HL Deb 22 January 1980 vol 404 cc395-407

3.44 p.m.


My Lords, with the leave of the House, I will now repeat a Statement which has been made by my right honourable friend the Secretary of State for Industry in another place in answer to a Private Notice Question on the steel industry talks. The Statement runs:

"The Secretary of State for Employment and I met Mr. Sirs and Mr. Smith on Saturday. Together with the Secretary of State for Employment and myself, the Prime Minister saw trade union leaders and BSC management at separate meetings yesterday.

"The Government welcomed the meetings which allowed those concerned to explain their views to Ministers. All concerned clearly understood that Ministers were in no way involving themselves in negotiation—and Ministers emphasised that there was no taxpayers' money available to fund a settlement. ACAS continue their contacts to see whether they can help."

My Lords, that is the end of the Statement.


My Lords, the House will be grateful to the noble Viscount for repeating the Statement which has been made in another place. In view of the fact that the Statement tells us that Ministers are in no way involving themselves in negotiation, may I ask whether the Government are still demanding that BSC break even by March this year? If that is not intervention, I do not know what the word means. Could he tell me of any bulk steel industries throughout the world which are now making profits, anyway? The Statement goes on to suggest that ACAS continue their contacts with both sides of the industry. May I ask the noble Viscount what ACAS are supposed to talk about to the industry? The Secretary of State has already prohibited any useful discussion about the issues which have caused the strike and, therefore, ACAS, it seems to me, are stymied by Government action before they can begin.

Much of the case which the Secretary of State and the Prime Minister have been making is based on productivity figures for steel in Britain which are arrived at, I suggest, by the most unfair comparisons imaginable. Would the noble Viscount agree that the only suggestions on productivity that we have heard, either from the Government or from BSC, is that productivity should be improved by a large-scale reduction in the labour force? Is there no other way in which an industry which has had a huge input of capital in recent years can think in terms of increasing productivity? And if productivity is as bad as all that, ought there not to be inquiries into the management of BSC and not condemnation of the unions?

We are now approaching the end of the third week of this damaging strike. Surely by now the Government will have made some estimate of the unemployment in other industries which is bound to come in consequence of this strike. What estimate are they making of the effects, and the cost, on the economy if this strike continues much longer? I do not know whether the Government are aware that throughout the country, and, certainly, throughout the trade union movement, it is now believed that the Government picked on the most reasonable trade union in British industry with no strike record whatever and whose members—none of whom if they are under 60-years-old have ever been on strike—are now convinced that they have been picked on for the reason that they have no strike record. I wonder whether the noble Viscount would say what sort of action can now take place? ACAS have been stymied by the Government; the Government have said that they take no heed whatever of the economic and social consequences of this strike. Where do we go from here? Is the noble Viscount aware that steel is the genesis of a dozen major industries and that if this strike goes on much longer there will be chaos throughout the whole British economy?

3.50 p.m.


My Lords, I do not wish to follow in any detail what the noble Lord, Lord Lee of Newton, has said. We can understand that the Government wish not to intervene in this dispute and to leave it to the management, the unions and ACAS. May I ask the Government whether they will consider seriously trying to clarify the situation for the public at large—clarify it by publishing an up to date and authoritative statement of the facts which everybody can understand? What, for instance, is the actual take-home pay of the major categories of steelworker in the public and private sectors at the moment? Does anybody really know that? Certainly, I do not. By how much would the productivity proposals increase wages and reduce costs if implemented to the full? May we have any other relevant facts that would enable the public to understand what is involved? It is a very difficult situation for any corporation making such losses as these to pay any increase in wages; but we should be better advised if the public at large and we ourselves could know exactly what is in dispute.


My Lords, I thank the noble Lord, Lord Lee of Newton, and the noble Lord, Lord Byers, for their contributions, with the one exception of the last contribution of the noble Lord, Lord Lee. I am sure that he will agree with me that the last thing any of us on any side want to do is to widen an area of dispute. I therefore must refute very strongly indeed any idea that this Government has picked on steel. That is far removed from the truth. Even Mr. Bill Sirs, and others, I am glad to say, said after the weekend talks that they were quite clear that this strike had no political motivation. It has none. We are involved as representatives of the shareholders, as representatives of the taxpayers; but we are not involved as management in negotiations, and we believe that the record of Government getting involved as managers in negotiation has been a very poor one over many years.

Yes, my Lords, the target of break-even—or profit, not loss—in the new financial year from the end of March is still the same. We believe that the situation with British Steel is that enough money has been put in by the taxpayer to make that kind of requirement a reasonable proposition. Over £2 billion has been invested in the past few years to make British Steel one of the best equipped steel industries in the world. Our productivity, to which the noble Lord also referred, falls, by any objective measurement—and I am well aware that one can go on bandying around different productivity figures for as long as one likes—as was agreed in the sector working party, where both unions and management are involved, far short of that of all the main competitor-countries' steel industries.

The noble Lord asked what ACAS were going to do arising from my right honourable friend's Statement that they were in touch and that we welcomed their activity. By asking that, did he mean that the Government should authorise British Steel—who do not ask for it—to put in more money than the £4 billion that the taxpayer has contributed in the past five years? I do not believe that would be a right course to take with the industry equipped as it is with the 1976 report on productivity—again acknowledged by both sides—still regrettably not a reality.

It is not the time to apportion blame; it is the time to say that in an industry which is superbly equipped today, where our labour rates, regrettably, are far below those of other countries, by matching productivity with this superb equipment, considerable pay increases beyond anything that is on the table—and a considerable sum is on the table—could be earned. Let us ask both management and the workforce to forget the past, to use the equipment and to get down to negotiating again, as I hope they will; and, as my right honourable friends the Secretary of State and the Prime Minister, have suggested, a self-financing deal within these confines is more than possible.


My Lords, is the Minister not aware that this is the first strike in the industry over the past 50 years? We are dealing here with a moderate union. Mr. Sirs is a very moderate trade union leader. Apart from that, are the Government not aware that in Europe alone, if we are to compare like with like, in most of West Germany, Belgium, France and Italy, steel making concerns are in the red? They are subsidised partly because of subsidies to the coking industry which supplies the steel industry. Is the Minister not aware that there is a danger that if the closures that are now taking place continue, our defence requirements will be hit? That is very dear to the hearts of noble Lords opposite. No doubt we will discuss this in a future debate. There was a question on the Order Paper only today about the situation regarding ships. All this will be in danger. Worse than that, if this policy continues, the Tory Party will be said to have created industrial deserts where men and women have no work and where there will again be rising poverty. The Government have behaved deplorably in this matter and the men have been extremely reasonable.

3.57 p.m.


My Lords, I am of course aware—as is the whole House—that this is the first steel strike since 1926. My right honourable friend, who knows Mr. Sirs—I do not know him personally—is convinced of his integrity. We are well aware that, as the noble Lord put it, Mr. Sirs is considered a moderate. Regarding other steel industries, noble Lords are a little out-of-date. There is substantial improvement going on in the German, French and Dutch steel industry. The German industry is quite definitely in the black. I am well aware of the point about coking coal. I am also aware of the prices at which coking coal is purchased by companies in these countries. Taking all these matters into consideration, there is no burking the issue that our productivity is the main reason for this problem. That is why the right honourable gentleman, Mr. Eric Varley, set the target of break-even by March of this year; and that is why we believe that that target should be honoured.

So far as paying for defence equipment and the general seriousness is concerned, nobody in this House will under-estimate the seriousness of a prolonged steel strike. Equally, our ability to pay for anything—defence or social services—depends upon a growing realisation that management and workforces together, when provided by the taxpayers with equipment, shall use them to good advantage and shall not demand extra money from the taxpayer which has to be taken away either from the social services or from defence.

I regret the noble Lord the Leader of the Opposition's remarks on the Tory Party causing an industrial wilderness. I could remind him of the difference between the situation that we took over and the one that he took over in 1974. It is partly because of this continuous so-called element of "settle this at all cost", which means extra taxpayers' money from somewhere, that we are in this mess. We intend to carry out the target that was set by the right honourable gentleman, Mr. Eric Varley, the previous Secretary of State for Industry.


My Lords, when the noble Viscount talks about low productivity being the cause of all troubles, may I ask whether he has really investigated who and what is responsible for the low productivity? The implication is always that it is entirely up to the workers whether productivity is high or low. I wonder whether the noble Viscount is aware that before the First World War the productivity of the German steel industry was more than twice that of the British steel industry and that, according to the best experts, this was due to the fact that the German industrialists made far better use of economies of scale and carried out a scheme of compulsory standardisation, allowing long runs, which it was not possible to do in the case of the British industry. That had nothing whatever to do with the workers.

May I also ask the noble Viscount whether he is aware that our grossly over-valued exchange rate is an important factor in causing our profitability to be low in the steel industry in relation to other countries? The value of the exchange rate is certainly not the responsibility of the steel industry or of the steel workers: nor can the Government abdicate from responsibility in a matter of this sort. Finally, I want to ask the noble Viscount whether he is aware that this question of steel is absolutely vital to the economic future of Britain. The Government are perfectly callously and calmly willing to see the size of our steel industry cut by 40 per cent., which means that Britain's industrial power will be reduced by 40 per cent. and that Britain's industrial standing and defence capacity will be reduced by 40 per cent. And they do that, following the narrow and pointless objective of financial solvency, which under certain conditions makes no sense whatsoever.

4.4 p.m.


My Lords, I am well aware that the causes of low productivity are many and indeed the management and the unions of this industry have been into them on many occasions. The problem is that the identification of those many and complicated causes has not led to effective action. I am not blaming anyone: I am stating a fact. I will not follow the noble Lord hack before the first war because he knows that, while he has educated me on a number of historical figures, I cannot follow him back in detail on this. We are not saying either that management is perfect or that trade unions are perfect. What we are saying is that after many joint studies targets have been declared by the previous Administration and by ourselves, and it is now up to the two combined to implement those targets.

The exchange rate has complicated the position in so far as the competitiveness of the British industry is concerned, but if one looks at the strengthening of the exchange rate against the very low wage costs that regrettably we now have in Britain compared with our main competitors in steel, an equal productivity would more than cover the exchange rate and would allow major increases beyond the levels that have been on the table and which have been estimated at 12 per cent.

Of course, we know how vital this industry is. I wish, however, that the noble Lord had not suggested that we were sitting callously waiting to see the destruction of important things. He almost makes me believe that that is what he believes—almost assumes—will happen. I hope I have the support of the House in appealing to both sides that in the time left—and there is time left before the really serious damage sets in and before jobs are put at risk within steel and outside—all in British Steel should get round the negotiating table again and seek methods of using this superb equipment to solve all the problems, in the way in which the previous Administration asked them to do.


My Lords, on this issue of being involved in the dispute, may I ask the noble Lord the Minister whether there are not special circumstances associated with this dispute; namely, that while there is a dialogue about money not being available and one side saying it ought to be available, vast numbers of men in the industry have been disemployed and vast numbers will be thrown out of employment before very long because of the changes that are taking place in the industry? Obviously that is bound to be considered by those engaged in this dispute, particularly on the workers' side, when the men are asking for better conditions and simultaneously vast numbers of their colleagues, and even they themselves, are going to be thrown out of employment. Is that not a special circumstance that the Government should take into consideration?

On the matter of involvement, suppose, for example—I admit it is partly hypothetical although it may be actual and realistic before long—that there is a dispute in connection with the supply of water and the disposal of sewage. Are we to understand that the Government would say: "We refuse to be involved in a dispute of that character, which affects vast numbers of the people in our country"? Are not the Government going a little bit too far in this matter of non-involvement? Are we not dealing here not with a private industry, although parts of it are in the private sector, as we all know, but substantially with a nationalised industry? Is it possible for this Government, or for any Government, having accepted nationalisation, though reluctantly, as a fact which cannot be ignored, to say: "We will not be involved in matters concerning this industry"? Is this not a new concept that has been developed by the Government?

Having observed the activities of the Secretary of State for Industry, Sir Keith Joseph, does not one come to the conclusion—this may not be acceptable but this is how I see it—that he does not mind at all this dispute taking place, whatever the consequences may he, as long as he puts the union in its place? That is what he is after doing, when in point of fact he is helping to ruin this country; and that ought not be to allowed.

4.9 p.m.

Viscount AMORY

My Lords, I just want to say that a good many years ago now I used to be a director of a steel company and at that time workers were extremely proud of being steel workers and we were extremely proud of our workers. Therefore, the present situation really makes my heart bleed. I have to face the fact that, if there was evidence that in spite of the money which has been pumped in by the taxpayers the factories concerned were still ill-equipped, then I would consider there was a case for still more taxpayers' money to be pumped in, even though it had not been used fully effectively to date. But I understand that that is not the case, and that the industry is pretty well equipped today—up to the level of our competitors. That being so, until something can be linked with the assurance of increased productivity, then, with the deepest regret, I feel that any further money pumped in by the taxpayer would not be effective in bringing about the improvement that we all long to see in the years ahead.


My Lords, did I understand the Minister to say—?


My Lords, if am not to lose track of the important points which the noble Lord, Lord Shin-well, raised, as well as those raised by my noble friend Lord Amory, may I say that every industry has special circumstances, and every department of Government and national service always has special circumstances. The combination of those special circumstances and the meeting of them beyond the resources of the nation, in order to secure a settlement, has been the practice of Governments of both parties for a very long time and it is one of the reasons why we are in the mess that we are in now.

So far as the redundancy question is concerned, the whole thing depends upon the market for steel. The last Administration's White Paper of March 1978 contained a quotation which ran as follows: To achieve financial viability, it is necessary for capacity to move more into line with demand". In the last two years British Steel, after making heavy losses and with this new equipment, have sold 17 million tons. One just does not know, because one is not the management of this organisation, whether their estimates of 15 million tons against a changing world for the future are right exactly. But we have no reason to challenge them, and the numbers involved to make that amount must be brought to a level which is competitive with other countries' industries, which, as I have already said, are at the moment improving.

On the question of involvement, once more, we are involved in how much money shall be taken from the taxpayer and denied to other important areas. Yes, my Lords, we are very involved. We are involved in ensuring that damage of the magnitude that is being outlined is not done to the British economy. But if we ignore the former type of involvement, which is correct involvement as shareholders, and start intervening as management in negotiations and taking more taxpayers' money from other sources which we do not have, then this country will go to wrack and ruin, to quote the noble Lord's phrase. I was very grateful for the intervention of my noble friend Lord Amory.


My Lords, would the Minister—?


My Lords—


On every occasion I am going to stand—


My Lords, I think that the noble Baroness, Lady Wootton, has the ear of the House.


My Lords, may I ask the noble Lord the Minister one or two questions? First, will he confirm that the original statute under which this industry came into public ownership required that it should break even taking one year with another, but gave no indication of over what period that balance was to be struck? Secondly, may I ask him how the present Government can say that they are not involved, when they and their predecessors have in fact set the targets which are the cause of most of this trouble? Thirdly, may I ask him why it is possible to find 20 per cent. for the miners and only 2 per cent.—although I think they have pushed it up to 12—for the steel workers?


My Lords, I am not so familiar as the noble Baroness with the original statute, but on the assumption that she is accurate, as usual, and that the object was to break even taking one year with another, it is worth recording that a cash limit of £700 million to accommodate losses of £300 million was required for the current financial year, which is not yet over. So that by no stretch of the imagination can it be said that British Steel has in recent years been breaking even one year with another.

We are, of course, involved once again in setting targets. This is our duty as representatives of the shareholders, who are the taxpayers. We cannot avoid that. So far as our setting a particular target is concerned, we have taken and reinforced the target of the last Administration. The right honourable gentleman Mr. Varley, in reply to a parliamentary Question on 22nd May 1978 said: The BSC must get its finances straight as quickly as is practicable. My right honourable friend will know that in the last financial year BSC, in common with many comparable companies overseas, lost money. It lost £440 million. Part of the Government policy is that the financial objectives of the BSC should be to break even by the financial year 1979–80"—[Official Report, Commons; col. 1105.] We are talking now about 1980–81.

The Earl of ONSLOW

My Lords, would it be possible for Her Majesty's Government to put slightly more emphasis on the fact that Mr. Sirs appears such a reasonable, such a good, ordinary Englishman? Secondly, the implications of the noble Viscount's earlier reply, that more is available if productivity goes higher, could be underlined by allowing the Gas Corporation, with their enormous projected profits, to pay very much above the going rate to their workers because they have made profits. This would surely show to the people who work for our industries in the public sector that profits mean good wages and secure jobs while no profits means not very secure jobs and not such good wages. Thirdly, the exchange rate surely has nothing to do with productivity and manhours per ton of steel. Fourthly, with all these closures, does British Steel not have anything to "flog" in order to raise more money, if it really is put in a squeeze about providing more money to put on the table?


My Lords, the Minister's case, as I understand it, is that successive Governments have provided the BSC with all the money that is necessary, and that the equipment in the industry now is of such a first-class nature that the only thing that needs to happen is to increase productivity. I wonder whether the noble Viscount would tell us what happens to the increased productivity when it has been produced. Do they eat it, or do they take it out into the Atlantic and drop it overboard?—because the one thing that is demonstrable is that they cannot sell it. The truth, surely, is that the Government's attitude here is completely bogus. They are not concerned at all with productivity. They are concerned about the ratio of productivity with a decreased number of men. In other words, this is a politically motivated strike, in order to squeeze out of the industry every man who can be squeezed out. The typical Tory policy, throughout this century when they have been in Government, is to solve our economic problems by increased unemployment.


My Lords, may I intervene for a moment, before the noble Viscount answers that question, by suggesting to the House as a whole that when the noble Viscount has replied we really will have had enough of this and that it is becoming a debate. If that is the feeling of the House after the noble Viscount has answered that question, I hope that we might go on to the other business.


My Lords, that is certainly my feeling. In my view, all those involved in this dispute in British Steel—the union leaders and the management—are reasonable and solid Englishmen, some with very great experience—

A noble Lord: What about Scotsmen?


Yes, my Lords, and Scotsmen, too, for all I know—and Welshmen. I appeal to all, both inside and outside this House, to restrain from blame-awarding and the like. I shall not deal with the points made by my noble friend, as this discussion has gone on for a long while and his last two are really for British Steel to deal with, not for me. However, may I deal very quickly with one point which was raised by the noble Lord, Lord Wigg. He asked what I expect British Steel to do with it if they get higher productivity; do I expect them to eat it? No, I do not. I am aware of the harshness of what I am about to say. If, however, one has a situation in which an industry or a company is not competitive, it has first to become competitive before it can hope to increase its market share. We have to do that first in British Steel. When there is a backlog such as this, because things have been allowed to become noncompetitive, I am aware that it involves redundancies, which are already necessarily high but which were not faced up to by the previous Administration, though the request to face up to them was made by that Administration. However, the redundancies were not faced up to by the previous Administration and they have to be faced up to now. As soon as they are faced up to there is a very good chance that the market share will start to increase; and as and when world economic activity begins to increase, British Steel will be well placed.

I think that I missed a point made by the noble Lord, Lord Shinwell. The cash limits have taken full account of the estimated redundancy requirements. I know that money is by no means everything; in fact, it is less than half the problem when one considers the human problems. But, Yes, the redundancies have been allowed for in the figures.