§ '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
§ 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 anEffing—physicist to tell me how to run a steel mill"—
§ 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.
811 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 812 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 (Dagenham)
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 813 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 814 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?
§ 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.
815 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. 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 (Darlington)
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 816 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 817 customers can be protected? Where are the mechanisms to inhibit the abuse and exploitation of the monopoly position?
§ Mr. Tim Devlin (Stockton, South)
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.
§ 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 (Glasgow, Cathcart)
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 (Rotherham)
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 819 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".
§ 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. 820 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, 821 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.
§ Mr. Malcolm Bruce (Gordon)
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. 822 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 (New Forest)
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.
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 825 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. 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 (Motherwell. North)
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 826 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.
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 828 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 829 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 (Cardiff, West)
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 830 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.
831 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.
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, 832 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 (Banff and Buchan)
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 833 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 834 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 (Hamilton)
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 835 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.
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.
836 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 837 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.
838 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 839 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 840 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.
§ 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 841 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. 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. 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 842 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.
843 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 (Brigg and Cleethorpes)
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. If there is confusion, the hon. Gentleman is making it worse by bringing in extra matters.
§ 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. 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. 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
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. 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. 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.
§ 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.
§ Question put, That the clause be read a Second time:—
§ The House divided: Ayes 14, Noes 253.854
|Division No. 306]||[6.50 pm|
|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.|
|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)|
|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)|
|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.