§ 3.47 p.m.
§ THE MINISTER OF POWER (LORD MILLS)My Lords, I beg your Lordships' permission to intervene in this debate to make a statement which the Prime Minister is making in another place at the present time.
The Government have accepted the conclusion of the Iron and Steel Board that additional capacity for the production of strip mill products is required to meet the future needs of the national economy. It has been decided, in principle, that this additional capacity should include two major strip mill projects each with appropriate steel making and finishing capacity.
The Government have decided to issue an industrial development certificate for a project to be undertaken by Richard Thomas & Baldwin, Limited, at Newport, Monmouthshire. This will represent the first stage of a major expansion of strip mill production in South Wales. Its precise nature, timing and financing are under discussion between the interested parties, including the company and the 577 Iron and Steel Board, but it is envisaged that the initial production capacity will be of the order of 500,000 tons for sheet and tinplate. It is not yet possible to give an estimate of the cost.
The Board of Colvilles, Limited, have agreed in principle to undertake the other project in association with their new Ravenscraig works at Motherwell and their existing works at Gartcosh, both in Lanarkshire. The Government are prepared to grant an industrial development certificate for this purpose. It is intended that this project, which includes modernisation of existing plant, should have an initial productive capacity of approximately 500,000 tons per annum for sheet and light plate. It will make use of facilities already being provided by the company, and the additional cost is estimated at about £50 million. The initial capacity for sheet will represent a surplus above present Scottish consumption and will, I hope, attract to Scotland new industries using sheet.
Both projects will be capable of substantial extensions, particularly that in South Wales. To the extent that their construction will require funds additional to the resources of the two companies the necessary amounts will be advanced to them by Her Majesty's Government. Details of the final arrangements will be made available in due course.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, I am obliged to the noble Lord for giving us the advantage of that statement. I should like to know whether, in deciding on this division between Wales and Scotland, there has been any consideration of the respective costs involved. We have no figure yet for the Welsh scheme, but we have an estimated figure of additional cost in connection with another project in the case of the other scheme. It is a little difficult to ascertain upon what basis it has been made. As I have always understood in the last few months, in talking about the matter, that the Scottish capacity for absorbing steel for tinplate and similar materials is only about 150,000 tons a year, are the Government thinking of transferring Midland industries to Scotland, or have they some other scheme in mind?
With regard to the finance of this matter, these works would no doubt have 578 taken place in the normal course of events under a national scheme, but it is now being done by private enterprise. Could we have some idea as to what is meant by the method of financing? I recognise that full estimates have not yet been prepared, but the Minister's statement says:
To the extent that their construction wilt require funds additional to the resources of the two companies the necessary amounts will be advanced to them by Her Majesty's Government.What does that mean? Does it mean a loan direct? Does it mean a loan by the City, guaranteed by the Government? And what proportion of the capital will be provided by the firms themselves, and what proportion by law?
§ LORD MILLSMy Lords, I thank the noble Viscount for his understanding of the position. Of course, the Government, in considering the best way to meet the requirement, have had regard both to the demand in Scotland, in England and in Wales and to the costs involved in putting up the necessary plants. I think I made it clear in my statement that in the case of the Scottish project we should be able to take advantage of the existing steel-making capacity and marry-in this extension with the operations already being carried out there. That has been taken fully into account. The noble Viscount said that the present absorption rate in Scotland—of sheet, that is; not of plate—was about 150,000 tons, and this plant will show a surplus above that. It is hoped, however—many people believe it, and I have had it urged frequently—that if Scotland is able to produce sheet within its own borders, then sheet-using industries will establish themselves there. It is not the intention, of course, to move industries or to direct that they should be moved, from the Midlands to Scotland, but it is hoped that extensions and new industries will establish themselves in Scotland with the advantages of a supply of sheet on the spot.
With regard to finance, it is true that I mentioned a figure in regard to Colvilles, because that was fairly easy to work out at this stage. The figure in Wales will be of a higher order. There we are providing a new works, on a new site, which has not the advantages which Colvilles have through the ability to use their existing facilities. But both works 579 are economic. I am not yet in a position to answer the noble Viscount as to the extent to which the Government will provide the money and what it will be possible for the firms to provide from their own resources. That matter is being carefully studied, and I will see that the noble Viscount has the information in due course. I should like to say, however, that the arrangements will be such that the money will be repayable, with proper interest, and the taxpayers' position will be fully covered.
§ LORD GREENHILLMy Lords, may I ask the noble Lord whether these two projects are to be begun simultaneously or at different times?
§ LORD MILLSMy Lords, we should expect that work on these projects—and by "work" I mean the physical work—will be commenced in both cases in the second half of next year.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, I am obliged to the noble Lord for the care which he has taken to see that we get the answers we need—of course, he is always most courteous to the House. May I ask him now whether, when he has got nearer the point of being able to make a statement on the matter of finance, we could have some idea of the method of the finance. For example, what kind of interest will loans carry, and what will be the period? And could we have an estimated cost overall of the capital development, including the amortisation of the loan and interest. It makes rather a difference in assessing the cost per pound or per ton of the additional capacity provided. The statement says that the Welsh plan will be in connection with Baldwin's, at Newport, Monmouthshire. It is a new site. Is the site to be in Newport, west of Newport, or where?
§ LORD MILLSMy Lords, I will gladly see that all the necessary information to facilitate a full understanding of these projects is made available to the House in due course. So far as the site in Newport is concerned, Richard Thomas and Baldwin, Limited, already have the site. I think it is to the east of Newport.
§ LORD MACDONALD OF GWAENYSGORMy Lords, the statement says that it is at Newport, and I 580 understood that the discussion going on in Wales was whether it should be in Newport or further west. Are we to understand that it has been definitely decided that it shall be in the area of Newport?
§ LORD MILLSMy Lords, the position is that the major project in South Wales to which I have referred will be in the neighbourhood of Newport. The Government have considered two other possible sites in Wales. Perhaps your Lordships may be interested in the Kidwelly site which we considered, but we had to abandon it on the grounds of economics and because it would prevent access to very large quantities of coal.