§ LORD ORR-EWINGMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they expect a shortage of British steel in view of the expanding needs of United Kingdom industry.
§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)My Lords, there is at present a shortage both here and abroad of certain types of steel. The rapid growth in home demand this year has coincided with tile cyclical upturn in world demand for steel. The Corporation has also experienced some severe labour and production troubles. Though supplies are currently under pressure, the Government believe that the industry is doing its utmost to overcome these difficulties and to meet the requirements of its customers. The Department of Trade and Industry is dealing sympathetically with requests to suspend import tariffs on steel products which are in short supply domestically. However, the ten-year development strategy which the Government settled with the British Steel Corporation last December is designed to enable the Corporation to meet the rising demands of British industry in both quantity and quality, and a number of steel companies in the private sector have also announced development schemes.
§ LORD ORR-EWINGMy Lords, I thank my noble friend for that helpful and constructive reply. It is clear from his reply that the Government are aware that British industry is already being held back by a very long date for delivery of steel, and it is disappointing that this should be so at a time when our potential and our sales and our order books are all turning up. One realises fully that of course this is partly 814 due to the serious strike at Scunthorpe, but I hope the Government will take every possible measure at their disposal to overcome this shortage.
§ LORD DRUMALBYNMy Lords, as I said, the steel industry itself is doing all it can to solve these problems, including the quota-ing of supplies by the British Steel Corporation to their customers in order to make certain that purchases are not made for purely stocking or speculative purposes.
§ BARONESS GAITSKELLMy Lords, may I ask the Minister whether we are always from now on going to be fobbed off, whenever we in this country have either shortages or high prices, with the answer that this is due to world shortage or to world high prices?
§ LORD DRUMALBYNMy Lords, I have not said that this shortage was due only to world shortages. But it is a fact that steel is in short supply and it is difficult for users here to obtain their supplies from abroad, even at a much higher price. What I said was that there has been delay in completing such projects because of production and labour difficulties.
§ LORD MAYBRAY-KINGMy Lords, in view of what has been said, will the noble Lord tell us why the Government are cutting back the steel industry?
§ LORD DRUMALBYNMy Lords, the Government certainly are not cutting back the steel industry. There is a very big development programme which is going to cost £3,000 million over the next ten years. What they are doing is to make the steel industry more efficient in order to compete better in the world and give the best possible service at home.
§ LORD BALOGHMy Lords, would not the noble Minister agree that every time we have a boom in England we have a steel shortage and we have to import steel, which imperils the balance of payments as we saw yesterday after those very encouraging speeches by the noble Earl, Lord Gowrie, and others? Would he not also agree that this steel shortage shows the utmost short-sightedness of the Government last year when they tried to cut the expansion scheme to 28 million tons and were only with difficulty persuaded to make it 42 million tons?
§ LORD DRUMALBYNMy Lords, so far as the question of importing steel is concerned, the fact is of course that steel in this country is cheaper than it is abroad. Therefore there is a tendency for foreigners to want to buy steel here at the cheaper prices that persist, and that is an additional factor which leads to shortages here. As to the review of steel that took place, there was no question of the Government's cutting back from 42 million tons. At the present time steel is running a production of 27 million tons and the forecast output in the ten-year programme is something between 36 million and 38 million tons.
§ LORD ORR-EWINGMy Lords, would my noble friend bear in mind that much of the scrap supply is now going abroad; and will the Government look at this matter to see whether there are any fiscal measures they can take to encourage scrap to remain and to be used in this country, in view of the developing black market there is for new steel?
§ LORD DRUMALBYNMy Lords, my noble friend will be aware that we are now members of the European Economic Community and have to comply with its Rules, but I shall look at the problem to see whether anything can be done in this field.
§ LORD SLATERMy Lords, would not the Minister agree that it is bad economics to dispense with thousands of people who have been engaged in the steel industry producing steel for the nation and for the benefit of industrial development, and to cut back production, instead of increas'ing it, when more development ought to be taking place?
§ LORD DRUMALBYNMy Lords, it does not follow that, because labour requirements are reduced, the rate of production is being cut. It is well known that the purpose of the reduction in labour requirements is to make the industry more efficient, and at the same time to produce more. I would say to the noble Lord only that the present position is not due to closures or cutting down. I have here a list of the closures and there has been only one closure this year: that of Cookley Rolling Mills.
§ LORD SLATERMy Lords, is the Minister not aware that these people who 816 have been engaged in the industry are practical men, and having spent their lives inside the industry know much about it, just as the management knows about the industry? This is what the Government and some of the "higher-ups" inside the industry never take into consideration, and then they are faced with labour problems.
§ LORD DRUMALBYNMy Lords, if I may say so I think the noble Lord is going a little wide of the Question on the Order Paper. I have made clear the position as to the future and to the course that we shall take on supplies. We are entirely sympathetic with the fact that the development will require economies in the use of labour and that some men will be redundant. The Government are taking every possible measure, in conjunction with the industry, to meet this problem.
§ LORD BROWNMy Lords, are we to understand that the Rules of the Common Market now inhibit the Government from prohibiting the export of steel scrap to the Common Market itself, in line with the orders that used to be issued to this effect?
§ LORD DRUMALBYNMy Lords, I really should require notice of that Question, because again it does not arise immediately out of the Question on the Order Paper. If I remember correctly, this is so or it will be so; I am not quite certain whether it is so at the moment or whether it will be so.
§ LORD BROWNMy Lords, in that case could not the Government introduce regulations, as has been done frequently in the past, prohibiting the export of scrap at this time?
§ LORD DRUMALBYNMy Lords, I have already said that I will look at this.
§ LORD PARGITERMy Lords, would not the Minister agree that the problem with regard to the steel industry has always been that they have tried to work on too fine a margin of spare capacity, as compared with America, which always leaves herself sufficient spare capacity to take up a suddenly expanding market.
§ LORD DRUMALBYNMy Lords, I do not think that is entirely true. The 817 present situation is due in some considerable part to the fact that steel stocks were run down very substantially and then they had to be built up again.
§ LORD MAELORMy Lords, the Minister stated that he has a list of steelworks that are to be closed. Can he tell us whether the Shotton steelworks in North Wales is included in that list?
§ LORD DRUMALBYNMy Lords, that again is wide of the Question on the Order Paper and I think I should refer the noble Lord to the White Paper on Steel, published in February last.
§ LORD ORR-EWINGMy Lords, if my noble friend gives the time taken before capital expenditure is made and before new steel comes on stream, will it not be revealed that our present shortage arises, because first years ago, the previous Government did not make adequate plans for steel-making?
§ LORD DRUMALBYNMy Lords, I was careful not to make any suggestions of that sort here; but of course it is a fact that steel developments take three to five years and noble Lords can draw their won conclusions.
§ LORD SLATERMy Lords, if the Minister is going to answer in the manner in which he has done to his noble friend, perhaps it would be as well for him to take a look—
§ SEVERAL NOBLE LORDS: Question!
§ LORD SLATERThen, my Lords, will the Minister take a look at and go over the records, back to 1950 and 1951, after the Labour Government was in power, to see what really happened when the Tory Government came into power?
§ LORD DRUMALBYNMy Lords, I am quite willing to do that, but it does not arise out of the Question.