§ 3.40 p.m.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick)My Lords, with the permission of the House I will repeat a Statement made in the other place by the Secretary of State for Industry. The Statement is as follows:
§ "On 23 May, I reported to the House the procedures we had agreed, with those concerned, for conducting the review of the proposed closures of steelworks, which we had promised in the Labour Party's Programme for Britain: 1973. My right honourable and 767 noble friend the Minister of State, Lord Beswick, undertook that review, and has now made an Interim Report, copies of which were made available to Members of the House this morning and which will be printed in the Official Report. This Report represents the first results of the most extensive and open examination of the plans of a public corporation that has taken place, requiring them to justify their proposals in detail in the light of their social responsibilities. The Government have accepted the conclusions in Lord Beswick's Report, and hope they will also be acceptable to those who work in the steel industry and to the House.
§ "We have carefully re-examined the capacity target of the Corporation, set out in the previous Government's Paper on BSC's development strategy, about which many of my honourable friends have been concerned. In the light of the review, the Corporation propose to accelerate their development strategy so as to achieve a capacity of 37 million tonnes a year in the early 1980s. This is as rapid an expansion as can be realistically expected in current conditions.
§ "The plants covered by the Interim Report are East Moors, Hartlepool iron and steelmaking, Cleveland ironmaking, Shelton, Shotton and Ebbw Vale. Nothing announced today will preempt decisions still to be taken on the BSC's proposals for Scotland or other cases still under review. For East Moors, we have secured the deferment of the closure by four years to not earlier than January 1980. At Hartlepool, the closure of iron and steelmaking will be deferred by at least two years until 1978. At Cleveland, the closure dates proposed by the BSC will be adhered to because alternative employment is readily available at the BSC plants close by. As to Shelton, a new electric arc steel plant will be erected which will save about 800 jobs. The proposed closure at Shotton will be deferred at least until 1980–81, while further study is undertaken of the economics of modernised steelmaking there. At Ebbw Vale, we have accepted the BSC proposals for the closure of 768 iron and steelmaking and ultimately of the hot mill. Production at the hot mill, as elsewhere, will be maintained until adequate supplies of replacement steel become available from other plans.
§ "This review has therefore saved some 13,500 jobs for from two to four years or more at East Moors, Hartlepool and Shotton and has permanently saved the jobs of about 800 men at Shelton. Of the plants reviewed, the only closure now immiment is ironmaking and some of the steelmaking at Ebbw Vale. Discussions with the chairman of the Corporation about the detailed phasing of redundancies and the provision of new jobs have already begun.
§ "It is the policy of Her Majesty's Government to ensure that resources are available to assist the provision of new employment and to improve infrastructure in areas affected. We have also decided to ask the Corporation to accept a special responsibility both in the phasing of redundancies and, to as great an extent as possible, for the provision of new job opportunities in steel-related and other projects. This latter concept, which I hope the House will welcome, needs to be examined and discussed more fully but it could introduce a new dimension into redundancy problems in the public sector."
§ My Lords, that ends the Statement.
§ The Interim Report referred to is as follows:
§ "In statements on 23rd May the Secretary of State for Industry and I announced the procedures we had agreed with the British Steel Corporation and the TUC Steel Committee for conducting the review of the proposed closures of steelworks which we had promised in the Labour Party's Programme for Britain:1973.
§ 2.Last year we accepted the Corporation's proposals for Stanton and Irlam as their arrangements for closure were already very far advanced. At Workington, with the closure of Bessemer steelmaking, the Corporation gave me assurances that the plant had a long-term future as one of their major centres of railmaking and that the coke ovens would be fully maintained pending decisions on their long-term future.
§ I have now completed my review of the Corporation's proposed closures of Ebbw Vale, East Moors, Hartlepool iron and steelmaking, Cleveland ironmaking and Shelton, but have decided that further study is needed of the proposed closure at Shotton. My review has 769 not covered Bilston since the Corporation have put forward no proposals for closure there. Consultations on the BSC's development strategy in Scotland and their proposals for Hartlepool and Consett plate mills continue. The workforces concerned rightly wish to have further opportunity to present alternative proposals and this will take more time. To reduce uncertainty as much as possible I make this report to Parliament on the position now reached. Nothing announced today will adversely affect the review of the BSC's proposals for Scotland or of unfinished cases elsewhere.
§ 4. In each case covered by the Report, I have held tripartite meetings with the BSC and the TUC Steel Industry Consultative Committee together with local representatives of the workers from each plant. I have met with the constituency Members of Parliament, with local authorities and other interested parties, and have visited each plant and had further discussions with the workers involved. I have been given every help and assistance by the Corporation, and I have been immensely impressed by the positive and constructive attitude of management, trade unions and indeed workers at all levels.
§ 5. The review has been principally concerned to help the development of a successful and expanding steel industry, essential for the country as a whole and for all those who work in the steel industry, both providing the best prospects of long term employment for steelworkers and reducing to a minimum the disturbance to the life and livelihood of steelworkers and their communities.
§ 6. We have considered the BSC's capacity 'target' announced in the Command Paper 5226 of February 1973 to see if a higher target would help to save more of the plants the BSC propose to close. That target was equivalent to 35 to 37 million tonnes of liquid steel (after adjustment for developments in 1973). The Corporation now propose to accelerate their development strategy and to achieve 37 million tonnes a year in the early 1980's. Our present conclusion is that this is as high as can be realisticaly expected given the market possibilities and the time inevitably taken in planning and construction.
§ 7. We have already agreed that the Corporation should go ahead with the £210 million Redcar IIB iron and steelmaking project, and we have welcomed BSC's plans for expanding stainless steel capacity at a cost of some £60 million. My report today will enable the BSC to proceed with the proposed expansion of billet making at Normanby Park and Consett The Corporation submitted to us very recently a proposal for the construction of new coke ovens and coal-handling plant at Port Talbot at a cost of £64 million. We have now agreed to this. The Corporation have just submitted proposals for further expansion at Port Talbot, and these will be urgently examined. There is no doubt that further substantial investment at Port Talbot will be needed.
770§ 8. In the case of East Moors, I have looked carefully at the various proposals ably put forward by the workforce as a means of saving the plant by modernisation. After making every allowance for transport costs, other advantages of close proximity to customers, the effects of the rescheduling of Cardiff as a development area, and the benefits offered by the submerged injection process, we have reluctantly concluded that significant investment cannot be justified. However, in the light of the review, the BSC now propose that the closure, initially set for not earlier than January 1976, should be deferred until not earlier than January 1980. Even this must remain subject to the proviso that adequate supplies of steel of the right qualities are available then from BSC developments else- where for processing by GKN in Cardiff in conjunction with the 400,000 tonnes per annum electric arc plant which GKN are now building there. Meanwhile, the deferment we have sought will give us more time to work out new plans for alternative employment.
§ 9. At Hartlepool, BSC now accept that, in the light of the review, the closure of iron and steelmaking, initially set for 1975–76, be deferred at least until 1978. We cannot justify major new investment in steelmaking at Hartlepool, but steelmaking there will continue for at least two extra years and any closure then would still be subject to the proviso that adequate replacement iron and steel are available by then from Redcar/Lackenby.
§ 10. About 24,000 jobs in steel will still remain in the Cleveland area. BSC propose to invest some £25 million in developing the two existing pipe mills at Hartlepool so as to produce a greater range of pipes and also higher specifications to meet North Sea oil requirements. This should provide some 200–250 new job opportunities. The deferment now agreed will provide more time to work out new plans for alternative employment. The Corporation's own plans provide for substantial recruitment at South Teesside in the next four years. The Government will study urgently how the daily travel facilities from Hartlepool to Redcar can be improved so as to facilitate Hartlepool steelworkers taking up employment at Redcar.
§ 11. BSC propose to close some old iron-making plant at the Cleveland works over the period 1975–78 but there will be every opportunity for workers at the plant to take up employment at BSC Redcar and on that basis the proposals are acceptable.
§ 12. On Shelton, BSC have reconsidered their plans in the light of all the representations made during the course of the review. The Corporation now propose to construct an electric arc steelmaking plant with a capacity of up to 350,000 tonnes a year to replace the existing iron and steelmaking plant. This will feed the existing continuous-casting plant; will ensure a long term future for steelmaking at Shelton; will preserve approximately 800 jobs which would otherwise have been lost; 771 and, I am confident, will be welcomed by the workforce and the local authorities.
§ 13. In the case of Shotton, I have carefully considered the BSC proposals in the light of the informed and thoroughly documented representations made by the workers, local authorities and other interested parties. At Shotton as at other traditional steelmaking centres there is a valuable heritage of a skilled and loyal workforce, and potential for development there must if at all possible be utilised. I consider that further study is needed of the economics of modernised steelmaking at Shotton and its implications for BSC's proposals elsewhere and this study has now been put in hand. The Corporation have meanwhile agreed to defer their proposed date for the closure of iron and steel-making to 1980–81. In the meantime work is going ahead on developing the finishing plant at Shotton. A highly modern cold-reduction mill is now commissioned there, and work is under way on a £30 million coating complex. Further expansion in finishing is now being studied.
§ 14. My review has convinced me that we cannot justify large new investment in iron and steelmaking at Ebbw Vale. Representatives of the workforce there put their case with as much force and skill and determination as the spokesmen of the other plants, and it is doubtless these qualities and the great tradition of steelmaking at Ebbw Vale which has kept the plant operating a decade beyond what might have been considered viable. But the limited capacity of the plant itself compels me to conclude that we must accept the closure dates of 1975–77 proposed by the BSC for different sections of iron and steelmaking there. The hot mill must also close eventually, but the closure date now proposed by BSC for 1978– 79 must be dependent on adequate supplies of hot rolled coil for processing at Ebbw Vale becoming clearly available from other plants. Ebbw Vale is already an important tinplate works and the Corporation are committed to a programme of far-reaching modernisation. Work is under way on a £40 million development scheme, and the Corporation plan to follow this as soon as possible with a second stage development, incorporating modern coldreduction facilities, to cost at least £30 million. These projects, together with developments at the Corporation's other Welsh tinplate works, should ensure for the Principality a position of pre-eminence in the world's tinplate industry.
§ 15. Since the closure is imminent in iron and steelmaking at Ebbw Vale, it should be possible for both the Government and the Corporation to concentrate immediate efforts here to secure the establishment of more diversified employment alongside the development of the tinplate complex. Discussions with the Chairman of the Corporation about detailed phasing of redundancies and the provision of new jobs have already begun. In Ebbw Vale as elsewhere, of course, the services of the Manpower Services Commission and its 772 agencies will be available and eager to help. However, the Ebbw Vale decision creates a situation which will demand the fullest cooperation of the Corporation with the Government to demonstrate that this challenge to our ability to combine social responsibility with the modernisation programme will be properly met. Special provision is to be made by the Corporation for alternative employment at the plant itself during these critical twelve months ahead, but the responsibility of the Corporation to give direct assistance with the provision of new jobs, including direct participation in individual projects, will be a continuing one. In addition the Government will play its part by putting into effect other measures to assist in the provision of new employment and to improve infrastructure. £12.6 million will be spent on factory' building, clearance of derelict land, water and sewerage schemes and assistance to local authorities for the preparation of industrial sites.
§ 16. It is the policy of the Government to ensure that everything possible is done to provide alternative employment in areas affected. We have also decided to ask the Corporation to accept a special responsibility both in the phasing of redundancies and, to as great an extent as possible, for the provision of new job opportunities in steel-related and other projects. This latter concept, which we hope Parliament will welcome, needs to be examined and discussed more fully but it could introduce a new dimension into redundancy problems in the public sector.
§ 17. The Government has, of course, been considering other measures to assist the provision of new employment and to improve infrastructure in the areas affected. Much has been done, or is already in hand, including the generous use of selective assistance under Section 7 of the Industry Act, factory building, derelict land clearance, road schemes and accelerated clearance of unfit housing. Further measures which we are considering include site and factory provision in all areas, help to local authorities in site preparation, improved roads, and assistance with water and sewerage schemes. The deferments in proposed closure dates will provide more time for this work to be done.
§ 18. This interim report on the Government's review of the BSC strategy will, I hope, be acceptable to those who work in the industry and to Parliament. It represents the first results of the most extensive and open examination of the plans for a Public Corporation, requiring it to justify its proposals in detail in the light of its social responsibilities. The outcome, so far, preserves some 13,500 jobs for two to four years or more through deferments of proposed closures at East Moors, Hartlepool and Shotton, saves approximately 800 jobs permanently at Shelton and leaves the future of steelmaking at Shotton for further consideration. Moreover, the role of the BSC 773 in creating new job opportunities to replace jobs to be phased out constitutes an impor-
| SUMMARY TABLE | |||
| Cases considered | Number of job opportunities involved | Original proposed date of closure | Outcome |
| Shotton (Iron and steelmaking and hot rolling). | 6,000 | Phased closure 1976–78 | Further study needed of economics of new steel plant. Meanwhile BSC defer their proposed closure date to 1980–81. Development of finishing plant, saving 500 jobs or more. |
| Shelton (Iron and steelmaking) | 1,700 | 1976 | New electric arc plant to be built with saving of approximately 800 jobs. |
| East Moors (Total plant closure) | 4,700 | Not before January 1976 | Closure deferred to not before January 1980. |
| Ebbw Vale (Blast furnaces, steel plant and slabbing mill). | 3,300 | 1975–77 | BSC proposal agreed. Further development of tin plating. |
| Ebbw Vale (Hot strip mill) | 1,300 | 1978–79 | Closure to be dependent on adequate supplies becoming clearly available from elsewhere. |
| Hartlepool (Coke ovens, sinter plant, blast furnaces, steel plant and slabbing mill). | 2,800 | 1975–76 | Closure deferred to 1978 at earliest. Pipe mills to be developed. |
| South Teesside—Cleveland Works (Coke ovens, sinter plant and blast furnace). | 1,400 | 1975–78 | No change to BSC proposals given new job opportunities at Redcar. |
§ 3.44 p.m.
§ Lord ABERDAREMy Lords, the House will be grateful to the noble Lord, Lord Beswick, for repeating this Statement, particularly as he is clearly suffering from a considerable cold. We should like to thank him and to congratulate him on having undertaken what is obviously a very thorough review of the British Steel Corporation's plans. Naturally, I think all your Lordships will be pleased to hear that a number of jobs have been saved, or at least their loss has been postponed for a few years, provided always, of course, that this is not at the expense of the future prosperity of the British steel industry.
At the end of the Statement the noble Lord referred to the permanent saving of jobs of about 800 men at Shelton. I know that he would acknowledge that this was foreshadowed in our own White Paper; that the arc process would be developed somewhere like Shelton. The noble Lord shakes his head. If he refers to paragraph 57 of our White Paper, he will find that that is so. As for the 13,500 jobs which have been saved for two to four years, can the noble Lord say how much this will cost the British Steel Corporation? This is clearly going to cost more than if they had gone ahead with their previous plan for rather quicker closure. 774 tant development in thinking about the role of public enterprise."
Could the noble Lord say how much money is involved?
I also notice that there is no mention in the Statement of Port Talbot and yet, as I understand it, the future of steel making at Port Talbot is intimately bound up with the future of Shotton. May I ask the noble Lord, Lord Beswick, whether it is proposed to press ahead with the investment programme at Port Talbot at the same time keeping Shotton in operation until 1980–81. Lastly, my Lords, may I ask when we can expect a Statement on the situation in Scotland?
§ Lord ROCHESTERMy Lords, we on these Benches would also like to thank the Minister for having repeated in this House the Statement of his right honourable friend in another place. We appreciate the amount of work he himself has done in undertaking the reviews to which this Statement refers, and we also commiserate with him on his lack of voice this afternoon. We appreciate also, my Lords, the Government having evidently sought to balance their understandable desire that as many jobs as possible in the steel industry should be preserved with the need for that industry to remain competitive. I am bound to say that beyond that we are somewhat uncertain, as a result of the Statement, as to the precise criteria which have caused the Government to reach these 775 particular conclusions. On the face of it, they give evidence of being a compromise between the conflicting interests to which I have referred rather than being clear-cut decisions in themselves.
I should like to ask the Government a number of specific questions, First, how can we be satisfied that the decisions which have been taken are in fact based not so much on short-term political expediency in the face of union pressure as on longer-term commercial considerations, taking account of the knowledge and experience of top management in the British Steel Corporation? Indeed, how can we have the confidence that we should like to have that these decisions are in the long-term interest of British steel workers as a whole? Might it not be better, in the interest of the people in the plants which are ultimately to be closed, if we were to face up to those closures now and see that the people concerned were retrained, under a system of generous allowances, in other jobs which will still have to be done?
Secondly, my Lords, I should like to amplify a little the question which has already been asked by the noble Lord, Lord Aberdare: to what precise extent will these decisions, including the length of time that it has already taken to reach them, add to the amount of money that the British Steel Corporation will have to spend in connection with its ten-year plan for strategic development? Finally, we have noted that in the case of Scottish plants the review is not to be completed until April, as I understand it. We wonder whether it would have been better for the Government's replanning to have been done on an integrated basis, taking account of all steel plants in England, Wales and Scotland at the same time.
§ Lord BESWICKMy Lords, I thank the noble Lord, Lord Aberdare, and the noble Lord, Lord Rochester, for their kindly personal references. I will try to answer the questions that have been posed. I was asked to confirm that the production of the electric arc steel-making plant at Shelton had been foreshadowed in the previous Statement. I can only say that if the noble Lord was to consult the men outside, who have expressed their relief to me, he would realise that they themselves never knew that it was foreshadowed by the previous programme.
776 I was asked what would be the cost of keeping these plants open for a further two, four or, in some cases, five years. The fact is that there will be no extra cost. These plants will be kept open producing steel and doing so competitively. One of the extraordinary things about the investigations which I have been through is that some of the plants that were proposed for closure are, as of now, among the most profitable of the BSC organisation. But of course they were the old open-hearth plants, and in two, three or four years' time they would not be competitive. So there will be no extra cost as a result of keeping these plants open.
I was asked by the noble Lord, Lord Rochester, about the cost implied by this deferment. This last year for the first time in our industrial history we have been a net importer of steel. In part this is because of the premature closures resulting from the programme which was initiated by the previous Government. We should not have made these closures until we were absolutely certain that the new capacity, or the new production, was available.
One more word about cost. It is true, of course, that the cost of the new equipment which will be erected will be more than estimated in the 1973 White Paper. But it would have been more anyway, because of the inflationary processes. I cannot convince myself—although I have looked at this matter very carefully—that any additional cost for the new equipment will result from any alleged delay. The truth of the matter is that there has been no real delay at all so far as the provision of new equipment is concerned.
The noble Lord, Lord Aberdare, asked me about the position of Port Talbot. He said there was no mention of this in the Statement. I am not sure whether he has read the full Report with all the details which is lodged in the Vote Office. He will see in paragraph 7 that:
The Corporation have just submitted proposals for further expansion at Port Talbot, and these will be urgently examined. There is no doubt that further substantial investment at Port Talbot will be needed ".One of the reasons why I have been unable to reach a decision about Shotton is because I have only just received the 777 formal proposals of the British Steel Corporation for development of Port Talbot. These proposals were in fact brought to my office on Friday night last, and time will be needed to study them. I was asked, too, about Scotland and when it was expected that we should be able to make a report about the closures there. I hesitate to make a definite promise, because I have found that the stage up till now has taken longer than I thought, partly due to the General Election intervening; but I would hope that it would be possible to reach a conclusion about the Scottish situation by about May.
§ Lord ROBBINSMy Lords, may I ask the noble Lord a question which is not intended to trap him into making a prediction? It would be of great interest if the noble Lord could tell us the assumptions that he made in reaching his conclusions as regards the future price of steel, and the future rate of interest.
§ Lord BESWICKMy Lords, the noble Lord, Lord Robbins, almost always prefaces his questions with the statement that he has no intention of trapping anyone, but they are very difficult questions to answer. It is impossible to predict the price of steel in the 1980s. What we are out to show is that we can produce steel as cheaply as any other country in the world.
§ Lord WINDLESHAMMy Lords, may I join the noble Lord, Lord Robbins, in pressing the noble Lord, Lord Beswick, further, because we have the opportunity today of questioning the Minister who is personally responsible for carrying out this important inquiry. It would be of help if he could take the House into his confidence. May I ask him, for example, whether in carrying out his review he was conscious in the back of his own mind of any conflict between the need to keep as many people as possible in employment, and the viability, profitability and future prospects of the British steel industry? If he did, how did he come to balance where the public interest lay?
§ Lord BESWICKMy Lords, the noble Lord asked me a very interesting question, and I wish that I had more time to go into it in some detail. Basic to this consideration was the proposition that size 778 was the compelling factor in economic production; that the so called "jumbo" plant was the answer in reducing costs. On the other hand, I also had examples of where in a smaller organisation, where there was extra effort put into it, where there were possibly local considerations— as for example at Shelton—it would be possible to be competitive. I was convinced by the arguments put to me both by the men themselves, and in discussions with the Corporation, that in that particular scrap-arising area, producing for a steel-using area, it would be possible to have a small economic plant. Thus I came to that conclusion. At the same time on Teesside, for example—or it may be said at Port Talbot—there were clearly advantages of scale, and one therefore reached a different conclusion. It is not easy to give a simple answer to the noble Lord's question. I can only tell him that we went into the matter as carefully as possible.
Further to the question of the noble Lord, Lord Robbins, on future markets —that is what it amounted to—the Steel Corporation itself must have one of the most professional marketing organisations to be found anywhere. I have advisers in my own Department, and it was consideration of advice from both these areas that eventually brought us to this figure of 37 million tonnes.
§ Lord LEE of NEWTONMy Lords, may I join in the congratulations to my noble friend? I wish I could have congratulated him a year or two ago on saving 5,000 of my former constituents at Irlam from losing their jobs. Is my noble friend aware that the 37 million tonnes target is still well below the target that we had in mind in 1965 when we were aiming at a target of 40 million tonnes? There is also the fact that there has been some growth in the private sector, in areas which are not historically steel-producing areas, where they are using electric arcs. Could we have an undertaking that the provisions of the 1967 Act which permit Government interference in that kind of development, will be used if it is to the detriment of the public sector?
§ Lord BESWICKMy Lords, in answer to the first part of my noble friend's question, the 42 million tons figure was never, in fact, a formal target. It was spoken 779 about but was never agreed. There has been a range of figures from 33 million tonnes to 42 million tonnes, and 37 million tonnes, as I said, now brings forward the BSC's original figure to an earlier point in the 1980s. As for the development of the electric arc steel-making plant, it is not possible to multiply such plants, because they are wholly dependent on scrap and the scrap is just not available. One difficulty with which we have had to contend is that, since our accession to the European Coal and Steel Community, we have no right to plan or control the steel industry in the private sector.
§ Viscount HANWORTHMy Lords, could the noble Lord say very briefly why the British Steel Corporation has been in favour of earlier closures than were recommended?
§ Lord BESWICKMy Lords, I should not like to say very briefly. It was the BSC's judgment that those dates were right but in a mammoth programme of this kind it was my view before, and it certainly is so now, that assumptions and decisions of this magnitude can be usefully checked by the people who work in the industry. I am bound to say that the last 10 months have been a stimulating experience for me, because of the informed, constructive and reasoned way in which workers at all levels have helped to examine, analyse and comment on the original decisions.
§ Baroness LLEWELYN-DAVIES of HASTOEMy Lords, I think that the whole House will feel that we have had a highly informative and fascinating account of this whole question from my noble friend. This discussion has now lasted 22 minutes and we have an enormous amount to do on the Children Bill, so if the House would agree I think we might move on.