive". Now he says that Ravenscraig is viable—[Interruption.] He said "viable". He said that its retention is fully justified if one takes the longer-term view. The markets have heard that one before, and they will hear it again. However, "viable" and "fully justified" are not of course the same as "fully competitive".
      Dr. Bray: The Ravenscraig-Shotton-Dalzell group would be fully profitable.
      Mr. Fallon: I am reassured. If the group were to be fully profitable, I see no reason for the markets that follow those matters, the investors in British Steel or the board to go to an annual general meeting or to the City proposing the closure of those plants. I am sure that the new reassurance from the hon. Member for Motherwell, South will be regarded as strongly as his original offering that Ravenscraig is "fully competitive".
      Having dealt with the point about full competition, with the assistance of the hon. Member for Rotherham, I turn now to the suggestion of the hon. Member for Dagenham that the report might assist in some way and that the function that he suggested in new clause 3, which was not selected, might be attributed to the ombudsman. I refer to his complaint that no regulatory agency is to be set up. Of course I am concerned, as he is, that the British Steel Corporation should not exercise a monopoly. That is important for my constituency also. The British Steel Corporation has a half share in one of the major employers in Darlington. Therefore, I do not want it to abuse its monopoly position in the United Kingdom domestic market, any more than the hon. Gentleman does.
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      However, I am not clear—I do not think that the hon. Gentleman's other new clause has been selected, so we will not be able to explore this point fully—exactly how the ombudsman or "Ofsteel" agency would cut across the normal rules of competition policy or the remit that the European Community has in that regard.
      Mr. Gould: I am grateful to the hon. Gentleman for giving way, especially as I pay him the credit of knowing that he is one of the prime exponents and supporters of free markets and therefore, one assumes, of competition also. I take seriously his statement that he too is concerned about the abuse or potential abuse of monopoly by a privatised steel company, but what does he propose to do about that?
      Mr. Fallon: I am grateful to the hon. Gentleman; I share that concern. We have heard from my hon. Friend the Member for Stockton, South (Mr. Devlin) about the Canary Wharf development. One of the major fabricators in this country, Cleveland Bridge, in my constituency, has the contract for that development, but it must purchase the steel. Therefore, I am concerned that, when privatised, the British Steel Corporation may be able to abuse or to exploit its position in the United Kingdom market.
      The point that I was putting to the hon. Member for Dagenham and that he was putting back to me was that I do not see how an ombudsman or an "Ofsteel" regulatory agency could necessarily have a stronger regulatory framework than the normal rules of competition policy or the supervision that the Commission exercises in that regard.
      Mr. Gould: Again, I am grateful to the hon. Gentleman because he was honest enough to say that he had not answered my question. Between the question that he is putting to me and the question that I wish to put to him, it is fair to say that we are scrabbling around the margins of a situation that we do not wish to see arise. However, he and the Government, who are the supporters and sponsors of this Bill, are committed to the outcome, so he has to answer the question rather more pointedly than I do. I return to the question: what would he do to allay the fears that he has conceded he feels?
      Mr. Fallon: That is a fair question. All that I am saying is that new clause 3, which has been tabled by the hon. Gentleman, does not go anywhere near as far as we need to go. His regulatory body, which is not called "Ofsteel", but the Office of Fair Trade in Steel, would have, I understand, only a monitoring and reporting role. He does not envisage that office going any further than the present competition policy scrutiny arrangements allow. Therefore, we are entitled to ask how much further new clause 1 takes us. If it is his view that the monopoly aspect of a privatised British Steel Corporation should be of paramount concern to consumers and to industrial customers, he must come up with firmer regulatory arrangements than either his hon. Friend the Member for Motherwell, South or he himself has proposed.
      In conclusion, arguments can be put forward against the privatisation of British Steel as a single entity and arrangements could be advanced by the Opposition for ensuring greater competition. However, the primary amendment or time of attack of this Report stage is this somewhat ambivalent new clause which seeks on the one hand to suggest that British Steel's monopoly is a threat,

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      but on the other hand, and at the same time, requires an extraordinary and permanent degree of protection for one plant. I for one certainly oppose the new clause.
      4.45 pm
      Mr. Malcolm Bruce: I support the broad thrust of new clause 1. The reasons for this debate are, first, the way in which the privatisation is being brought forward and, secondly—this appeared not only on Second Reading but on Report—that the Government are anxious to get British Steel off the stocks while the books look acceptable and have not considered any option other than to sell it as a single entity.
      Even if one brushes aside ideological and philosophical arguments, the thrust of the new clause is that, having decided that our steel industry was ready to be put into the private sector, any responsible Government would wish to look at every conceivable way in which that might be done so that they could pursue the best possible option. The House is entitled to conclude that the Government have not made any such attempts, but have simply said, "Heavens, we have a slippage in our privatisation programme. British Steel looks profitable. Let us flog it off as quickly as we can before we have even considered the best way to do it." The House is entitled to ask the Government to explain why they have not considered the options or, preferably, to say that they are prepared to consider the options and have decided on the particular course of action that is most appropriate, having presented the facts to the House.
      Hon. Members representing Scotland are especially worried about the implications of the Bill for the future of Ravenscraig. In an intervention the hon. Member for Stockton, South (Mr. Devlin) told us that international competition would ensure that matters of choice and competition would be resolved. The hon. Gentleman proceeded to point to a location for the landing of foreign steel that is about as far away from the Scottish steelyards as one could get, in circumstances where the yards that manufacture steel for North sea oil production are reasonably expecting increased demand in the future and wish to look to a good quality competitive local supplier, which is what they have had in the past few years in Ravenscraig.
      Another matter of concern, which has already been mentioned by the hon. Membr for Rotherham (Mr. Crowther), is that the British Steel Corporation has made little secret of the fact that it wishes to offload Ravenscraig. Indeed, if I am not mistaken, it attempted to present information that gave the impression that Ravenscraig was not viable, when in fact it was. The corporation loaded the accounts in a certain way to lead to that possible conclusion. That bears out the anxieties not only of Scottish Members, but of all Opposition Members.
      The argument that was put forward by the hon. Member for Darlington (Mr. Fallon), that somehow the market is always right and that if an entity is profitable or viable it has nothing to fear, is naive. It is possible for those in an organisation to say, "We have four viable enterprises, but we could rationalise them into three viable enterprises." That may or may not make any difference other than one of managerial convenience. It may make a marginal improvement in efficiency, but it may not.
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      However, the idea that because one of the enterprises is profitable such a decision would not be taken is foolhardy and is not borne out by the facts.
      Ravenscraig is so crucial to the core of what is left of the Scottish industrial economy that its loss would he a damning blow. We should take on board the fact that we are talking about a Scottish economy which at the moment sustains over 5 million people and which, according to Government forecasts, will sustain only 4·8 million people in 12 years' time. Unless we can reinvigorate our whole economy we shall not be able to hold the population that we have, never mind add to it. It is really not credible to argue that if an entity as large as Ravenscraig were taken out there would be sufficient residual strength in the Scottish economy. Ravenscraig is crucial not just to the 5,400 people employed and the £300 million turnover that it represents, but to the whole Scottish industrial infrastructure.
      Mr. Fallon: I appreciate that that may well be the case, but does the hon. Gentleman share the view of the hon. Member for Motherwell, South (Dr. Bray) that Ravenscraig is "fully competitive"?
      Mr. Bruce: As far as I am aware, Ravenscraig has been profitable and, if accounts are independently examined, could have a profitable future, but that depends on several things, two of which are crucial to this argument. One is the wholehearted commitment of the management, which most of us know does not exist, and the second is the follow-through of that wholehearted commitment by investing in the plant to ensure that the extent to which it is competitive can be sustained in the future because it has the best equipment available. So far the only assurances that we have from the Government are qualified and relate to the finite nature of existing investment rather than the ploughing-in of any new investment.
      Mr. Devlin: Does the hon. Member think that Ravenscraig is fully competitive? Perhaps I can home in a little more for him. Would he say that Ravenscraig is fully competitive with the other steel plants in the United Kingdom—Teesside, for instance?
      Mr. Bruce: The pressure from Conservative Members shows why we have every reason to be worried, because the implication behind that question is that the hon. Gentleman thinks that Ravenscraig is not competitive and that the sooner it is closed the better. That is exactly what we are trying to defeat, because the consequences of that action would be devastating. This is not the place to widen the debate to social costs and the costs of infrastructure, but we cannot take out such a plant and ignore what that would mean to British Rail in Scotland and the effect that it would have on the cost competitiveness of our North sea oil industry in the 1990s. Those are factors that should have been, but have not been, taken on board.
      I cite the record of British Steel in the early days of North sea oil development, when it decided to discontinue specialist steel pipe making just at the point when a major market had opened up for North sea equipment. We had to import a large proportion of the piping from Japan because we had closed down our capacity. The judgment of British Steel management has not always been impeccable. That may be—at this stage I say only "may be"—an argument why British Steel, if it is to be privatised, could usefully be privatised in more than one

      823
      entity. Different managements might make different judgments of the appropriate priority and the market opportunity.
      Given the indecent haste with which the Minister wishes to sell off British Steel, before it has fulfilled one year of viability, if British Steel gets into financial difficulties in the future, what will the Government's response be? Will they allow British Steel, as an industry, to disappear? Will Britain simply opt out of steel-making because the Government are not prepared to operate a steel industry that cannot pay its way, regardless of the strategic implications and of the effect that that would have on other industries? If so, that is a highly irresponsible attitude to take. If the Government are prepared to accept responsibility, how will they ensure that we have a viable steel industry that is not likely to get into difficulty? I say only that this may be an argument, but if there were two or three steel corporations, not all of them would necesarily get into difficulty at the same time and the scale of the problem might not be quite so severe.
      The Government have failed to demonstrate that they have in mind what I would regard as responsible stewardship of this industry. I come back to the debate, having spoken on Second Reading and criticised the impetuosity and haste with which the Government have pushed this matter forward, and find that throughout the Committee stage that situation persisted.
      The steel industry continues to be crucial to our economy. Everybody must welcome the fact that it is in a strong position, but questions remain to be answered by the Government, and I do not believe that they have looked at the possible different ways in which they could pursue their objective. I feel that the reason for that is that they are anxious to get British Steel off their hands while the going is good, and I for one have no confidence in their record so far.
      Mr. Patrick McNair-Wilson: I came to the House 24 years ago direct from the steel industry. I start my remarks by declaring an interest in that I am currently associated, and have been for 30 years, with a company that makes the bulk of the melting electrodes for the industry.
      The steel industry today is in very good heart indeed, which has not been achieved without going through some very difficult times during the past two decades. I remember vividly when I came to the House—indeed, I made my maiden speech on the steel industry—that the Labour party was full of the views of the late Richard Crossman and the need for the commanding heights of the economy to be taken into public ownership—and, of course, the steel industry was the most commanding height of all. Far from being an easy business to operate, it turned out to be one of the most difficult that any Government had managed. Indeed, it has been an albatross around the neck of the taxpayer that is only now beginning to release its grasp.
      It amazes me to hear Opposition Members asking for assurances about what may or may not happen in the future and about one particular plant, which I shall certainly refer to in a moment, when I remember the savage treatment meted out to plants such as Consett, where the whole of the local economy was dependent on
      824
      the one plant—the gas supply, the bus station, the whole lot. That was because of the need to keep the corporation viable.
      One could argue that the presence of the big integrated plants has played a substantial part in the destruction of many of the smaller companies and, as a result, produced a great deal of misery and unhappiness in all parts of the country. In Scotland it is not just that Ravenscraig may or may not suffer; other plants have already had to go in order to keep these big monsters alive. One could argue whether the investment in plants, such as Anchor and the other big integrated plants, was in the best interests of the steel industry in this country. One has to recognise that, although the corporation is now in very much better shape than it has ever been before, our inability to provide the necessary products to bring the North sea oil ashore is a good example of how sadly the British steel industry has failed over the last two decades to meet all the requirements that we would all have liked it to meet.
      The British Steel Corporation, as a monopoly, has been ruthless to the private sector. We are being asked by Front Bench Opposition Members to build in all sorts of safeguards to protect various individual companies when the company is eventually privatised. BISPA—British Independent Steel Producers Association—has put up a magnificent fight over many years to try to protect that sector of the industry that was not nationalised, but how can that part of the industry ever compete with a corporation with its hand deep in the taxpayer's pocket? As a result, Ministers from both Labour and Conservative Governments have come to the Dispatch Box at various times with borrowing powers Bills to top up the corporation's finances and created a situation in which a private organisation could not hope not merely to compete but even to survive. Therefore, I hope that we shall not hear too much in the remainder of these debates about the almost benevolent attitude that the corporation has taken in the past. It has been a ruthless monopoly.
      Mr. Austin Mitchell: What the hon. Gentleman is saying is, of course, borne out by the record, particularly the crushing of the private sector from 1980 to 1982. Is he therefore happy that a monopoly which has the potential for being even bigger and more powerful should be put in the private sector without any let, hindrance, control, restraint or supervision in any form?
      Mr. McNair-Wilson: The hon. Gentleman is making an important point. Under nationalisation, as a result of destroying companies' names and structures, all the landmarks within the industry were ultimately removed. That was done deliberately to make it extremely difficult to denationalise the industry into the shape that it had been before it was taken into public ownership. In future I, too, should like to see the industry returned to real competition. The whole of the nationalisation statute was undoubtedly based on creating a single monopoly and, as the hon. Gentleman pointed out in his intervention, that had a disastrous effect on the private sector.
      5 pm
      The Ravenscraig plant has been mentioned. I do not represent a Scottish constituency, and Opposition Members know Scotland's problems better than I do, but in its heyday as a flat product plant supplying originally Rootes at Linwood with autostrip and the shipbuilding industry on Clydebank it obviously had a substantial

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      home market. That has changed. I do not know what the future of Ravenscraig is. I do not involve myself directly in that. But we must recognise that other parts of the industry have every bit as strong a claim to survival, but this plant has caught the public imagination and hon. Members with constituency interests have properly fought for it. I hope that we shall recognise, as Opposition Members who lived through the days of closures know only too well, that we cannot make complete predictions about the viability of any plant or business. I hope that Ravenscraig survives and prospers, but I must recognise that its original concept was against a completely different market background from that which applies today.
      I end my remarks with a plea for the industry. The industry's shape has changed, its product range has to some extent changed and, indeed, it is probably safe to say that another blast furnace will never be built. Electric melting should have a bright future, but that depends on energy costs. The cost of energy has always been a problem which we have had to confront in the industry, even when the blast furnace route was regarded as the only route. Sir Ian MacGregor, when chairman of British Steel, said that there was no future for electric melting because electricity costs would never be sufficiently low to make it viable. Indeed, subsequently when he went to the National Coal Board he stated that electricity generation costs would always militate against electric melting. That is a great pity.
      If my right hon. and hon. Friends on the Front Bench are considering the future of the steel corporation as a privatised entity, they must consider it alongside what I hope will also be a powerful supporter of that entity, namely, a privatised electricity business—
      Mr. Deputy Speaker (Mr. Harold Walker): Yes, but I hope not this afternoon.
      Mr. McNair-Wilson: The new clause cannot provide the assurances that Opposition Members seek. Despite the fact that we all share the same desire for a successful corporation in future, no guarantees can be given from the Front Bench.
      Dr. John Reid: I hope that the hon. Member for New Forest (Mr. McNair-Wilson) will not mind my saying that I found his contribution bizarre. The gist seemed to be that, because plants had been closed in the past in order to retain a viable steel industry, we should now sanction the closure of a steel plant which is viable at present and which would have a fully profitable future if the new clause were accepted. The hon. Gentleman almost seemed to say that we should sanction the closure of Ravenscraig as an act of vengeance for the ruthlessness of the British Steel Corporation in the past.
      At least the hon. Gentleman's speech had the merit of clarity. The hon. Member for Darlington (Mr. Fallon) seemed to suffer under so many misapprehensions that it would be impossible to correct them, but perhaps I could try to correct one or two. For the record, the red rose is not the monoply of England. If his knowledge of Scottish poetry is as deep as his knowledge of Scottish history, he has probably been taught that Robbie Burns wrote that his love was like a red, red thistle. The red rose was the subject of that particular poem.
      The hon. Gentleman seemed to suffer from a misapprehension on three other occasions. He seemed to think that we were arguing for a Scottish steel industry. At
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      no stage in or outside Committee, or in or outside the House, have any of us argued for a Scottish steel industry; nor do we argue for one in the new clause. Similarly, the hon. Gentleman seemed to be under the impression that in the new clause we were arguing for protection for Ravenscraig. The clause merely asks that a rational, viable and cold look be taken at all the options. This is not merely a protection clause for Ravenscraig, although that is one element in the reasoning behind the new clause.
      The hon. Gentleman seems to have left the Chamber, but at least he can read my comments in Hansard. Even if this were a protection clause for Ravenscraig, given the choice between a protection clause for Ravenscraig and a protection clause for City investors, I would have to choose the former, and I am sure that my hon. Friends from Scotland would do the same.
      Mr. Devlin: My hon. Friend the Member for Darlington (Mr. Fallon) has had to leave the Chamber temporarily to meet a Cabinet Minister and he will return shortly, but I am taking note of all the hon. Gentleman's comments so that I can pass them to my hon. Friend when he returns.
      Dr. Reid: I hope that the hon. Gentleman will explain the points to his hon. Friend slowly and in single syllables so that his future contributions may be slightly more enlightening than the one he made today.
      My hon. Friend the Member for Motherwell, South (Dr. Bray) outlined in considerable detail the reasons why the Government would be wise, politically and commercially, to reconsider the future configuration of the steel industry. His reasons included consumer satisfaction, competition and national interest. There are 58,500 other reasons why the Government should reconsider—the constituents I represent. I wish that the Secretary of State for Scotland was in the Chamber to hear our combined reasons and to listen to the debate. I cannot think of a more important debate for the industrial future of Scotland in recent years, yet the Secretary of State is prominent by his absence. Why he should be absent is a mystery to me. So far as I am aware, there are no cup finals in Scotland today, but no doubt he has business that he considers more important than the future of Ravenscraig.
      For my constituents and their families, this is perhaps the most important debate held in the Chamber for many years. Moreover, it is vital to millions of people in Scotland who live far from my constituency or, indeed, Lanarkshire and have no direct interest in the steel industry. Today we are simply concerned about the survival of the largest industrial entity in Scotland—the Ravenscraig steel plant.
      My hon. Friend the Member for Motherwell, South has said today as well as in Committee that there are no easy options. We do not expect unanimity on the Conservative Benches, or even on these Benches, on future solutions on configurations. The task is difficult. There are conflicting interests between political parties and within them. There are differing interests of employees at different plants, as there are between managements and product groups.
      I pointed out in Committee that the major steel plant in my constituency is the Clydeside tube works, which the Chancellor of the Duchy of Lancaster knows well. That has been suffering because North Sea oil-related work has been falling as the ratio of the pound to the dollar has

      827
      changed in a direction adverse to the commercial prospects of the works. For all those reasons, the works has been operating at a loss.
      Objectively, at first sight, it would in the interests of those who work in the plant, many of whom are my constituents, as the plant lies at the heart of my constituency, to support the privatisation of BSC as a single entity. But that view is greatly over-simplified and very dangerous, and it is the reason why I support my hon. Friend's new clause.
      We are discussing nothing less than the future of the Ravenscraig steel plant. Unless the new clause is accepted by the Government, and if the Government go ahead with privatisation of BSC as a single entity, as they seem intent on doing, all the history of BSC and all the evidence that I have seen—although I am not privy to the information seen by Ministers, nor have they been inclined to reveal it to me or other hon. Members—suggests that the closure of Ravenscraig is on the cards.
      Closure will not come immediately, of course. Commercial considerations will prevent an early closure of Ravenscraig, and political considerations will be involved as well. It will not do for Ministers, especially those at the Scottish Office, to allow the closure of the Craig so quickly after they have washed their hands of responsibility for the Scottish steel industry. Closure will be done very tastefully, and existing plans for the industry, including the Scottish industry, will first be passed to the private sector. Then a respectable period will elapse during which the Government can clearly indicate that they have severed for ever the ties binding them to the industry.
      After a respectable period, after political honour has been satisfied and when commercial considerations, above all profit, demand it, Ravenscraig will be closed. Perhaps closure will not happen all at once but will be achieved by the infamous "salami tactics"—slice by slice, section by section—but the ultimate outcome will be closure, dictated by profits and implemented by private management and sanctioned from the safety of her bunker in Downing street by a Prime Minister who, given her political responsibility, has been reluctant so far to sanction such a closure. Today is the Government's last chance to avoid that disastrous development.
      I regret to say that, from the evidence of today's debate, the Government still do not want to grasp that opportunity. On the basis of all the evidence that I have seen, I believe that privatisation of the British Steel Corporation as a single entity will mean ultimately the closure of Ravenscraig. Every person in my constituency will be affected. I will not ask workers in the tubes division to safeguard their future by being signatories to the death warrant of the Ravenscraig steel plant; nor will any reasonable person with the future of Lanarkshire and the Scottish industry near his heart.
      5.15 pm
      If the new clause is not accepted, my constituents who work in the tubes division will be asked to participate in an act of industrial murder, which will prove in the long run to be industrial suicide. Despite objective evidence, who can doubt that if BSC in its privatised form comes for Ravenscraig in the early 1990s, it will not be long
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      thereafter that it comes for DL Clydesdale, Imperial and Clydebridge, the remaining rump of the Scottish steel industry.
      Two facts motivate our concern and the new clause. Anyone with even a passing acquaintanceship with the Scottish steel industry knows from bitter experience that the Ravenscraig steel plant has long been a target for closure by BSC's management. The battle for Ravenscraig did not start today and does not end today with this debate. It has been fought at the plant, in the press, and in the communities of Lanarkshire. The argument has been paraded almost constantly, it must seem to Ministers, through the streets of Glasgow and Lanarkshire and it has been carried through the snow from the gates of Gartcosh to the barriers at the end of Downing street. It is an argument for survival.
      Over the past few years, workers in the Lanarkshire steel industry, particularly at Ravenscraig, have waged that battle for survival. They fought, not using the traditional weapons of industrial action but by almost unparalleled feats of production. Their efforts have won acclaim from every shade of opinion in Scotland, from plant floor workers, to the churches, community groups, management and trade unions; up to now, ministerial support has come from the Chancellor of the Duchy of Lancaster and from the Scottish Office.
      Those of us who raise the issues today do so after long thought and consideration. On occasions we have been accused of talking down Ravenscraig or of having almost a death wish about the plight of the Scottish steel industry. Nothing could be further from the truth.
      Nobody who lives, as I and my hon. Friend the Member for Motherwell, South (Dr. Bray) do, in the midst of a community that is dependent on the Ravenscraig steel plant would want anything other than a prosperous and healthy future for the plant. But the history of the BSC's imagined ambitions to close Ravenscraig in the past is the first factor that motivates us. The second is speculation about BSC's intentions. By its very nature, it is far more speculative than the history that we can read.
      We have been denied access to information in order to reach that judgment, but we are eternally grateful to Motherwell district council for having financed a study, to which my hon. Friend the Member for Motherwell, South referred earlier. The study was carried out by Arthur Young and Company, which is not a Left-wing think tank, but a company with sound commercial credentials and an impeccable reputation in the City and City affairs. Its conclusions must be taken seriously, and they can be stated starkly.
      They are that, if the Government proceed with privatisation of BSC as a single entity, first, it will not be in the interests of BSC as a commercial enterprise to keep Ravenscraig open beyond 1991. Secondly, it will not be in the interests of BSC to keep DL open beyond 1994. Thirdly, 11,000 jobs will be lost in Scotland, mainly in and around Motherwell. Fourthly, the loss of income to Scotland will be about £100 million. Those conclusions, even the possibility of those conclusions, demand a more urgent and constructive response from the Government than has been forthcoming so far, because they constitute nothing less than a national industrial disaster for the Scottish economy.
      It is no use Ministers harping back to the so-called guarantees of 3 December. I said at the time that those guarantees of steel in our time were as legitimate as

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      Chamberlain's guarantees of "peace in our time". They will not guarantee the future prosperity of the steel industry. They were a timetable for the execution of the steel industry in Scotland. There was a symmetry of cold and almost poetic logic in the timetable set out by the Chancellor of the Duchy of Lancaster on 3 December—legislation in 1988, flotation in 1989, amputation of the Craig in 1990 and termination in 1994. If that timetable were allowed to proceed, and if BSC is privatised as suggested, the social and economic effects on my constituency and on Scottish industry will be disastrous.
      I conclude in the spirit in which my hon. Friend the Member for Motherwell, South moved the new clause. We are not here to score party points, and we do not intend to be provocative. We do not ask the Government to prejudge the matter, as some hon. Members have suggested. We merely ask them to abandon prejudgment and prejudice. We ask the Government to leave the door ajar for further reasoned and rational decision-making. We ask them further to consider alternative offers and to encourage such offers. Above all, we ask them to accept the avenue that the new clause provides for combining the implementation of their privatisation plans with the security of our industry. If that offer is accepted, it will certainly benefit the Scottish steel industry and people in my constituency. If the Government reject it, they will find that there is no hiding place if Ravenscraig eventually closes. There will be no political get-outs or management scapegoats. The decision and the responsibility will be theirs. Neither today nor then will they be allowed to avoid that responsibility to the people of Scotland.
      Mr. Rhodri Morgan: I speak on behalf of all my Welsh Opposition colleagues when I make it plain at the outset that we do not agree with the Ravenscraig-Shotton-Dalzell option. We in Wales are concerned, in the context of the RSD implications drawn from the structure of the new clause, that splitting-off the finishing plants of BSC from the hot metal production plants will open up the equivalent of Pandora's box. In the steel industry world-wide money is made, not at the steel production end, but at the finishing end. The last thing that we want to encourage is the idea that the finishing end, such as the tinplate or coating divisions, should be split off from the hot metal end, whether at Ravenscraig or in the two south Wales strip mills at Port Talbot and Llanwern. We want to avoid that. We do not want finishing mills to be sold off separately as the most profitable parts of BSC's operations. We do not want that possibility even to be considered, although it might be attractive to the local management of BSC in those areas and to people in the City who might want to back them.
      In amendments Nos. 31 and 32 we question whether the structure of BSC should continue into privatisation without further consideration. I want to continue in the spirit of the remarks made by my hon. Friend the Member for Motherwell, North (Dr. Reid) and by the hon. Member for New Forest (Mr. McNair-Wilson) and try to discuss the affairs of the steel industry in the way in which people in it do when talking among themselves. One thinks of people who have finished their shifts and have gone for a pint discussing the industry, or people on the management side of the industry discussing it with their professional advisers.
      What is the proper and best future for the steel industry? We are trying to see whether we can improve the
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      Bill. We have said that we are not keen on it and do not like it. We are attempting to persuade the Government that the Bill could be improved by slicing off the parts of BSC over which it no longer has any management control. That makes sense, because. Ministers have so far not examined closely the fact that the nationalisation of the industry took place in two ways, as the hon. Member for New Forest said.
      The main part of the industry was nationalised in 1967, but there was a considerable hidden wave of second nationalisation, in the Phoenix programme between 1979 and 1981, when orders in the steel industry fell off the edge of a cliff, as they said in those days, and when the creation of single-capacity companies, where previously there had been competition between BSC and the private sector, took place on a substantial scale. Some private sector competitors disappeared altogether. Duport in Llanelli was bought out by Mr. MacGregor in 1980–81 and was closed down. There was the merger of the rod and bar interests of GKN and BSC and the formation of Allied Steel and Wire in 1981. The following year—or a few years later—United Engineering Steels was formed, and Sheffield Forgemasters and the other Phoenix companies followed.
      That was the second wave of nationalisation, which absorbed much of the competitive structure under which the private sector had competed with BSC, and the reason for it was that conditions in the industry were appalling between 1979 and 1981. Energy prices were far too high, the pound was far too high, and demand was low. So it was a matter of who would survive the holocaust, and single capacity working was chosen as the only method of procuring any sort of survival. Considerations of competition did not enter into it.
      Now the Government must consider whether they need to undo the nationalisation of the industry as though it had all taken place in one fell swoop in 1967, or whether they should consider undoing it as it actually took place, which was in two stages—the original nationalisation, and the Phoenix nationalisation with the consequent elimination of competition in the areas in which even in 1967 it had been thought right to preserve competition between GKN, Johnson and Firth Brown and other private steel companies such as Duport and BSC.
      We are asking the Government to remove from the successor company the right to inherit the minority shareholdings that it has because of the Phoenix mergers that took place between 1980 and when the last Phoenix company was formed in about 1983. We ask them to give serious consideration to whether those minority shareholdings—sometimes they are as much as 50 per cent., but in Allied Steel and Wire they have shrunk to 20 per cent.—should be separated and denationalised separately, or held by the Government. We could discuss that matter at a later stage. Should BSC be granted the right to hang on to those minority, or up to 50 per cent., shareholdings?
      Accepting these amendments would introduce an area of clean competition between BSC and Allied Steel and Wire. They do not always necessarily compete in steel products, although they do in one or two. In the main, they compete in the end use—in the construction industry. As the hon. Member for New Forest said, they compete because of the competition between the electric arc production method and the blast furnace and basic oxygen method.

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      It is a healthy thing for the consumer to know that the Allied Steel and Wires of this world are competing flat out against the BSCs by pitting the best of the electric arc technologies in the world against the best BOS vessel technologies, without BSC having the extra leg that would stifle competition—the leg of knowing exactly the prices that Allied Steel and Wire was negotiating for its electrodes, scrap and so on. That is healthier for the consumer, and it is the way to keep imports down and produce a clean flotation of the industry. It would remove the octupus-like hold that BSC would have, because of its minority shareholdings in the Phoenix companies, on the new companies that are being created, which will shortly be floated themselves. It is suspected that Allied Steel and Wire will be floated in three or four weeks' time.
      What could be healthier for the consumer of steel, for the workers in the industry and for its management than to know that BSC and ASW—and later UES, when it is floated—are competing against one another, not knowing the prices the others are paying for raw materials, the technological developments that they have up their sleeves, or the investment plans of their competitors? What could be worse for management and the work force of Allied Steel and Wire than knowing that every new investment and technological advance and every new negotiated price reduction will be known before they can be made use of, through the nominee directors that BSC will have on the board of Allied Steel and Wire? Is that healthy for the consumer? I do not think that it is.
      Above all, it would not only produce a healthier climate for competition and keep down imports, but would have a beneficial effect. If the 20 per cent. shareholding which BSC holds in Allied Steel and Wire were transferred at any time of the Government's choosing before BSC is floated, early next year or later this year, into an employees' trust fund for the employees of Allied Steel and Wire, it would encourage the workers and management of Allied Steel and Wire to buy shares in the company to ensure that the company stayed independent of BSC.
      5.30 pm
      The Government have agreed in principle to provide a golden share type of protection for the British Steel Corporation. During the period of five years, or whatever time the Government have in mind for a golden share for BSC, the corporation might try to make a clean sweep of the Phoenix companies. It may decide to make a takeover bid for Allied Steel and Wire or for United Engineering Steels. That would do away almost completely with competition within the United Kingdom. There would still be a few companies, such as Sheerness, the ownership of which is outside the country, which would be independent, but in the main it would demolish competition within the country. Indeed, by insisting on the golden share provision, we would protect BSC and make it easier for it to do that, unless a golden share is given for the same period for the Phoenix private sector companies.
      The 20 per cent. share stake in BSC being held by the Government in an employees' trust fund for the employees of Allied Steel and Wire, with comparable arrangements for United Engineering Steels and so forth, will encourage workers to have shareholdings. It will also double as a golden share to protect Allied Steel and Wire from being taken over by BSC, with disastrous effects for competition,
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      steel consumers and the level of imports. That is why I ask the Government to think seriously before they dismiss the amendments. They would be healthy for the industry and would reflect the way in which the industry was originally nationalised. They would make a genuine improvement to the Bill.
      Mr. Alex Salmond: I am pleased to support the new clause. It is modest in its intent, asking merely for a quantitative estimate of the economics of a competitive privatisation of British Steel. However, it has been enough to expose ambiguities in the Government's position. It has also exposed ambiguities in the position of the Labour party, but I shall leave that to one side for the moment.
      Mr. Maxton: I do not wish to go too deeply into what the hon. Gentleman may say later about the so-called divisions in the Labour party, but his party is in alliance with the Welsh nationalist party, Plaid Cymru. I am interested in the fact that no members of that party are present. Perhaps the hon. Gentleman can give us the views of Plaid Cymru on the RSD proposal.
      Mr. Deputy Speaker: Order. The hon. Member for Banff and Buchan (Mr. Salmond) should give his own views.
      Mr. Salmond: I shall certainly do that, Mr. Deputy Speaker. Neither we nor Plaid Cymru are in favour of the Ravenscraig-Shotton-Dalzell option. I am amazed that the hon. Member for Glasgow, Cathcart (Mr. Maxton) does not know that. We argued for an integrated steel industry in Scotland. Of course, the question has been asked many times whether the Labour party Front Bench is in favour of the RSD option, which has been argued so forcefully by Labour Back Benchers. That is a legitimate question to put to the Labour party; it has not been answered. Ambiguities on Labour's position have also been illustrated by the hon. Member for Cardiff, West (Mr. Morgan).
      But I want to leave the divisions in the Labour party to one side for a moment and explore the ambiguities in the Government's position. On Friday last, I made the mistake of switching on the television and seeing the Conservative party conference in Scotland. One speaker—I forget who; it may have been the Minister of State—in an eminently forgettable speech, was putting forward one argument which had an element of sense. The argument was that the process of nationalisation had removed from the Scottish economy key areas of decision making. That was a legitimate criticism of nationalisation. It is not a criticism of public sector control in itself, but it is a legitimate criticism of the process of nationalisation as it took place in the 1950s and 1960s.
      We might think that it also shows the extraordinary cheek of a party which has privatised the TSB and Britoil and has shown how privatisation can remove control from the Scottish economy. None the less, it was a substantial point which was made at the Conservative party conference in Scotland. Given that the Government have the opportunity to reverse the process in the privatisation of British Steel and the opportunity through privatisation to restore management control to Scotland, it is all the more surprising that they do not take it. Here we see the first major ambiguity in the position of the Conservative

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      party in Scotland. The only conclusion can be that the Scottish Office is taking its orders, as usual, from south of the border.
      The second ambiguity exposed by the new clause concerns the attitude to the competitive market environment. I am a member of the Select Committee on Energy where we are discussing the privatisation of electricity, a major utility. There are grave problems about introducing competition into the transmission and delivery of electricity. However, the Conservative members of the Committee and the Ministers who have appeared before it insist that, whatever else happens in the privatisation, competition must be introduced. Is it not all the more curious that, in the privatisation of the steel industry, where it would be much simpler to introduce domestic competition than in the electricity supply industry, the Conservative party should abandon that principle and go for monopolistic privatisation? It is a curious ambiguity, which cannot be defended on principle. There are only the poorest arguments for sending the steel industry into the private sector as a monopolistic entity.
      I am sorry that the hon. Member for Darlington (Mr. Fallon) is not still here. I can only assume that the important meeting with a Cabinet Minister is a meeting with the Secretary of State for Scotland. That would explain the absence of right hon. and hon. Gentlemen from the debate. Perhaps the hon. Member for Darlington is giving the Secretary of State for Scotland his weekly economics lecture and is telling him what to say in Scotland next week.
      If the hon. Member for Darlington had been here, I would have put it to him that it is the most elementary point of free market economics that there should be no monopolistic behaviour. Of course, if British Steel is sent into the private sector as a single unit, it will restrict output and maximise profitability. It is incredible that the hon. Member for Darlington should have ignored that point.
      If British Steel is sent into the private sector unencumbered, the entrenched hostility of British Steel senior management to the Ravenscraig complex will come to the fore, without any protection of the public interest. The Chancellor of the Duchy is fond of saying that this fear exists in the minds of Opposition parties and that we talk down the Ravenscraig complex. But that view is generally held. For example, it is held by the Scottish Council (Development and Industry). Recently, the Chancellor of the Duchy made some complimentary references to that body which by no means can be described as a party politically oriented body in Scotland.
      In March, in reference to the dangers of sending British Steel into the private sector as a single entity, the council said:
      "On track record, it is reasonable to assume that a single company operated in the private sector and thereafter not subject to public control would close Ravenscraig Works at an early stage. The adverse effects on the Scottish economy have already been well documented. Closure would also jeopardise the delivered price of steel in Scotland from other sources, because of loss of the basing point which is used in the price formula."
      That quote from the Scottish Council encapsulates the real fears on the conclusion of any serious examination of the likely future of the Scottish steel industry under the Government's proposed privatisation. We also recognise the important point made by the Scottish Council, that the closure of Ravenscraig would not just be a matter of the enormous direct loss of 11,000 jobs, and £100 million in
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      output, but it would have a continuing impact on the Scottish economy because the loss of the basing point would affect many steel using industries throughout the length and breadth of Scotland.
      The fears for Ravenscraig are real, and not just the fears of entrenched political interests. They are shared by many impartial bodies in Scotland, and the Government have done nothing whatever to allay the fears. No hon. Member has made the case for an integrated steel industry in Scotland as the best possible option. I should like to make that case.
      Mr. Deputy Speaker: Order. The hon. Gentleman must not seek to make that case while discussing this new clause.
      Mr. Salmond: The case for how the industry should be competitively privatised is the subject matter of this new clause.
      Mr. Deputy Speaker: Order. The hon. Gentleman cannot be reading the new clause that I have before me, because it says:
      "Before the appointed day the Secretary of State shall lay before Parliament a report giving quantitative estimates".
      I fail to see how that would justify the kind of argument that the hon. Gentleman is seeking to advance, and I hope that he will not persist.
      Mr. Salmond: One of the important estimates that I expect to see the Government produce if this new clause is accepted is about the real possibility of an integrated steel industry in Scotland. It should be central to the debate on this clause—
      Mr. Deputy Speaker: Order. It seems that there is a difference of opinion between the hon. Gentleman and me, and on this occasion my opinion will prevail. I hope that the hon. Gentleman will address himself to the new clause.
      Mr. Salmond: The new clause would certainly prevent what would be the worst of all possible situations—the sending of the steel industry unencumbered into the private sector, unrestrained by the public interest, in so far as that is recognised in Scotland by the Government, and unrestrained by the force of competition in the market place. The new clause will test whether the Government believe in a free market or a rigged market in the Scottish economy. If the Government refuse to accept the new clause, they may well be signing the death warrant of Ravenscraig. If that happens, Scotland will sign the death warrant of the Conservative party.
      Mr. George Robertson: The Opposition have said a number of times that this is the wrong solution for the British steel industry. We have to work on the premise that a better solution exists and that the British Steel Corporation should stay in the public sector. If we accept the argument that it is a central, important and vital industry, then only in the public sector can it get the protection that it deserves.
      We are considering the privatisation of this industry well ahead of schedule; further ahead than the Minister told us after the election. We know that there is a gap in the legislative programme and that the Chancellor of the Exchequer, with all his difficulties, needs more of the loot that comes from privatisation, and that BSC falls neatly into that category. This is an important and balanced debate in which we are considering one of the more serious and important issues in politics. It did not require much

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      vision to see at the weekend how important even the Prime Minister now considers the Scottish dimension to be to her own political future.
      It was fascinating to watch the Conservative party in Scotland going through a disastrous general election and then an even more disastrous series of local elections only a fortnight ago and then the Prime Minister came to Perth and spent a weekend in Scotland. It was an incredible set of experiences. The Glasgow garden festival was granted three hours of the Prime Minister's time, and Hampden park was graced with her presence for lunch. The large crowd at Hampden park found that she was there to present trophies at the end of the game. It is a matter of some pride to us that she now feels it sufficiently important to come to Scotland and to be troubled about the fortunes of her party.
      5.45 pm
      Those who examine the way in which the Conservative party treats Scotland—and people do not have to be terribly perceptive to do that—will have noticed a considerable difference in attitude from previous occasions. When the Prime Minister came to Scotland at the weekend she did not tell us, as the Conservatives have told us in the past, that we were a bunch of whingeing no-gooders, supplicants at the public purse. The hon. Member for Darlington (Mr. Fallon) is the main script writer for the Prime Minister and other Ministers. This time we were told that Scotland was the birthplace of Adam Smith, that he was the precursor of Thatcherism and that we were to be congratulated on producing that philosophy. We were told that Scotland was the base for silicon glen, that it represented all that was best in the country and that only the small aberration in Scotland's voting pattern set it apart from the rest of the United Kingdom. Anyone who watched on television the penguin parade of political casualties in Perth could have been mistaken for thinking that the Conservatives had had two triumphs instead of two disasters there.
      It is important to remind ourselves that Scottish politics are important in the national context and that the debate on the new clause could not be more relevant. In my constituency the largest employer is the Ravenscraig steel works, which is based in the constituency of my hon. Friend the Member for Motherwell, South (Dr. Bray). I do not think that any hon. Member who has participated in the debate considers the future of Ravenscraig as a constituency matter or, indeed, as a simple, parochial west of Scotland or even Scottish interest. We are concerned about the importance of Ravenscraig and about the importance of a balanced steel industry to the British economy. At times Conservative Members, and even Ministers, have been willing to admit that that is a fact of life.
      We all rightly feel inhibited about talking down the fortunes of Ravenscraig and the associated steel works in Scotland. I concede that that is a danger. If we speak often enough, and regularly enough, about the dangers to Ravenscraig and to Scottish steel, the argument will take on an inevitability that might bring the disaster that we continue to predict. My hon. Friends the Members for Motherwell, South and for Motherwell, North (Dr. Reid) are aware of that in this debate, as they have been in every other debate that has taken place.
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      We are interested, not in milking Ravenscraig, but in boosting it. We do not want to criticise it. We want to give due credit to its work force and management, who over the past 10 to 15 years have made it one of the most efficient, profitable and effective contributors to the European steel industry. That is certainly not knocking Ravenscraig. To draw attention to the dangers facing Ravenscraig, both under the Government and, perhaps more acutely, under the non-political leadership of the present management of BSC, is not knocking or criticising Ravenscraig, but is simply pointing out a basic fact of life that Ministers will have to take on board.
      Much has been made in the debate of the assurances that have been given to Ravenscraig, and I have no doubt that the Minister will tell us about those. We have been told regularly how important those assurances are, and Ministers have mentioned periods of seven years and two years. They have told us that these are greater guarantees than have ever been given by any previous Government. These guarantees exist on paper, but the moment a guarantee is given people ask about what will happen at the end of the guarantee period.
      The Government have a political reason for keeping Ravenscraig open. If the Prime Minister's eyes have been opened sufficiently so that she can walk through the streets of Glasgow with the same fearlessness as she displayed last year when she walked through the streets of Tbilisi in Georgia, she is beginning to learn the lesson that the Scottish people have been trying to teach her for at least the last five years. Perhaps Ministers have taken on board the importance of Ravenscraig to Scotland and the importance of Scotland to the United Kingdom as a whole.
      As Ministers have now realised how difficult it would be in political terms to take a decision that would rob the steel industry of Ravenscraig, they are about to pass the industry into the hands of people whose motives are even more suspect and who are even more remote from political accountability than Ministers with only 10 Members of Parliament behind them.
      I make no attack on Sir Robert Scholey and the senior BSC management. They have done an extremely good job and have produced for the Government an extremely profitable industry which is now so attractive that it is being handed over to them on a plate. Sir Robert Scholey is a man of considerable esteem. Indeed, when I left university 20 years ago I was offered a job at the United Steel Company, which was the main launch pad for Sir Robert Scholey and the group that presently runs British Steel. Given different circumstances, who knows where I might now have been in that organisation.
      I make no criticism of the management's competence. They have said openly that the British Steel Corporation and British Steel plc would be leaner, fitter and more competitive in the general European context in which they believe they must operate if there were one fewer integrated steel works. They make no bones about which one they would like to see go.
      The Government will now hand the stewardship of British Steel into the hands of that group. It is right for and perceptive of our constituents and the wider community in Scotland to be deeply suspicious about the future of Ravenscraig, given the declared views of the individuals who will be in charge of British Steel. It is normal to be suspicious. It is not an aberration to be suspicious of those who will take the decisions in the future. We should not

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      take it as part of a gigantic conspiracy. Those suspicions have due foundations and Ministers should take them on board and should not, for their own political skins, dare to dismiss them as the frivolous rantings of the people who represent those areas.
      My hon. Friend the Member for Motherwell, South introduced the new clause as a form of enabling provision that would allow the Government, consistent with their ideological fixations, to put forward alternatives within which competition could take place and accountability could be measured. The Ravenscraig-Shotton-Dalzell plan is on the table as an example of a method by which competition could be achieved and Ravenscraig perhaps safeguarded, but there are other alternatives.
      Strathclyde regional council's industrial development committee has written to the Minister suggesting the possibility of a British Airports Authority-type solution, with different components within the single denationalised organisation. The Government should give balanced consideration to that proposal. It is not designed simply to safeguard Ravenscraig. It has been designed within the context of the Government's objectives for the British Steel Corporation to ensure a degree of internal competition that would perhaps stimulate management, as Ministers believed that the BAA solution would for that organisation. If it is good enough for that, we should not simply consider a monolithic transfer from public ownership to private monopoly ownership. In fairness, Ministers should consider other alternatives, and the new clause would provide the basis for that.
      The many thousands of my constituents in Lanarkshire employed at the Ravenscraig steel works do not ask for special treatment. They are not interested in giving the hon. Member for Darlington and his Right-wing cronies the idea that they are coming with a begging bowl to the Treasury, the Department of Trade and Industry—or the Department of Enterprise—looking for a lifeline or a permanent subsidy. They want recognition of the achievements at Ravenscraig over the past few years. They want an appreciation of the fact that the Scottish steel industry has been transformed out of all recognition and is now one of the finest in Europe. They want that protected and continued in the future. That is a modest enough request to make of the Government. If the Government choose to decline or ignore that request, they will not be lightly forgiven.
      The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): The hon. Member for Hamilton (Mr. Robertson) is obviously well qualified to speak in this debate with his constituency interest and background in the steel industry, about which I was intrigued to hear for the first time. The mind boggles at the thought of the hon. Gentleman perhaps moving on, if he had pursued a career in the industry, to become chairman of the British Steel Corporation. He would probably have found himself doing a more valuable job than being a Front-Bench spokesman for the Labour party, however competent he may be at the job, unless his party performs better in the near future. If he had had a continuing direct interest in the steel business from a management point of view, I doubt whether he would have made the speech that he has just made about the possible future configuration of the industry.
      I should like to deal with amendments Nos. 31 and 32, in the name of the hon. Member for Cardiff, West (Mr.
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      Morgan), who was concerned about the position of Allied Steel and Wire Ltd. He chose a timely day to put forward an amendment about that company because its flotation was announced this morning. The purpose of the amendments is to seek to persuade the House that the Government should take away the 20 per cent. owned by British Steel and make it a Government stake, albeit held in trust for the benefit of the employees of Allied Steel and Wire Ltd.
      I listened with care to the comments of the hon. Member for Cardiff, West. He was mainly concerned to protect Allied Steel and Wire Ltd. from what he perceived to be a threat to the future independence and commercial freedom of the company from the British Steel Corporation with its minority holding. I have no reason to believe that Allied Steel and Wire Ltd. is threatened by the BSC in the way that he suggests and I am certainly not persuaded by what he said about allowing the Government to have, in effect, a golden share in a company that has been in the private sector for some years. We shall deal with special or golden shares in the privatised BSC on a later amendment, but the hon. Gentleman will not be surprised to know that we are not tempted by the idea of taking a special share in a wholly private sector company, albeit one in which BSC has a minority holding.
      I am attracted by the idea that the employees of Allied Steel and Wire Ltd. should have a stake in the company. Once again, the hon. Gentleman's chosen method, contained in amendment No. 32—in effect, to give a fifth of the company to the employees—is generous, but it goes over the top somewhat. Most of the employees already have a stake in the company. Most of them own shares in the company, and I trust that many of them will take the opportunity to increase their holding as a result of today's flotation. Generosity would be taken considerably further by, in effect, taking a fifth of the company away from British Steel and holding it solely for the benefit of the work force. We do not need to go so far in worker participation.
      Mr. Morgan: I apologise to the Minister for having missed the beginning of his speech. I was in the Lobby reading his Department's press release regarding the new special share and employee share arrangements, as it had just been handed to me by a journalist. [Interruption.] I had not read beyond the seventh line when I was interrupted and told that the Minister had started his speech, but perhaps my hon. Friend the Member for Dagenham (Mr. Gould) would care to look at it.
      Would the Minister take a more generous view of our amendment if he understood it to mean that the transfer from the Government holding to an employee holding could take place gradually over a number of years and involve employees paying for their shares through arrangements, which could be discussed in detail, to maximise the employees' holding in the company?
      Mr. Clarke: I welcome the hon. Gentleman back to the Chamber. I can see no case for removing the 20 per cent. minority holding from the British Steel Corporation. I do not share the hon. Gentleman's fears about the way in which the BSC may use that holding with regard to Allied Steel and Wire Ltd. I also believe that there is already an adequate employee stake in the company. I heard what the hon. Gentleman said, but, as amendment No. 32 stands, there is no provision for the payment for those shares and

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      I do not find the proposition any more attractive after the hon. Gentleman's comments. The flotation that has been announced today should be allowed to proceed. I do not believe that the company's position will be jeopardised if it proceeds without the benefit of amendment No. 32.
      6 pm
      Dr. Reid: Does the Chancellor of the Duchy of Lancaster consider that there are merits in the case advanced by my hon. Friend the Member for Cardiff, West (Mr. Morgan), particularly as the Chancellor said that his major objection was that, although he was not opposed to it in principle, the proposed formulation was too generous? Is it really too generous to give those workers a 20 per cent. share in the company when he is writing off the public debt and writing down the public dividend capital of the BSC by almost a half or even more before gifting it to the City? In comparison to that write-off, does not my hon. Friend's proposal lack generosity?
      Mr. Clarke: With respect, the hon. Gentleman is making a false comparison. Although the hon. Member for Cardiff, West has rather spontaneously tried to modify his first proposition, on its face value amendment No. 32 involves removing a 20 per cent. holding of the BSC in Allied Steel and Wire Ltd. and giving it to the employees. That 20 per cent. holding has a substantial financial value which will emerge as flotation proceeds.
      The hon. Member for Motherwell, North (Dr. Reid) has made a false comparison about what is proposed for the future financial structure of the privatised BSC. We are not writing down debt. We are ensuring that the new privatised company has a balance sheet that reflects its present-day position. We are coping with the accumulated losses that have appeared on the balance sheet from years past when the corporation unfortunately traded at a very heavy loss. There is no cash involved in that and we are not writing off real money. The books will take account of the fact that, unfortunately, during the years of nationalisation the BSC lost a great deal of money on its trading account. That money still lies on the books, and obviously it cannot stay there if the company is to be privatised successfully.
      We started this debate discussing new clause 1. We have had a particularly discursive discussion during which no particular theme has emerged, despite the fact that the vast majority of those who spoke were Opposition Members—Labour Members, Liberal Members or Scottish nationalists. That lack of theme has occurred because no one really agreed with the underlying purpose of new clause 1.
      The hon. Member for Motherwell, South (Dr. Bray) is the prime advocate of the so-called Ravenscraig-Shotton-Dalzell proposal. He made it clear that he sees the proposal as one way of getting hold of more factual information which he hoped might support his proposition.
      The hon. Member for Dagenham (Mr. Gould), who spoke from the Opposition Front Bench, and other Labour Members, out of a sense of courtesy, did not directly contradict the hon. Member for Motherwell, South. The hon. Member for Dagenham seemed to imply that he almost supported the new clause in so far as it was
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      a technical matter asking for a report and some information. However, it became clear that no one really supports the underlying aim of the hon. Member for Motherwell, South.
      The hon. Member for Dagenham confirmed that he believes that the BSC should remain a single entity. He is no more attracted by the idea of breaking up the BSC, either in the public or in the private sector, than Conservative Members. It is wrong to believe that there is widespread support for the idea of different configurations. I hope to reveal that it is wrong to believe that the future of Ravenscraig will benefit from vaguely floating ideas that one might restructure the company and privatise it as two companies which, in effect, is what the hon. Member for Motherwell, South was advocating.
      Mr. Gould: I am certain that the Chancellor of the Duchy of Lancaster is sufficiently intelligent to understand that a single entity in public ownership is a different proposition from a single entity in private ownership. That is essentially the point that we have made. It is also the point of new clause 1. Of course we support new clause 1 in the sense that it provides a straightforward and unobjectionable mechanism whereby the Government can learn and then inform Parliament about the basis on which they will reach a decision on the form that the British steel industry should take in private ownership. That seems to be a very modest request and the simplest of requirements of good government in that area.
      Mr. Clarke: I will consider what I believe to be wrong with the mechanism in a moment. Before the hon. Gentleman retreats and considers new clause 1 as a purely technical amendment after he and his Labour colleagues have spent two and a half hours debating the issue, I want to state that, of course, I understand the difference between a single entity in public ownership and one in private ownership. I accept that the hon. Gentleman would prefer it to remain in public ownership. I remain quite convinced—and the hon. Gentleman has never contradicted me—that, if it is to be privately owned, the hon. Gentleman prefers it to be a single entity.
      It is obvious that that is the view of all Labour Members, apart from the hon. Member for Motherwell, South, who continues to advocate what I regard to be a complete red herring—namely, the so-called Ravenscraig-Shotton-Dalzell proposal.
      Dr. Reid rose—
      Mr. Clarke: I will give way to the hon. Gentleman shortly.
      The hon. Member for Motherwell, North underlined the fact that the hon. Member for Motherwell, South is not putting forward a truly Scottish option. The hon. Member for Motherwell, North rightly explained that Clydesdale is not included in his hon. Friend's proposal.
      The Ravenscraig-Dalzell-Shotton option is not entirely Scottish. To make it a credible proposition, the hon. Member for Motherwell, South must try to annex Shotton, which is in Wales, to the other Scottish interests. I know that Arthur Young's report stated that the headquarters of the new entity might be situated in Wales. As we have heard from the hon. Member for Cardiff, West, that does very little to assuage Welsh fears, because no one in Wales or in the BSC outside Motherwell sees the slightest future in the Ravenscraig-Shotton-Dalzell

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      proposal, which is the underlying aim of the new clause. That proposal is a complete red herring in the wider debate.
      Dr. Reid: Neither my hon. Friend the Member for Motherwell, South (Dr. Bray) nor I, or anyone else, has ever claimed that the proposal is motivated by nationalism or national sentiment. The configuration has been put forward on the basis of industrial sense and commercial viability. It is a red herring to suggest that somehow that shows a lack of support, because we have never claimed it as a Scottish option. For the record, I want to correct the Minister. I support my hon. Friend the Member for Motherwell, South and his proposal. Even if we stand in splendid isolation, if the proposal offers a solution for the long-term security of Ravenscraig, I am proud to support the proposal.
      Mr. Salmond rose—
      Mr. Clarke: It seems that the proposal has the support of the hon. Member for Motherwell, North and it appears that the hon. Member for Banff and Buchan (Mr. Salmond) is about to volunteer his support as well. However, the hon. Member for Cardiff, West opposes the proposal and the hon. Member for Dagenham will not say what he thinks. I want to consider what I believe is wrong with the idea of privatising British steel other than through a single entity.
      Mr. Salmond rose—
      Mr. Clarke: It is always a mistake to guess at the grievances of the Scottish nationalists. I had better hear what they are.
      Mr. Salmond: As the Chancellor of the Duchy of Lancaster is aware, I should be delighted to set out the Scottish option if I am allowed to do so. With regard to the Ravenscraig-Shotton-Dalzell option, the Minister must not invest in the new clause something which does not exist. If people believe that there should be a non-monopolistic privatisation of the BSC, they are entitled to support new clause 1, whether they believe in the Ravenscraig-Shotton-Dalzell option or any other for privatising the BSC. Both I and my party believe in that.
      Mr. Clarke: The Government remain convinced that the corporation should be privatised as a single entity. If anyone is suggesting that it should be broken up for privatisation, they are at liberty to put forward the configuration that they would prefer in different companies. As far as I am aware, the Ravenscraig—Shotton—Dalzell configuration is the only one that has ever been suggested. If anyone has some alternative way of dividing the corporation, it has not been advocated this afternoon.
      The reason why I believe the corporation should remain as one—and we examined a huge variety of options before taking the decision to come forward last December with the privatisation proposals—is that any change in its shape will dismember an interdependent business—which has been built up very successfully by the management and work force in recent years—which has begun to show considerable commercial success. It would throw the future of all parts of the business into considerable uncertainty and set back the achievement we have seen so
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      far, whereby the last published half-year figures showed £190 million profits. Everybody obviously expects those profits to be maintained.
      To divide up the corporation and to cut out of it and privatise the Ravenscraig-Shotton-Dalzell operations alone would be extremely difficult. The resulting company would have no kind of track record and its commercial outlook would be uncertain. It would have considerable difficulty in raising investment capital and it would be an extremely weak competitor against the rest of British Steel, let alone competitors in the rest of Europe.
      The hon. Member for Motherwell, South spoke of the history of what he described as the competition for survival between steel plants, and of the pressures which are placed on Ravenscraig. Competition to reduce costs and increase efficiency is an essential part of the steel business, especially in present circumstances. I do not see how those pressures would be reduced, because the proposed new RSD company would be pitched into difficult competition against the remainder of British Steel and other European competitors.
      I believe that such a company would be impossible to float. There are those in Scotland who believe that a type of trade sale to Scottish interests might be arranged. I am doubtful about the prospects of raising any capital for a company having no track record of any kind.
      Having listened to the hon. Member for Motherwell, South, who is very erudite and who surrounds his arguments with as much information as he can, I still believe that what has been conceived is a political structure for part of the industry. The origins of the argument centre on fears about Ravenscraig. In order to make a credible configuration for a company that might protect Ravenscraig, there has been devised the notion of Ravenscraig-Shotton-Dalzell as some kind of industrial entity. It is not the Government who are obsessed with the Welsh trade unions, and so on. That configuration has been devised as the best that could be produced—leaving out other parts, because the trade unions are opposed to their inclusion. The hon. Member for Dagenham will not support it because he knows that the Welsh trade unions are against it. Clydesdale Steelworks is not included because the hon. Member for Motherwell, South knows that the Scottish trade unions are against it. It is the Opposition who are getting knotted over the trade unions. They are trying to produce a political structure which they believe will improve their position vis-a-vis Ravenscraig.
      The whole history of steel, as of other industries, shows that once one starts making political decisions about the structure of the industry, about where investments should be made, and about the future, the more one causes difficulties, closures and disruption. We believe that privatising British Steel as a single entity is best for British Steel and for all those who work in it.
      Dr. Bray: The Minister is quite inaccurate in his claim about the origins of that idea. The first time that I remember hearing about it was—if the Minister insists that I name names—from Jake Stewart, chairman of the flat products group of the British Steel Corporation. It was later argued for in the presence of Bob Scholey by the managing director, who is a Welshman but whose name I momentarily forget.

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      6.15 pm
      The argument when Gartcosh was being closed was not that Ravenscraig was being robbed of a finishing mill but that the originator was being given a newer, more modern and more diversified finishing mill at Shotton. BSC itself planted the idea and made the point that it was an integral, sensible operating unit.
      Mr. Clarke: I shall take that point up with Jake Stewart when next I meet him, if indeed he was the originator. However, Ravenscraig is still supplying Shotton. British Steel, when privatised as a single entity, will continue to have that link between Ravenscraig and Shotton.
      Whatever the origin of the suggestion—and I accept that the originator may have been Jake Stewart, as the hon. Gentleman said—it has nevertheless been put forward by the hon. Member for Motherwell, South as a political solution to what he perceives to be the problems of Ravenscraig. He has sought to cloak it with more credibility by citing, for example, the Arthur Young report. What I regret about this debate is that, as it has progressed, it has depended upon an attempt by the hon. Member for Motherwell, South and some of his hon. Friends to continue casting doubts on the assurances that we have given about the future of Ravenscraig. The Arthur Young report seeks to diminish the calculations made by British Steel and its expectations as to the future of Ravenscraig. I do not see the point of doing that.
      What ought to be regarded as the best news from the steel industry for people in Scotland for many years is British Steel's commercial estimates of its future steelmaking needs in Scotland. Its best estimate, subject to market conditions—and those are not weasel words; they are essential and sensible words which the management of any corporation would use—was that steelmaking at Ravenscraig would be required for at least another seven years. It followed that the output of the Dalzell plate mill would be required for as long as the output from Ravenscraig continued—another seven years.
      That is a much better description of the prospects of an industrial plant than the managers of most industrial plants, north or south of the border, will usually give. The situation will always depend on continued commercial success, continued efficiency, and the kind of efforts which have been achieved by the management and work force at Ravenscraig in the past.
      The best estimate is that at least seven years' more steelmaking is required. Beyond seven years, as was rightly pointed out by my hon. Friend the Member for Darlington (Mr. Fallon), everything will depend upon the state of the steel market at the time and on the performance of BSC, including that of Ravenscraig. An underlying myth in much of this debate is that politicians can override those factors and give political guarantees extending beyond seven years—and beyond the best estimates of the British Steel Corporation.
      Mr. Malcolm Bruce: Is it not a fact that but for political guarantees, of which the Secretary of State for Scotland has boasted to the House on many occasions, Ravenscraig would not be there to provide a seven-year guarantee at the time when privatisation was formulated? For Scottish
      844
      Members of Parliament not to find the Minister's assurance credible is not unreasonable, given that we know what the management of British Steel wanted to do before.
      Mr. Clarke: The hon. Member for Gordon (Mr. Bruce) refers to previous assurances given by my right hon. and learned Friend the Secretary of State for Scotland that, again subject to market conditions, three years' output of steel was expected about three years ago. In the present situation, that estimate has improved. The chairman of BSC expects that seven years' output will now be required from Ravenscraig. There are no such things as political guarantees. The history of British industry, particularly during the last Labour Government, shows that when politicians claim that they can, by political undertakings, wave away the dictates of the market and the requirement to be competitive and give guarantees that a particular industrial operation will, come what may, continue, such claims are not worth the paper on which they are written or the voices by which they are uttered.
      We have here a much more copper-bottomed reassurance for the people of Ravenscraig. The commercial judgment of those managing the corporation is that the mill will be required to make steel for another seven years. The Opposition are so put out of countenance by the estimates made by the chairman of BSC last autumn that they are trying to fan the flames of fear in Ravenscraig. The Opposition are attempting to imply that the situation is not what it appears to be and is not such a reflection of good performance as I have said. The hon. Members for Motherwell, North and for Mortherwell, South are trying to imply that the privatisation of a separate unit comprising Ravenscraig, Shotton and Dalzell will offer Ravenscraig a better future. I do not believe it. A small splinter company would have a difficult time after being privatised. There would be difficulty in raising the capital and it would be exposed to a much more difficult competitive climate.
      Dr. Reid: As the Chancellor wishes to avoid weasel words, let me give him the opportunity to give a straight answer on the commercial guarantee. I ask him for no political guarantee. Is it the right hon. and learned Gentleman's understanding, in accordance with the statement of 3 December and the commercial guarantee, that there is no guarantee of a hot strip mill at Ravenscraig employing 1,200 people beyond 1990? Is that his understanding as well as mine?
      Mr. Clarke: The hot strip mill was, as I made clear in December, not included in the forecast of BSC's steel-making requirements. BSC's best commercial estimate is that it will require steel making at Ravenscraig for at least seven years. At the moment it has surplus capacity in the hot strip mill and BSC has made it clear that it will not reconsider its future, or that of any other hot strip mill, until 1989. Beyond that, it depends on the requirements of hot strip.
      I see cheery looks from the hon. Member for Great Grimsby (Mr. Mitchell), delighted to discover that neither I nor British Steel can give the same guarantee for the hot strip mill. Presumably the Labour party will guarantee four hot strip mills in Britain for seven, 10 or 15 years, whether anybody wants them, regardless of cost, regardless of the advantage that that may give to our overseas competitors and regardless of the cost that that may impose on British steel users. I do not believe it. The

      845
      Labour party is seeking to imply that it will give a more copper-bottomed guarantee to Ravenscraig about the future of steel making and hot strip. It is not for me to judge, but I do not believe a word of it. It is not within the Labour party's capacity to guarantee the future of steel making, the hot strip mill and everything else at Ravenscraig, regardless of commercial and market considerations.
      Dr. Bray: Can the Chancellor name any other works that have survived simply as a slab producer? Will he bear in mind that 70 per cent. of the slabs produced at Ravenscraig go into the hot mill hot. If they have to be transported 250 miles to south Wales before being rolled into hot rolled coil, how can they possibly be hot?
      Mr. Clarke: The hon. Gentleman regards himself as an alternative management for BSC. He spends his entire time lecturing the House and, when he can, BSC's management about the plant's configuration, where the products should and should not be made, where they should be sent, and so on. If I had to choose between the opinion of Bob Scholey and his colleagues on the board and their managers and that of the hon. Member for Motherwell, South, I know which I would prefer.
      BSC expects steel making to continue at Ravenscraig for at least seven years. Whether the hot strip mill will continue all that time, we know not. However, BSC has made it clear that it will not close that this side of 1989. The future of Ravenscraig depends on the continued commercial success of the kind that it has achieved so far. The Opposition do not have it within their power to give political guarantees that extend beyond that.
      The argument that is being used by those, other than the hon. Members for Motherwell, North and for Motherwell, South, who seek to claim they have a genuine interest in looking at alternative configurations, means that they are worried about our privatising BSC as a monopoly. When that argument is put forward, as it was by the hon. Member for Dagenham, it carries the slight implication that he would therefore contemplate breaking it up, but he never quite acknowledges that.
      When talking about the need for competition and whether the privatised BSC might constitute a harmful monopoly, we are principally talking about the interests of consumers as well as those inside BSC. It is necessary to test that argument primarily by looking at the market within which BSC operates. At the very least, it is a European-wide market because we are in the European steel regime. We are not just looking at the United Kingdom market. If we were, the Ravenscraig-Shotton-Dalzell argument would not improve things much, because the RSD group would be the only producer of coated steel within the United Kingdom market. Therefore, it would not immediately inject any added competition into the United Kingdom market, unless and until British Steel started competing with it in coated steel by alternative routes.
      The competition argument was used by the hon. Member for Dagenham, and it is relevant. It is no good dismissing it and saying that we are not just talking about the United Kingdom market for steel. We are looking at the European-wide market for steel, the competitive pressures within that market and the kind of choice that consumers have as things stand. As has already been mentioned, and it cannot be dismissed, 40 per cent. of steel
      846
      is imported into Britain, so there is no doubt that United Kingdom consumers have a choice about steel. About one third of BSC's entire production is exported. It sells only about two thirds of its production in the British market.
      When BSC is privatised, it will be the dominant British producer, but it will not have a competition-free hold on any part of the market, whether in the United Kingdom or in the rest of Europe. It is our intention to proceed to a cartel-free market. We are anticipating the end of European quotas. In the new situation that will emerge, once we have got rid of the excess capacity and quotas, there will be no legitimate grounds for feeling, on grounds of competition or anti-monopoly policy, that there is anything wrong with privatising BSC as a single entity which will compete successfully in the kind of market that will then emerge.
      Mr. Salmond: The Chancellor says that having two or more companies in the steel market would not introduce competition if not all their production was in the same area. Is not that argument rather like saying that Rowntree does not compete with Cadbury because Cadbury does riot produce KitKat?
      Mr. Clarke: I thought that I was at last coming to the House of Commons to talk about something other than chocolate. The market for steel is not quite the same as the market for chocolate. There is an altogether more international market in steel, whereas chocolate has a particularly domestic market. The British taste in chocolate is sharply different from that in the rest of western Europe. Steel has at least a European-wide market. In fact, it is international, because American steel comes into the continent as well.
      The Opposition cannot be, serious in saying that they are pressing alternative configurations because of the need for competition. I am not quite sure what they are pressing and this is not the time to take that further. There may be more enlightenment on Third. Reading. The hon. Member for Dagenham would not say what he was in favour of, other than hinting that on competition grounds he would like some kind of regulatory body of steel, rather like Oftel. He has floated such ideas once or twice recently.
      If we are talking about how to privatise BSC and how to provide the competition to which a great deal of attention has been devoted, I should be interested to know where the Labour party has got to. It has not yet made it clear whether BSC is one of those companies that it proposes to renationalise if it returns to power. We are told by the hon. Member for Great Grimsby, among others, that the Labour party is searching for a new form of public ownership. It does not seem yet to have found that new form. It is working on it hard. Not only has it not decided what form of public ownership it will have, but it has not decided which industries will be in public ownership. If we had a new, enlightened—dare I say—Social Democratic Labour party, it might go back to square one and ask whether it needs to have public ownership of any of the commanding heights of the economy at all. At the moment it is engaged in a fruitless search for some form of public ownership and it cannot even decide on the candidate industries.
      Mr. Michael Brown: I think that I can help my right hon. and learned Friend on the point of confusion because last night, with the hon. Member for Dagenham (Mr. Gould), I heard a speech

      847
      given by the honourable Roger Douglas, the Minister of Finance in the New Zealand Labour party. I saw the hon. Gentleman taking copious notes. I suspect that he listened to this small portion of the speech where the Minister said:
      "I would say to those countries which choose for domestic political reasons to ignore economic realities, that the results of your subsidy and protectionist policies are that your poor are poorer"—
      Mr. Deputy Speaker: Order. What does this have to do with new clause 1?
      Mr. Brown: I am trying to account for the Opposition's confusion. The hon. Member for Dagenham (Mr. Gould) obviously realises that he will—
      Mr. Deputy Speaker: Order. If there is confusion, the hon. Gentleman is making it worse by bringing in extra matters.
      6.30 pm
      Mr. Clarke: There is confusion on all fronts about whether Opposition Members, if they support the new clause, want to divide British Steel into more than one company when it is privatised, whether they would renationalise it if it were privatised, how they would regulate it if it were nationalised, whether they want alternative configurations, and whether they want Ravenscraig-Shotton-Dalzell or some other configuration. No light was shed on any of those matters. The hon. Member for Dagenham regards it as a narrow, technical clause. It is harmful also on that ground. It requires us to give information about the many options that we considered before we proposed privatisation, as I said in my statement of 3 December.
      We resist the new clause and the suggestion that we produce the information and the kind of report for which new clause 1 asks because the contents of the report will be of huge value to British Steel's competitors. It would involve disclosing information about British Steel's future business strategy, the kind of market share that it envisages getting for its products, where costs lay and how they are incurred in different parts of British Steel. Not only the British Steel Corporation but any other company, whether nationalised or in the private sector, would strongly object to being required publicly to produce—in this case, in the House of Commons—the kind of information that the hon. Member for Motherwell, South plainly contemplates will be produced if the new clause is carried. Although the Opposition Front Bench treats the new clause as a minor technical matter, if it is inserted in the Bill it will do great commercial damage to the British Steel Corporation while it remains nationalised and when it is privatised.
      Having listened to the debate, the Government remain persuaded that the British Steel Corporation should be privatised as a single entity. It is in the best interests of the corporation, its work force, customers and the taxpayer to do so. Because we remain so convinced, and having looked closely at the options, I invite the House to reject the new clause if it is pressed on any ground.
      Mr. Maxton: The Chancellor of the Duchy of Lancaster concluded by saying that he did not wish to give information. That is his usual line. He does not want to give information to hon. Members, but he is quite happy
      848
      to give it to the press. Just before the debate the Department of Trade and Industry released a press statement on the Bill, announcing two minor concessions. The Chancellor and his junior Ministers are happy to give information to the press before they give it to the House of Commons. The Minister could have given the information when our amendments were moved. That would have been the respectable, proper way to do it. It is typical of the Minister. He does not like to give information.
      It is nice to see the Chancellor here at all during consideration of the Bill. In Committee he was notable for his absence. He is winding up this debate, not because he has any particular interest in Ravenscraig or because he believes that the new clause is important, but because he wants to speak early in the debate, then go and have his usual good dinner and big cigar and not have to bother with any later speeches. Any Minister and any Government with any sensitivity to the steel industry and to what the new clause is about would not have put forward the Chancellor or anybody connected with the Department of Trade and Industry to speak in this debate.
      The Secretary of State for Scotland should have replied on behalf of the Government. It was obvious that it was to be a Scottish debate. It was to be about the future of Ravenscraig, not about the overall nationalisation of the British Steel Corporation. Where is the Secretary of State for Scotland? I know where he is. Tonight, Scotland are playing Colombia at Hampden park. Yet again, the Secretary of State is desperately trying to retrieve the political position in Scotland by going to Hampden park, as he did on Saturday, without, of course, informing the relevant hon. Member of his presence on that occasion. I consider that to be extremely rude and offensive.
      Mr. Richard Holt: Will the hon. Gentleman give way?
      Mr. Maxton: I shall not give way. It is a short debate.
      Mr. Holt: On Hampden park?
      Mr. Maxton: I shall give way on Hampden park.
      Mr. Holt: Does the hon. Gentleman accept that an Opposition Front-Bench spokesman was in my constituency on Sunday, attending the opening of the new Catholic cathedral, and did not have the courtesy to let me know?
      Mr. Maxton: I do not wish to go down that route. Three Conservative Members were in my constituency on Saturday. The only one who bothered to inform me was the Prime Minister, and she did so on Monday. That does not show a great deal for what Conservative Members have to say.
      Mr. Fallon: Will the hon. Gentleman give way?
      Mr. Maxton: No, I shall not give way. We have listened to a confused speech from the hon. Member for Darlington (Mr. Fallon). He spends most of his time attacking Scotland and all that is in Scotland. I see no reason why we should willingly allow him to speak in any debate. Obviously he will take part in debates, but we shall not give him an opportunity. I make no apology for that.
      The new clause presented an opportunity to the Scottish Office Minister to tell us what guarantees he is prepared to give Ravenscraig. The Chancellor and his Ministers use the phrase "the future of steel making". They

      849
      do not talk about the hot roll mill or anything like that. They talk only about steel making. As it stands at present, British Steel Corporation's investment programme is a timetable for closure. It is not a guarantee for the future. We are seeking, more from the Scottish Office than from the Department of Trade and Industry, a guarantee on the future of the corporation.
      As my hon. Friend the Member for Hamilton (Mr. Robertson) said, the Tory party conference was held in Scotland last week. It was quite a remarkable occasion. It is best compared to the French aristocrats gathering in English country houses after the 1789 French revolution, desperately telling themselves that the revolution had not taken place and that, with the help of the English armies, their wealth and lands would soon be restored to them. At the conference, members of the Conservative party tried to prove that a few extra votes at Edinburgh and winning one Stirling seat by one vote from an independent candidate meant that the fight back had begun. They failed even to mention the loss of one of their five out of 66 seats in Glasgow and the continuing decline—
      Mr. Fallon: Let us have a vote.
      Mr. Maxton: I shall refer to steel.
      Mr. Fallon: On a point of order, Mr. Deputy Speaker. I am completely at a loss to understand what the hon. Gentleman's arguments have to do with new clause 1. Why has the hon. Gentleman managed to attract only six Opposition Members to the debate? What will he do with the new clause? Will he press it to a vote?
      Mr. Deputy Speaker: Order. I am sure that the hon. Gentleman is about to refer to the new clause.
      Mr. Maxton: I am about to refer to the new clause and, more particularly, to what it is about, which is the future of Ravenscraig. The closure of Ravenscraig is of prime importance to the political future of Scotland. That is what it is all about.[interruption.] I know what the new clause is about. It is an opportunity for debate. That is quite clear. Therefore, I am entitled to make some reference to it. Conservative Members hate to talk about their disastrous political future and presence in Scotland. They know that perfectly well. They have lost election after election. If they cannot give a guarantee to Ravenscraig, they "ain't seen nothin' yet" in terms of what will happen to the Tory party in Scotland. That will be the end of the Tories.
      Ravenscraig has become a symbol for the industrial present and future of Scotland. It is no longer just about steel making. Ravenscraig's closure would be, not just another industrial closure to add to the already appallingly long list that Scotland has suffered since 1979, but a psychological body blow to the whole Scottish economy. Confidence would be lost. There would be disastrous unemployment throughout Scotland, such as exists in my hon. Friends' constituencies at present. That is why the new clause has been tabled. I am displeased that the Chancellor of the Duchy of Lancaster replied to the debate, rather than even the Minister of State, Scottish Office, because we want long-term guarantees on Ravenscraig's future, not those that we have had so far.
      Mr. Kenneth Clarke: If that was the purpose of the debate, why did no hon. Member ask for those guarantees until I replied? The hon. Gentleman has nothing to say on
      850
      the new clause, which is about privatisation of the industry, whether as a single entity or not. Having sat here for three hours, the hon. Gentleman finally decided what the new clause might be about and what his opinion was, but so far he has not addressed himself to one solitary subject raised by the hon. Member for Motherwell, South (Dr. Bray).
      Mr. Maxton: If the right hon. and learned Gentleman had bothered to come to any of the Committee sittings, or even to sit at the hack of the Committee Room and listen to the debate, or had managed to read any of the Committee's reports—which, obviously, he has not bothered to do—he would know that Ravenscraig's future has been of concern. He should not suggest that my hon. Friend the Member for Motherwell, South (Dr. Bray) is not concerned about Ravenscraig's future.
      Dr. Reid: On the subject of arguments that have been missing, perhaps my hon. Friend would like to give some thought to the lack of argument by the Chancellor of the Duchy of Lancaster on competition, which we argued would be enhanced by the new clause, and in particular his bizarre boast that, because we have 40 per cent. imported steel, consumer choice has increased. It is rather like defending the invasion of Poland on the basis that the Poles had someone different with whom to drink.
      Mr. Maxton: My hon. Friend's analogy is apt, and amusing. He is right.
      The Chancellor of the Duchy of Lancaster—the great believer in market forces, the use of the market place and all things to do with privatisation—spent his whole speech defending the monopoly. That was remarkable.
      We are concerned about Ravenscraig because it has done everything that the Government wanted it to do. Conservative Members have talked about efficiency and competition. Ravenscraig has reduced production costs, increased productivity and shed so-called surplus labour and, rightly or wrongly, it continued to work during the miners' strike. Ravenscraig has become profitable. The grave danger is that Ravenscraig can be destroyed by its own efficiency.
      One of the things that Ravenscraig does better than any other part of the steel industry is to produce highly specialised steels, such as the grain-oriented steels for the electricity industry, which no other company can produce with any profit. Those types of steels are expensive to produce and do not yield the large profits that flow from other mass-produced steels. The danger is that Ravenscraig, by being able to produce such steels, can be made to appear unprofitable in the market place and therefore liable for closure. A privatised industry might believe that it is more profitable to close Ravenscraig than to keep it open, whatever its profit levels and productivity. Unless Ravenscraig can show that it can make more profit than the £100 million that closure would produce, it might be easier for the private sector to close it.
      We have not had guarantees from the Government about Ravenscraig. Obviously we shall not get such guarantees from the Secretary of State for Scotland, or even from the Chancellor of the Duchy of Lancaster. That appalling indictment will be visited upon the few Tory politicians left in Scotland. The day that Ravenscraig closes, they will be in deep trouble. Scotland will make its electoral decision at the next general election and even the

      851
      Minister of State, Scottish Office—the hon. Member for Galloway and Upper Nithsdale (Mr. Lang)—will lose his seat. We do not want to see that—
      Mr. George Foulkes: We do.
      Mr. Maxton: There are grave dangers in having no Tories left in Scotland. That would put the Union at risk. Even now the Government should consider giving guarantees on Ravenscraig's future, which so far they have dismally failed to do.
      6.45 pm
      Dr. Bray: My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) was perhaps a little uncharitable to the Chancellor of the Duchy of Lancaster when he suggested that it was the thought of the right hon. and learned Gentleman's dinner and cigar to which we owe his presence. I assure the right hon. and learned Gentleman and the House that I shall not keep him long from them.
      The hon. Member for New Forest (Mr. McNair-Wilson) referred to the ruthless policies of the British Steel Corporation in concentrating production on five sites. That proposal was originally put forward in the Benson report in the 1960s, before the nationalisation of steel, so the hon. Gentleman's friends in the private steel industry were behind that move.
      The Chancellor of the Duchy of Lancaster powerfully endorsed the structure, as we dreamt it up in 1966, of the nationalised steel industry. As one of the Ministers responsible, I am flattered by the right hon. and learned Gentleman's endorsement of that structure, but I am not entirely persuaded that, after more than 20 years, we do not need to take a further look at it, in view of the different regime in which it will operate in the private sector.
      The right hon. and learned Gentleman said that the Ravenscraig-Shotton-Dalzell company would be difficult to float, but my advice is to the contrary. There would not be difficulties in financing it. It is not big enough to float on the stock exchange immediately, but the financial institutions would accept it.
      The right hon. and learned Gentleman said that no other proposals to split off bits of BSC had been received, and he was right. That is what I expected. My hon. Friend the Member for Cardiff, West (Mr. Morgan) said that there was some fear that the Ravenscraig-Shotton-Dalzell solution would open a Pandora's box, with all the finishing plants wanting to spin off from it. That is not a danger and there has been no evidence to that effect.
      The Chancellor of the Duchy of Lancaster said that it would be difficult for the RSD group to survive. Another reaction is outrage at the thought that it should romp off with some of the most profitable bits of the BSC, leaving BSC without any coated sheet capacity. I do not think that the group would have difficulty in surviving, but it would make sense, in terms of marketing in Europe, to form wider links, just as BSC will do. One difficulty in discussing this matter has been that the moment one starts talking about steel companies in Europe, questions are asked about the United Kingdom Government's attitude, and so far we have not been able to offer any assurance. If Ministers could offer even a glimmer of interest privately,
      852
      it would be possible to put forward practicable arrangements to assure the viability of Ravenscraig-Shotton-Dalzell.
      The right hon. and learned Gentleman said that we were asking BSC to produce confidential information which would prejudice its competitive position with other steel companies. The most important, sensitive performance measures in steel companies, and steel works, are collected by the International Iron and Steel Institute and are published. Therefore, it was possible for the Arthur Young report to produce its argument, which has not been disputed by the right hon. and learned Gentleman or BSC. A further report might convince Ministers that that was a viable solution that would solve a number of their problems.
      We met the Chancellor of the Duchy in July and were, I think, the first group of people outside the Department whom he had met since taking office in the Department of Trade and Industry. At that meeting, he said engagingly that he did not really know much about the steel industry, but that he was anxious to learn. He said that he was more concerned about getting the structure of the steel industry right than in privatising it—there was no hurry to do that. It was therefore a surprise when a few months later he said,
      "By the way, the structure is the same, but we are going to privatise the industry."
      In the debate today, the right hon. and learned Gentleman showed some dangerous signs of beginning to learn something about the industry, of taking an interest in and asking some of the right questions about the future of the structure of the industry. In the hope that that process will be carried further, I beg to ask leave to withdraw the motion.
      Mr. Deputy Speaker: Is it your wish that the new clause be withdrawn?
      Hon. Members: No.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 14, Noes 253.

      Division No. 306]

      [6.50 pm

      AYES

      Alton, David

      Skinner, Dennis

      Beith, A. J.

      Steel, Rt Hon David

      Campbell, Menzies (Fife NE)

      Thomas, Dr Datydd Elis

      Carlile, Alex (Mont'g)

      Wallace, James

      Fearn, Ronald

      Wigley, Dafydd

      Jones, Ieuan (Ynys Môn)

      Kennedy, Charles

      Tellers for the Ayes:

      Michie, Mrs Ray (Arg'l & Bute)

      Mr. Malcolm Bruce and

      Salmond, Alex

      Mr. Andrew Welsh.

      NOES

      Alexander, Richard

      Bennett, Nicholas (Pembroke)

      Alison, Rt Hon Michael

      Bevan, David Gilroy

      Allason, Rupert

      Biffen, Rt Hon John

      Amess, David

      Biggs-Davison, Sir John

      Amos, Alan

      Blackburn, Dr John G.

      Arbuthnot, James

      Body, Sir Richard

      Arnold, Jacques (Gravesham)

      Bonsor, Sir Nicholas

      Arnold, Tom (Hazel Grove)

      Boscawen, Hon Robert

      Ashby, David

      Boswell, Tim

      Aspinwall, Jack

      Bottomley, Mrs Virginia

      Atkins, Robert

      Bowden, A (Brighton K'pto'n)

      Atkinson, David

      Bowden, Gerald (Dulwich)

      Baker, Nicholas (Dorset N)

      Boyson, Rt Hon Dr Sir Rhodes

      Baldry, Tony

      Braine, Rt Hon Sir Bernard

      Banks, Robert (Harrogate)

      Brandon-Bravo, Martin

      Batiste, Spencer

      Brazier, Julian

      Beaumont-Dark, Anthony

      Brittan, Rt Hon Leon

      Bellingham, Henry

      Brown, Michael (Brigg & Cl't's)

      Bendall, Vivian

      Browne, John (Winchester)

      853

      Bruce, Ian (Dorset South)

      Hayhoe, Rt Hon Sir Barney

      Buchanan-Smith, Rt Hon Alick

      Hayward, Robert

      Buck, Sir Antony

      Heddle, John

      Burns, Simon

      Heseltine, Rt Hon Michael

      Burt, Alistair

      Hicks, Mrs Maureen (Wolv' NE)

      Butcher, John

      Hicks, Robert (Cornwall SE)

      Butler, Chris

      Hill, James

      Butterfill, John

      Hogg, Hon Douglas (Gr'th'm)

      Carlisle, Kenneth (Lincoln)

      Holt, Richard

      Carrington, Matthew

      Hordern, Sir Peter

      Carttiss. Michael

      Howarth, Alan (Strat'd-on-A)

      Cash, William

      Howell, Ralph (North Norfolk)

      Chalker, Rt Hon Mrs Lynda

      Hughes, Robert G. (Harrow W)

      Chope, Christopher

      Hunt, David (Wirral W)

      Churchill, Mr

      Hunt, John (Ravensbourne)

      Clark, Dr Michael (Rochford)

      Hunter, Andrew

      Clark, Sir W. (Croydon S)

      Irvine, Michael

      Clarke, Rt Hon K. (Rushcliffe)

      Irving, Charles

      Colvin, Michael

      Jack, Michael

      Conway, Derek

      Jackson, Robert

      Coombs, Anthony (Wyre F'rest)

      Janman, Tim

      Coombs, Simon (Swindon)

      Jessel, Toby

      Cope, John

      Johnson Smith, Sir Geoffrey

      Cormack, Patrick

      Jones, Gwilym (Cardiff N)

      Couchman, James

      Jones, Robert B (Herts W)

      Cran, James

      Jopling, Rt Hon Michael

      Davies, Q. (Stamf'd & Spald'g)

      Kellett-Bowman, Dame Elaine

      Davis, David (Boothferry)

      Kilfedder, James

      Day, Stephen

      Kirkhope, Timothy

      Devlin, Tim

      Knapman, Roger

      Dickens, Geoffrey

      Knight, Greg (Derby North)

      Dicks, Terry

      Knowles, Michael

      Dorrell, Stephen

      Knox, David

      Douglas-Hamilton, Lord James

      Lamont, Rt Hon Norman

      Dover, Den

      Lang, Ian

      Dunn, Bob

      Lawrence, Ivan

      Dykes, Hugh

      Lennox-Boyd, Hon Mark

      Eggar, Tim

      Lightbown, David

      Emery, Sir Peter

      Lilley, Peter

      Evans, David (Welwyn Hatf'd)

      Lloyd, Sir Ian (Havant)

      Evennett, David

      Lloyd, Peter (Fareham)

      Fallon, Michael

      Lord, Michael

      Farr, Sir John

      Lyell, Sir Nicholas

      Favell, Tony

      McCrindle, Robert

      Fenner, Dame Peggy

      Maclean, David

      Field, Barry (Isle of Wight)

      McLoughlin, Patrick

      Finsberg, Sir Geoffrey

      McNair-Wilson, M. (Newbury)

      Fookes, Miss Janet

      McNair-Wilson, P. (New Forest)

      Forman, Nigel

      Madel, David

      Forsyth, Michael (Stirling)

      Major, Rt Hon John

      Forth, Eric

      Malins, Humfrey

      Fox, Sir Marcus

      Mans, Keith

      Franks, Cecil

      Maples, John

      Freeman, Roger

      Marland, Paul

      French, Douglas

      Marshall, Michael (Arundel)

      Fry, Peter

      Martin, David (Portsmouth S)

      Gale, Roger

      Mates, Michael

      Gardiner, George

      Maxwell-Hyslop, Robin

      Garel-Jones, Tristan

      Mellor, David

      Goodlad, Alastair

      Meyer, Sir Anthony

      Gorman, Mrs Teresa

      Mills, Iain

      Gorst, John

      Mitchell, Andrew (Gedling)

      Gow, Ian

      Moate, Roger

      Gower, Sir Raymond

      Monro, Sir Hector

      Greenway, Harry (Ealing N)

      Morrison, Hon Sir Charles

      Greenway, John (Ryedale)

      Moss, Malcolm

      Gregory, Conal

      Moynihan, Hon Colin

      Griffiths, Peter (Portsmouth N)

      Mudd, David

      Grist, Ian

      Neale, Gerrard

      Grylls, Michael

      Neubert, Michael

      Gummer, Rt Hon John Selwyn

      Nicholls, Patrick

      Hamilton, Hon Archie (Epsom)

      Nicholson, David (Taunton)

      Hamilton, Neil (Tatton)

      Nicholson, Emma (Devon West)

      Hampson, Dr Keith

      Page, Richard

      Hannam, John

      Paice, James

      Hargreaves, A. (B'ham H'll Gr')

      Patnick, Irvine

      Hargreaves, Ken (Hyndburn)

      Peacock, Mrs Elizabeth

      Harris, David

      Porter, Barry (Wirral S)

      Haselhurst, Alan

      Porter, David (Waveney)

      Hawkins, Christopher

      Powell, William (Corby)

      854

      Price, Sir David

      Thorne, Neil

      Raffan, Keith

      Thornton, Malcolm

      Rhodes James, Robert

      Thurnham, Peter

      Riddick, Graham

      Townend, John (Bridlington)

      Rifkind, Rt Hon Malcolm

      Tracey, Richard

      Roberts, Wyn (Conwy)

      Tredinnick, David

      Roe, Mrs Marion

      Trippier, David

      Rowe, Andrew

      Trotter, Neville

      Shaw, David (Dover)

      Vaughan, Sir Gerard

      Shaw, Sir Giles (Pudsey)

      Waddington, Rt Hon David

      Shaw, Sir Michael (Scarb')

      Waldegrave, Hon William

      Shepherd, Colin (Hereford)

      Walden, George

      Sims, Roger

      Walker, Bill (T'side North)

      Skeet, Sir Trevor

      Walker, Rt Hon P. (W'cester)

      Smith, Tim (Beaconsfield)

      Wardle, Charles (Bexhill)

      Speller, Tony

      Warren, Kenneth

      Stanbrook, Ivor

      Watts, John

      Steen, Anthony

      Wheeler, John

      Stern, Michael

      Whitney, Ray

      Stevens, Lewis

      Widdecombe, Ann

      Stewart, Andy (Sherwood)

      Wiggin, Jerry

      Stewart, Ian (Hertfordshire N)

      Winterton, Mrs Ann

      Stradling Thomas, Sir John

      Wolfson, Mark

      Sumberg, David

      Wood, Timothy

      Summerson, Hugo

      Young, Sir George (Acton)

      Tapsell, Sir Peter

      Taylor, John M (Solihull)

      Tellers for the Noes:

      Temple-Morris, Peter

      Mr. Tony Durant and

      Thompson, D. (Calder Valley)

      Mr. Richard Ryder.

      Thompson, Patrick (Norwich N)

      Question accordingly negatived.

    New Clause 5

      CAPITAL EXPENDITURE PROJECTS
      '(1) The successor company shall inform the Secretary of State of any proposed capital expenditure projects the cost of which exceeds £1 million, and in connection therewith shall make an annual forecast of the domestic prospects for steel demand in the five years from the end of the most recent financial year.
      (2) The forecast specified in subsection (1) above shall be laid before Parliament by the Secretary of State as soon as is reasonably practicable.
      (3) This section shall no longer apply when the successor company has ceased to be wholly owned by the Crown.'.—[Mr. Austin Mitchell.]
      Brought up, and read the First time.
      Mr. Austin Mitchell: I beg to move, That the clause be read a Second time.
      It is clear from the previous debate that Ministers desire only to sell the British steel industry in one lump—to get rid of it and to run. Their only real desire to offer any help, encouragement, support or intervention in the industry—their only real aim—is to put up posters of Sir John Harvey-Jones looking as if he is about to burp and saying, "History is in the making." That is the Government's only preoccupation with the indu3try. They do not have arty concern about competition. They have not learnt the lessons of privatising monopolies such as British Telecorn. They have not thought of the consumer, or of whether they are privatising or just creating private sector monopolies, which seems the essence of the process.
      New clause 1 asked the Government to give the reasons for and an explanation of what they are doing and why they are doing it. New clause 5 puts that more positively. We want to reinforce our concern about investment because that is crucial to the British steel industry. The new clause is limited by section 3 and ceases to apply when a successor company has ceased to be wholly owned by the Crown. So far as one can gather from the rumours and the

      855
      gossip, the Government's aim is to get rid of the corporation as quickly as possible. In my view, that would be a mistake and a national tragedy.
      We had to put the new clause in that form because of the nature of the Bill. It is essentially a shabby little Bill. It transforms the great British Steel Corporation into a company of a kind that might have fallen off the back of the register of companies, and allows the Government to flog it off. It is difficult for us to intervene in a Bill that is shaped like that.
      However, our intervention is an attempt to impose concern about investment and a requirement on the company to report to the Secretary of State and to Parliament on the need for, the prospects of and the commitment to investment, and to set a precedent which we hope will be sustained after the Government have finally got rid of it and it has ceased to be wholly owned by the Crown. We are primarily concerned about investment in the industry.
      Investment will not be the central preoccupation of private investors, who will want the maximum rate of return from the British steel industry, the highest level of dividends, and to be able to write off the investment over a period. They will not be concerned, in the way in which a public sector company or a nationalised industry is, with the long-term health and viability of the steel industry. They will not have the same concern as a nationalised industry about wider social and national interests or about the need to provide a cheap basic feedstock for manufacturing industry.
      The key to the Japanese manufacturing success has been the provision of low-priced, high-quality steel to manufacturing as a basic raw material. We are anxious that such steel should be provided as cheaply as possible to our manufacturers as the base for manufacturing's healthy activity. We think that a nationalised framework is best for that. If the corporation is now to be passed to the investors, who will be concerned about getting a return and not about building up the industry, we believe that we can only sustain investment by requirements such as those set out in new clause 5.
      However, Ministers do not seem to be interested in investment, although it is crucial if the industry is to remain viable, effective and competitive. We must have more investment in continuous casting. The proportion of our output derived from continuous casting is lower than that of most of our competitors. We have been slow to move into continuous casting. Japanese industry will be almost totally continuous casting within a short period. If we are to stay competitive, there must be heavy investment in that area. We also need investment in continuous annealing, which is further downstream. We need investment in plate and mini-mills.
      We need considerable investment. The chairman of British Steel has estimated such investment at £300 million per year. However, he has not said for how long he intends to sustain that level of investment, or whether it will be a long-term commitment, which is what we should like. However, we are talking about a heavy level of investment to bring British Steel up to the level of our competitors and to allow for the new technology and new processes that are necessary in a rapidly evolving industry.
      856
      Without sustained concern for investment and a sustained process of investment, British Steel will lag behind, and be concerned only to exploit the market and pay out dividends, which is what happened when the steel industry was in private ownership. It had an appalling record of paying dividends—often out of capital—failing to invest and failing to keep up with processes. Investment can be sustained adequately only by nationalisation. Nationalisation has transformed the industry. The under-invested wreckage that was taken over by the Labour Government in the 1960s was transformed into an industry which has been developed on five integrated coastal sites, which is highly invested and which needs to keep up if it is to remain at the forefront.
      All we ask, therefore, is that there be a continuing requirement on the company to report on its investment proposals, the role of that investment as a drive motor of the economy and the role of steel as an index of economic performance in this country, and to report also to Parliament. Although the Secretary of State's views may be prejudiced and, under this Government, ill informed, Parliament will then at least have the basis for forming its own judgments and testing and measuring the assumptions built into these investment projections by British Steel. This is therefore an attempt to maintain a continuing interest by Parliament and Government in the responsibilities that both have for the British steel industry.
      The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): We had a long debate earlier without a vote and now perhaps we can have a short debate with a vote. I do not want to delay the House for long.
      At present, under section 4(3) of the Iron and Steel Act 1982, the corporation is obliged to act in accordance with a general programme settled from time to time with the Secretary of State when carrying out any work which involves a substantial outlay on capital account. During the period between vesting and privatisation, the question of investment by the successor campany will be covered by provisions in the company's articles of association and a memorandum of understanding with the Secretary of State. These will broadly preserve the present arrangements for monitoring the company's investment programme at a strategic level. The Secretary of State will not intervene in the day-to-day management of the company. All such arrangements will cease once the successor company ceases to be wholly owned by the Crown. While the company is wholly owned by the Crown, the Secretary of State will be accountable to Parliament as the company's sole owner. As such, he will have ultimate control of the company and its strategic operations.
      During the interim period before privatisation, therefore, the successor company will have to inform the Secretary of State of major capital projects. There is no need to incorporate the arrangements in the Bill. Such arrangements in previous privatisations have been handled perfectly satisfactorily in the same way.
      We see no reason to provide in the Bill that the successor company shall submit a forecast of steel demand in the United Kingdom for the five years following the last financial year. If the successor company submits an investment proposal to the Secretary of State for approval, it will be required, under the memorandum of understanding, to submit a detailed investment appraisal.

      857
      Clearly, that appraisal would be subject to commercial confidentiality and would not be proper material for debate in Parliament. If hon. Members wish to obtain forecasts of future steel demand, there are sources other than British Steel which could provide those figures.
      We do not therefore accept that there is a need to incorporate the provisions of the new clause in the Bill, and I ask the House to reject it.
      Mr. Michael Foot: I find the Minister's answer totally unsatisfactory. I am very glad that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) moved the new clause in the form that he did because he called attention to one of the essential weaknesses in the Bill which the Government are trying to push through and one of the most important features of the steel industry. I hope that this new clause will be passed and that the Government and the BSC will be forced to take it into account.
      I believe that the evidence from all that has happened in past years underlines the need for that kind of action. I cite the steel works in my own constituency, which in the past two or three years has been fairly successful. The tinplate finishing plant in Ebbw Vale has been producing tinplate as successfully as any firm on the face of the planet, but all that was planned and was dependent upon investment that took place 10, 11 or 12 years ago. When we had the big rundown in general steel making, we carried through a big expansion of investment in the finishing plant, and that is why we have been able to carry through the advances there. We had an investment of £70 or £80 million in 1977 and 1978, and that is the reason for the proper conduct of the industry in Ebbw Vale at the present time.
      We want the same sort of guarantees for the future, but the BSC, for its own reasons—I am not blaming it for this—has been carrying through fresh investments in Trostre and Velindre, not quite on the scale that it did with us 10 years ago, but looking to the future there. Naturally, when that tinplate investment took place elsewhere, we asked the BSC to give us guarantees that we should have fresh investment to sustain our tinplate production on a proper basis over the years ahead.
      The people in the BSC are eager that that should happen. They told us that they planned a major expansion of the operation in Ebbw Vale in two or three years' time and that there would be other capital advances in the meantime. The tinplate operation in Ebbw Vale would be serving the nation for the next 10 or 20 years, and would at any rate have the basis of proper investment for the future.
      Of course, if the industry had been left in public ownership, that is exactly what could have been done. The Steel Corporation could have given a valid, continuing pledge to the people in Ebbw Vale, who have managed a very difficult changeover with great skill and success. But, owing to the miserable, squalid measure that the Government have brought forward, and their allegiance to the ridiculous dogma of handing the industry over to somebody else, the corporation is not able to give that guarantee.
      So, even at this late hour, I urge the Government to accept the new clause and the arguments put forward by my hon. Friend the Member for Great Grimsby so that at least some safeguards may be incorporated in this measure. It is quite absurd that that kind of guarantee
      858
      should have been removed by the change in ownership. We are trying to rescue something so that the workers in the industry may have some proper guarantees for the future.
      7.15 pm
      Mr. Austin Mitchell: My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) has put the case so powerfully that there is no need to repeat it. The Minister's reply was very unsatisfactory. It indicated that in all those hours in Committee he learned nothing, and that he d id not know much in the first place. His reply was totally dismissive. Under private ownership, this industry had an appalling record of bad investment and disorganisation. It has now been passed back in to the private sector, with no guarantees concerning the maintenance of investment, by a Government who tell us that they have no major proposals for investment in the steel industry at the present moment. It is no answer to our argument to hide behind the skirts of business confidentiality. We need to know that British Steel has plans for investment in continuous casting and all the other processes to keep up with the technology.
      We need to be satisfied that this will be a healthy industry that will take Britain into the next century and provide a firm, strong base for the manufacturing sector—a manufacturing sector that it will be the responsibility of the next Labour Government to rebuild and that will be rebuilt on the basis of a powerful, competitive steel industry. That is our concern, and it can be met only by investment and continuous provision for investment through this new clause.
      I ask my hon. Friends to support the new clause in the Lobby.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 202, Noes 235.

      Division No. 307]

      [7.20 pm

      AYES

      Abbott, Ms Diane

      Clarke, Tom (Monklands W)

      Adams, Allen (Paisley N)

      Clay, Bob

      Allen, Graham

      Clelland, David

      Alton, David

      Clwyd, Mrs Ann

      Anderson, Donald

      Cohen, Harry

      Archer, Rt Hon Peter

      Cook, Frank (Stockton N)

      Armstrong, Hilary

      Corbett, Robin

      Ashley, Rt Hon Jack

      Corbyn, Jeremy

      Ashton, Joe

      Cousins, Jim

      Banks, Tony (Newham NW)

      Cox, Tom

      Barnes, Harry (Derbyshire NE)

      Crowther, Stan

      Barron, Kevin

      Cummings, John

      Beckett, Margaret

      Cunliffe, Lawrence

      Beith, A. J.

      Dalyell, Tam

      Bell, Stuart

      Darling, Alistair

      Bennett, A. F. (D'nt'n & R'dish)

      Davies, Ron (Caerphilly)

      Bermingham, Gerald

      Davis, Terry (B'ham Hodge H'l)

      Bidwell, Sydney

      Dewar, Donald

      Blair, Tony

      Dixon, Don

      Boateng, Paul

      Dobson, Frank

      Boyes, Roland

      Doran, Frank

      Bradley, Keith

      Douglas, Dick

      Bray, Dr Jeremy

      Dunnachie, Jimmy

      Brown, Gordon (D'mline E)

      Dunwoody, Hon Mrs Gwyneth

      Brown, Nicholas (Newcastle E)

      Eadie, Alexander

      Bruce, Malcolm (Gordon)

      Eastham, Ken

      Buchan, Norman

      Ewing, Harry (Falkirk E)

      Buckley, George J.

      Fatchett, Derek

      Caborn, Richard

      Faulds, Andrew

      Callaghan, Jim

      Fearn, Ronald

      Campbell, Ron (Blyth Valley)

      Field, Frank (Birkenhead)

      Campbell-Savours, D. N.

      Fields, Terry (L'pool B G'n)

      Canavan, Dennis

      Flannery, Martin

      Carlile, Alex (Mont'g)

      Flynn, Paul

      Clark, Dr David (S Shields)

      Foot, Rt Hon Michael

      859

      Foster, Derek

      Morgan, Rhodri

      Foulkes, George

      Morley, Elliott

      Fraser, John

      Morris, Rt Hon A. (W'shawe)

      Fyfe, Maria

      Morris, Rt Hon J. (Aberavon)

      Galbraith, Sam

      Mowlam, Marjorie

      Garrett, John (Norwich South)

      Mullin, Chris

      Garrett, Ted (Wallsend)

      Murphy, Paul

      Gilbert, Rt Hon Dr John

      Nellist, Dave

      Godman, Dr Norman A.

      O'Brien, William

      Gordon, Mildred

      O'Neill, Martin

      Graham, Thomas

      Orme, Rt Hon Stanley

      Grant, Bernie (Tottenham)

      Parry, Robert

      Griffiths, Nigel (Edinburgh S)

      Patchett, Terry

      Grocott, Bruce

      Pendry, Tom

      Hardy, Peter

      Pike, Peter L.

      Hattersley, Rt Hon Roy

      Powell, Ray (Ogmore)

      Healey, Rt Hon Denis

      Prescott, John

      Heffer, Eric S.

      Primarolo, Dawn

      Henderson, Doug

      Radice, Giles

      Hogg, N. (C'nauld & Kilsyth)

      Randall, Stuart

      Holland, Stuart

      Redmond, Martin

      Home Robertson, John

      Rees, Rt Hon Merlyn

      Hood, Jimmy

      Richardson, Jo

      Howarth, George (Knowsley N)

      Roberts, Allan (Bootle)

      Hoyle, Doug

      Robertson, George

      Hughes, John (Coventry NE)

      Robinson, Geoffrey

      Hughes, Robert (Aberdeen N)

      Rooker, Jeff

      Hughes, Roy (Newport E)

      Ruddock, Joan

      Illsley, Eric

      Salmond, Alex

      Ingram, Adam

      Sedgemore, Brian

      Janner, Greville

      Sheerman, Barry

      John, Brynmor

      Sheldon, Rt Hon Robert

      Jones, Barry (Alyn & Deeside)

      Short, Clare

      Jones, Ieuan (Ynys Môn)

      Skinner, Dennis

      Jones, Martyn (Clwyd S W)

      Smith, Andrew (Oxford E)

      Kaufman, Rt Hon Gerald

      Smith, C. (Isl'ton & F'bury)

      Kennedy, Charles

      Soley, Clive

      Lambie, David

      Spearing, Nigel

      Lamond, James

      Steel, Rt Hon David

      Leadbitter, Ted

      Steinberg, Gerry

      Leighton, Ron

      Stott, Roger

      Lestor, Joan (Eccles)

      Strang, Gavin

      Lewis, Terry

      Straw, Jack

      Litherland, Robert

      Taylor, Mrs Ann (Dewsbury)

      Lloyd, Tony (Stretford)

      Thomas, Dr Dafydd Elis

      Loyden, Eddie

      Thompson, Jack (Wansbeck)

      McAllion, John

      Turner, Dennis

      McAvoy, Thomas

      Vaz, Keith

      McCartney, Ian

      Wall, Pat

      McFall, John

      Wallace, James

      McKay, Allen (Barnsley West)

      Walley, Joan

      McKelvey, William

      Wardell, Gareth (Gower)

      McLeish, Henry

      Wareing, Robert N.

      McNamara, Kevin

      Welsh, Andrew (Angus E)

      McTaggart, Bob

      Welsh, Michael (Doncaster N)

      Mahon, Mrs Alice

      Wigley, Dafydd

      Marek, Dr John

      Williams, Rt Hon Alan

      Marshall, David (Shettleston)

      Williams, Alan W. (Carm'then)

      Marshall, Jim (Leicester S)

      Wilson, Brian

      Martin, Michael J. (Springburn)

      Winnick, David

      Martlew, Eric

      Wise, Mrs Audrey

      Maxton, John

      Worthington, Tony

      Meale, Alan

      Wray, Jimmy

      Michael, Alun

      Young, David (Bolton SE)

      Michie, Bill (Sheffield Heeley)

      Michie, Mrs Ray (Arg'l & Bute)

      Tellers for the Ayes:

      Mitchell, Austin (G't Grimsby)

      Mr. Frank Haynes and

      Moonie, Dr Lewis

      Mrs. Llin Golding.

      NOES

      Alison, Rt Hon Michael

      Baker, Nicholas (Dorset N)

      Allason, Rupert

      Baldry, Tony

      Amess, David

      Batiste, Spencer

      Amos, Alan

      Beaumont-Dark, Anthony

      Arbuthnot, James

      Bellingham, Henry

      Arnold, Jacques (Gravesham)

      Bendall, Vivian

      Arnold, Tom (Hazel Grove)

      Bennett, Nicholas (Pembroke)

      Ashby, David

      Bevan, David Gilroy

      Aspinwall, Jack

      Biffen, Rt Hon John

      Atkins, Robert

      Biggs-Davison, Sir John

      860

      Blackburn, Dr John G.

      Grist, Ian

      Body, Sir Richard

      Ground, Patrick

      Bonsor, Sir Nicholas

      Gummer, Rt Hon John Selwyn

      Boscawen, Hon Robert

      Hamilton, Hon Archie (Epsom)

      Boswell, Tim

      Hamilton, Neil (Tatton)

      Bottomley, Peter

      Hannam, John

      Bottomley, Mrs Virginia

      Hargreaves, A. (B'ham H'll Gr')

      Bowden, A (Brighton K'pto'n)

      Harris, David

      Bowden, Gerald (Dulwich)

      Hawkins, Christopher

      Boyson, Rt Hon Dr Sir Rhodes

      Hayhoe, Rt Hon Sir Barney

      Braine, Rt Hon Sir Bernard

      Hayward, Robert

      Brandon-Bravo, Martin

      Heathcoat-Amory, David

      Brazier, Julian

      Heddle, John

      Brooke, Rt Hon Peter

      Heseltine, Rt Hon Michael

      Brown, Michael (Brigg & Cl't's)

      Hicks, Mrs Maureen (Wolv' NE)

      Browne, John (Winchester)

      Hicks, Robert (Cornwall SE)

      Bruce, Ian (Dorset South)

      Hill, James

      Buchanan-Smith, Rt Hon Alick

      Hogg, Hon Douglas (Gr'th'm)

      Burns, Simon

      Holt, Richard

      Burt, Alistair

      Hordern, Sir Peter

      Butterfill, John

      Howarth, Alan (Strat'd-on-A)

      Carlisle, Kenneth (Lincoln)

      Howell, Ralph (North Norfolk)

      Carrington, Matthew

      Hughes, Robert G. (Harrow W)

      Carttiss, Michael

      Hunt, David (Wirral W)

      Cash, William

      Hunt, John (Ravensbourne)

      Chalker, Rt Hon Mrs Lynda

      Hunter, Andrew

      Chapman, Sydney

      Irvine, Michael

      Chope, Christopher

      Irving, Charles

      Churchill, Mr

      Jack, Michael

      Clark, Dr Michael (Rochford)

      Jackson, Robert

      Clark, Sir W. (Croydon S)

      Janman, Tim

      Clarke, Rt Hon K. (Rushcliffe)

      Jessel, Toby

      Conway, Derek

      Johnson Smith, Sir Geoffrey

      Coombs, Anthony (Wyre F'rest)

      Jones, Gwilym (Cardiff N)

      Coombs, Simon (Swindon)

      Jones, Robert B (Herts W)

      Cope, John

      Jopling, Rt Hon Michael

      Cormack, Patrick

      Kellett-Bowman, Dame Elaine

      Couchman, James

      Kilfedder, James

      Davies, Q. (Stamf'd & Spald'g)

      Kirkhope, Timothy

      Davis, David (Boothferry)

      Knapman, Roger

      Day, Stephen

      Knight, Greg (Derby North)

      Devlin, Tim

      Knowles, Michael

      Dickens, Geoffrey

      Knox, David

      Dicks, Terry

      Lamont, Rt Hon Norman

      Dorrell, Stephen

      Lang, Ian

      Douglas-Hamilton, Lord James

      Lawrence, Ivan

      Dover, Den

      Lennox-Boyd, Hon Mark

      Dunn, Bob

      Lloyd, Sir Ian (Havant)

      Dykes, Hugh

      Lloyd, Peter (Fareham)

      Eggar, Tim

      Lord, Michael

      Emery, Sir Peter

      Lyell, Sir Nicholas

      Evans, David (Welwyn Hatf'd)

      Maclean, David

      Evennett, David

      McLoughlin, Patrick

      Fallon, Michael

      McNair-Wilson, M. (Newbury)

      Farr, Sir John

      McNair-Wilson, P. (New Forest)

      Favell, Tony

      Madel, David

      Fenner, Dame Peggy

      Major, Rt Hon John

      Field, Barry (Isle of Wight)

      Malins, Humfrey

      Finsberg, Sir Geoffrey

      Mans, Keith

      Fookes, Miss Janet

      Maples, John

      Forman, Nigel

      Marshall, Michael (Arundel)

      Forsyth, Michael (Stirling)

      Martin, David (Portsmouth S)

      Forth, Eric

      Mates, Michael

      Fox, Sir Marcus

      Mawhinney, Dr Brian

      Franks, Cecil

      Maxwell-Hyslop, Robin

      Freeman, Roger

      Meyer, Sir Anthony

      French, Douglas

      Mills, Iain

      Fry, Peter

      Moate, Roger

      Gale, Roger

      Monro, Sir Hector

      Gardiner, George

      Morrison, Hon Sir Charles

      Garel-Jones, Tristan

      Moss, Malcolm

      Goodlad, Alastair

      Mudd, David

      Goodson-Wickes, Dr Charles

      Neale, Gerrard

      Gorman, Mrs Teresa

      Neubert, Michael

      Gow, Ian

      Nicholls, Patrick

      Gower, Sir Raymond

      Nicholson, David (Taunton)

      Greenway, Harry (Ealing N)

      Nicholson, Emma (Devon West)

      Greenway, John (Ryedale)

      Page, Richard

      Gregory, Conal

      Paice, James

      Griffiths, Peter (Portsmouth N)

      Patnick, Irvine

      861

      Peacock, Mrs Elizabeth

      Temple-Morris, Peter

      Porter, Barry (Wirral S)

      Thompson, D. (Calder Valley)

      Porter, David (Waveney)

      Thompson, Patrick (Norwich N)

      Powell, William (Corby)

      Thornton, Malcolm

      Price, Sir David

      Thurnham, Peter

      Raffan, Keith

      Townend, John (Bridlington)

      Rhodes James, Robert

      Tracey, Richard

      Riddick, Graham

      Tredinnick, David

      Roberts, Wyn (Conwy)

      Trippier, David

      Roe, Mrs Marion

      Waddington, Rt Hon David

      Rowe, Andrew

      Waldegrave, Hon William

      Rumbold, Mrs Angela

      Walden, George

      Sainsbury, Hon Tim

      Walker, Bill (T'side North)

      Shaw, David (Dover)

      Walker, Rt Hon P. (W'cester)

      Shaw, Sir Giles (Pudsey)

      Wardle, Charles (Bexhill)

      Sims, Roger

      Warren, Kenneth

      Skeet, Sir Trevor

      Watts, John

      Smith, Tim (Beaconsfield)

      Wheeler, John

      Speller, Tony

      Whitney, Ray

      Stanbrook, Ivor

      Widdecombe, Ann

      Steen, Anthony

      Wiggin, Jerry

      Stern, Michael

      Winterton, Mrs Ann

      Stevens, Lewis

      Wolfson, Mark

      Stewart, Andy (Sherwood)

      Wood, Timothy

      Stewart, Ian (Hertfordshire N)

      Young, Sir George (Acton)

      Stradling Thomas, Sir John

      Sumberg, David

      Tellers for the Noes:

      Summerson, Hugo

      Mr. David Lightbown and

      Tapsell, Sir Peter

      Mr. Richard Ryder.

      Taylor, John M (Solihull)

      Question accordingly negatived.

    Clause l

      VESTING OF PROPERTY ETC. OF BRITISH STEEL CORPORATION IN A SUCCESSOR COMPANY
      Mr. Austin Mitchell: I beg to move amendment No. 2, in page 1, line 19, at end insert
      `and shall remain thus owned in perpetuity'.
      Mr. Deputy Speaker: With this it will be convenient to take the following amendments: No. 29, in clause 3, page 2, line 45, leave out from 'State' to end of line 49.
      No. 30, in page 2, line 49, at end insert
      '(1A) The proportion of the securities of the successor company which are allotted and subsequently issued in accordance with subsection (1)(b) above shall not exceed 20 per cent.'.
      No. 12, in clause 6, page 4, line 13, after 'limit', insert
      'of not less than one quarter'.
      No. 13, in page 4, line 20, leave out 'first'.
      No. 14, in page 4, line 24, leave out from beginning to end of line 48.
      Mr. Mitchell: I have moved the amendment in the hope that the steady fall in the Government's majority, which was achieved by the brilliant arguments from this side of the House, will continue. The amendment deals with the basic principle whether British Steel should be privatised and will be better under private ownership or, as we believe, should continue under national control as a public corporation.
      It is a basic argument whether British Steel should serve national, social and economic purposes for the nation, as it can do and does under public control, or whether it should serve primarily the interests of investors; whether its measure of success should be geared to its rate of profit. In our view, BSC should stay under public control and continue to serve those purposes which it has been serving so successfully over the years.
      We argue that BSC's present success, which the Government tell us about and which British Steel itself
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      points out in its advertisements on commercial television to prepare the way for privatisation, is due entirely to the fact that the company has been built up under public ownership. Only public ownership has allowed the amount of investment and expenditure that is required to keep steel going through the difficult periods that a cyclical industry always faces and allowed the British steel industry to develop into the successful industry that it is today. That is entirely the result of public ownership.
      It is irresponsible to throw away those benefits and advantages as the Government propose to do in order to make a quick profit and seize on a window of opportunity for the sale. Fortunately, that action would be made impossible by our amendment, which allows the Government to achieve what they believe to be the benefits of privatisation. Those are the benefits of running the company commercially, of placing marketing imperatives on the company, and of freeing it from the shackles of Treasury control and interference by Ministers, who know so little about industry, and care less.
      The amendment allows the company to be governed as a Companies Act company. The shareholder will be the Government of the day. In other words, we want, and we shall maintain, ultimate public control of the organisation. We draw the line there. The amendment requires the Government to keep the shares in perpetuity. Subsequent amendments, particularly amendment No. 29, stop the provisions in later clauses that allow the Government to sell off shares in the company.
      It is sensible to draw the line there. What else can the Government gain by flogging shares that they have created in the company? They do not need the money. The Chancellor of the Exchequer has been insistent that he has money rolling out of his ears to give away to the wealthy, with £2 billion going to the top 5 per cent. of the population. As the Chancellor has that much money and the economy is doing so well, why do the Government need the much smaller amount that will be forthcoming from the sale of British Steel?
      Not only do the Government not need the money, but there is the question of the cost of selling this corporation, as opposed to borrowing the money in gilts, which is the alternative. Privatisation is a form of public debt that is acquired by selling off assets belonging to the state. It is cheaper to sell gilts, taking into account the reduction of the value of the assets and the taxpayers' investment written off, and taking into account also the cost of privatization—the advertising, the underwriting, and the advice given to the Government by self-interested parties in the City about how privatisation can be made more palatable and acceptable to them.
      When all that is taken into account, the gains from privatising British Steel and selling the shares, as distinct from the Government borrowing in the normal way, are minimal. The answer is, "Do not sell." Our amendment allows the Government to get the advantages of the more commercial approach with British Steel, which they say they need, without the ultimate act of selling the shares to the public. It is a simple amendment along those lines.
      The amendment brings us to the basis of the argument about privatisation. The Government are obsessed with ideology. Privatisation is not a matter of fact or any tenable arguments or propositions about commercial advantages. It is simply doctrine. The Government have the obsession of Lady Macbeth. They want to wash their hands of any involvement in industry and any control over

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      industry. Yet how can they do that with steel? The industry is basic to the economy. It is the basic raw material of manufacturing, and basic to the manufacturing strength and health of this country.
      It is in the interests of manufacturing that steel should be provided as cheaply and efficiently as possible and of as high a quality as possible. That needs massive investment. Indeed, massive investment has been needed to get the steel industry to its present state. That scale of investment is likely to be forthcoming only from the state. It is an industry that is capital hungry, in a way that very few other industries are. It can be fed better by the state because the state does not have to ask for the same rate of return, thus forcing up the prices of the finished products and making our industry less competitive on world markets, in a way that is certain to happen with privatisation.
      The Government are so obsessed with privatisation that they are putting themselves in the position of spivs or ticket touts, seizing on a brief window of opportunity, as if they were selling a perishable product, to get rid of it as quickly as possible. That is exactly what they are doing.
      The opportunity has gone, though the effects linger on in steel production. The fall in the value of sterling in 1986, which the Chancellor neither wanted nor accepted, and resisted all the way, was forced on him by the rising oil price. It made British Steel, and much of British manufacturing, competitive. It opened our export opportunities in a way that the Government should have passed on to industry much earlier than they did, if they had had the economic sense to do so.
      Steel has benefited from the growth of manufacturing that was provided by that fall in the value of sterling, but it has done so at a time when the Chancellor has killed the goose that has laid its golden eggs. He has riddled it with bullets, gone through it with a machete knife, buried it and put a stake through its heart, and put garlic on the grave. Essentially, he has massacred that goose by letting the pound go up in a way that has been destructive to manufacturing industry.
      This argument between the Prime Minister and the rest of the Cabinet seems to have dominated the public prints. Nobody seems to notice that they are arguing from the wrong hypothesis. Both accept some increase in the value of sterling. The only argument is whether it should be fast and out of all proportion, or slower and more moderate. Yet there has been an increase of 23 per cent. in the real exchange rate of the pound sterling against the deutschmark since the last quarter of 1986. Our steel industry, in order to be competitive in the face of such an increase in the value of sterling, could not, even if British steel workers began to work for free, eliminate the cost increase forced on it by economic policies of high interest rates keeping sterling artificially over-valued.
      The Government are laying burdens and charges on the industry by power price increases, too. The 9 per cent. increase in electricity charges will be crippling for steel and many other industries. Having brought steel to the verge of privatisation, the Government can now impose charges on it to fatten up electricity for privatisation in its turn. So another window of opportunity has been closed and another burden on the steel industry added. It is another difficulty that will make the corporation a much less marketable proposition.
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      By July, probably 90 per cent. of quotas on steel production will have been taken off by the EEC. There will be almost unrestricted competition in the EEC then, and it can be guaranteed that other EEC countries will support their industries more generously than we shall, even if direct state aids are forbidden. Governments can manipulate to get around such restrictions, as the Italians have shown. So, even if there are no state aids, industries in other countries will be more generously supported than will ours, through transport subsidies, redundancy payments and other indirect means of state support with which our Government are much meaner than comparable Governments in the EEC. So another window of opportunity has been closed.
      There is a fourth closed window, in the sense that other industries are now going through the modernisation process and shedding labour in the way that British Steel pioneered. They will catch up. The Germans may be facing difficulties now, but they—Thyssen, for instance—are rapidly slimming down to a highly competitive state, the more so as the deutschmark has become under-valued against the pound, and there is world over-capacity in steel.
      British Steel will be sailed off into dangerous, stormy waters by the Government as quickly as possible in order to grab the briefly opened window of opportunity provided by the improvement of 1986–87, which was caused largely by the fall of sterling. The symptoms of these problems are all around us. They can be seen in the Metal Bulletin of 14 April, which says that United Kingdom demand for steel is up only 4 per cent., but customers' lead times are lengthening. The only alleviation of the situation is offered by imports, which are now much cheaper because of the high value of sterling. In 1987 imports were at an all time high, excluding 1980, the year of the steel strike. Metal Bulletin for 31 March says that Teesside's order to supply slabs to Tuscaloosa has now been lost to USX, formerly United States Steel—an early symptom of what is happening because the dollar is falling and the pound rising.
      In this position it will be a wise Government who recognise the risks of turning this capital-hungry cyclical industry loose on the world market and absolving themselves of all involvement in the consequences. Steel may face consequences and difficulties that will make it again need support from the State to see it through the difficulties that it has had in the past.
      The real question to be asked about privatisation—it is the reason why we want to stop the sale of the securities—is who will British Steel be sold to? What are the imperatives of the investors who will take it over? I do not imagine that they will be small investors. This will be a somewhat risky investment in a cyclical capital-hungry industry—too risky to sell to Sid and his friends. All the signs from the Bank of England are that Sid is satiated and will be once bitten twice shy after last October. The buyers will be big internationally diversified investors who want another element in their portfolio. They have no interest, necessarily, in the continuation of steel production in this country. They want a return that will perhaps allow them to write off their assets over a 20-year period. All they want is another egg in their basket, which British Steel can provide.

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      7.45
      This is part of the Government's process of making this land fit for investors to live in. They have closed down £25 billion worth of investment in manufacturing industry to make the rest of investment in manufacturing industry more profitable. They have allowed investors to diversify overseas, with money pouring out of this country. They have put on the stock market better invested internationalised industries as an attractive alternative to overseas or other industrial investment in this country. The land is becoming fit for investors, but investors do not have the same commitment to the maintenance of a powerful and effective steel industry, to providing steel as cheaply as possible to manufacturers, and to investing to keep up with the foreign competitors, as the State and community have. Nor do they have the same resources as the State to provide the wherewithal for investment. They do not have the commitment which is central to public ownership and which can be sustained only by public ownership.
      The very terms in which the company is being privatised in this shabby little Bill, with its shabby little company, are incentives for investors to write off their investment over a period and for British Steel to run the company to pay dividends regularly to investors rather than to invest in new capacity, new plant and new processes as we would want.
      The process of privatisation is essentially a commercial fiddle to write down the assets and make them attractive to investors. Lord Jenkin of Roding said that the Government will sell British Steel at a price that will be attractive to the investor. In other words, they will manipulate the asset value of British Steel until they get it to a price at which investors will bite and be guaranteed the return they want. Such a fiddle would be prevented by our amendment.
      The Government will not only write off the £17·6 billion—at current prices—that the taxpayer has put into British Steel, and for which he will receive no return, but even the remaining £3·9 billion of public dividend capital, which is all that is left after earlier write-offs. will be written down to make it attractive to investors. The best estimate that we have of the price that investors will pay for British Steel conies from the Financial Times of 29 February and is £2 billion. At that price the corporation will be an attractive investment for internationally diversified investors who want another egg in their basket.
      Clause 2 allows the Government to write down the public dividend capital of £4 billion to a level at which it can be sold—let us say £2 billion. So there will be a substantial write-off at the start to make British Steel attractive to investors. But there is another element in the confidence trick—clause 7. Our best estimate of the assets of British Steel is £5·4 billion. That figure is a combination of the fixed assets at current cost, which are £3·2 billion, plus £926 million of plant, which is fully written off and depreciated, but still in use in British Steel, which is still extracting profit from that money, plus the other assets of £1·2 billion, giving a total of £5·4 billion worth of assets.
      The statutory reserve in clause 7 will be set at the difference between the written-down value of public dividend capital—say, £2 billion—and the nominal value of the shares. If the nominal value can be determined at will, the Government can create for themselves free capital which can be distributed and used to absorb losses and then form the basis for write-downs in the asset values of the British Steel Corporation. If the fixed assets are written
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      down, as they will be, below their economic value, the returns that they produce count as income available for distribution. So the basis of privatisation is a confidence trick to fiddle down both assets and public dividend capital to a price that investors will pay. The Government are robbing themselves and the taxpayer and knocking down the value of their assets to get them on the market as quickly as possible—just to get rid of them.
      The Government have no higher sense of commitment to or responsibility for the steel industry, which is so important to the economy. As British Steel's assets are already under-valued, this sets the industry out on a dangerous path. The Government say that it is possible, even desirable, to write down assets to provide dividends for investors, and that it is desirable to reduce the price I to make it attractive for investors. On what path does that start the steel industry? It starts it back on the path on which it was previously under private ownership. The record of private ownership of steel was to pay dividends out of capital, to keep up the flow of dividends, at the expense of cutting down on investment or, in many cases, making no investment at all.
      There was a fascinating article in Accountancy in 1959 which showed how, when the industry was privately owned, in most years up to the war it paid dividend out of capital. It resumed that process in the 1950s and continued it in the 1960s. It was effectively an industry that was eating itself. It produced a cycle in steel that was a national tragedy. Irresponsible private ownership meant no investment and distribution of dividends out of capital, so reducing the industry to a position where it had to be taken over by the state to build it up by force feeding it in a sense, because only the state is powerful enough to do that.
      The state transformed the industry so that in the 1970s and the early 1980s it was a well invested, highly developed industry, producing an extremely competitive product on five integrated coastal sites. Then along come the Government to throw it back to the private sector to resume the irresponsible cycle that will reduce the industry to the state that it was in the early 1960s. This the Government call wisdom, economics and statesmanship. It is pure, simple irresponsibility which is unworthy of any Government, even this one.
      Mr. Crowther: No doubt my hon. Friend will recall the Benson report, which drew attention to the fact that the industry was being starved of capital, which led directly to its being taken into public ownership. No doubt my hon. Friend agrees that if that had not happened there would not be a steel industry today.
      Mr. Mitchell: My hon. Friend is right. Because of his long association with and deep knowledge of the steel industry, I am grateful for the point that he made.
      The interests of investors will not be the interests of the nation, the workers or manufacturing. Investors will be interested only in their returns. It is worthwhile asking how the return will be secured from British Steel. The answer is that it will be secured by the kind of fiddle which the Government themselves sanction by the very basis of the Bill.
      If we take £2 billion as the price for British Steel, the return that an investor will require will be about 20 per cent. We have to add to the rate of return 10 per cent., say, as a risk premium because of the nature of the industry. On our calculation, that will mean an annual dividend of

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      about 20 per cent. to make it an attractive investment. That is a high return. If we take into account Sir Robert Scholey's statement that he wants investment of about £300 million—he did not say for how long—it will be difficult for British Steel to make an annual return to investors on that scale and carry through the national investment.
      How could British Steel do that? It could do it by fiddling the figures in part, as it has done by using capital which has been written off. It has already started on that path to pretty up the accounts for privatisation. The Government encouraged that process after they had painted the picture far blacker than it was up to 1985 in order to enhance the case for loss of jobs and closures.
      Even on the return which it is making in 1987–88 British Steel will not be able to provide an annual return of £400 million. Therefore, it will be driven down the path that my hon. Friend the Member for Motherwell, South (Dr. Bray) described. The report from Youngs, the management consultants from Motherwell district council, shows clearly how the profits of British Steel could be increased by closures. The figures in the report are clear and dramatic. The closure of Ravenscraig would produce, every year, an extra profit of £100 million because there would be no need to finance investment and employment. In other words, British Steel could get from closures the rate of return that investors will want.
      It is not a question of profitability, but just of getting more profit as a return for the investor. That will be feasible by closing plants that might be profitable. The closure of Ravenscraig alone might not bring the dividends up to the requisite figure. The Government have already started British Steel down that path by sanctioning in clause 7 the write-off of assets. That will lead inevitably to further closures to extract more dividend for investors.
      Mr. Peter Hardy: There is another path as well as the one to which my hon. Friend has referred. British Steel could engage in asset stripping and sell off cheaply United Engineering Steels, which is so important in Rotherham and in my constituency.
      Mr. Mitchell: My hon. Friend is correct.
      Different dangers attend privatisation. There is the wasting way, the anorexia nervosa treatment, which provides a steady return for investors at the cost of failing to invest to build up the capacity of the industry so that it may remain competitive. That started with the process which we are now on of letting imports fill the peaks and not expanding the industry to provide for them. That path was pioneered by the British motor cycle industry and has also been trodden by the British car industry. It has had disastrous consequences for both of them.
      There are lots of possibilities. What we need is public control so that the industry serves the purposes of the nation, the national strength and British manufacturing. That can be secured only by public ownership in the form provided for in the amendment. The argument is simple. The danger is an irresponsible handover by a Government who are determined to get the cash as quickly as possible and to grab at the money in the window of opportunity so as to produce an incentive for investors who will take over British Steel to screw the maximum rate of return out of
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      their investment in ways which are disadvantageous for the national purposes of the country and the economic health of manufacturing.
      It would be irresponsible to throw away the benefits of public ownership and public investment just when they are beginning to make a return. Why should that money not return to the taxpayer? If the industry is to be as efficient and competitive as the Government tell us, why should the taxpayer not continue to derive the benefit and retain for himself and the community the power to sustain the industry through the difficulties which might lie ahead and which the cyclical industry of the past has shown probably do lie ahead?
      Mr. Michael Brown: I am absolutely flabbergasted by what the hon. Member for Great Grimsby (Mr. Mitchell) has said. He served with me on the Standing Committee. I refreshed my memory from the proceedings in Committee to see what the hon. Gentleman said. He said that the Labour party's amendments to the Bill
      "propose that British Steel should demonstrate a track record before privatisation."
      He went on to say, and I remember him saying it:
      "We are not standing in the Government's way and saying, 'Thou shalt not privatise'. We are saying that we should privatise taking into account all the sense and virtues that the Government tell us are to be found in the Conservative party"—
      Mr. Austin Mitchell: Will the hon. Gentleman give way?
      Mr. Brown: No, I will not give way until I have completed the quotation—
      "the feelings of financial market, financial rectitude and financial responsibility—by establishing a track record before this important national asset is launched on an uncertain sea."
      Later, he said:
      "Our concern, which we reiterated throughout the Second Reading debate, is that British Steel should not be privatised. We do not want it to be privatised. We are flatly opposed to privatisation."
      [Official Report, Standing Committee D, 10 March 1988; c. 59–60.]
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      I do not think that the Labour party knows its policy about the British steel industry. Once upon a time we knew what it was. I have no doubt that hon. Members who were here in the mid-1960s—such as the right hon. Member for Blaenau Gwent (Mr. Foot)—when the nationalisation of the steel industry was going through the House saw the House packed with hon. Members. Today there is no passion in the Opposition's arguments, and the fact that only about half a dozen Opposition Members are present shows that there is little concern whether the British steel industry is privatised.
      Mr. Austin Mitchell: It is fascinating for me to hear my speeches reread with some deterioration in the style, the grammar and the charm of the delivery. It is "Play Away" politics for the hon. Gentleman to engage in that kind of exercise. He well knows that the purpose of a Standing Committee is to probe the thinking of Ministers. In Committee, we were probing to find out if there was any thinking. Ministers emerged very badly from that examination. It is the intention of the Standing Committee to approach matters from different angles. The

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      amendments to which I was speaking approached the problem from different points of view. It is silly and irresponsible to quote one and to hold it against the other.
      The hon. Gentleman asked about the Labour party's position on privatisation. Our policy is to stop it. This industry needs to stay in public ownership. Public ownership has served the industry well and we feel that it will prosper only under such ownership. That is a clear statement of the position.
      Mr. Brown: We have made some progress, because we know what the Labour party would not do if it were in government. It would not denationalise or privatise. If one day—perish the thought—the Labour party were to form the Government, what would they do with the steel industry? We have not heard from the Opposition whether they would renationalise it.
      Mr. Mitchell: Will the hon. Gentleman give way?
      Mr. Brown: No, because I intend to be brief.
      We know what the Labour party opposes, but we do not know what it would do to the steel industry if it were to come back to power. I remember pressing the hon. Member for Dagenham (Mr. Gould) time and again in Committee about what he would do, and his ideas changed from day to day. When he and the hon. Member for Great Grimsby had not had time to consider their policy, they expressed totally different views.
      Shortly before the 1987 election, the Prime Minister announced three broad goals that the Government would set out to achieve in their term of office: first, a reduction in the burden of public indebtedness; secondly, a significant reduction in personal and corporate tax rates; and, thirdly, the improved provision of social services. A key role in the reduction of debt was to be played by the reform and sale of state-owned businesses.
      Those words were used not by our Prime Minister but by the Finance Minister in the New Zealand Labour Government. He used them yesterday evening in the presence of the hon. Member for Dagenham. Labour Governments in other countries who have the responsibility for looking after state assets recognise that they cannot for ever be held in the the public sector. The Labour Government of New Zealand have found a way of giving a future to their steel industry. It was significant that the hon. Member for Dagenham took the trouble to go and listen to that speech, probably because he does not have his policy worked out and is probably trying to get some ideas to see how it is done.
      The amendment should be rejected. Labour Governments of the 1960s and 1970s implemented policies that brought the steel industry near to bankruptcy. The Conservative Government of the 1980s have brought the industry back to profitability. It is now time to secure that profitablility by ensuring that the industry is privatised as quickly as possible.
      Mr. Elliot Morley: We should remember what we are talking about when we discuss these amendments. The Bill will turn the British Steel Corporation into a plc wholly owned by the Government. That could go ahead with the ownership remaining with the Government, and that is what we are arguing for in the amendments. There are very good
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      arguments for that, and many of them have been outlined by my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
      It is worth remembering that British Steel's present prosperity is a direct result of the investment that was made during public ownership. Scunthorpe would have gone the way of Corby if it had not been for the Anchor project and the massive investment in the early 1970s under public ownership. We must face the question whether that same kind of massive investment and modernisation programme will continue in private ownership, or whether the temptation will be to take the profits while they are good and while the exchange rate is to the benefit of BSC. There may be a temptation to take the money while BSC is going through a boom and then, when the industry goes down again, to forget about it.
      People who have worked in the steel industry all their lives and have been through the changes when it was privately owned and state-owned have told me that, when the industry was nationalised, investment was in the form of new machinery. They said that when it was denationalised, all it got was a new coat of paint and money was not invested as it should have been. We all want to see a prosperous and competitive steel industry. We do not want to see such a national asset being sold at a loss to Britain and to the taxpayers. That is exactly what we will get under the terms of the Bill.
      We have not addressed the problem of the billions of pounds of public money that have gone into the steel industry since the beginning of the 1980s. In reply to a question, the Minister said that since 1979, over £5 billion of taxpayers' money has gone into the industry to help it to restructure and modernise. Are we completely to forget about that money? Now that we have seen the fruits of that investment, are we simply to throw it away while there is an opportunity to receive some dividends, some return in terms of the profits that the steel industry is making? Those profits should go to the Exchequer to repay the taxpayers for all the money that has gone to the industry.
      Steel is a strategic industry, important to the well-being of our nation. Britain is a manufacturing nation but we may well be swamped by imports and lose that status. It is important that steel is given the kind of security that a state-owned company enjoys.
      I am prepared to accept that there were weaknesses in the Morrison form of nationalisation. I am not saying that we cannot look at different approaches to public ownership that will give the people who work in the industries a real say and a stake in them. I am not saying that a free-standing company should have a great deal of direct interference in its day-to-day running. Such a company should operate on a commercial basis.
      Even under the Bill, the company would remain in public ownership and the money that has gone into it could be retrieved through the profits that the industry is now making. There is no logic in selling off British Steel to the private sector and thinking that there will be increased competition, because that will simply produce a monopoly. The sale of other former public companies, such as British Telecom and British Gas, to the private sector has not improved the service to consumers. In the case of British Telecom, the quality of service has deteriorated. There is no guarantee that the benefits to the consumer will be enhanced by selling the British Steel Corporation to the private sector.
      Mr. Tim Janman: I am interested in the hon. Gentleman's comments about competition. Does he accept that 40 per cent. of steel products sold in the United Kingdom are imported and that there is plenty of competition in Europe that British Steel must face, which will act as an incentive to give good quality service to customers?
      Mr. Morley: I am not sure that the answer to our economic problems is to increase imports. I would rather see competition among United Kingdom plants, rather than rely upon imports.
      We shall go into a unified market in 1992. Our industries already suffer the disadvantage of high energy costs compared with our European rivals. The BSC is by no means one of the largest steel-producing companies in Europe, so it runs the risk of unfair competition which will undermine its position and, as a result, this country's position as a steel-producing nation.
      Public ownership protects the steel industry from its cycles. When the going has been good, the private sector has taken money out of the industry, but, when the going has been difficult, it has cleared off and left the state to pick up the pieces. After rebuilding our steel industry and making it one of the best in the world, the Government are prepared to throw it to the wolves, to wash their hands of it and to destroy what has been built up with public money and support.
      Mr. Fallon: The trouble with Opposition Members is that they try to have things both ways. The hon. Member for Glanford and Scunthorpe (Mr. Morley) and, in the earlier debate, the right hon. Member for Blaenau Gwent (Mr. Foot) claimed that the successful steel operations in their constituencies were due to the massive investment programme of the last Labour Government. If that is true, the failure of the steel operations in Corby and Consett must also be due to that programme. Opposition Members cannot have it both ways.
      I have always thought that Mr. Speaker was a generous man, but he has been more than generous in his selection of the amendments, because it is clear that amendment No. 2 comes close to being a wrecking amendment. The Labour party says that, even if the British Steel Corporation is allocated in share capital, the shares should not be sold: they should be retained for ever in public ownership. That is quite clearly a nonsensical approach for three reasons.
      First, as the hon. Member for Great Grimsby (Mr. Mitchell) admitted, future and continuing large-scale investment will be required in the industry. He suggested that that could be financed from gilts, but, if that is the case, steel would always be competing against other equally massive investment in key public services, such as education and health, which are also financed from gilts and public borrowing. Steel would therefore always be competing, perhaps at a disadvantage, with other claims on investment from the public sector.
      Secondly, if the shares are retained in public ownership, the British Steel Corporation will be far less responsive to its customers' and shareholders' needs. In new clause 1, Opposition Members specifically advocate taking account of customers' and shareholders' wishes. Those wishes may well be considered, but, if the shares are retained in public ownership, they will always be less important than the wishes of Ministers, particularly of the Treasury Ministers.
      Dr. Reid: Is the hon. Gentleman suggesting that, as British Telecom is now in the private sector, it is more responsive and pays more attention and gives better service to its customers?
      8.15 pm
      Mr. Fallon: Yes, certainly. British Telecom and Oftel do nothing but write to Members of Parliament about all the improvements that they are making and planning. If the improvements are of the scale that they describe, one wonders what the service was like under public ownership. There is therefore no real strength in that argument.
      Thirdly, if the BSC is retained in the public sector, it will be placed at a strong competitive disadvantage to other companies in the European and world market place which are privately owned or which Governments intend to be privately owned. As my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) has reminded us, such privatisation is envisaged by both Conservative and Socialist Governments.
      The amendment seeks to preserve the status quo. If the shares are publicly owned, there is not much point in privatising the BSC. The amendment advocates no change in British Steel and it shows, above all, no confidence in either the management or the work force to make a success of the industry in the market.
      Mr. Foot: As I have listened to the debate, I have been more and more amazed at the prospect that a Minister from the Welsh Office is to reply to it. The Minister of State, Welsh Office is the only Minister to have listened to the debate, so I presume that he will answer for the Government. That is a pretty amazing state of affairs. I have the greatest affection for the hon. Gentleman, as everyone in Wales knows, but we do not regard him as a great spokesman about steel. Is he going to come to the Dispatch Box and say that it was wrong to nationalise the steel industry in Wales?
      What will happen to the Llanwern works? There would have been no such works without public ownership. When the works was set up and hundreds of millions of pounds invested in it, it was called the Spencer works. Aneurin Bevan suggested that it was better to call it the Spencer works because Sir Henry Spencer had backed it throughout. He advocated public ownership and knew that only public money could sustain the industry on the proper scale. He would have been gratified by the scale of the success of the Llanwern works over recent years, but he would have been horrified that a Welsh Office spokesman should have dared to come to the Dispatch Box to seek to justify throwing this great industry, built up by huge public funds and effort, back into private hands, when it had been built up solely by public investment and public foresight. If it had not been for that, there would have been no works at Llanwern.
      My hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Glanford and Scunthorpe (Mr. Morley) have put the case magnificently that the steel industry is a long-term industry. It must have a chance of long-term planning. That was the situation in Llanwern. It had some difficulties for two or three years, but Henry Spencer said that we must back it over a period. That is what the steel industry needs.
      I recall vividly when the Government took the wretched decision to appoint Ian MacGregor to run the steel industry. The fact that he had ruined the coal industry was

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      bad enough. I remember my first private conversation with him and I believe that it is perfectly all right to make the facts public now. He said to me, "You must recognise that we are not bound by the undertakings of the British Steel Corporation." I said, "But the whole point about the British Steel Corporation is that it must be bound by its previous obligations to the work force and the community at large." Eventually, for a while, we forced him to carry out the obligations that his predecessors had undertaken; that was extremely important for the industry.
      Ian MacGregor wanted to wriggle out of the obligations, and under his leadership many commitments to my constituents and others were broken—shamefully so in some cases—and thereby the corporation thought that it did not have to carry out its obligations to the communities. Ian MacGregor was absolutely opposed to the plan of building up other industries and for the steel industry to play a major part in that development. The Labour Government had given that undertaking, but he wanted to wriggle out of it.
      It is absolutely appalling that the Minister of State, Welsh Office should come to the Dispatch Box to throw the industry back into private ownership without knowing what the outcome will be. As my hon. Friend the Member for Great Grimsby said, no one can foresee the world situation for steel over the next five or 10 years. It is shameful and shocking that the Government should decide now to put at risk an industry which has been through such pain and agony.
      I say this in the interests of the whole steel industry, in which the whole nation has a special interest. As I said earlier, I speak in the interests of each steel plant. We want firm commitments about investment over the next five or 10 years. We should have a Minister at the Dispatch Box who is capable of giving firm commitments. If the industry is to be privatised, such firm commitments cannot be given from the Disptach Box. That is why we are opposed to the privatisation. If the Minister wants to do a service to Wales, he should tear up his prepared speech and say "No, we will not do this." He has experience of steel matters. He had better get an underling from another Department to do the dirty work.
      The Minister of State, Welsh Office (Mr. Wyn Roberts): The hon. Member for Great Grimsby (Mr. Mitchell) was sufficiently honest to admit at the beginning of this debate that he was using the amendment to debate the basic principle. Therefore, we heard the age-old argument of public ownership versus privatisation. We covered this ground thoroughly on Second Reading, and we touched on it in Committee.
      During the Second Reading my right hon. and learned Friend the Chancellor of the Duchy of Lancaster set out the Government's position clearly when he said:
      "The Government believe that good commercial enterprises should be in the private sector because they thrive better there. They are free of Treasury control, free of ministerial control and further away from political lobbying which raises problems now or in future."— [Official Report, 23 February 1988; Vol. 128, c. 170.]
      I am aware of the connection of the right hon. Member for Blaenau Gwent (Mr. Foot) with steel. He may not know about mine. I was present at the opening of the Llanwern works in the early 1960s, and I remember Sir Henry Spencer. They used so much blue paint at Llanwern that it was called Spencer Blue. Perhaps the right hon. Gentleman does not remember as clearly as I do that the
      874
      talk at the time was that the opening of the Llanwern works would mean the end of steel making at Ebbw Vale. It did not mean that for many years thereafter. Was it not left to a Labour Government, towards the end of their term in office, to close down steel making at Ebbw Vale and in Cardiff? That was very much in prospect towards the end of that Labour Government's term of office.
      Mr. Foot: The Minister should get his facts straight. The Minister responsible for the proposal to close the heavy end of steel making at Ebbw Vale was his right hon. Friend the present Secretary of State for Wales. The Minister had better be careful about what he says.
      Mr. Roberts: I am fairly sure of my facts. It was only a matter of time and of allowing the general election to pass before the decisions were implemented. The Labour Government had been forced into the position where they recognised that the rundown at Ebbw Vale and in Cardiff had to take place.
      I want to consider the Government's justification for privatisation. As my hon. Friend the Member for Darlington (Mr. Fallon) said, we believe that the steel industry will perform better in the private sector. The Government are not alone in that belief. The BSC wants that. If hon. Members care to look at the report and accounts published in July last year, they will discover in the penultimate paragraph that the chairman states:
      "The board believes that a return to the private sector would bring clear commercial advantages to the corporation."
      Mr. Hardy: Will the Minister give way?
      Mr. Roberts: No, I want to finish this point. I shall give way later.
      The chairman of BSC said that in the context of all the challenges that BSC must face in the near future. BSC is facing the challenges for the future with some confidence, and the Government share that confidence. Having listened to Opposition Members today and in Committee, it seems that they base their views entirely on their worst fears and believe that the steel industry will be better protected if it is in public ownership.
      The record of British Steel in public ownership is not as the Opposition would make out. I have a copy of an excellent document written by Elizabeth Cotterell, called "The Giant with the Feet of Clay: the British Steel Industry 1945–1981." This very good document describes some of the delays and damage caused during the period of public ownership.
      We have not discussed the amendment in detail. However, it is clear that it is our intention that we should sell at least the majority of shares that we hold in the successor company following vesting. If a minority shareholding is retained, it will not be because the Government consider it necessary to retain a formal interest in the successor campany; nor, in those circumstances, would the Government seek to exercise any influence over the company's policy. Once again I reiterate our firm belief that we believe that the industry will react better to the requirements of he market place when it is in the private sector.
      8.30 pm
      The amendments are designed to preserve a specific Government shareholding in the successor company. That is completely at odds with our policy and it would certainly

      875
      be wrong to enshrine such restraints in statute. These issues were thoroughly discussed in Committee, and the broader questions were debated on Second Reading. We accept that the steel industry is important, but it does not follow that the Government must retain control over it to protect the national interest. British Steel's history shows that Government intervention is often not beneficial either to the commercial success of the company or, in the longer term, to the national interest.
      I recall debates in the House in 1973—and reference was made to this in Committee—when a great argument raged across the Floor of the House on how much steel should be produced. The then Government were talking of 38 million tons, whereas the Opposition were talking of 42 million tons or thereabouts. We all know what volume of steel production was reached within a few years after that time. In other words, all of us, on both sides of the House, were wrong. So much for our deep political knowledge and judgment of the steel industry.
      This is an enabling Bill, and privatisation will take place subject to market conditions. We have always made that clear. The taxpayer will have his reward through the return to the Treasury from the sale of shares. I emphasise to the hon. Member for Glanford and Scunthorpe (Mr. Morley) that the return from the proceeds of the sale is likely to be far greater than any return from dividends over the years.
      Mr. Austin Mitchell: The Minister is a poet or a bard, and he made a reply appropriate to a poet or a bard. It was not an economist's reply, nor was it a politician's reply. It was essentially doggerel. There was no mobilisation of any argument. Apart from the Minister's repetition of a few cliches, I heard no justification for taking the British Steel Corporation, which the Minister has told the House is so successful, transforming it into a shell company, and flogging it off. What gains will materialise from such an action? Can those gains be quantified? What prospects lie ahead if that is done?
      We claim—and the history of steel shows this to be true—that there is an inherent tendency in private ownership to take the maximum return on investment and to draw the maximum dividends, but not to make the new investment in capacity and plant that is necessary for the industry to remain competitive. The tendency is not to build new plants, but to pay dividends out of capital or out of a failure to invest. That is the whole history of the steel industry. What will make that different now that the Government are again putting the steel industry into the hands of the self-same investing community that produced that record of neglect in the past? What will turn British Steel into a dynamic industry when it is privatised this time? There has been no indication at all from the Government.
      One change is that the investors will be internationally diversified. British Steel will represent only a small proportion of their investment and will be something that they can write off. They will have no interest in the continued well-being of British Steel, provided it pays dividends. Once those investors have enjoyed a return on their capital they will be able to write it off after 20 years and put their money into another steel industry somewhere else. British Steel will be just one of the eggs in their basket. The danger is that they do not have any concern for the national interest of the kind which the Government have,
      876
      and which the elected representatives of the people can have in influencing the Government through the House. That is the argument for public control, and it is one that has not been answered.
      The only justification that the Government can provide for privatisation is that the Opposition are against it. That is the equivalent of a thug who has been arrested for attacking an old lady demanding of the policeman, "What is your philosophy about crime? What are you going to do to stop crime?", while not recognising that his own actions were wrong. The Minister's only arguments have come in the form of a few statements from British Steel executives. Of course they are in favour of privatisation, because they will get rid of Treasury control, with all its restrictions, and of interference by Ministers who they believe know nothing about the industry. They will also be able to pay themselves more money. In that situation, I would be in favour of privatisation. However, we in this Chamber must take account of the nation's interests and ensure the survival of a healthy manufacturing economy. We must also concern ourselves with the production of steel as cheaply and as abundantly as possible, to act as a basis for that industry.
      Mr. Wyn Roberts: The hon. Gentleman does an injustice to the management of BSC when he ascribes to it those reasons for being in favour of privatisation. I am sure that he would wish to take account of the entire contents of the chairman's review, in which his statement in favour of privatisation occurs. He would then see that the BSC board is in favour of privatisation because it believes that the steel industry will do better.
      Mr. Mitchell: The Government have been telling the House how well British Steel has been doing under public ownership, and that the whole basis of its success has been the investment made, the reorganisation undertaken, and the shedding of labour that has been carried through under state ownership. When the hon. Member for Darlington (Mr. Fallon) said that private ownership means success, and that public ownership means failure, his assertion is in direct defiance of all the facts. There is in the 16 May issue of Metal Bulletin a table of results for EEC steelmakers. The only major success is that of British Steel, which is publicly owned, with a profit of 286 million ecu for 1987. The privately-owned German steel maker, Klockner, made a loss of 39 million ecu. Thyssen lost 107 million ecu. Hoechst made a profit of only 24 million ecu, and both Irish Steel and Danish Steel made losses. Private steel makers are losing money, but British Steel is successful, and has been made successful by public ownership. The Government want to throw that away, and that is irresponsible of them to do so in the fashion that they propose.
      The Government are irresponsible. They are a Government who have presided over years of oil wealth and have thrown that away. They have thrown away the nation's opportunity and are now selling off the nation's assets at knockdown prices—grabbing a quick window of opportunity to get the best price that they can, irrespective of the consequences for the industry and the problems that will confront the national economy later. It is Government by irresponsibility, and we shall vote against it.
      Question put, That the amendment be made:—
      The House divided: Ayes 186, Noes 246.

      Division No. 308]

      [8.37 pm

      AYES

      Abbott, Ms Diane

      Harman, Ms Harriet

      Adams, Allen (Paisley N)

      Healey, Rt Hon Denis

      Allen, Graham

      Heffer, Eric S.

      Anderson, Donald

      Henderson, Doug

      Archer, Rt Hon Peter

      Hogg, N. (C'nauld & Kilsyth)

      Armstrong, Hilary

      Holland, Stuart

      Ashton, Joe

      Home Robertson, John

      Banks, Tony (Newham NW)

      Hood, Jimmy

      Barnes, Harry (Derbyshire NE)

      Howarth, George (Knowsley N)

      Barron, Kevin

      Hoyle, Doug

      Battle, John

      Hughes, John (Coventry NE)

      Beckett, Margaret

      Hughes, Robert (Aberdeen N)

      Bell, Stuart

      Hughes, Roy (Newport E)

      Bennett, A. F. (D'nfn & R'dish)

      Illsley, Eric

      Bidwell, Sydney

      Ingram, Adam

      Blair, Tony

      Janner, Greville

      Boyes, Roland

      John, Brynmor

      Bradley, Keith

      Jones, Barry (Alyn & Deeside)

      Bray, Dr Jeremy

      Jones, Martyn (Clwyd S W)

      Brown, Gordon (D'mline E)

      Kaufman, Rt Hon Gerald

      Brown, Nicholas (Newcastle E)

      Lambie, David

      Buchan, Norman

      Lamond, James

      Buckley, George J.

      Leadbitter, Ted

      Caborn, Richard

      Leighton, Ron

      Callaghan, Jim

      Lestor, Joan (Eccles)

      Campbell, Ron (Blyth Valley)

      Lewis, Terry

      Campbell-Savours, D. N.

      Litherland, Robert

      Clark, Dr David (S Shields)

      Lloyd, Tony (Stretford)

      Clarke, Tom (Monklands W)

      Loyden, Eddie

      Clay, Bob

      McAllion, John

      Clelland, David

      McAvoy, Thomas

      Clwyd, Mrs Ann

      McCartney, Ian

      Cohen, Harry

      McFall, John

      Cook, Frank (Stockton N)

      McKay, Allen (Barnsley West)

      Corbett, Robin

      McKelvey, William

      Cousins, Jim

      McLeish, Henry

      Cox, Tom

      McNamara, Kevin

      Crowther, Stan

      McTaggart, Bob

      Cummings, John

      Mahon, Mrs Alice

      Cunliffe, Lawrence

      Marek, Dr John

      Dalyell, Tam

      Marshall, David (Shettleston)

      Darling, Alistair

      Marshall, Jim (Leicester S)

      Davies, Ron (Caerphiily)

      Martin, Michael J. (Springburn)

      Davis, Terry (B'ham Hodge H'l)

      Martlew, Eric

      Dewar, Donald

      Maxton, John

      Dixon, Don

      Meale, Alan

      Dobson, Frank

      Michael, Alun

      Doran, Frank

      Michie, Bill (Sheffield Heeley)

      Douglas, Dick

      Millan, Rt Hon Bruce

      Dunnachie, Jimmy

      Mitchell, Austin (G't Grimsby)

      Dunwoody, Hon Mrs Gwyneth

      Moonie, Dr Lewis

      Eadie, Alexander

      Morgan, Rhodri

      Eastham, Ken

      Morley, Elliott

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon J. (Aberavon)

      Fatchett, Derek

      Mowlam, Marjorie

      Faulds, Andrew

      Mullin, Chris

      Field, Frank (Birkenhead)

      Murphy, Paul

      Fields, Terry (L'pool B G'n)

      Nellist, Dave

      Flannery, Martin

      O'Brien, William

      Flynn, Paul

      O'Neill, Martin

      Foot, Rt Hon Michael

      Parry, Robert

      Foster, Derek

      Patchett, Terry

      Foulkes, George

      Pendry, Tom

      Fraser, John

      Pike, Peter L.

      Fyfe, Maria

      Powell, Ray (Ogmore)

      Galbraith, Sam

      Prescott, John

      Galloway, George

      Primarolo, Dawn

      Garrett, John (Norwich South)

      Radice, Giles

      Garrett, Ted (Wallsend)

      Randall, Stuart

      Gilbert, Rt Hon Dr John

      Redmond, Martin

      Godman, Dr Norman A.

      Reid, Dr John

      Gordon, Mildred

      Richardson, Jo

      Graham, Thomas

      Roberts, Allan (Bootle)

      Grant, Bernie (Tottenham)

      Robertson, George

      Griffiths, Nigel (Edinburgh S)

      Robinson, Geoffrey

      Grocott, Bruce

      Rooker, Jeff

      Hardy, Peter

      Ruddock, Joan

      878

      Salmond, Alex

      Vaz, Keith

      Sedgemore, Brian

      Wall, Pat

      Sheerman, Barry

      Walley, Joan

      Sheldon, Rt Hon Robert

      Warded, Gareth (Gower)

      Short, Clare

      Welsh, Andrew (Angus E)

      Skinner, Dennis

      Welsh, Michael (Doncaster N)

      Smith, Andrew (Oxford E)

      Williams, Rt Hon Alan

      Smith, C. (Isl'ton & F'bury)

      Williams, Alan W. (Carm'then)

      Soley, Clive

      Wilson, Brian

      Spearing, Nigel

      Winnick, David

      Steinberg, Gerry

      Wise, Mrs Audrey

      Stott, Roger

      Worthington, Tony

      Strang, Gavin

      Wray, Jimmy

      Straw, Jack

      Young, David (Bolton SE)

      Taylor, Mrs Ann (Dewsbury)

      Thomas, Dr Dafydd Elis

      Tellers for the Ayes:

      Thompson, Jack (Wansbeck)

      Mrs. Llin Golding and

      Turner, Dennis

      Mr. Frank Haynes.

      NOES

      Alison, Rt Hon Michael

      Coombs, Anthony (Wyre F'rest)

      Allason, Rupert

      Coombs, Simon (Swindon)

      Alton, David

      Cope, John

      Amess, David

      Cormack, Patrick

      Amos, Alan

      Couchman, James

      Arbuthnot, James

      Cran, James

      Arnold, Jacques (Gravesham)

      Davies, Q. (Stamf'd & Spald'g)

      Arnold, Tom (Hazel Grove)

      Davis, David (Boothferry)

      Ashby, David

      Day, Stephen

      Atkins, Robert

      Devlin, Tim

      Atkinson, David

      Dickens, Geoffrey

      Baker, Nicholas (Dorset N)

      Dicks, Terry

      Baldry, Tony

      Douglas-Hamilton, Lord James

      Banks, Robert (Harrogate)

      Dover, Den

      Batiste, Spencer

      Dunn, Bob

      Beaumont-Dark, Anthony

      Dykes, Hugh

      Beith, A. J.

      Evans, David (Welwyn Hatf'd)

      Bellingham, Henry

      Evennett, David

      Bendall, Vivian

      Fallon, Michael

      Bennett, Nicholas (Pembroke)

      Farr, Sir John

      Bevan, David Gilroy

      Favell, Tony

      Biffen, Rt Hon John

      Fenner, Dame Peggy

      Blackburn, Dr John Q.

      Field, Barry (Isle of Wight)

      Body, Sir Richard

      Finsberg, Sir Geoffrey

      Bonsor, Sir Nicholas

      Fookes, Miss Janet

      Boswell, Tim

      Forman, Nigel

      Bottomley, Peter

      Forsyth, Michael (Stirling)

      Bottomley, Mrs Virginia

      Forth, Eric

      Bowden, A (Brighton K'pto'n)

      Fox, Sir Marcus

      Bowden, Gerald (Dulwich)

      Franks, Cecil

      Boyson, Rt Hon Dr Sir Rhodes

      Freeman, Roger

      Braine, Rt Hon Sir Bernard

      French, Douglas

      Brandon-Bravo, Martin

      Fry, Peter

      Brazier, Julian

      Gale, Roger

      Brittan, Rt Hon Leon

      Gardiner, George

      Brooke, Rt Hon Peter

      Garel-Jones, Tristan

      Brown, Michael (Brigg & Cl't's)

      Goodlad, Alastair

      Browne, John (Winchester)

      Goodson-Wickes, Dr Charles

      Bruce, Ian (Dorset South)

      Gorman, Mrs Teresa

      Bruce, Malcolm (Gordon)

      Gow, Ian

      Buchanan-Smith, Rt Hon Alick

      Gower, Sir Raymond

      Buck, Sir Antony

      Greenway, Harry (Ealing N)

      Burns, Simon

      Greenway, John (Ryedale)

      Burt, Alistair

      Gregory, Conal

      Butcher, John

      Griffiths, Peter (Portsmouth N)

      Butterfill, John

      Grist, Ian

      Carlile, Alex (Mont'g)

      Ground, Patrick

      Carlisle, Kenneth (Lincoln)

      Grylls, Michael

      Carrington, Matthew

      Gummer, Rt Hon John Selwyn

      Carttiss, Michael

      Hamilton, Hon Archie (Epsom)

      Cash, William

      Hamilton, Neil (Tatton)

      Chalker, Rt Hon Mrs Lynda

      Hampson, Dr Keith

      Chapman, Sydney

      Hannam, John

      Chope, Christopher

      Hargreaves, A. (B'ham H'll Gr')

      Churchill, Mr

      Harris, David

      Clark, Dr Michael (Rochford)

      Hawkins, Christopher

      Clark, Sir W. (Croydon S)

      Hayhoe, Rt Hon Sir Barney

      Clarke, Rt Hon K. (Rushclifie)

      Hayward, Robert

      Colvin, Michael

      Heathcoat-Amory, David

      Conway, Derek

      Heddle, John

      879

      Heseltine, Rt Hon Michael

      Nicholson, Emma (Devon West)

      Hicks, Mrs Maureen (Wolv' NE)

      Paice, James

      Hicks, Robert (Cornwall SE)

      Patnick, Irvine

      Hill, James

      Peacock, Mrs Elizabeth

      Holt, Richard

      Porter, Barry (Wirral S)

      Hordern, Sir Peter

      Porter, David (Waveney)

      Howarth, G. (Cannock & B'wd)

      Raffan, Keith

      Howell, Ralph (North Norfolk)

      Rhodes James, Robert

      Hughes, Robert G. (Harrow W)

      Riddick, Graham

      Hunt, David (Wirral W)

      Roberts, Wyn (Conwy)

      Hunt, John (Ravensbourne)

      Roe, Mrs Marion

      Hunter, Andrew

      Rowe, Andrew

      Irvine, Michael

      Rumbold, Mrs Angela

      Irving, Charles

      Ryder, Richard

      Jack, Michael

      Shaw, David (Dover)

      Jackson, Robert

      Shaw, Sir Giles (Pudsey)

      Janman, Tim

      Shepherd, Colin (Hereford)

      Jessel, Toby

      Skeet, Sir Trevor

      Johnson Smith, Sir Geoffrey

      Speller, Tony

      Jones, Gwilym (Cardiff N)

      Spicer, Michael (S Worcs)

      Jones, Robert B (Herts W)

      Stanbrook, Ivor

      Jopling, Rt Hon Michael

      Steen, Anthony

      Kellett-Bowman, Dame Elaine

      Stern, Michael

      Kilfedder, James

      Stevens, Lewis

      Kirkhope, Timothy

      Stewart, Andy (Sherwood)

      Kirkwood, Archy

      Stewart, Ian (Hertfordshire N)

      Knapman, Roger

      Stradling Thomas, Sir John

      Knight, Greg (Derby North)

      Sumberg, David

      Knowles, Michael

      Summerson, Hugo

      Knox, David

      Tapsell, Sir Peter

      Lamont, Rt Hon Norman

      Taylor, John M (Solihull)

      Lang, Ian

      Taylor, Teddy (S'end E)

      Lawrence, Ivan

      Temple-Morris, Peter

      Lennox-Boyd, Hon Mark

      Thompson, D. (Calder Valley)

      Lightbown, David

      Thompson, Patrick (Norwich N)

      Lilley, Peter

      Thorne, Neil

      Lloyd, Sir Ian (Havant)

      Thornton, Malcolm

      Lloyd, Peter (Fareham)

      Thurnham, Peter

      Lord, Michael

      Townend, John (Bridlington)

      McCrindle, Robert

      Tracey, Richard

      Maclean, David

      Tredinnick, David

      McLoughlin, Patrick

      Trippier, David

      McNair-Wilson, M. (Newbury)

      Trotter, Neville

      McNair-Wilson, P. (New Forest)

      Twinn, Dr Ian

      Madel, David

      Vaughan, Sir Gerard

      Major, Rt Hon John

      Waldegrave, Hon William

      Malins, Humfrey

      Walden, George

      Mans, Keith

      Walker, Bill (T'side North)

      Maples, John

      Wallace, James

      Marshall, Michael (Arundel)

      Wardle, Charles (Bexhill)

      Martin, David (Portsmouth S)

      Warren, Kenneth

      Mawhinney, Dr Brian

      Watts, John

      Maxwell-Hyslop, Robin

      Wheeler, John

      Meyer, Sir Anthony

      Whitney, Ray

      Michie, Mrs Ray (Arg'l & Bute)

      Widdecombe, Ann

      Mills, Iain

      Wiggin, Jerry

      Moate, Roger

      Winterton, Mrs Ann

      Monro, Sir Hector

      Wolfson, Mark

      Morrison, Hon Sir Charles

      Wood, Timothy

      Morrison, Hon P (Chester)

      Young, Sir George (Acton)

      Moss, Malcolm

      Mudd, David

      Tellers for the Noes:

      Neubert, Michael

      Mr. Stephen Dorrell and

      Nicholls, Patrick

      Mr. Alan Howarth

      Nicholson, David (Taunton)

      Question accordingly negatived.
      Mr. Austin Mitchell: I beg to move amendment No. 5, in page 1, line 19, at end insert
      'and must be a company in which there shall be designated a special share which shall have the effect in terms of voting at an ordinary meeting of representing 50·01 per cent. of the shares and which shall be held by the Secretary of State for the following purposes—

      (a) ensuring that all directors of the successor company are British citizens;

      (b) restricting the proportion of shares held by non-British citizens or institutions to 15 per cent. of the paid-up capital of the company;

      880

      (c) protecting the successor company from being taken over by another person or body; and

      (d) the restriction of any individual shareholder or their nominee to no more than 5 per cent. of the paid-up share capital of the company;

      and the Secretary of State shall report to Parliament on the use of the golden share designated under this subsection.'.
      This amendment relates to retaining Government influence over the privatised British Steel Corporation. Even if the Government are so irresponsible as to want to divest themselves of ownership through a state corporation, they should still retain some influence over the new company and set out certain priorities in the form of a golden share. That is clearly a faute de mieux, in the sense that we prefer the corporation to be publicly owned and amenable to national interests through public ownership—that is the best way of doing that—and, in default, there should be a golden share.
      From the Minister's own agnostic position on Second Reading, it is clear that he did not think of including a golden share in the proposals. It is clear also that, through our arguments in Committee, we have brought the Government round. In Committee, there was little Government movement. Perhaps it was because the Ministers did not know much about steel or the Bill. But, during our discussions, we managed to secure one concession—and there will be a golden share in British Steel plc. We rate that as a success, but it is no more than a recognition by the Government of their responsibility to privatised industry. We are glad about that concession, but we want the Minister to put some flesh on it and tell us exactly what the Government envisage in the golden share. We envisage the range of powers that is specified in our amendment. The first is
      "that all directors … are British citizens."
      It restricts
      "the proportion of shares held by non-British citizens or institutions to 15 per cent.".
      In other words, we do not want to get into a British Petroleum problem.
      The amendment protects
      "the successor company from being taken over by another person or body."
      Clearly, it could be in danger of that. If there is no investment and industrial strength is not maintained, it restricts
      "any individual shareholder or their nominee to no more than 5 per cent. of the paid-up share capital of the company."
      More important, it requires the Secretary of State to
      "report to Parliament on the use of the golden share designated under this subsection."
      That is the golden share as we would like it. We wait to hear how the Minister would define it. There can and should be no doubt about the principle of the golden share. The 23 July 1985 minutes of Her Majesty's Treasury Official Committee on Nationalised Industry Policy, which is an unclassified document on special rights shares, show that that body agreed:
      "In some privatisations, there will be no need for reserve powers. But in certain cases, the Government needs to retain specific limited powers over the future ownership or control or conduct of a privatised company. Powers have been taken for example to prevent foreign control where this is judged to be undesirable, to block take-overs during a limited period while the company fully establishes itself in the private sector, and to veto any material disposition of assets. The exact powers required will need to be determined by the circumstances of each case, but they should always be limited to the minimum necessary."

      881
      In British Steel, the minimum necessary is substantial, because it is a crucial industry. We want the industry to be run as closely in accord with the national interest as a privatised industry—a plc—can be. That is why we have opted for the form of words in our amendment.
      If the Minister does not think that British Steel is important, strategic or crucial enough to the economy to justify that full range of powers, it is incumbent on him to tell us why he rejects them and how the dangers that they safeguard against can be avoided if they are not specified in the golden share.
      Clearly there is scope for discussion about the golden share. The golden share should be written into the legislation. That seems to be an essential safeguard. I assume that the Government's approach will be to write it into the articles of the company. That is not as effective as putting it into the Bill. If a case goes to court and a judge rules that the equal rights of shareholders are overruled or obviated by the existence of a golden share, the nature of the operation could be endangered. That is always a possibility. To safeguard against that, legislation will have priority and will be fully and comprehensively binding in a way in which the company's articles will not. That is why we prefer to have this in the legislation.
      Let us examine what is in the golden share. The contents of golden shares have varied from privatised company to privatised company. There is no pattern. I should have thought that it was incumbent on the Government to set out some basic pattern of requirements to be imposed on privatised companies. The Government have certainly had enough practical experience to set out certain basic rules in the form of a golden share and what it should be about. I ask hon. Members to look at experience. For instance, the golden share of the British Airports Authority provides that there will be no individual shareholding of more than 15 per cent. It entrenches the ownership of major airports with the British Airports Authority. In British Aerospace, there is no foreign stake over 15 per cent. The directors are British, and there is one Government director. British Airways has no special share, but no individual stake over 15 per cent. and no foreign holding over 25 per cent. are allowed. In British Telecom, there is no stake above 15 per cent. The chief executive must be British and the Government have the right to appoint directors. There is a patchwork quilt of provisions.
      Steel is so crucial that we should have the maximum possible provision and safeguards in the golden share. There are real dangers. It is important to assert the national interest, in whatever form it can be asserted, through a golden share held by the Government. I was pleased to hear the Minister announce that there is a possibility that the Government will maintain a shareholding. Clearly we welcome that. We prefer them to maintain as big a shareholding as possible and for as long as possible—certainly until Labour returns to power, when we shall know what action to take with the shareholding.
      The golden share is a different provision—[Interruption.] The Under-Secretary of State is checking what was said in the previous debate. In Committee, he envisaged a 25 per cent. Government shareholding in BSC. I hope that he will not whittle away at the figure and cause that shareholding to vanish like a mirage. That shareholding was important in building up our vote on amendment No. 2. I notice that the Government's
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      majority fell abruptly. Either their supporters do not have faith in the privatisation proposals or we are gathering new
      strength, perhaps as a consequence of the Minister's commitment in the last debate.
      Since the 1920s, we have not had a totally unregulated market in steel, without any Government involvement or state responsibility for the market's overall shape. Over the years, Government aspirations about public versus private ownership have changed like a zigzag. The Conservative party came into office hostile to public ownership, but the Government increased it massively by encouraging the British Steel Corporation in the early 1980s to drive all the competition out of business. Dunford and Hatfield was the classic example. Private steel producers which had prospered and made profits under Labour—we had a different attitude towards the private sector—were driven out of business by BSC under this Government. In effect, a Government committed to privatisation were closing down the private sector. The Government then took another zigzag with the Phoenix hive-offs, in which British Steel retains a stake.
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      Now, in another zigzag, the Government are to turn this dominant public limited company loose on the market without control or supervision, let or hindrance. There will not even be effective controls by the Monopolies and Mergers Commission. The procedures have been speeded up and will probably be weakened. How effective will those procedures be as a control on any monopolistic tendencies implicit in British Steel's performance? I asked the Under-Secretary of State for Corporate Affairs when he intended to publish the M MC's report on various nationalised industries, including BSC. Having given me a holding answer, because the question so disturbed him and the Government's actions were so obscure that he was not able to find the answer immediately, the hon. Gentleman said:
      "The report was delivered to the Secretary of State in 1986."
      No date was given, but it was almost certainly the beginning of 1986. The hon. Gentleman did not even give the month. He said:
      "The delay in publication has been caused by the need to consider very carefully a request by the British Steel Corporation that the Secretary of State should exercise his powers under section 17 of the Competition Act 1980 to make a number of excisions to the published report in order to avoid prejudicing the interests of the corporation."—[Official Report, 3 May 1988; Vol. 132, c. 373]
      What are the Government hiding? What was cut out of the report and why can it not be published? Is the report so
      damaging about the privatisation prospects of the British Steel Corporation that it will deter investors?
      If that is effective supervision of a nationalised company by the Monopolies and Mergers Commission, it is clear that the privatised company will be turned loose with no effective control over it. That is why we want the Government to have a golden share. The fact that the Government have bungled the golden share over Britoil does not invalidate the golden share. It might invalidate its use by the Government, but it does not invalidate the principle of retaining a vestige of influence and setting the company in the right direction. The fact that the EEC has doubts about it does not invalidate the golden share. My guess is that the Government now wish that they had a golden share in BP. That is the line argued by The Independent, which, on 5 May 1988, said:

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      "In simple truth, the Government has run into difficulty with BP because it was never envisaged that such a situation could arise."
      That was a reference to the Kuwaiti investment, which is bigger than our Government's stake in BP. Kuwait, a member of the Organisation of Petroleum Exporting Countries, has more influence and control over BP than our Government. If the Government had provided themselves with the instrument which we provide for them in the amendment, that situation with BP could not have arisen.
      Before the marines begin to abseil down the front of the British Steel building, unveiling the slogan "Three and threepence," as they did on BP, let us take a sensible precaution. Any Government with wisdom would maintain the vestige of public influence, national control, and point it in the direction of public involvement and interest in what will be a powerful private competitor.
      Mr. Crowther: We are all probably aware that the Government have issued a press statement today, setting out what they will write into the articles of association. I think it would have been more courteous if they had let hon. Members know at the same time as they informed the press.
      Mr. Kenneth Clarke: I did not intervene during the speech of the hon. Member for Glasgow, Cathcart (Mr. Maxton) when he made the same point. The press statement actually repeats the text of an answer to a parliamentary question. We followed the convention of not issuing it to the press until Parliament had been told. Our intention was that the debate on the amendment should be better informed, which could be achieved by giving advance notice of the terms of the special share that we were proposing. Whatever else we can be accused of—the hon. Member may be about to accuse us of all kinds of things—discourtesy to the House is not one of them.
      Mr. Crowther: Is the Chancellor of the Duchy saying that the answer is in Hansard today?
      Mr. Clarke: No, it is not. We followed the usual convention. Parliamentary questions are always answered at 3.30 pm, and press releases can be given after that. Parliamentary questions are available, as the hon. Member knows, and, if one goes to the right place in the House, one can obtain a copy of today's answers.
      Mr. Crowther: I do not think that that is satisfactory. Most hon. Members will not have had the opportunity of seeing the written answer until later.
      A representative of the press told me what is in the answer. As I understand it, in the first place it is intended that the Government retain a golden share in British Steel. Perhaps the Chancellor of the Duchy will tell me if I am wrong, but they are intending to limit share ownership by any individual to 15 per cent. However, whether there is a limitation on foreign ownership—
      Mr. Kenneth Clarke indicated dissent.
      Mr. Crowther: I see that the Chancellor of the Duchy shakes his head. That is what fills me with dismay. I thought that there was to be no limitation. However, I understood that the Government may have been agreeable to writing that limitation in. If they are not prepared to
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      write it into the articles of association, that makes the matter worse. However, even if they had done that, I would not have found that adequate. That limitation on foreign ownership needs to be written into the legislation, which is what the amendment is all about. If we are going to protect the national interest, it is essential that this amendment is carried. The amendment deals with both those matters.
      The golden share principle is fine, so long as the golden share is held by a Government who are really concerned about the national interest. I confess that I am not confident that the Government have any concern for the national interest. That is also why we need to write it into the Bill. In order to avoid uncertainty about the future ownership of the industry, a limitation on foreign ownership with no time limit needs to be written into the Bill. I believe that even the golden share principle may be limited to five years. That will be a five-year limit on the modest provisions which are now proposed.
      We know, of course, that the Government are intending to push the British Steel Corporation into the private sector as soon as possible. The great danger is that this privatised company will enter into a cut-throat price war in Europe when the production quotas are lifted at the end of next month. It is now fairly clear that about 90 per cent. of all steel products in the Community will be outside the quotas. At the same time, the West Germans are still alleging—wrongly in my view—that the British steel industry is receiving Government subsidies. If the Chancellor of the Duchy of Lancaster knows something about that that I do not know, I shall be pleased to hear it, because as far as I know there are now no Government subsidies for the steel industry—
      Mr. Kenneth Clarke: The hon. Gentleman has invited me to intervene and I am glad to say that I agree with him on this point. I understand that some German companies are complaining about the capital write-offs that took place in the past which they claim were unfair subsidies of the British steel industry against their steel industry. Those so-called capital write-offs were cleared by the British Government with the Commission and accepted by the Commission some years ago. We agree with the European Commission that the German complaints are completely unjustified. British Steel's present position has been fairly won in the market place and reflects great credit on all those in the corporation.
      Mr. Crowther: I am happy to have that assurance. However, what worries me is that the Germans may well regard their allegations—false though they may be—as a good excuse for increasing the German Government's existing subsidies which assist their industry. I admit that those subsidies are indirect, but they are nevertheless substantial.
      Because of the continuing excess capacity outside Britain, which will continue for some time despite the impending closure of the Krupp works at Rheinhausen, an attempted takeover of the British Steel Corporation from another country—probably Germany—is becoming more and more probable. I am worried by that because, from the German point of view, it would make sense. Also, American steel producers which, according to a recent report, are now operating at 90 per cent. of capacity, may be looking for a way of buying into the European

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      Community in much the same way as some Swiss companies are trying it on in the chocolate industry. That is another serious danger.
      I am not concerned only about the British Steel Corporation itself. Like my hon. Friend the Member for Wentworth (Mr. Hardy) 1 am worried because the BSC stilll owns 50 per cent. of the shares in United Engineering Steels in our area. That company used to be mostly the British Steel special steels group. It is the biggest engineering steel producer in Europe. It is a successful company which, last year, made over 2 million liquid tonnes of steel, mostly in Rotherham. It made a pre-tax profit of over £36 million on sales of £577 million. It is the kind of operation that might well be attractive to predators who will think that they may get a foothold in that company by buying BSC shares. Again, that causes great concern. My constituents, and those of my hon. Friend the Member for Wentworth, who worked for United Engineering Steels are entitled to some assurance about the future ownership of the company in which they work.
      I emphasise that it is not some sort of narrow chauvinistic nationalism that makes people like me worry about such matters. It is the simple conviction that Britain, British industry and the people who work in British industry still count for something in this world. They are entitled to a fair crack of the whip and to believe that the British Government are on their side, although we have seen little evidence of that recently. That may be an old-fashioned view, but it was the view of the Conservative party until it started to abandon all its traditional principles under the leadership of the present Prime Minister, who apparently thinks that a combination of empty rhetoric and wild gestures is an adequate substitute for the real policies which would allow British manufacturers to compete on equal terms with the rest of the world, instead of having to fight with their hands tied behind their backs.
      At present, the British economy is more dominated by foreign-owned companies than that of any other country in western Europe. That is not something that we can be proud of as a nation. I am certainly not against foreign companies investing in new factories in Britain and creating new jobs, but I am very much against foreign companies buying British firms in order to manipulate them for their own purposes. If that were to happen to the British Steel Corporation, it would be an absolute disaster.
      The Government proposals for handing over the Rover Group to British Aerospace contain no restriction whatever to prevent British Aerospace, on the expiration of five years, from selling the Rover business to anyone anywhere in the world who might be interested in buying it.
      I believe that it is not a flight of fancy to suggest that in the foreseeable future vehicle manufacture, as distinct from vehicle assembly, could be coming to an end in this country. I do not want to see the steel industry, the most basic of all our industries, placed in the same hazardous position. The only way to make sure that that does not happen is to approve this amendment. If Government Members wish to demonstrate their patriotism tonight, they will vote for it.
      9.15 pm
      Mr. Hardy:I am delighted to follow my parliamentary neighbour, my hon. Friend the Member for Rotherham
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      (Mr. Crowther), because he has quite properly drawn attention to the very real need for concern about the position in south Yorkshire of the larger part of United Engineering Steels. The Government have not been very helpful in dispelling the anxieties felt by the people working there, who have contributed to establishing world records, creating profits and providing Britain with a strategically important industry.
      I was extremely sorry that in the last debate I was unable to intervene as I had hoped to during the speech by the Minister of State, Welsh Office, because it would have reduced the length of his speech. However, I can make the point now and remain entirely in order. It refers to the shareholding.
      The Welsh Minister said—and I am sure that the Minister, in winding up this debate, may say—that the board of the British Steel Corporation is eager to see privatisation. He gave the impression, indeed, that it is more eager than the Government, because the Minister was prepared to wait until the climate was right, while Sir Robert Scholey and his friends appear to have wanted it yesterday whether the climate was appropriate or not. The reason may be that they feel that the precedents established in other privatisations mean that they will do very well out of it.
      I wanted to tell the Minister, since I am an amateur historian—I stress the word "amateur"—that my observation of privatisations over the last few years shows that the Government have been applying the rules that were applied in the Nelsonian navy in terms of the distribution of prize money to the distribution of free shares in private industry. The arrangements for the privatisation of British Telecom, British Petroleum or any of the others seems to be closely in accord with the distribution of prize money earned by the flagships, the frigates and so on in the 18th and early 19th centuries, if not before.
      The distribution of shares to people in higher positions is clearly a matter of great public interest. I am grateful that my attention has been drawn to the publication of the articles of association and the details of the share arrangements. I have only received a copy in the last two or three minutes. My constituents will be most moved by the fact that they are being offered £70-worth of free shares, plus a further £2-worth of shares for each year of service. Sir Robert Scholey must have been in the industry for about 40 years, which suggests that he will be given £150-worth of shares. Some of my constituents who have worked there only 10 years will receive £90-worth. That is not an impressive way of involving people in their privatised concern.
      Will the basis of distribution of free shares in this document apply throughout the industry from the chairman to the apprentice? I am a little worried that the document states that BSC pensioners applying for shares will be allowed certain facilities. Will United Engineering Steels' pensioners—those who have retired since UES was established and who may have had 30 or more years' service with the corporation before that Phoenix manifestation—have that facility extended to them?
      The Government have ignored the national interest. A few months ago, together with other south Yorkshire Members, I met the Engineering Employers Federation. We were astonished to learn that British industry could now provide armour plating from only two sources. The Ministry of Defence had become extremely worried about

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      this diminution of our strategic capacity and it invited Thyssen of Germany to tender for the engineering steel required for our defence purposes. We established that under no circumstances would the Germans allow any other country, not even an ally or another member of the European Common Market, to tender for military requirements. That suggests how low our Government's concern has been for our strategic interests.
      That is not the only reason why I support the amendment. I am glad to see the Under-Secretary of State present and he will know what I am about to say. The amendment refers to takeovers. I have no great faith that all captains of British industry are fit and proper people to run the industry upon which the country depends and on which many of our constituents depend for their livelihood.
      Two years ago I hesitated before I joined the demand for a reference to the Monopolies and Mergers Commission when a company called Guinness took over a firm, Bells, which owned Canning Town glass works in my constituency—one of the most effective glassworks in Europe. Before I decided to join that demand, I wrote to Guinness to establish its intentions in respect of my constituency. I wrote two letters to the then chief executive and I was given firm assurances about its intentions. Guinness did not wait five years, which is why I am worried about a five-year golden share and why we need the protection which the amendment would afford.
      The workers put their backs into the new company, demonstrated their success and more than passed the targets which the company set. The company gave such strong assurances that the ratepayers in my area gave it grants for additional work to improve the facilities at the plant. Towards the end of last year, the company announced that it was moving the administrative jobs, but it assured me that production would be untouched. Then in January came the decision to close the plant. Almost 500 jobs in Dearne valley, perhaps the area of highest unemployment, were destroyed.
      When I complained, the chairman of Guinness announced that the company had never given me an assurance. Fortunately, I could present his letters which I also showed to the Under-Secretary of State. He knew that the company had behaved extremely badly when my hon. Friend the Member for Don Valley (Mr. Redmond) and I went to see him. That is one section of the captains of British industry on which we cannot depend for our national interest.
      The Minister pointed out that it is not the Government's policy to intervene in these matters, and we know that all too well. We have very good cause to know it in areas like mine. It will not be in areas like mine where a large proportion of shares in BSC or those resulting from any other privatisation will be distributed. This will be grasped more readily in the areas that have been doing very well. Concern was expressed about the green belt in the south last night; that is the sort of area I am referring to.
      I believe that the amendment is entirely justified. It protects the interests of communities that have contributed to the successful condition of British Steel. It gazes realistically at the position of British commerce and business today. Perhaps those who now direct large sectors
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      of that industry might be more appropriately placed, if not at the tables of 10 Downing street then in the Old Bailey. I am not prepared to see the interests of my constituents sacrificed to the whim of those who will trade with only the shortest term consideration and my hon. Friends are to be congratulated on tabling the amendment.
      When we tabled an amendment to the Gas Bill—now the Gas Act 1986—we proposed merely that the chairman or chief executive should be a British citizen. I was called a chauvinist when I moved that amendment in Standing Committee. The Minister mocked and attacked the suggestion, until I pointed out that we had taken the amendment literally from the Act that established British Telecommunications. I am glad that we are not being so modest tonight as we were in that Committee. I am delighted that we are suggesting that the directors of the successor company to BSC should be British citizens. If we had not proposed such an amendment, and if the Government do not accept it, the point made by my hon. Friend the Member for Rotherham becomes valid.
      I have great anxieties about who will own the British steel industry in less than five years. Certainly I believe that there is a danger from the Germans, who know how effective our steel industry is, or that the Japanese may well look at the industry. Knowing what a soft touch we are, perhaps the next time that Nestle and Suchard decide that they want to buy a British business, they may decide to demonstrate their interest in diversity and buy steel as well as chocolate in Yorkshire. That decision would be as logical as many made by British industry.
      The amendment is valid. It should commend itself to every hon. Member who is interested in maintaining a strategic industrial capacity. Certainly I believe that it would be welcomed by those people who have made sure that British Steel is a successful industry, worth more than £2,000 million, which is the rather optimistic price that the Government will seek, according to my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
      By the time that the Government have carried out a few more dawn raids in Brussels, the price might have to come down—who knows?—but certainly it will be sold at far less than its value. The people who will be betrayed are those who contributed to its value in the first place.
      Ms. Marjorie Mowlam: In supporting amendment No. 5, we are trying to provide some protection for British Steel as a major United Kingdom industry, so that it functions in the interests of its past and present employees, its customers, and the United Kingdom economy as a whole. That is not for exports, but for the many firms that feed into British Steel. That is very important, both nationally and regionally. Many secondary and tertiary industries on Teesside are dependent on British Steel, and any change in the strength and market of British Steel would have dire effects on those industries.
      By the amendment we are trying to make sure that the golden share is enshrined in a formal, constitutional way within the statute. As we have seen from the press releases that we have just obtained, it will exist for only five years. Why five years? Did the Minister pick that figure by luck, or by design? I hope that the Chancellor of the Duchy of Lancaster will explain and justify that period when he responds to the debate.

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      9.30 pm
      The protection afforded by the golden share is important, and would be even more important if we had a decent Government. The 50·01 per cent. share gives us the chance of providing certain protections that are essential for the future of British Steel. First, it would provide parliamentary accountability, which is essential to the development of a major United Kingdom industry such as this. Secondly, it would maintain some formal links between Government Departments—especially the DTI—and the sponsorship of this major industry. Thirdly, it would provide additional shareholder protection. The golden share would help to inhibit price fluctuations caused by speculation. Fourthly, it would offer protection for non-shareholders. As with previous privatisations, the assets could be sold at substantial discounts. The golden share would prevent such assets being sold to overseas buyers and it would also prevent asset-stripping. These are all important reasons for protecting the industry as it moves forward into privatisation.
      Other important elements must not be ignored. One is the importance of keeping British Steel as an integrated whole. Without such integration there will be problems with new products, marketing and developing new processes. Research and development—particularly on Teesside—and new capacity and facilities will not come about without protecting the nature of the integrated company and without the five plants remaining together. Integration is important also because it would mean that resource allocation and management decisions would be kept in the United Kingdom.
      I hope that this protection will mean that other goods for the industry will be procured in the United Kingdom, and that research and development and the patents and licences that result from them would flow into the United Kingdom rather than out of it. The future development of the industry is important to my constituents in Redcar and to other hon. Members' constituents who depend on British Steel and on the secondary and tertiary industries which in turn depend on the company remaining integrated, not broken up.
      Information technology is a good example of what happens when an industry moves to branch plants. It is bad for direct and indirect employment, for future competitiveness and for other United Kingdom manufacturers. I am sure the Minister knows of the report on software in information technology, which showed the sorts of dangers that would ensue for British Steel—the problems of technological dependency, partial supply and non-supply. We are worried that such problems would afflict the industry without the integration of its several plants spread around the country.
      The golden share protects the integrity of the corporation. Without it the investment and confidence that are needed for the future of the industry will not exist. If the amendment is not accepted, I and my hon. Friends are worried that financial predators such as we saw in the Guinness and Westland affairs—or in dawn raids by Nestle or Suchard—will feature in the future of British Steel, which would be a crime. For eight years we have suffered on Teesside, and without this amendment our future there looks bleak.
      Mr. Morley: The amendment is a major step forward in what the Bill is attempting to do. It would give the Government the best of both worlds. We could argue that
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      on the one hand they have a free standing company which operates without commercial restraint, and on the other they have the golden share and the option to make sure that whoever controls the company and is involved in it has some responsibility. Responsibilities are involved, such as the responsibility to my community. If the steel industry was removed from my constituency, it would take the very heart out of the constituency.
      The Government have been consistent on these issues, as we have seen with Suchard and Rowntree, where they have shown not the slightest concern, but many hon. Members on the Government Benches have shown concern. I hope that they will show concern tonight by supporting the amendment and giving security not only to the steel industry but to the many communities which rely upon steel.
      Mr. Kenneth Clarke: I wish, first, to answer a couple of points with which I shall not deal at length in my reply to the debate. I took note of the point made by the hon. Member for Wentworth (Mr. Hardy) about employee shares. We shall return to that later in a debate on a suitable amendment. I accept that he is interested in what has been announced today in answer to a parliamentary question on employee shares. At this stage I can assure him that the availability of shares to employees will be on an equal footing with management throughout the rest of the company. Management will have no special rights.
      I also know of the hon. Gentleman's great concern about the circumstances in which Guinness took over the company which owned Canning Town glass works because my hon. Friend the Parliamentary Under-Secretary of State has discussed the case with me. Obviously this is not the time to discuss that further. I do not think that it is right to generalise, as the hon. Gentleman did, about all takeovers.
      The hon. Member for Redcar (Ms. Mowlam) also raised a point, which I shall not deal with at length, about the need to keep British Steel as an integrated whole. I wish that she had been here earlier for the debate on new clause 1 which arose out of a desire of certain of her hon. Friends to see the company broken up when it is privatised. I should like to pray her in aid in saying that, whatever else happens to British Steel, at the moment it is in the national interest that it is privatised as one unit and not broken up.
      The debate was really about special shares. First, I must congratulate the hon. Member for Great Grimsby (M r. Mitchell), as usual, on carrying the heat and burden of the day on the Bill. I regret that the hon. Member for Glasgow, Cathcart (Mr. Maxton) has not returned. He teased me earlier by saying that I would vanish to have a large meal and a cigar. I have had the cigar, but I have not had the meal. I assume that the hon. Gentleman is having a good meal, wherever he is.
      Apart from his leg pull, the hon. Gentleman accused me, as did the hon. Member for Rotherham (Mr. Crowther), of discourtesy to the House by giving details of the special share in a press notice this afternoon. I think we followed the usual convention in this place: that no announcement is made to the press until an announcement has been made to the House. There was a parliamentary question today, answered at 3.30 pm. I believe that hon. Members can always browse through the day's answers in the Library when they come in at half-past three. The parliamentary answer was followed by a press notice. I am

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      glad that it came to the notice of both hon. Gentlemen, which means that they know the nature of the special share which we propose.
      We begin at least with agreement. The Government have accepted—as I said on Second Reading that we were considering, and as my hon. Friend said in Committee—the case for a special share. As the hon. Member for Rotherham has discovered, we propose to put in the articles of the company a provision which will restrict individual shareholdings in the company to a maximum of 15 per cent. of the equity and to retain that special or golden share for a period of five years.
      In several of the privatisations that the Government have taken through, we have included varying provisions for special or golden shares. As the hon. Gentleman said, no pattern has emerged because we have held that each industrial situation and each company should be judged on its merits. Our policy is as far as possible to put privatised companies into the position of any private sector company.
      To varying degrees, in different terms and with different companies, we have had a look at the situation and have decided that, usually for a limited period, some sort of restraint is required on the ability of outside companies to make bids for the acquisition of other companies. In terms of British Steel, we have come up with the formulation that I have described. I shall shortly explain why we have done that. Our suggestion does not match the Opposition amendment that we are discussing. I suppose that it differs in one very significant respect because what we propose will not discriminate between British holders of equity and overseas owners of equity. We see no case for doing so in the case of British Steel because we see no defence or strategic interest in British Steel. It is a Bismarckian view to regard steel as one of the key defence industries. Many private sector steel companies have no restrictions on foreign ownership.
      Mr. Crowther: I am astonished that the Minister can say that the steel industry, of all industries, has no strategic importance. Can he tell us any type of weapon that does not have steel in it?
      Mr. Clarke: In terms of modern warfare, electronics is probably more important than steel and more difficult to get in the required quality, whereas the world is somewhat awash with steel of varying qualities. I am not a defence expert and the hon. Gentleman may be ahead of me in that respect, but I think that he is thinking in terms of the Franco-Prussian war rather than in terms of today's warfare.
      I have recently detected to a growing extent that the Opposition are going through one of their fits of slightly anti-foreign fervour when they speak about industrial policy. The Conservative party is the patriotic party of Britain and we demonstrate that quite frequently. The Labour party goes into occasional fits of chauvinism where suddenly everyone across the Channel is some sort of dread threat to British industry. In this case, I do not think that we should go as far as the Opposition want us to go and place restrictions on foreign ownership or say that no director should be a non-British citizen. It is quite absurd to say that there should not be an American, let alone a
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      European, director. It is absurd to say that one should have to produce a passport before one can become a director and that shareholdings should be restricted.
      This is a somewhat unsuitable time for the Labour party to go through one of these anti-foreigner fits, because we are presently contemplating the implications for British industry of 1992 and the European single market. We wish to see, perhaps, much stronger Europewide companies that can compete with the Japanese and the Americans, and this is not the time to impose fancy restrictions about foreign shareholdings. Presumably such restrictions would apply to citizens of the Irish Republic and Germany and to French companies.
      The hon. Member for Motherwell, South (Dr. Bray) has not agreed with a great deal of what I have said about the Bill. He quite rightly touched on the possibilities of Europewide integration in the steel industry. He contemplated his hobby horse of a Ravenscraig-Shotton-Dalzell company perhaps linking up with Europeans. British Steel has made it clear that it is not opposed to overseas participation in the equity of the company. I think that the hon. Member for Motherwell, South and I agree that as a private company British Steel may well contemplate some overseas acquisitions and buy into the European steel industry in order to strengthen its position in the European market.
      Whatever else we are looking at in the special share, we should not be looking at a tight little national, British holding and we should not be averse to all overseas holdings or overseas equity investment on the scale that the Opposition amendment would seek to rule out. If we are contemplating a British company taking shareholdings in Europe, we cannot possibly start laying down legislative or other restrictions on European shareholdings in Britain. It is a mistake to discriminate against foreigners whether it applies to the nationality of the directors or to overseas holdings or anything else. As I said, there is some agreement between us because upon consideration we have accepted the case for having a special share in British Steel.
      We have time-limited the share because we contemplate that British Steel will eventually be a private sector company like any other and should be open to all the commercial pressures that we believe improve a company's performance. Among the pressures to which management should be subject is the ordinary need to compete for market share and to achieve a decent return on capital by producing the right products and selling them in the market place, but, if performance falls, the threat of possible acquisition by people who believe that they can improve the performance of the company and who appeal to the shareholders with the prospect of acquiring the company and improving its performance is a perfectly legitimate commercial pressure.
      I do not believe that all mergers are undesirable. Occasionally, the House goes into a fit to try to restrain them. Managers are usually against takeovers of their companies. If I were the manager of a company, I would want to resist anything other than a welcome acquisition of my company, because my position might be threatened. The pay and taxation of British management have now become extremely attractive and high rewards are available for high performance, although managers who take those rewards are not entitled to consider themselves as having a job for life, free from their shareholders being able to look to someone else who might acquire the

      893
      company and improve the management performance, if that person thinks that he can do better. In most cases, those privatised companies should be open to the same perfectly desirable pressures.
      We have opted for the special share because we believe that too early a bid might be disruptive. It is fair to give a reasonable time for the company to become established as a private sector company before it is opened to those pressures. We are privatising British Steel at a time when there is still excess capacity throughout the European market. Some other European countries must face up to the need to shed unprofitable excess capacity which is no longer producing products that can be sold. We cannot return to a stable market until that has been done. We wish to protect ourselves against the prospects of the acquisition of British Steel by someone seeking to acquire it for the purpose of closing down capacity. That is a perfectly legitimate point, and another reason for having a time-limited anti-takeover provision.
      The hon. Member for Redcar asked why we had chosen five years. There is no right time. We hope that eventually British Steel will act in the market like any other private sector company. Within five years, I very much hope that the excess capacity problem will have been resolved, and I believe that five years is long enough to give what might be described as a fledgling company to establish itself in the market place and to get rid of the risks of purely predatory bids designed to cut capacity.
      Dr. Bray: Will the Minister make clear the apparent limitation of the special share that he is proposing? Will he confirm, first, that the Government are able to agree to a person holding more than 15 per cent? They can agree to that at any time, so there is only the possibility that they might block a takeover bid. Secondly, will he confirm that the special shareholder will have no other rights in respect of other provisions in the articles or in respect of voting and that, in other words, it is solely a possible blocking function in respect of a person holding more than 15 per cent?
      Mr. Clarke: The hon. Gentleman is quite correct, but I shall not go into that in detail now. It may be a further point of division between us.
      On the hon. Gentleman's second point, we do not intend to use the special share for the purpose of intervening in the company's commercial decisions. That is a case of division between the Government and, for example, the hon. Member for Great Grimsby, who believes that the Government should continue to exercise an influence. We do not intend to do that through our policy.
      With regard to the hon. Gentleman's first point, certainly there is only a right to use the blocking mechanism. If the Government chose not to exercise that right, we would be answerable to the House for our decision if for some reason a larger than 15 per cent. holding was not contrary to the national interests or the interests of steel consumers or employees. The hon. Gentleman's description was quite right.
      Finally, I want to consider why we have not included the special share in the Bill but are merely undertaking via a parliamentary answer to include it in the articles of association. I hope that hon. Members will agree that that
      894
      is a technical point. A parliamentary reply to a question is binding and we intend to include the special share in the articles of association.
      The suggestion was raised in Committee that the golden share might give rise to litigation. No doubt we have all taken legal advice. However, anything can give rise to litigation, as lawyers are always happy to say. The prospects of litigation of the kind that hon. Members fear is slight. People who take shares in the private sector company when it is floated will be aware that they are taking shares in a company within which there is a special share. I am advised that they would have no prospect of redress if subsequently they tried to claim that the use of the special share was contrary to the overriding interest of the company to act in the interests of the shareholders.
      There is at least some agreement between the Government and the Opposition on this amendment. The disagreements are about foreign holdings and foreign management. We see no reason to be against that in principle, but we see a need to protect the company against takeover while it is a fledgling industry. We see a need to protect the company while there is an excess capacity problem and the risk that competitors will buy the company to close it down. At least we have gone part way towards meeting the Opposition. I await the Opposition's response. Perhaps we will end on a note of happy accord.
      Mr. Austin Mitchell: If the Minister calls that moving part way, I am not sure what he would call long-distance running. The Minister's response was pathetic. It is no wonder that he had to trail his parliamentary answer this afternoon—which was itself a shabby device—so that we should not be too stunned by incredulity at the inadequacy of his comments. To assume that we were thronging the Library at 3.30 pm to skim through the parliamentary answers is an excuse designed to disguise the total shabbiness of the manoeuvre of leaking information in that way.
      It is always possible to tell when something nefarious is afoot. It is leaked in a written answer to a stooge question asked by a page boy in this particular case—[Interruption.] Ministers could have given us information in Committee. They dared not do that. They held cut grandiose prospects of a golden share with real meaning, because they knew that if they told us the reality they would have to face long barracking opposition in Committee rather than the co-operation that they received. They knew that they would have to face much more hostility.
      As defined in the Bill, the golden share is practically useless. It goes no way towards meeting the proposals that we have put forward. The limitations that the Minister revealed about the golden share in response to questions from my hon. Friend the Member for Motherwell, South (Dr. Bray) are pathetic.
      It is not that the mountains of labour have produced a ridiculous mouse. The mouse does not even have a squeak. It is a pathetic creature. When we consider the golden share, we must bear in mind the nature of the world into which the BSC will be turned loose as a public limited company. It will not be sold to Sid like British Telecom or British Gas. Sid is not in the market. I imagine that Sid's hands are firmly in his pockets, if he has any sense.
      The Minister clearly does not want to sell the company to the small shareholder. It is also clear from the parliamentary answer that he does not envisage much

      895
      employee participation. The gesture made to employees in the parliamentary answer is insulting. Seventy pounds worth of free shares and a further £2 of shares for each year of service is insulting as a gesture to those who have worked in the industry, seen it slimmed down and their jobs threatened. Nothing is offered to those who have sacrificed their jobs in the massive rundown of the industry that has taken place under this Government.
      That share offer, which we shall be discussing tomorrow, is an insult. However, it is clear that a small shareholder company or an employer participation company is not envisaged. It will be a company for the big boys, turned loose for the big investors—the top I per cent. of the population, the institutions, and possibly, because the steel industry is an incestuous world, its competitors, too. We want to guard against that. In an area where big investors will be operating and in which British Steel will not have a broad shareholding base—which is what the Government wanted for British Telecom—there is a danger that it will fall prey to the wrong people. That is why we want the safeguards in our amendment.
      Steel is a tough and peculiar industry. It is conventional to distance oneself from competitors by an occasional punch in the ribs and a sally of exports into competitors' markets. It is also conventional to take shareholdings in one's rivals, to damp down competition and to maintain cartel-like relationships. The danger is that competitors will take a stake in British Steel—particularly European competitors, because they are the closest and those with which British Steel is in most intense competition for its markets.
      It is our contention that control of British Steel should remain in this country. Only British investors and the Government of this country have the interests of the nation in mind. It will be in the interests of others to take a stake in British Steel, perhaps to increase the company's prices, to dampen the competition that it poses and to reduce its exports. It may be their intention not to invest in British Steel but to run it down. Foreign shareholders do not want a healthy foreign competitor, and if they take a stake in British Steel it will be with those intentions in mind. We want to safeguard against that situation by means of the golden share.
      It is also possible that foreign shareholders will wish to take a stake in British Steel for financial reasons. It will be possible for them to demand the maximum return and maximum dividends on the minimum investment, and to require that British Steel is run in such a way as to cream off the market rather than to build up the industrial strength of this country.
      Contrary to what was said by the Minister, there is also a defence interest. By weakening the industrial capacity of this country, the Government have practically eliminated our ability to fight a war or a sustained conflict. They have decimated engineering and shipbuilding and done much damage to our steel-making capacity. It comes ill from such a Government to say that steel is not essential in the fighting of any conflict or in any other military endeavour. Steel is the very sinews of war. It would have been impossible to undertake even the Falklands conflict without it.
      Mr. Kenneth Clarke: I have already made the point to the hon. Member for Rotherham (Mr. Crowther) about the dated nature of his argument. Defence sales represent about 5 per cent. of British Steel's turnover. The Ministry of Defence could decide, for purposes of tendering, to extend competition to German firms, for instance, because it must be remembered that the Germans are on our side now. West Germany is a friendly nation.
      Mr. Mitchell: I am glad that the Minister is able to give me that permanent guarantee, and I look forward to exercising it in the future. Special steels in particular—it is a highly specialised field—are essential to any defence capability. For that capability to slip outside the control of this country will mean a loss of national sovereignty and of power. We cannot fight a sustained conflict without a steel industry. We want that industry to be sustained under British control and British investment. It must not become prey to competitors in the way that is likely to occur unless the special share is written into the Bill.
      We want British Steel to produce to capacity as part of British manufacturing industry. Steel is a cyclical industry. If it is producing to capacity, money pours out of its ears, but if it is producing under capacity, it becomes a bottomless pit into which one must throw money. That is one risk, but the risk also is that under this Government British Steel faces a very hard future until we have a Labour Government in the 1990s dedicated to rebuilding Britain's manufacturing and industrial strength. That Labour Government will want a powerful, independent, British steel industry to produce the sinews of our manufacturing strength. That is why we shall pursue the amendment in the Division Lobbies.
      Question put, That the amendment be made:—
      The House divided: Ayes 198, Noes 240.

      Division No. 309]

      [10 pm

      AYES

      Abbott, Ms Diane

      Clelland, David

      Adams, Allen (Paisley N)

      Clwyd, Mrs Ann

      Allen, Graham

      Cohen, Harry

      Alton, David

      Cook, Frank (Stockton N)

      Anderson, Donald

      Corbett, Robin

      Archer, Rt Hon Peter

      Cousins, Jim

      Armstrong, Hilary

      Cox, Tom

      Ashley, Rt Hon Jack

      Crowther, Stan

      Ashton, Joe

      Cummings, John

      Banks, Tony (Newham NW)

      Cunliffe, Lawrence

      Barnes, Harry (Derbyshire NE)

      Dalyell, Tam

      Barron, Kevin

      Darling, Alistair

      Battle, John

      Davies, Ron (Caerphilly)

      Beckett, Margaret

      Davis, Terry (B'ham Hodge H'I)

      Beith, A. J.

      Dewar, Donald

      Bell, Stuart

      Dixon, Don

      Bennett, A. F. (D'nt'n & R'dish)

      Dobson, Frank

      Blair, Tony

      Doran, Frank

      Boateng, Paul

      Douglas, Dick

      Boyes, Roland

      Dunnachie, Jimmy

      Bradley, Keith

      Dunwoody, Hon Mrs Gwyneth

      Bray, Dr Jeremy

      Eadie, Alexander

      Brown, Gordon (D'mline E)

      Eastham, Ken

      Brown, Nicholas (Newcastle E)

      Ewing, Harry (Falkirk E)

      Bruce, Malcolm (Gordon)

      Fearn, Ronald

      Buchan, Norman

      Field, Frank (Birkenhead)

      Buckley, George J.

      Fields, Terry (L'pool B G'n)

      Caborn, Richard

      Flannery, Martin

      Campbell, Ron (Blyth Valley)

      Flynn, Paul

      Campbell-Savours, D. N.

      Foot, Rt Hon Michael

      Canavan, Dennis

      Foster, Derek

      Carlile, Alex (Mont'g)

      Foulkes, George

      Clark, Dr David (S Shields)

      Fraser, John

      Clarke, Tom (Monklands W)

      Fyfe, Maria

      Clay, Bob

      Galbraith, Sam

      897

      Galloway, George

      Morley, Elliott

      Garrett, John (Norwich South)

      Morris, Rt Hon A. (W'shawe)

      Garrett, Ted (Wallsend)

      Morris, Rt Hon J. (Aberavon)

      Gilbert, Rt Hon Dr John

      Mowlam, Marjorie

      Godman, Dr Norman A.

      Mullin, Chris

      Golding, Mrs Llin

      Murphy, Paul

      Gordon, Mildred

      Nellist, Dave

      Graham, Thomas

      O'Brien, William

      Grant, Bernie (Tottenham)

      O'Neill, Martin

      Griffiths, Nigel (Edinburgh S)

      Parry, Robert

      Grocott, Bruce

      Patchett, Terry

      Hardy, Peter

      Pendry, Tom

      Harman, Ms Harriet

      Pike, Peter L.

      Heffer, Eric S.

      Powell, Ray (Ogmore)

      Henderson, Doug

      Prescott, John

      Hogg, N. (C'nauld & Kilsyth)

      Primarolo, Dawn

      Holland, Stuart

      Radice, Giles

      Home Robertson, John

      Randall, Stuart

      Hood, Jimmy

      Redmond, Martin

      Howarth, George (Knowsley N)

      Rees, Rt Hon Merlyn

      Hoyle, Doug

      Reid, Dr John

      Hughes, John (Coventry NE)

      Richardson, Jo

      Hughes, Robert (Aberdeen N)

      Robertson, George

      Hughes, Roy (Newport E)

      Robinson, Geoffrey

      Illsley, Eric

      Rooker, Jeff

      Ingram, Adam

      Ruddock, Joan

      Janner, Greville

      Salmond, Alex

      John, Brynmor

      Sedgemore, Brian

      Jones, Barry (Alyn & Deeside)

      Sheerman, Barry

      Jones, Ieuan (Ynys Môn)

      Sheldon, Rt Hon Robert

      Jones, Martyn (Clwyd S W)

      Short, Clare

      Kaufman, Rt Hon Gerald

      Skinner, Dennis

      Kennedy, Charles

      Smith, Andrew (Oxford E)

      Kinnock, Rt Hon Neil

      Smith, C. (Isl'ton & F'bury)

      Kirkwood, Archy

      Smith, Rt Hon J. (Monk'ds E)

      Lambie, David

      Soley, Clive

      Lamond, James

      Spearing, Nigel

      Leadbitter, Ted

      Steel, Rt Hon David

      Leighton, Ron

      Steinberg, Gerry

      Lestor, Joan (Eccles)

      Stott, Roger

      Lewis, Terry

      Strang, Gavin

      Litherland, Robert

      Straw, Jack

      Lloyd, Tony (Stretford)

      Taylor, Mrs Ann (Dewsbury)

      Loyden, Eddie

      Taylor, Matthew (Truro)

      McAllion, John

      Thompson, Jack (Wansbeck)

      McAvoy, Thomas

      Turner, Dennis

      McCartney, Ian

      Vaz, Keith

      McFall, John

      Wall, Pat

      McKelvey, William

      Wallace, James

      McLeish, Henry

      Walley, Joan

      McNamara, Kevin

      Warden, Gareth (Gower)

      McTaggart, Bob

      Wareing, Robert N.

      Mahon, Mrs Alice

      Welsh, Andrew (Angus E)

      Marek, Dr John

      Welsh, Michael (Doncaster N)

      Marshall, Jim (Leicester S)

      Williams, Rt Hon Alan

      Martin, Michael J. (Springburn)

      Williams, Alan W. (Carm'then)

      Martlew, Eric

      Wilson, Brian

      Maxton, John

      Winnick, David

      Meale, Alan

      Wise, Mrs Audrey

      Michael, Alun

      Worthington, Tony

      Michie, Bill (Sheffield Heeley)

      Wray, Jimmy

      Michie, Mrs Ray (Arg'l & Bute)

      Young, David (Bolton SE)

      Millan, Rt Hon Bruce

      Mitchell, Austin (G't Grimsby)

      Tellers for the Ayes:

      Moonie, Dr Lewis

      Mr. Frank Haynes and

      Morgan, Rhodri

      Mr. Allen McKay.

      NOES

      Alison, Rt Hon Michael

      Banks, Robert (Harrogate)

      Allason, Rupert

      Batiste, Spencer

      Amess, David

      Beaumont-Dark, Anthony

      Amos, Alan

      Bellingham, Henry

      Arbuthnot, James

      Bendall, Vivian

      Arnold, Jacques (Gravesham)

      Bennett, Nicholas (Pembroke)

      Arnold, Tom (Hazel Grove)

      Biffen, Rt Hon John

      Ashby, David

      Biggs-Davison, Sir John

      Atkins, Robert

      Blackburn, Dr John G.

      Atkinson, David

      Body, Sir Richard

      Baker, Nicholas (Dorset N)

      Bonsor, Sir Nicholas

      Baldry, Tony

      Boswell, Tim

      898

      Bottomley, Peter

      Ground, Patrick

      Bottomley, Mrs Virginia

      Grylls, Michael

      Bowden, A (Brighton K'pto'n)

      Gummer, Rt Hon John Selwyn

      Bowden, Gerald (Dulwich)

      Hamilton, Hon Archie (Epsom)

      Bowis, John

      Hamilton, Neil (Tatton)

      Boyson, Rt Hon Dr Sir Rhodes

      Hampson, Dr Keith

      Braine, Rt Hon Sir Bernard

      Hannam, John

      Brandon-Bravo, Martin

      Hargreaves, A. (B'ham H'll Gr')

      Brazier, Julian

      Hargreaves, Ken (Hyndburn)

      Brittan, Rt Hon Leon

      Harris, David

      Brooke, Rt Hon Peter

      Haselhurst, Alan

      Brown, Michael (Brigg & Cl't's)

      Hawkins, Christopher

      Browne, John (Winchester)

      Hayhoe, Rt Hon Sir Barney

      Bruce, Ian (Dorset South)

      Hayward, Robert

      Buchanan-Smith, Rt Hon Alick

      Heathcoat-Amory, David

      Buck, Sir Antony

      Heddle, John

      Burns, Simon

      Hicks, Mrs Maureen (Wolv' HE)

      Burt, Alistair

      Hicks, Robert (Cornwall SE)

      Butcher, John

      Hill, James

      Butterfill, John

      Holt, Richard

      Carlisle, Kenneth (Lincoln)

      Hordern, Sir Peter

      Carrington, Matthew

      Howarth, Alan (Strat'd-on-A)

      Carttiss, Michael

      Howarth, G. (Cannock & B'wd)

      Cash, William

      Howell, Ralph (North Norfolk)

      Chalker, Rt Hon Mrs Lynda

      Hughes, Robert G. (Harrow W)

      Chapman, Sydney

      Hunt, David (Wirral W)

      Chope, Christopher

      Hunt, John (Ravensbourne)

      Clark, Dr Michael (Rochford)

      Hunter, Andrew

      Clark, Sir W. (Croydon S)

      Irvine, Michael

      Clarke, Rt Hon K. (Rushcliffe)

      Irving, Charles

      Colvin, Michael

      Jack, Michael

      Conway, Derek

      Jackson, Robert

      Coombs, Anthony (Wyre F'rest)

      Janman, Tim

      Coombs, Simon (Swindon)

      Jessel, Toby

      Cope, John

      Johnson Smith, Sir Geoffrey

      Cormack, Patrick

      Jones, Gwilym (Cardiff N)

      Couchman, James

      Jones, Robert B (Herts W)

      Cran, James

      Jopling, Rt Hon Michael

      Davies, Q. (Stamf'd & Spald'g)

      Kellett-Bowman, Dame Elaine

      Davis, David (Boothferry)

      Kilfedder, James

      Day, Stephen

      Kirkhope, Timothy

      Devlin, Tim

      Knapman, Roger

      Dickens, Geoffrey

      Knight, Greg (Derby North)

      Dorrell, Stephen

      Knight, Dame Jill (Edgbaston)

      Douglas-Hamilton, Lord James

      Knowles, Michael

      Dover, Den

      Knox, David

      Dunn, Bob

      Lamont, Rt Hon Norman

      Durant, Tony

      Lang, Ian

      Dykes, Hugh

      Lawrence, Ivan

      Emery, Sir Peter

      Lennox-Boyd, Hon Mark

      Evans, David (Welwyn Hatf'd)

      Lilley, Peter

      Evennett, David

      Lloyd, Sir Ian (Havant)

      Fallon, Michael

      Lloyd, Peter (Fareham)

      Farr, Sir John

      Lord, Michael

      Favell, Tony

      Lyell, Sir Nicholas

      Fenner, Dame Peggy

      McCrindle, Robert

      Field, Barry (Isle of Wight)

      Maclean, David

      Finsberg, Sir Geoffrey

      McLoughlin, Patrick

      Fookes, Miss Janet

      McNair-Wilson, M. (Newbury)

      Forman, Nigel

      McNair-Wilson, P. (New Forest)

      Forsyth, Michael (Stirling)

      Madel, David

      Forth, Eric

      Major, Rt Hon John

      Fox, Sir Marcus

      Malins, Humfrey

      Franks, Cecil

      Mans, Keith

      Freeman, Roger

      Maples, John

      French, Douglas

      Marland, Paul

      Gale, Roger

      Marshall, Michael (Arundel)

      Gardiner, George

      Martin, David (Portsmouth S)

      Garel-Jones, Tristan

      Mawhinney, Dr Brian

      Gill, Christopher

      Maxwell-Hyslop, Robin

      Goodhart, Sir Philip

      Meyer, Sir Anthony

      Goodson-Wickes, Dr Charles

      Miller, Hal

      Gorman, Mrs Teresa

      Mills, Iain

      Gow, Ian

      Moate, Roger

      Gower, Sir Raymond

      Monro, Sir Hector

      Greenway, Harry (Ealing N)

      Morrison, Hon Sir Charles

      Greenway, John (Ryedale)

      Morrison, Hon P (Chester)

      Gregory, Conal

      Moss, Malcolm

      Griffiths, Peter (Portsmouth N)

      Mudd, David

      Grist, Ian

      Neubert, Michael

      899

      Nicholls, Patrick

      Taylor, Teddy (S'end E)

      Nicholson, David (Taunton)

      Temple-Morris, Peter

      Nicholson, Emma (Devon West)

      Thompson, D. (Calder Valley)

      Paice, James

      Thompson, Patrick (Norwich N)

      Patnick, Irvine

      Thorne, Neil

      Peacock, Mrs Elizabeth

      Thornton, Malcolm

      Porter, Barry (Wirral S)

      Thurnham, Peter

      Porter, David (Waveney)

      Townend, John (Bridlington)

      Price, Sir David

      Tracey, Richard

      Raffan, Keith

      Tredinnick, David

      Rhodes James, Robert

      Trippier, David

      Riddick, Graham

      Trotter, Neville

      Roberts, Wyn (Conwy)

      Twinn, Dr Ian

      Rowe, Andrew

      Vaughan, Sir Gerard

      Rumbold, Mrs Angela

      Waldegrave, Hon William

      Shaw, David (Dover)

      Walden, George

      Shaw, Sir Giles (Pudsey)

      Walker, Bill (T'side North)

      Shepherd, Colin (Hereford)

      Wardle, Charles (Bexhill)

      Skeet, Sir Trevor

      Warren, Kenneth

      Speller, Tony

      Watts, John

      Stanbrook, Ivor

      Wheeler, John

      Steen, Anthony

      Whitney, Ray

      Stern, Michael

      Widdecombe, Ann

      Stevens, Lewis

      Wolfson, Mark

      Stewart, Andy (Sherwood)

      Wood, Timothy

      Stewart, Ian (Hertfordshire N)

      Young, Sir George (Acton)

      Stradling Thomas, Sir John

      Sumberg, David

      Tellers for the Noes:

      Summerson, Hugo

      Mr. David Lightbown and

      Taylor, John M (Solihull)

      Mr. Richard Ryder.

      Question accordingly negatived.
      It being after Ten o'clock, further consideration of the Bill stood adjourned.

    BUSINESS OF THE HOUSE Ordered,
    ordered,
    That, at this day's sitting, the British Steel Bill and the Matrimonial Proceedings (Transfers) Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Peter Lloyd.]

    British Steel Bill
    As amended (in the Standing Committee) again considered.
    Further consideration of the Bill adjourned.—[Mr. Peter Lloyd.]
    Bill to be further considered tomorrow.

  Joint Research Centre and the EUREKA Programme
  10.12
  The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher): I beg to move,
  That this House takes note of European Community Documents Nos. 9454/87 and 5616/88 on the Joint Research Centre and 10845/86 on EUREKA and Community Science and Technology; and supports the Government's aims of raising the quality and relevance of the work at the Joint Research Centre and of using EUREKA to help British industry become more competitive in world markets.
  Mr. Nigel Spearing: On a point of order, Mr. Speaker. The motion refers to European Community document No. 5616/88. The Scrutiny Committee has not looked at that document, which recently arrived at Whitehall. The explanatory memorandum was issued within the past two or three days. Had the Scrutiny Committee been able to see the document last Wednesday it might well have concluded that this matter did not materially affect the course of the debate, but the debate on the document occurs a little too soon. Perhaps the Minister will comment on that and on the timetable of the debate in relation to the decision in Brussels, with which it may well be connected.
  Mr. Alan Haselhurst: Further to the point of order, Mr. Speaker. I take the point made by the hon. Member for Newham, South (Mr. Spearing). As a member of the Select Committee on European Legislation, I should like to raise a similar matter in connection with this document. There is at least one other document which the Scrutiny Committee has recommended should be considered by the House—that on the mutual recognition of higher education diplomas. That matter will be decided within a short time by the European Council and has been recommended for debate, yet we have not been given the opportunity to discuss it. This seems to be an odd juxtaposition of business.
  Mr. Speaker: I am sure that the Minister has heard what has been said. The motion is in order.
  Mr. Butcher: It may be helpful if I deal immediately with the matter raised by the hon. Member for Newham, South (Mr. Spearing) before going into the main body of my speech.
  European Community documents Nos. 9454/87 and 5616/88 deal with the Joint Research Centre. The first document forms the original basis for the debate on the JRC. I am aware that the second document, 5616/88, has not yet been considered by the European Legislation Committee. I apologise for the fact that we have not given the Committee time to give us the benefit of its advice on this second document, which contains slightly amended proposals on the JRC. It was only recently provided by the Commission. After careful consideration, we did not consider that it merited postponement of the debate, in view of the pressure on the Parliamentary timetable and, more important, so that we could have the view of the House well in advance of the next Research Council meeting, which will be on 29 June, when further negotiations are scheduled.

  901
  We shall be delighted to receive any further observations of the Committee well in advance of that date, if that is its wish. The House has exercised its right in the highest form by debating these two issues this evening. I assure the hon. Member for Newham, South that my hon. Friends and I will carefully examine the record of this evening's exchanges. We will find it helpful to have that in advance of our negotiations on 29 June.
  Mr. Haselhurst: I am grateful for what my hon. Friend has said, but he will understand the perplexity of members of the European Legislation Committee when there is uneven treatment by the Government of measures that are put forward. We are not ungrateful for the fact that the House has been given the opportunity to discuss this matter, but it is odd that it should be discussed before the Select Committee has seen the document, especially when there are the measures to which I referred on a point of order which we recommended for debate but which have not been considered.
  Mr. Butcher: I shall draw to the attention of my right hon. Friend in another Department the subject matter on which my hon. Friend would like a debate. However, as I said in my response to the hon. Member for Newham, South (Mr. Spearing), there was a delay in the documents coming from the Commission. My right hon. Friend the Chancellor of the Duchy of Lancaster explained the complication and the difficulties of the time table in a letter to the Committee. I readily conceded that under more ideal circumstances this should not happen, and we will take into account the views expressed for by the House. As requested, we have supplied the day for the debate. I hope the House will consider that I have observed the courtesies in that explanation to the hon. Gentleman and that I can now proceed to explain what these two issues are all about.
  Mr. William Cash: I am also a member of the Select Committee on European Legislation. Although we understand the position as expressed by my hon. Friend, the fact remains that, as we move nearer to the implementation of the internal market, with the increased use of article 100A and the accelerated procedure that that must involve, there will clearly be a greater need for closer observation of the requirements that have been laid down by resolution of the House. Further, there is a strong case for the changes in the terms of reference of the Committee to ensure that, in the avant-project stage,. there is greater opportunity for consideration of those matters that cannot be met exclusively by other Parliaments. The Committee needs to be fully involved at an earlier stage. I hope my hon. Friend will accept that as a short interruption, but one that I regard as highly important.
  Mr. Butcher: My hon. Friend has made a valid point. I do not disagree with a word of what he has said. There is the additional factor of the sheer volume of measures, directives and papers that are now emerging. This means that all Whitehall Departments must be vigilant in ensuring that the Scrutiny Committee and, if it so recommends, the House have ample opportunities to look at those well in advance, if necessary, of decisions being made.
  As I explained earlier, we are dealing with two issues tonight which bring together two very different ventures which in some ways characterise the old and the new approaches to European collaboration in research and
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  development. What both have in common is that they need to remain flexible and attuned to Europe's needs. It is illuminating to compare and contrast the two.
  The first is the European Community's Joint Research Centre. It is the Community's own public laboratory, financed by the Community member states, with the European Commission bearing responsibility for its overall management. Long-established, it seems increasingly to have lost its way and is now failing to respond to the Community's needs. The Commission's proposals seek to correct that state of affairs.
  EUREKA, on the other hand, is a very much newer and different venture. It brings together European industrial partners, both from within the Community and outside. It avoids bureaucratic central control. Responsibility for initiatives rests with the industrial participants themselves and flexibility of response is very much the keynote of its success. The Commission document addresses the specific aspect of co-operation between EUREKA and the European Community.
  The JRC is a considerable undertaking, with four laboratories in different member states of the Community—Ispra in Italy, Karlsruhe in the Federal Republic of Germany, Geel in Belgium, and Petten in the Netherlands.
  The JRC's last four-year research programme, covering the years 1984 to 1987, showed a total staff complement of 2,260, of whom about three quarters were at the largest laboratory at Ispra and with a central management team in Brussels. Total expenditure was some 700 million ecu, roughly 26 per cent. of the Community's total R and D expenditure at that time.
  It is not possible to understand the problems that we are facing at the JRC today without going a little further back into its history. It was established in 1957 for the joint conduct in the European Community of nuclear research for peaceful purposes. In the 1950s nuclear power was young science and the many important subsequent developments in the safe generation of nuclear energy were still in the future. By the late 1980s the nuclear industry is, by any standards, mature and the nuclear research community in all countries has developed with it.
  At the JRC, however, one might be forgiven for thinking that time has stood still. It is true that the range of its activities has widened, but as recently as the period 1984 to 1987, 60 per cent. of the JRC's research programme remained in nuclear fission and reactor studies, with a further 7 per cent. concerned with nuclear fusion. Non-nuclear energy studies accounted for a further 6 per cent. Some 14 per cent. was concentrated on the environment and only another 14 per cent. was devoted to research into industrial technologies.
  In short, the JRC has not diversified its activities as have comparable public laboratories in the United Kingdom and elsewhere. It has not stayed in step with the rest of the Community's R and D effort, which is directed ever more to improving the competitive position of European industry.
  That is not acceptable for what, under the Commission's proposal, amounts to nearly 1 billion ecu of expenditure—or £700 million—at the JRC between 1988 and 1991. We are, therefore, looking to the JRC to earn an increasing share of its expenditure from external customers and to accomplish more from the still substantial financial resources that would continue to be provided by the Community's framework programme. Despite growth in external earnings, those resources are expected to amount

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  to about 700 million ecu—£500 million—or some 13 per cent. of the framework programme. Only the ESPRIT programme of 1·6 million ecu is larger. The United Kingdom has been outspoken in its criticisms and in pointing out that this unhappy situation cannot continue, and we are now far from alone in making that judgment.
  Last year a panel of distinguished European industrialists prepared a report which was sharply critical of the JRC. They advocated major reform. They urged faster movement towards a larger proportion of external contracts for customers outside the Commission. Other Community member states have similarly stressed the need and the Joint Research Centre's own board of governors—which is at present more an advisory body than a governing board in the true sense.
  I am glad to say that in its proposal the Commission faces the need for change. It provides a good basis for further discussion, even though it does not go as far as we believe is required. Above all, we need to make faster progress and to see a greater sense of urgency on the Commission's part.
  We accept that change at the JRC cannot happen overnight, but the problems have been allowed to slip for too long. Our public laboratories in this country started long ago to adopt a more commercial approach to their work. The JRC has to face change which may be more harsh than if it had been tackled earlier. Now is the moment when the JRC must be given clear guidelines for the future.
  The Commission has a key responsibility. The Single European Act highlighted its role in the management of the Community's joint R and D effort. It should make no mistake. The JRC, representing such a large proportion of that total effort, will demonstrate whether or not it is prepared to discharge that responsibility effectively.
  It is our intention to work rapidly towards the conclusion of an agreement with the Commission, the European Parliament and other member states which will set the targets for a Joint Research Centre that will increasingly show real vitality and responsiveness to customers' needs.
  We shall expect the Joint Research Centre to go after more demanding targets for growth in external contracts and to accept tighter financial targets overall. We are looking for a target that by 1991 at least 20 per cent. of the JRC's turnover will come from work for public or private customers external to the Commission. This is a demanding target, but not an unreasonable one. Only in this way can we be sure that the stills at the JRC will be more widely tested as well as becoming more widely available.
  We shall expect clear-cut principles governing the JRC"s relationship to the customers for its work. These customers must include the various directorates general of the European Commission, which must be free to turn to laboratories other than the JRC if they consider their research needs would be better met elsewhere.
  We shall expect a more rapid turnover of staff. Some members of staff may wish to leave. New blood will be required as well. The JRC must have the right staff with the right disciplines. Its staff costs must come down.
  We shall expect the JRC management to be given clearer responsibilities, to pay more heed to the advice of
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  customers and experts from Community member states, and to demonstrate the ability to improve the quality of JRC research in areas where it has been deficient.
  We shall expect the executive role of the board of management to be strengthened too.
  Mr. Tam Dalyell: As a member of the indirectly elected European Parliament Budget Committee who on several occasions has been to Ispra, may I ask whether the Minister agrees that the root of the matter is Italian law and all its difficulties? The Minister says that we must have a turnover. It is difficult to get any kind of turnover once one accepts that Italian law operates, at any rate in relation to local employees. Having tried, as a Member of the European Parliament, to negotiate with the Italian trade unions, let me say that it is extremely difficult to get things changed as the Minister is suggesting.
  Mr. Butcher: If tonight we were looking for a model of the sort of operation and apparatus that we should like to see, we need not go further than an establishment not too far from the constituencies of the hon. Members for Linlithgow (Mr. Dalyell) and for Motherwell, South (Dr. Bray)—the National Engineering Laboratory. It and other research establishments have responded positively to the freer movement that is now taking place in engineering disciplines. They are responding to the market, looking for external contracts and are being successful.
  I do not wish to go into the question of Italian practices. On many occasions we have debated Spanish practices. The question of employment conditions in Italy as they affect research-based workers must be addressed within the new disciplines that we are putting before the House tonight. In rehearsing our negotiating stance, those who will pursue the negotiations are aware of these questions. Perhaps they do not have such vivid experience as the hon. Gentleman, but I assure him that his point will not be lost on those who speak for us in the third week of June.
  The United Kingdom wants to see in the JRC a modern, worthwhile, scientific institution. We want to see relevant research programmes, effective management, and an efficient operation. I hope that this will not be the last chance to get it.
  EUREKA is an initiative presenting unique opportunities and challenges to British and European industry, as I shall briefly explain to the House. Established in 1985, with considerable United Kingdom influence, EUREKA's goal is to help Europe compete with the rest of the world and to win markets for advanced technology goods and services. This can be achieved only by strengthening European and United Kingdom industrial productivity and competitiveness, and by exploiting the single market as a springboard for worldwide sales. EUREKA'S purpose, therefore, is to foster and facilitate pan-European collaboration in high-risk, technical projects. But the choice of projects is left to industry—the so-called "bottom-up" approach.
  Fostering projects does not create wealth. Profits come only from successful exploitation in the market place. EUREKA aims at achieving that outcome through a flexible, collaborative framework within the 19 member countries. The driving force comes from industry, with national Administrations and the Commission playing an important role, making sure that the economic conditions are right and that the European market is ready for exploitation.

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  What does EUREKA provide in the way of incentives for industry to take up the challenge of pan-European collaboration? First, it provides a network of national EUREKA offices for bringing projects and partners together. Secondly, and most important, it provides supportive measures. Put simply, these are steps taken by Governments towards improving a project's commercial prospects; for example, the adoption of a new common standard or regulatory measure. Lastly, EUREKA offers political commitment from all 19 member countries and the Commission, which is a member in its own right, to removing obstacles to collaboration, and ultimately commercial exploitation.
  The real hallmark of EUREKA is the nature of its projects, which are industry led and market driven. Participants are free to manage them as they wish with the minimum of red tape. The projects can be in any area of advanced technology and can cover the full spectrum of research and development. There is no central bureaucracy for the participants to deal with, no single pool of funding with conditions attached that the participants must meet, no preconceived strategies or limitations imposed on them, no prescribed EUREKA contract restricting their freedom to negotiate, and no regulations on the way participants establish and run their projects.
  I have already said that EUREKA is not simply a funding mechanism. Firms wishing to make their own private financial arrangements are free to participate in and benefit from EUREKA, just as much as those being publicly funded by their national Governments. Each member country is free to make its own funding provisions for her national participants.
  This, then, is the theory of EUREKA in outline. But is it working? The answer so far is clearly yes, for there are now more than 160 agreed projects, involving a total estimated investment cost of nearly £3 billion. Most projects have a duration spanning two to five years. Most of them are therefore still at the early stages, but the signs already point to these projects having a major impact in the future. Just over half these projects involve estimated costs of under £7 million. In another third, project costs lie between £7 million and £35 million, and for the remainder the costs are still bigger, with four projects exceeding a forecast spend of £70 million. Even more pleasingly, British participants are involved in one third, or 56 of these projects, 14 being United Kingdom-led and having an estimated total investment cost of £1·1 billion.
  To give the House a flavour of the project mix so far, about 35 per cent. are in information technology, 18 per cent. in robotics and manufacturing, 13 per cent. in biotechnology, 12 per cent. in new materials and the rest mostly cover lasers, energy, telecommunications and the environment. Specific examples involving the United Kingdom are HDTV which is a European competitor to the Japanese and American versions of the next generation of TV for the 1990s, EUROLASER or the application of lasers to industrial production technology, and FAMOS, or new flexible, automated manufacturing systems.
  Through that outline description of EUREKA I hope that I have helped the House to understand better what makes EUREKA so special and the reasons why it has a priority role in my Department's research and technology initiative. It ensures that United Kingdom firms form part of a stronger European technological capability through
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  industry-led projects with European partners, and that United Kingdom firms are well placed to take advantage of the completion of the single market.
  As the motion states, my Department's aim is to use EUREKA to help British industry become more competitive in world markets. Through EUREKA our innovators can combine strengths and share risks with their counterparts in Europe, free to profit from their undoubted talents and enterprise, through the critical mass and synergy which characterise all EUREKA projects. The rest of Europe is taking up the EUREKA challenge, and British firms must do the same if they are not to miss the boat.
  Mr. John Marshall: Does my hon. Friend accept that, in addition to the advantages that he has enumerated, there is evidence from those who have attended debates in the European Parliament, as I have done, of the coming together, perhaps for the first time., of our parliamentary colleagues in the European Parliament and ourselves in looking to opportunities in the regions and in our constituencies? Collaboration between European and Westminster parliamentarians can provide the basis for an active role m furthering the process that my hon. Friend has been outlining tonight.
  Mr. Butcher: My hon. Friend makes an excellent point. The additional advantage that accrues to these projects is that they extend outside the 12 or 13 countries within the Community.
  I know that our colleagues in the House who have strong connections with Europe have mainly become great supporters of EUREKA, not least because at the beginning it was seen as a counterbalance to the growing strength of American research and development work in certain key technologies. It is to the credit of those who saw EUREKA as a major opportunity—I see my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) here today—that the programme has moved so fast and so many excellent projects have been brought forward already.
  From what I have said, the House will be clear that EUREKA is quite different from other collaborative programmes, such as Community research and development, of which the JRC is a part. EUREKA is not in competition with these other programmes. It complements them and provides a major route for exploiting the pool of raw technology coming through from these other programmes. This applies particularly to the exploitation of the fruits of the Community's research programmes, which point leads me to the third document, 10845/86, concerning links between EUREKA and Community science and technology.
  The Government's view is that these links will become clearer through following the case-by-case approach, as the Research Council concluded in December 1986. Since then, there has been very little progress. However, l am pleased to inform the House that, following the most recent meeting of the Research Council on 11 April 1988, the Commission will be bringing forward new proposals for clarifying these matters.
  Mr. Dalyell: What, in the Government's view, is the reason for the delay since 1986?
  Mr. Butcher: The various partners have been anxious that the EUREKA programme should be complementary

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  to other programmes. There has been a continuing discussion about the relationship of ESPRIT, BRITE and other aspects of the framework programme. If there has been crab-like progress in the interim, that is because Ministers from different countries may have wanted value for money and non-duplication of resources. That is my assessment of one of the major factors. The Government's view is that these links will become clearer by following the case-by-case approach. There seems to be no dissension about the fact that that process has served us well.
  We wish these proposals to recognise that EUREKA is indeed a natural route for exploiting the results of Community R and D, and also that some of the R and D needs identified by work under EUREKA could be more appropriately carried out under a Community programme. The best way forward remains the step-by-step approach that we have advocated from the beginning. Only by close collaboration between projects, EUREKA officials and the Commission can the right decisions be made, consistent with EUREKA's bottom-up philosophy.
  In view of what I have said, this debate is most timely. With regard to both the JRC and EUREKA, our basic aims are value for money and to help British industry become more competitive in world markets. I therefore commend the motion to the House.
  10.41 pm
  Dr. Jeremy Bray: The House is indebted to the Select Committee on European Legislation for juxtaposing these documents. I fully understand its members' complaints about not having had time to consider one of them, but I should have thought that a more justifiable general complaint was that the House was generally far too dilatory about considering the papers that the Select Committee recommends to it. The Committee has certainly made helpful observations about the documents.
  We support the Government's intention to tighten up the management of the joint research centres. They need to be more clearly pointed at objectives and integrated with industry. They need to update their range of concerns to bring them into line with those which industry and society face.
  However, I find no great contribution in the Government's approach to positive thinking about what the joint research centres should be doing. For instance, if the Government were thinking positively about the jobs that the centres need to do, their thinking could not be encompassed by the present framework of the joint research centres.
  Let us consider one piece of work that should clearly be done nowadays on a European basis: the maintaining of absolute standards of mass, length, time and so on. Historically, that has been perhaps the principal mission of the National Physical Laboratory in this country. We devote an inadequate and incorrectly scaled effort to that area. It is not justifiable to do it on a national basis. It becomes expensive if one gets involved in hydrogen masers, and so on, which are of great interest for radio telescopes, radio astronomy work, and co-ordinating and synchronising signals across the diameter of the earth and
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  out to the satellites. It is not exactly the sort of thing that is done on a tiny budget to measured time standards in the National Physical Laboratory.
  If Europe as a whole is to do sensible work on the management of time standards, it must encompass the frontiers of research on the one hand and working down through the different levels of application to the grass roots implementation of standard services to industry on the other. The National Physical Laboratory used to do that. It is beyond the scope of the budget it can hope for today, but it would be reasonable to ask the joint research centres to do it, although I am not thinking necessarily of any existing joint research centres. It might be sensible to enlarge the framework of scientific and technical activity which is covered by the joint research centres.
  If the Government were willing to put positive thinking into the work programme, they would find it much easier to deal with some of the intractable problems which I am sure they are faced with in ESPRIT and elsewhere in the JRCs. If the Government appear to be on the side of the people with whom they are working, and if they share their technical interest and the view that they have an essential contribution to make to industry and society, it is more likely that those people will be on the Government's side and will be willing to accept the major changes which are needed in their work and organisation.
  I ask the Government, not just from a British point of view, to consider the traditions of the great national laboratories in Germany and France and ask what benefits we can gain from the Centre National de la Recherche Scientifique in France and the Max Planck institutes in Germany. The Government should ask how the work of the JRCs fits into the wider context of what Europe should be covering in science. I can well understand the Government and the Commission running a mile at the thought of subjecting a wider range of scientific activity to the present management and structure of the JRCs, but that is not the necessary end point of the freer thinking which the Government should initiate.
  To put the different parts of the picture into a pattern, on EUREKA it is bottom up, industry-led and market-driven, but basically it is a familiar pattern of technological support to the many schemes which we have had in this country. Those who know how to operate them know how to put in applications; they know the procedure in departments and they get their proposals through. Approval is not automatic, nor is there an overall, coherent industrial programme of application lying behind it.
  The Government may say that its very strength is that it is intended to be industry-led, market-driven, bottom up and all that, but it can result in an extraordinary jumble of variable-quality work without necessarily achieving the increase in technological competitiveness which we seek, say, in electronic components or in mechanical engineering so that Europe can fully match the best that is available in the United States in professional equipment or in Japan in consumer products.
  The Select Committee on European Legislation and the European Commission point us to the need for examining the relationship between EUREKA and the collaborative programme of the European Community generally—ESPRIT, RACE, BRITE and so on. In this, there is a quite different approach in that there is, for example in RACE a clear perception not only of the sort of technology developments that will take place in telecommunications,

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  but of the developments that will take place in standards and applications. Clear developments are already under way in important software areas, and to their credit the Government support and recognise those in other ways.
  BRITE takes traditional technologies and industries and begins to explore the immense potential for the upgrading of the technology used in many rather down-to-earth industries. ESPRIT is reaching a significant volume of activity and should offer the prospects of major initiatives. I hope that those initiatives will be followed up by industry.
  The joint research centres are being looked at rather narrowly as a revamping of a particular research organisation which is perhaps rather dead on its feet. EUREKA is very much a first come, first served programme that is industry-led and market-driven, but it has no special industrial logic. Then there are the specific technology area of programmes such as ESPRIT, RACE, BRITE and so on. They have industrial logic and a clear technology strategy.
  The reason for a certain sense of dissatisfaction about the overall pattern in Britain is that the Government do not offer any overall strategy for industrial and technological development. They rather positively turn their face against that. It is not simply that no clear picture is emerging in Britain for developments for broad band, space fusion and so on, but that the basic underlying logic is not clear. The Government follow the general principle of non-intervention and say that the free market must provide.
  In the early days after 1979, the Government started to develop a clear understanding that there are some things that industry could not do well or could not do at all and on which the Government needed to take a positive
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  initiative. I attribute a good deal of that initiative to the influence of Duncan Davies who, as chief scientist in the Department of Trade and industry, had a good deal of influence upon Lord Keith Joseph. I understand that directly from Mr. Davies. That pattern has not been carried through to the enterprise initiative or whatever it is called—the one in which the arrow comes up one's backside—in the Department of Trade and Industry.
  Mr. Rhodri Morgan: It is a harpoon.
  Dr. Bray: I am grateful for that explanation.
  We urgently need a statement about the Government's overall science and technology policy. That cannot wait until the next election. It must have urgent attention or we will lose desperately important time. The statement should embrace a Government reply to the strategy document of the Advisory Board for the Research Councils and the practical, down-to-earth concerns about the supply of scientists and engineers and the support developments needed in the education system and the school curriculum.
  Once in place, that overall strategic plan for the application of science and technology would enable us to make a positive contribution to European science and technology. It would also enable us to take a positive approach to the joint research councils and build them up into the genuine European science framework that Europe justifies and requires. It would enable us to integrate EUREKA with the much more positively mission-orientated approach offered by the other programmes. It could begin to get into Europe as a whole the sort of technological initiatives that we badly need and that our European partners, in their own interests, would like to join us in furthering.
  10.55 pm
  Sir Geoffrey Pattie: I wish to say a few words about the joint research centres, particularly the centre at Ispra.
  The commentary by my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs on the documents represents a reasonable behind-the-scenes achievement by the Government in their negotiations, but it shows that there is still a great deal more work to be done. Bearing in mind the difficulties to be surmounted, particularly the obdurate nature of the relevant commissioner, I do not want to underestimate the magnitude of the Government's task. However, the performance of the establishment at Ispra in recent years has been nothing less than a scandal because it has conducted a series of irrelevant programmes. During the time that I was involved in the Department of Trade and Industry, I could never find anyone in any Government or in the appropriate circles in Brussels who could say what the organisation was supposed to be doing and to try to change its tack proved to be absolutely impossible.
  The panel of industrialists referred to in the Government's commentary reported on the future role of the joint research centre and recommended
  "a much larger customer orientation and a re-structuring of the largest JRC establishment at Ispra in Italy. In its proposals the Commission recognise the need for change and have taken account of some of the principles set out by the Panel. However, a large part of the customer orientation will consist of work for other Commission Directorates."
  We see here the sadness and reservation in the words of the officials drafting the text—for example, that the Commission has taken account only of
  "some of the principles set out by the Panel."
  The document continues:
  "Work for genuinely external parties is expected to increase from about 10 per cent. at present to only 14 per cent. by 1991."
  As the Department fairly says:
  "In negotiations so far we have been pressing for this target to be raised to 20 per cent."
  I pay tribute to what the Government have been able to achieve so far, but the task is enormous. We should all like to see the various programmes improved, but, in view of waste of this order—hundreds of millions of units of account—it becomes scandalous. The hon. Member for Motherwell, South (Dr. Bray) mentioned his experience in dealing with the Italian trade unions. As he well knows, that is all part of the solidity and intractability of the situation. The people involved, whether Italian nationals or not, are completely locked into a series of programmes. It is verging on the obscene at a time when there is great pressure on the budget and we would like to see money released and used for other purposes.
  I hope that the steps reported to the House tonight for a new structure for all the joint research centres will lead to an improvement and a dramatic change at Ispra. My hon. Friend the Minister, in his introductory remarks, mentioned the problems that even the board of governors has experienced. I know, from talking to the chief scientific adviser to the Government, that the governors have a great advisory role. They can submit a report and make suggestions, yet the joint research centre at Ispra carries on exactly as before.
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  All those things must change. I urge my right hon. and hon. Friends to maintain the pressure. A series of first steps have been reported to us tonight, largely taken as a result of the pressure that this country and others have brought to bear. In the time that I represented the United Kingdom at the Research Council, I did not find another Minister representing any of our partners—it was not a case of Britain being isolated in that respect—who know what Ispra was doing. Therefore, there was total unanimity about that.
  I hope that my hon. Friend the Minister will maintain the pressure and regard what is being reported to the House tonight as the start. I welcome what my hon. Friend has told us tonight about EUREKA. The United Kingdom played a full part in getting that series of programmes into a relevant format. Department of Industry and Foreign Office officials worked extremely hard on that and continue to do so. I believe that the Commission has never particularly liked or welcomed EUREKA programmes. They are a little maverick and involve awkward people from outside the Community. Although the memorandum has some pleasant things to say about EUREKA, in the overlap sections there are other comments about the various programmes that are duplicated—as is their tendency.
  I add those comments about EUREKA while welcoming what my hon. Friend said about the programme. I urge him to keep up the pressure.
  11.1 pm
  Mr. Malcolm Bruce: There are obviously two aspects to the motion before the House. I hope that it is acceptable for me to qualify my comments by introducing a slightly jarring note about the clear general acceptance of criticism of the system, the need for reform and for the British Government to take a positive role in pushing for that reform. I do not dispute the need for that. However, the Government are not formulating a clear direction where they believe things should be going. I am sure that the Minister is aware that there is a lack of confidence in the Government's domestic approach to research and science in general. Against that background, there is legitimate suspicion about the Government's objective in terms of the pressure that they are bringing to bear in the Community.
  That is borne out in the motion. As has been accepted, the joint research centre needs to be reformed, targeted and given specific direction. The explanatory memorandum states:
  "The JRC's activities are relevant to the creation of the single market"—
  something that will concern us all—
  "to the improvement of the Community's industrial competitiveness, to the protection of the environment and to the enhancement of safety."
  I wonder why the Government's motion refers only to helping
  "British industry become more competitive in world markets"
  and excludes the relevant references to other factors. Is that because the Government have decided that research projects have no business doing anything other than promoting competitiveness?
  I am not disputing the desire for competitiveness. However, I believe that the other objectives are also important, relevant and worth supporting. I should like

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  the Minister to tell us whether he agrees with me, or whether the exclusion of those factors from the motion is significant.
  Reference has been made to the need to push research according to market or near-market considerations. It has been obvious for a long time that the Government have a warmth for EUREKA rather than for the joint research centre for that reason. That is perhaps understandable and consistent. I have no objection to attempts aimed at ensuring commercial relevance and research taking account of its applicability and commercial accountability. However, does the Minister accept that too much pressure in those areas can prejudice useful follow-up research?
  That aspect is of particular concern to the scientific community when it sees that pure research is being squeezed out of the system at the same time. My understanding is that researchers complain that they are prevented from following up opportunities which may lead in interesting directions because they do not have immediate commercial relevance. I am worried that the general thrust of the Government's contribution seems to militate against such work.
  Will the Minister tell the House how he believes the EUREKA projects can usefully be assessed and evaluated? Reading the documents, one sees figures on the number of projects and how much money is involved, but it is not clear how useful those projects are. Reference has been made to duplication and overlap, but, leaving that aside, is there not a method for evaluating how valuable research has been and what kind of results have been produced?
  In the Alvey programme, the Government have gone for fairly rigorous testing and have subsequently ordered cuts. It would be interesting to know whether the Government have any constructive proposals for evaluation.
  Arising from that—perhaps this is putting the matter too simply, but the Minister will know about this more than I do—fears have been expressed about instances where two large companies, which operate from different locations in two European countries, get together and qualify for a research project that really does not provide anything new or dynamic. If so, the present system of evaluation is neither useful nor valid. The Government could make some valid input by making constructive proposals for dealing with such situations.
  Will the Minister tell the House how smaller companies can cut themselves in? If the situation is as I have described, it is clear that larger companies with larger research organisations, and having a greater degree of sophistication, find out fairly rapidly how to milk the system, whereas small companies, which do not have the same guidance and opportunities, are shut out. I can only say in a very mundane way that, having experience of working for small or medium-size companies in my own area—in the days when they existed—which sought access to funding under European or British Government innovation projects, it is apparent that the sophisticated companies corner the market and that small companies are squeezed out. It would be nice to see the Government pressing for a role for small companies and helping to secure a greater share of relevant funding.
  I have asked one or two quesions which I hope will be considered relevant. I believe that if this debate is to follow through constructively, the Government—I do not wish to stray beyond the bounds of order—must give us a clear
  914
  idea of their own science and research policy, over and above trying to ensure near market or market commercial accountability.
  Many people in this country are proud of the fact that Britain has a good research record, but they are worried that our application of that research is not always as good as it could be and that the pressure applied by the Government will not solve the problem. They believe that applying that pressure will result in the quality and volume of pure research being squeezed, without any noticeable increase in the successful application of research to the country's advantage.
  I look forward to the Minister's replies with interest. I hope that the Government will steer future debates more clearly, showing that their lead is not a purely negative one about waste and duplication, but a slightly more positive one on accountability, how small businesses are becoming involved, what our clear objectives are and how we can ensure that the EC and the wider European interests gel on track in a coherent direction. It would be nice to see the Government giving a lead rather than just carping about the cost of what is being produced.
  11.10 pm
  Mr. Tam Dalyell: The Government inherited one almighty mess in relation to Ispra. The whole Ispra project started on the wrong foot, because it never had any clear scientific object or mission. It was a sop to the Italians for not getting the research facilities to which they thought they were entitled. It was a national partition of the European cake. That is almost the worst possible basis for starting any kind of scientific union.
  In brackets, I might say something pretty awful. We can thank our lucky stars that, thanks to Commissioner Brunner and to a number of hon. Members of all parities, Conservative and Labour—I and colleagues played our part in this—we prevented the Joint European Torus project from going to Ispra. I say here and now that if fusion had gone to Ispra, the kind of advances that have been made at Culham simply would not have taken place. Commissioner Brunner was right to say that it should be either at a German site or in Britain, where there is a determined engineering capacity.
  I listened to Italians such as Senator Noë and Mr. de la Briotta in the European Parliament going on and on about Ispra. It was deeply unsatisfactory, but, having said that, I am sanguine as to what can be done about it. I do not say that I have news for the Minister—I think that he understands the position full well—but there are such things as contracts. That is why I interrupted in relation to Italian law. The Italians have cast-iron contracts. The Milanese lawyers have done a wonderful job for them, and the Minister will find that they are contracts for life. Unless something can be done about all this, root and branch, I do not see what progress can be made and what turnover of people can possibly be achieved.
  My information is rather secondhand. It used to be firsthand. Before the debate I made inquiries, and I understand that things have not changed greatly from the old days. What will be done about the whole basis of contract, because no progress will be make at Ispra unless something is done about it?
  Incidentally, that may be part of the difference between Ispra on the one hand and Karlsruhe on the other, which,

  915
  from the occasional visit, I thought was rather good, and perhaps Petten and Geel. Do the same gloomy predictions occur in the other three?
  I ask, as the hon. Member for Gordon (Mr. Bruce) asked, what is their function and what does the Minister see as their object? They were doing what seemed to be quite good work on sunlight and heating, but it was pretty small scale and I am told that better work is done elsewhere. The right hon. Member for Chertsey and Walton (Sir G. Pattie) has recent ministerial experience, and he asked the same question.
  What is now seen as a sensible objective? Is there any future in some joint European effort on radioactive decommissioning, radioactive waste management and, in particular, super-compaction of solid waste? The Government have not said that that is best done at Ispra. Incidentally, it may be done better at Dounreay. Nevertheless, with this type of objective, it is sensible to ask whether it should be done on a European scale. I should like more clearly to hear what ideas the Government have on the constructive things that Ispra, Petten, Geel and Karlsruhe can do.
  Paragraph 14 of document 9454/87 states:
  "The United Kingdom would like closer links between JRC programmes and other Community programmes in similar areas. The proposals for enhanced powers for the Board of Governors are welcome, though the details have yet to be clarified and it is necessary that other structural changes at the JRC should operate in the interests of clear management responsibility."
  As has been said, the board of governors does not have a great say. I wonder what is really meant by
  "other Community programmes in similar areas".
  Can flesh and blood be put on those words? What exactly are we getting at? My hon. Friend the Member for Cardiff, West (Mr. Morgan) wishes to speak, and I must allow time for the Minister to reply to the questions that have been asked of him.
  11.16 pm
  Mr. Rhodri Morgan: I shall raise two points in relation to EUREKA. The Minister described the EUREKA document as clearly showing that EUREKA is successful on two grounds. He said that we are getting our share of it, that it does not follow bureaucratic principles, that it has the solid, good, old-fashioned virtue of a step-by-step approach and no red tape, and that it is bottoms-up. They were all good, sound phrases, borrowed from a Daily Express editorial of 30 years ago. They do not demonstrate whether EUREKA will perform in terms of the objectives of an industrial and technological policy of reducing the gap that has emerged between Japan and, to a lesser extent, the United States of America and the disparate countries of Europe, because EUREKA covers several countries outside the European Community.
  We want to know how EUREKA will achieve objectives, not merely that it will not fall into the trap of over-bureaucratisation that we can see in Ispra and, to a much lesser extent, in the administrative systems that the Commission must impose on directly funded research programmes such as ESPRIT, BRITE, RACE, and so on. We want an assurance that it will not fall into those traps and that it will achieve something. The right question is not whether we are getting a share of EUREKA but
  916
  whether it will produce results. Surely the dangers are just the same as those with RACE, ESPRIT, BRITE and other directly funded Commission programmes. They do extremely little for regions, small firms and the encouragement of enterprise.
  For too long we have suffered—EUREKA is likely to suffer in the same way—from being dominated by large firms. I refer to the national champions—the firms that are in with the powers-that-be. In this country, in electronics it is GEC and, occasionally, ICL and Plessey. In Germany it is Siemens, and in Holland it is Philips. Those firms already have the cash, and they are already well in with their Governments. They get much public sector funding, and they have no problems in getting private sector funding. They participate in EUREKA in the same way. Because of the way in which Davignon set up the ESPRIT programme, they were the first firms to get in with ESPRIT.
  Ludicrously and paradoxically, firms with enormous cash mountains—such as GEC with well over £1 billion— are given cash. Apparently, such firms do not have enough cash to carry out research and development in collaboration with industrial partners. That is nonsense. The firms which have a desire to take risks—unlike, say, GEC—and which do not have cash should be given cash. Firms such as GEC with plenty of cash should be encouraged to take risks.
  EUREKA operates on a national champion to national champion basis. It says, "GEC will please talk to Siemens. Philips will please talk to Thomson. Olivetti will please to talk to Philips and, preferably, Thomson." Cash-rich firms which wish primarily to protect their market share in Europe, rather than to catch up with the Japanese in world markets, will inevitably be the participants in EUREKA. They are the powers-that-be. They get in first. They get the invitations to the big conferences in the Queen Elizabeth II conference centre and in Hanover. They will dominate—not the small firms in the regions and the firms willing to take risks and make the breakthroughs.
  What would happen if the Government had a science and technology policy which they tried to relate to EUREKA and the other European sources of public funds to encourage research and development? The Government may want to look beyond the silicon chip to the next generation of materials, such as gallium arsenide, which can do the job much faster. They may try to link the University Grants Committee funding for pre-competitive research and development, which is carried out with encouragement from ESPRIT, with the collaboration at industrial level on development rather than research, through EUREKA. They may also want to look at those firms undertaking significant work.
  Over the past year, firms such as GEC and Plessey have been engaged in a massive quarrel over whether Britain will have a modern properly funded gallium arsenide foundry. The whole idea has been squashed, despite enormous efforts by the Department of Trade and Industry to get the two companies to work together. Smaller firms still at the venture capital stage, such as those involved in plasma technology in Bristol and electro-tech instrument development in south Wales, have made great efforts. In collaboration with University college, Cardiff and the university of Wales institute of science and technology in Cardiff, they are getting on with the job and doing the type of work on which the Minister would like

  917
  to be able to report to the House. EUREKA and other Community programmes are intended to assist in that work.
  Small firms which are still in the venture capital stage and universities such as Cardiff, which do not get big favours from the UGC and are outside the main stream of collaborative research, are willing to take risks and to reduce the gap in micro-electronic technology between Britain and Japan. Those firms are most unlikely to get funds from EUREKA on a big scale and to do well out of ESPRIT. They do not have the clout with the powers-that-be.
  How will the Minister correct the fundamental flaw which has occurred with ESPRIT, RACE and others and which is likely to occur with EUREKA? The small firms that are genuinely not averse to risk and the universities that are not in the golden triangle are cut out. How will the Minister ensure that the small firms and the universities in the regions get their proper share? This is needed if Britain is to catch up with Japan in science and technology. Jobs should flow from that catching up.
  11.24 pm
  Mr. Butcher: I thank all those who have spoken in the debate, during which considerable agreement has emerged. I shall do my best, in the time available, to deal with the various requests for information.
  The hon. Member for Motherwell, South (Dr. Bray) wished to know the stage that negotiations had reached and where we see our position to be. I am sure that he would not expect me to say in fine detail exactly how we will pursue our objectives, but it is right to restate what we are doing in those negotiations.
  The last JRC programme ran out at the end of 1987. An informal discussion on the Commission's proposal for a new programme was held last December at the Research Council, and there was a substantive discussion at the 11 April Research Council. The European Parliament has also examined the proposal, and it should be possible for the Council to reach a common position at its next meeting on 29 June.
  The main outstanding issues relate to aspects of management and staffing policy. I shall come in detail to the points made by my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) and the hon. Members for Cardiff, West (Mr. Morgan) and for Linlithgow (Mr. Dalyell). However, en passant, I say to the hon. Member for Linlithgow that we support his contention that the search for best practice now has to be on a pan-European basis.
  If, for example, I am looking for examples of best practice in the higher education institution in engineering, I should look at Aachen. I know that some of the more enlightened engineers in this country see Aachen as a model that has critical mass, expertise, and delivers teaching in volume of the highest quality, but, in addition, it is a major research centre. If the hon. Gentleman decodes some of the remarks made by Ministers from the Dispatch Box in recent months, he may see the beginnings of a policy that we believe will learn from the Aachen experience.
  Having said that, we also have to learn from the Ispra experience. The root of the matter has been identified in two speeches tonight as being Italian law operating in favour of local employees. I do not wish to turn this into
  918
  a political debate, so I shall not go into too much detail about the role of trade unions in Italy. However, at the start of the JRC, the staff conditions of our Commission employees were determined by the Commission, and the trade unions have been resisting the introduction of flexibility. That has not been helpful to the JRC's scientific vitality. We believe that the trade unions, too, are increasingly aware of the need for change. It is primarily for the Commission to tackle this obstruction to scientific change.
  The United Kingdom would like agreement on the following changes to JRC's staff conditions: a greater rate of annual turnover of staff, including the entry of younger scientists, with skills appropriate to JRC's future needs; more staffing to be on the basis of secondment to and from national institutions rather than on a permanent basis; a programme of compulsory retirements, which is necessary to achieve those ends; and a reduction of the cost of the JRC on the Community budget. The Commission has produced a working paper on staffing policy. It includes proposals for a reduced number of' permanent staff, reservation of posts for visiting scientists and the transfer of some service staff out of JRC budgets, consistent with the practice elsewhere in the Commission.
  The Commission assures us that the necessary flexibility in staffing policy is available under the present legal base of JRC. We are willing to examine the possibilities within the present framework, but we do not rule out the need for a more radical change if pressure is unsatisfactory.
  In case Opposition Members think that we are in a draconian gung-ho mood arid are seeking redundancies, I refer them to my opening speech, when I said that we need new blood. Further, without naming sites in the United Kingdom, at our own research establishments we are familiar with the problem of staff who have been in their positions for perhaps a quarter of a century. They are comfortable in their programmes, which have been rolling for a long time, and would bitterly resent the accusation that somehow they should examine how it is that they have been deploying their intellectual resources over this period of time on programmes which perhaps need some adjustment, and perhaps reassignment to other branches within their research establishment.
  Ispra is that writ large, but with some peculiarly domestic Italian questions that need resolving. For reasons which I am sure my right hon. Friend the Member for Chertsey and Walton will understand, it is not advisable for me tonight to engage in a tirade against that. I simply state the criteria on which we shall judge the efficacy of the Commission in making its arrangements for its employees. I suspect that there will be consensus among Ministers at the next Council meeting on the sorts of things that we want to see achieved.
  Mr. Dalyell: In the New Scientist of 29 October, under the byline of Debora Mackenzie, a table was published showing that 350 staff are between 51 and 55 years of age, that between the ages of 56 and 60 there are just under 200, and that between the ages of 46 and 50 there are 250—I suspect that the table is familiar to the Minister—with just 10 or so between the ages of 21 and 25. Is the age range really as cock-eyed as that?
  Mr. Butcher: I do not have immediate access to figures to confirm or deny that point. However, those who have observed the Ispra phenomenon have remarked on the

  919
  way in which the staff are deployed. I stated earlier that we in the United Kingdom are vividly aware that staffing is top-heavy and that it may be subject to hardening of the arteries in both a metaphorical sense and, perhaps, among many of the staff. However, we are on to that. My right hon. Friend the Member for Chertsey and Walton asked us to keep up the pressure, and of course we shall.
  Perhaps this should not have been a debate in which we examined the Government's general domestic research policy, but Opposition Members have tempted me to make one or two comments on that. It is interesting to note that what is going on in Europe in the framework programme and in the EUREKA programme is mirrored by what is happening in the United Kingdom. We have said clearly that, as a Government, observing an industrial sector that is now making healthy profits, it will be for companies to make their own commercial judgments in their own way now that they can luxuriate in investment, and their own R and D decisions.
  Given the changed trading conditions—if this is not a strategy, it is a matter for debate, and I believe that it is simply an observation on changed conditions—it is correct for public sector money, whether employed by the Department of Trade and Industry or by the Department of Education and Science, to move upstream and away from near-market exploitation. We have been discussing that very concept tonight. This is not a strategy in the way in which the right hon. Member for Chesterfield (Mr. Benn) would recognise a strategy. However, it is clearly stated in several of the objectives in our White Paper and it is articulated in the pattern of spending which the House can examine carefully, because it has been placed before the House.
  We can look, for example, at LINK, to meet the higher education links with outside industry, at EUREKA, at our DTI-sponsored programmes on advanced technologies, on things such as SMART—the small firms merit award for research and technology—at our exceptional projects and at things within sectors such as launch aid. We already have a number of programmes moving forward on key enabling technologies. The IT programeme rolls at £85 million over the next five years, building on Alvey, which was well assessed. Although Alvey has had its critics, any objective evaluation of it will show that it produced the goods and the results. The question now is the one raised by the hon. Member for Cardiff, West: will industry have the sense to exploit those technologies and not simply leave behind another collection of fundamental ideas which others may exploit?
  Higher education institutions are participating in EUREKA, as are small and medium-sized enterprises, to a significant extent, so the point that was made in that connection is not lost on us. I hope that there will be an occasion, should the House wish, when we can look more closely at the Government's current emphasis on research and development policy.
  My right hon. Friend the Member for Chertsey and Walton suspected that the Commission never liked EUREKA and tended to overstate its overlaps with the Community's own research and development policy. I can only tell my right hon. Friend that he is absolutely right. I did not regard his speech as cynical. I thought that he made an observation on a real phenomenon.
  920
  As for the profiles of the programmes within the various sites, at Ispra we have reactor safety, industrial hazards, fusion research, non-nuclear energy, environmental protection and remote sensing. At Karlsruhe they are undertaking research in the nuclear fuel cycle. At Geel in Belgium they are producing nuclear measurements and reference materials. At Petten in the Netherlands they are dealing with reactor studies and high temperature materials. In Brussels there is an administration of 20. That is the central administration and is not to be confused with the administrative function in the REs.
  The hon. Member for Linlithgow asked what we wished to see by way of new emphases within those facilities. In my opening remarks I said we felt it regrettable that, for example, the environmental programmes were running at about 14 per cent. Hence much work remains to be done there. We feel that their briefs could be expanded, but we must encourage them to seek custom, and in the first instance that custom will have to take advantage of the expertise that exists in-house. As with operations such as NEL and NPL, what they have in situ will bring along their first customers, but we hope that many of those will be industrial and private sector, although the Commission may put some work to them.
  I have referred to small and medium-sized enterprises. It is not true to say that we are talking only about large firms in the programmes. Many small firms are involved in EUREKA, ESPRIT and BRITE. They are involved in at least 40 per cent. of the projects across those programmes.
  I was asked about evaluation—about how we are to assess EUREKA—and whether it is simply to be reliant on numbers of projects or the amount spent. The hon. Member for Cardiff, West highlighted a point of crucial importance. In the past, Governments—I am talking generically—have measured success either by the amount spent or by whether those who benefited from projects stated themselves to be content.
  If a research or other body has just received a large sum of money, it will be reasonably content. We have had difficulty—as a task of Government generally—in measuring the output of any Whitehall Department's spending. We find it easy to measure input, taking into account the number of staff deployed, the amount of cash and the degree of effort but as soon as one asks what has been achieved, one gets different replies. We are aware of this and my Department is perfecting the science of measuring output against expenditure on the commitment of man and woman years.
  It is early days yet for EUREKA. The projects are industry-led and are funded primarily from the private sector. It is up to industry to assess the value, although, in the final analysis, the market will make the assessment, remembering that all the projects are allegedly near-market projects.
  I was asked by the hon. Member for Linlithgow what we meant by closer links between the JRC and Community programmes in similar areas. The JRC has activities in materials, environment and energy, and we hope that these will be kept in step with other efforts within the framework programme.
  Mr. Dalyell: The Minister has been courteous in answering my questions and I am not complaining, but what about the decommissioning of radioactive waste? Is there a future there?
  Mr. Butcher: The short answer must be yes, because it would appear that in several member states this has become a political as well as an industrial question. My personal view is that the search for safer fuels is of equal importance. That does not mean that I shall impose my bias into these arrangements, but the decommissioning question remains, if the House will excuse the metaphor, a live one.
  The hon. Member for Gordon (Mr. Bruce) pointed to the lack of confidence in the Government's science policies. My right hon. Friend the Secretary of State for Education and Science told the House of the increase of 15 per cent. in the science Vote since 1979. That is not enough for some scientists. There are wild accusations that we are no longer supporting basic and commercial research, and it is alleged that our sole criterion for supporting research is whether it will achieve a measured result in the market in the short term. That is a wholly unfair allegation. We have shifted the emphasis of science and technology policy in the right direction. If industry in its current state of profitability cannot bring forward appropriate development projects that are near to the market it will not be the Government's fault. We have delivered the framework within which it can do that.
  Question put and agreed to.
  Resolved,
  That this House takes note of European Community Documents Nos. 9454/87 and 5616/88 on the Joint Research Centre and 10845/86 on EUREKA and Community Science and Technology; and supports the Government's aims of raising the quality and relevance of the work at the Joint Research Centre and of using EUREKA to help British industry become more competitive in world markets.

  Joint Research Centre and the EUREKA Programme
    Matrimonial Proceedings (Transfers) Bill [Lords]
    Not amended (in the Standing Committee), considered. Bill read the Third time, and passed, without amendment.

  Bristol Channel (Waste Disposal)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kenneth Carlisle.]
  11.42 pm
  Mr. Tony Speller: It is with great pleasure that I see my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food in his place for this debate, not least because it shows the gravity with which the Government view the whole position.
  First, I should state what I am not seeking to do in this debate. I am not seeking some sort of anti-nuclear crusade, not least because I have a great respect for the CEGB, the quality of engineering and the ability of the nuclear inspectorate. Secondly, I am not seeking to attack Hinkley Point by some water-borne assault. It has existed for many years and has an excellent record. Thirdly, it is fair to say that my great interest in alternative energy is not intended to be anti-nuclear.
  After all, provided that all goes right, nuclear energy is the cleanest non-pollutant energy source, outside the range of wind, wave and solar power. Nuclear energy causes no acid rain, does no damage to the ionosphere and does not push lead into the faces of small children on our streets from car exhausts. This debate comes about from the accident of a rural and tourism Member of Parliament deeply concerned simply about three beaches that do not meet EEC standards: no more and no less.
  The Bristol channel runs from the River Severn to the Irish sea, with south Wales on its right, and Somerset, north Devon and north Cornwall on the left. Since obtaining this debate I have been overwhelmed by the instant response of others who, like me, are worried about the quality of the Bristol channel—or, rather, the water within it. Too many authorities control pollution and dumping. Although my right hon. Friend the Prime Minister says that the Department of the Environment co-ordinates all these works, I have not found that to be the case.
  When I saw detailed answers about the type of pollution that was occurring, I asked the Prime Minister about co-ordination, as well as the Ministry of Agriculture, Fisheries and Food, the Welsh Office, for the Welsh side of the channel, and the Department of the Environment regarding sewage and other deposits, and of course the Department of Transport, in relation to the water-borne sewage coming from coastal vessels moving up and down our side of the channel.
  Some of the answers conflict strongly, but I must thank all the Ministries concerned, especially the Ministry of Agriculture, for speedy and accurate answers. The only Department that has not answered my questions, despite the role allegedly placed upon it by my right hon. Friend the Prime Minister, is the Department of the Environment, which has had the co-ordinating job—in other words the co-ordinators unfortunately have lost their co-ordinants. Individual Departments can tell me what is happening, but not the co-ordinator. I am not filled with confidence in the Department.
  The Bristol channel is seaside for those who live in north Devon; it is ever-present, as one crosses Exmoor, and as one comes into my constituency. There is the water, which we call the sea. I have known it well since I was a child. It is the place where one builds sandcastles. plays in

  923
  the water, and later swims, surfs and goes water-skiing. There is fishing and trawling of course; all are pleasures of clean water, or so we thought.
  I sought simply to find out why the water is no longer what it has been and why we were not putting it to rights; I suspected that raw sewage outlets along the coastline were the cause. The results were as fascinating as they were unfortunate. I was astounded to find, from some very honest answers from MAFF, that we have a number of industrial sites, or sewage deposit sites. I had known, frankly, that the great and super city of Bristol, and the city of Cardiff, through their water authorities, dump their sewage sludge a mere 11 miles off the coast of Ilfracombe.
  I knew through a councillor friend of mine, Councillor David Spears of Ilfracombe, who is a fisherman, that there was an application from Port Talbot to dump 7 million tonnes of what is nicely called "capital spoil", again 11 miles north east of Ilfracombe. On top of this, MAFF told me that there were two minor liquid low-level radioactive outlets, one from Hinkley Point and another from Amersham International off the River Taff. I do not believe for a second that any one of those sources causes total pollution.
  Then the information grew worse. In seeking to find out just what goes into the Bristol channel, I asked that marvellously honest body, the Welsh Office. It answered simply that there are all the things that I knew about already, and by the way, there are 27 other outlets whereby low-level nuclear waste is indirectly dumped in the Bristol channel.
  So I had information from the Ministry of Agriculture, and learned more about the two nuclear sources—Hinkley on the Devon side and Amersham on the Welsh side—and the 27 other outlets, as well as sewage dumping, from the Welsh and English sides. There are no heroes or villains in this, just people going about their work, quietly polluting the waterways on the doorstep of north Devon. There are the industries of Port Talbot, and so it goes on, and on.
  Then I asked my friends in the coastguard service and the Royal Air Force about maritime pollution. The Ministry of Transport said with superb openness that it is quite legal to pump out the tanks of a ship in the channel, and that one may discharge gash, or rubbish, there. Rubbish from ships and cleanings from tanks—all goes into this narrow waterway that we in north Devon call the seaside. This grew from a simple problem of finding out how the water authorities work.
  I owe every credit to the water authorities. The South-West water authority is spending much money and doing very well in cleaning up sewage. I am sure that the Welsh authority and Wessex Water are doing the same. It is not the individuals who are polluting our waterways; a major hole is being caused, not by any of the pinpricks, but by the totality of water authorities, the industrial, agricultural, and agrichemical concerns and all the rest of them.
  We come to a very simple question: why do I find dead sea birds and plastic rubbish when I wander along the shores of my constituency? I find not the romantic things of the days of Sir Walter Raleigh, which could be looked at with excitement, but useless plastic rubbish. All of it is man-made and man-deposited because no one is obliged not to do it. That is the essence of my problem.
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  We are not much better on land. Dog owners—I am one—allow their dogs to foul the beach for children to sit in. Councils are getting better and beginning to enforce byelaws, but there is still pollution on the beaches. Our small local authorities still allow outfalls to be tucked away under the sands and to spill raw sewage into the sea for the pleasure of surface and submariners and all who enjoy fishing.
  The beautiful island of Lundy, just off my constituency, is the site of a maritime nature reserve and I am proud to have been instrumental in making it so. It is surrounded not by lobsters, however, but by the debris of civilisation. No one is forbidden to put it there, which means that everyone is allowed to. I was surprised to find that ships are allowed to pollute the area, but not with oil. So they pollute with oil after dark. Oil slicks appear on the beaches in my area, and, I am sure, across the water in Wales. Irridescent pools of oily water appear from ships dumping in the channel.
  So we have an incredible collection of debris all along our coastline. I do not seek to apportion blame to any authority or Ministry. This is not a case of villains; it is a case of everyone exercising rights given by statute or regulation, but the total result is that what should be a pleasant open stretch of beautiful water is polluted. As one approaches my part of the world, one comes across the top of Exmoor and sees the Bristol channel in the foreground and Wales in the background. It is a beautiful sight and equally beautiful from the other side. However, it is no longer a pleasure to walk or bathe there. I am a walker, bather and sailor in that area. The hulls of people's boats get coated with human excrement. Human debris, too, figures in the pollution of the coastal waters.
  No one in particular is at fault; all of us are at fault. The Welsh Office told me all about its problems. I asked about the capital spoil from Port Talbot, but no one appeared to know about it. Officials said it was dredging from the harbour. That is fine; but Port Talbot has been a fine industrial area and I am not sure that the dredgings are as pure as one might expect sand to be. No one minds; one applies for a grant.
  I hope that my right hon. Friend will not tell me that he has granted permission to dump 7 million tonnes in this narrow, shallow channel—a super-tanker carries 100,000 tonnes, by comparison. The material may not be dirty—I do not suggest that it is—but it seems odd. Why can they dump 11 miles off Ilfracombe? It is not a personal affront to me. That is the nearest point at which people can say that the dumped waste will go out to sea. But the Bristol channel does not work that way. Waste does not just all go out and come in—it swirls around. There are bays on the Welsh side, and on the Devon and Somerset side. What is put in the water does not exit on the tide. I wish it did. Some does, but some goes around and around. We are damaging the lives and pleasure of our people.
  I am grateful for being granted this debate. I do not seek villains. I am only saying—perhaps tediously—that three of the beaches in my area do not meet EEC standards. We should be grateful to the EEC; we condemn it often, but it has given us standards that I want my beaches to meet. All the things I have mentioned, taken together, are causing the trouble and pollution. My right hon. Friend has told me in parliamentary answers that he would be happy to bathe in our waters. God bless him, and I hope he enjoys it. It is a beautiful place and I am sure he

  925
  will come to no harm. But, with all these different authorities allowing dumpings, it seems strange to assume that ultimately no harm will be done.
  I suspect that I speak not just for my own area but for the whole country. For centuries we have used the sea as our cesspit on the assumption that the sea would clear it out. In our case it is no longer working. My right hon. Friend may say, as he has told me in answer to questions, that there is no apparent problem for fishing stocks. I must tell him there are problems. The fishing stocks have gone. The fishing stocks which were there in my youth are not there any more. My fishermen, not primed by me, say that they get boils from the water of the channel. The sub-aqua clubs tell me that there are problems when they are swimming; the surf clubs say the same thing. Everyone tells me that we are allowing our environment to be more and more polluted.
  I have asked the questions of all the individual Departments. All I could find out was that no one was exceeding his authority or doing anything he should not do, but all of us in total are doing what we should not do—damaging the environment of our beautiful country. All of us are proud of our own areas. Whether from Devon, as I am, or from Wales or Scotland, we all love our country, but, through nobody's apparent fault, the environment is being destroyed. Yet industrial refuse, nuclear waste and sewage sludge must go somewhere. In the south-west they go from other people's doorsteps into my constituency. That is not fair. It is causing aggravation—which brings us to this debate.
  I ask my right hon. Friend for simple assurances. I am told that the Department of the Environment co-ordinates. That amazes me because that is the one Department which has not the ability or the will to answer a priority written question. Every other Department does—Agriculture, the Welsh Office and Transport, but not Environment. How can I have faith in a Department which is said to co-ordinate, when it cannot answer simple questions such as how many sewage outlets or permits there are? I do not believe that the Department knows.
  My right hon. Friend is not responsible for that Department. His Department is responsible for the cleanliness of water and the agriculture side of things. I pay the Department credit for the work it does, but it seems wrong that all this waste is deposited in the Bristol channel. I will list it all for the last time—sewage sludge from the big cities of Wales and the west country, capital spoil, tippings and dredgings from the great industrial ports, nuclear waste from Hinkley Point, nuclear waste from Amersham International up the River Taff—it must be fun being a swan on the river—and 27 other indirect nuclear waste deposits on the Welsh side alone.
  I have had no answer, alas, for the English side of the water. The Department of the Environment is to write to me as soon as possible. That will be as soon as possible after the debate is over and is in Hansard, one suspects. When the battle is over, the gentlemen of England, now abed, may think themselves accursed they were not here, but they are wise not to say their piece because they would damn themselves out of their parliamentary questions and answers.
  On the agricultural side I say very little, but we know that agrichemicals leach into our waters. Some of it is the fault of the agricultural system and some is the fault of the water authorities being underfunded in the past. But all in all, from the shipping on the top of the water to the sewage
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  at the bottom, we are doing great damage to the nation. We must get together and say that what we did in the 19th century out of ignorance we may not continue at the end of the 20th century out of knowledge, nor in the 21st century when, I trust, the environment will be at the top of our agenda.
  11.58 pm
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Glimmer): First, I thank my hon. Friend the Member for Devon, North (Mr. Speller) for raising the subject which, as he rightly says, is not only of interest to him and to his constituency but to any of us who represent coastal areas. My constituency has 54 miles of coast., the nuclear power station at Sizewell A, a new one to come at Sizewell Band the proposal to build anotherat SizewellC, so I hope he will accept that, apart from my ministerial responsibility, I have a personal, local responsibility which makes me sympathetic to the issues that he has raised.
  I should like to begin where my hon. Friend ended by saying that in the 20th century we must not do out of knowledge what in the 19th century we did out of ignorance. I am happy to say that we have learnt and that what we now allow to be dumped in the sea is different from what would have been dumped in the 19th century.
  I recognise my hon. Friend's desire to tread the narrow path between worrying people unnecessarily and making sure that the programme arid policy of the Government are sufficiently structured to protect people. That is a difficult path for an hon. Member to tread because he must not make people feel that something is wrong with the beaches while at the same' time he must protect the beaches. I see the balance that my hon. Friend has to maintain, and he maintained it admirably in his speech.
  My hon. Friend spoke about co-ordination. He should draw some confidence from the fact that it is largely the scientists in the Ministry of Agriculture, Fisheries and Food who provide the basis for the work that is done. The scientific staff in my Ministry assess the potential effect of pipeline discharges, for example, on the marine environment. My hon. Friend mentioned dumping in the sea from Wales. The Welsh Office is deeply involved in trying to solve such problems and my Ministry is its agent in this work, thus ensuring that the effects of dumping from Wales are taken into the equation.
  My hon. Friend made an important point when he spoke about the equation. We must ask ourselves whether, when we add together all the things that happen, we get an unacceptable result, even though the individual things being done are acceptable. When the adding together takes place, it is the scientists in the Ministry of Agriculture, Fisheries and Food who play the vital role.
  In the Bristol channel area, there is a specific way of doing this because, as my hon. Friend rightly says, this area is of considerable concern as it is bordered by the great industrial areas of Wales. It is an important tourist interest and an historic waterway. For those reasons we have a special group of interested authorities which co-ordinate the assessment work in this area—the Severn estuary technical working group—and it includes representatives of MAFF, the water authorities, the Water Research Centre and Plymouth marine laboratory. These bodies each present the results of their monitoring work to the group which thus ensures that a detailed picture of 'the quality of the estuary and Bristol channel is available.

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  My hon. Friend need not worry about the co-ordination aspect. It is co-ordinated overall at ministerial level by the Department of the Environment. In the specific area that he spoke about, we have gone to particular trouble to cover this in the special working group. That group is of a technical kind and it covers precisely the problems that my hon. Friend rightly adumbrated. As he said, the problems that we have here are affected not only by the quality and type of waste that is put into the sea, but by the movement, the ebb and flow, of the sea. In this area the ebb and flow is much more complex than in other areas. That must be considered as well, and my hon. Friend was right to draw that to our attention.
  The reason for choosing a dumping site 11 miles off Ilfracombe, to which my hon. Friend refers, was not intended as a personal insult to my hon. Friend; nor was it chosen because it was the nearest place at which we could get away with such dumping, which perhaps my hon. Friend implied. The site was carefully chosen because we know the way in which the sea operates in that area. Its mechanism does what we intend it to do: it satisfactorily cleanses the area.
  I want to face head on the problem that my hon. Friend has placed before us. In this world we ask for all the benefits and advantages of a modern society, such as being able to turn on energy at the flick of a switch, of being able to drive to the lovely holiday beaches in his constituency and of being able to be warm in winter and cool in summer. We cannot expect to have all those things and the jobs in the industries that sustain them unless we accept that they produce waste that has to be dealt with somehow.
  I think that my hon. Friend would be the first to recognise that we must make sure that the waste that we produce does not pollute the environment. However, he is wrong to suggest that the sea has no part to play in the removal of waste. We must ensure that we do not put in the sea waste that cannot be purified or disposed of. If we treated the sea as our communal cesspool, we would do great damage to the environment and to future generations. We take considerable care about those decisions.
  Let me give my hon. Friend two examples of the care that we take. First, when I receive a new application, I consider it carefully, but, even in circumstances in which I believe that it is right to grant it, I seek to find an alternative way of reducing other inputs to the sea. I try to strike a balance to ensure that the total is, if anything, less than it was before. I always try to use it as the pressure point for reducing the use of the sea for the removal of waste, and I have found that approach very satisfactory.
  Secondly, I draw my hon. Friend's attention to the decision of the North sea conference, which was a great success and in which Britain took a major part. My hon. Friend referred to throwing things off a ship and getting rid of oil in the sea. We must draw a distinction here. People do things illegally and we then have to deal with the question of enforcement. They do other things legally, but we nevertheless have to deal with the problem of stopping them doing those things. I hope that our enforcement policy will increasingly enable us to ensure that ships do not do what they have done in the past—flush out their oil
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  tanks illegally, late at night, when no one is around. The evidence shows that that is a decreasing activity and that our policing has helped in that direction.
  However, we must improve as well as enforce the rules. I took a small part in ensuring that the British Government joined others in agreeing to much tougher rules about the use of the sea as a garbage pail for ships, whose crews appeared to think that they had a right to throw into it anything that they liked because it was waste produced on the ship. That is unacceptable and we have done a great deal to change that. The countries of northern Europe will now stop that and regulations are being prepared, as my hon. Friend knows from the reply that he received from the Department of Transport. That is a major improvement which will depend on the efficacy of the regulations and on the way in which we impose them.
  Mr. Speller: The answer that I have received from the Department of Transport simply says that it is not in itself an offence for ships to clean their tanks in the Bristol channel or, at present, to discharge ship's garbage into the sea, although regulations are being prepared. Can my hon. Friend tell me when those regulations will be in force and who will enforce them?
  Mr. Gummer: My hon. Friend must understand that those regulations will be in force as rapidly as possible because we gave an undertaking at the London conference. I cannot tell him exactly when they will be laid, but it will be as soon as possible. The responsibility for enforcement of the regulations will be spread between Departments, although the Department of Transport will have the primary responsibility. However, as other Departments have opportunities to watch out for these things, we all try to work together.
  I am sure that my hon. Friend will accept that, although it is not as unitary a system as he would wish, our fisheries patrol vessels, coastguards and local sea fisheries committees play their part in notifying the tell-tale signs that those incidents have occurred. I hope that my hon. Friend will accept that we catch people not simply in flagrante delicto, but also after the incident, when we can see what has happened. There are various ways of going about that, and I assure him that we are most concerned that the system works effectively. I have not yet considered or given a ruling on the question of the dumping of material from Port Talbot. We are discussing that issue, and I give an undertaking that I will look at the matter extremely carefully.
  The two licences currently issued for sewage sludge—one each to the Wessex and Welsh water authorities—apply to material that is already carefully refined. That is why it is put in the sea, and 96 per cent. of it is water. That would not have happened in the 19th century. I hope that my hon. Friend will remind his constituents of the enormous advances that have been made since then. In the 19th century, raw sewage was dumped into the sea, but we purify it seriously now. My hon. Friend should be happy that we monitor very carefully what enters the water. He should also be pleased that 70 per cent. of the sludge from Wessex is spread on land and does not enter the water. We are constantly trying to find alternatives where they are available.
  I want to refer briefly to the apparent inconsistency to which my hon. Friend referred. I am sure that he will not mind if I say that if he asks a slightly different question of

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  two people he may get a slightly different answer. When he asked the Ministry of Agriculture, Fisheries and Food what we gave licences for, we told him; and I hope he will be kind enough to acknowledge that we were very honest in our reply. We gave him full details. However, if he asked the Welsh Office what it granted licences for, he must accept that the Welsh Office would include licences for extremely small amounts of waste such as radioactive material from hospitals. Such licences are not granted by my Ministry. Therefore, the figures tie up as long as my hon. Friend remembers what the question is in the first
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  place. Nothing was hidden in either case, and full details were given to my hon. Friend. I hope that he will acquit us of not co-ordinating this properly.
  We have very tough controls on what is put into the sea. More important than that, it is our intention and the fact—
  The Motion having been made after Ten o'clock on Tuesday evening and the debate having continued for half an hour, MR. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
  Adjourned at eleven minutes past Twelve o'clock.