HL Deb 19 June 1980 vol 410 cc1237-48

4.37 p.m.

The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)

My Lords, if it is convenient to the House, I will now repeat a Statement made in the other place this afternoon by my right honourable friend the Secretary of State for Industry on the remedial measures for areas affected by the steel rundown. The Statement reads:

"On 11th December 1979 and 17th January of this year, the British Steel Corporation announced proposals for a large reduction in manned capacity at Llanwern, Port Talbot, Consett and Scunthorpe.

"The Government has made it clear that it would act to alleviate the economic and social consequences of the substantial and concentrated job losses involved. Now that the prospects have been discussed with the unions more details of the prospective job losses are available and the Government has taken the following decisions:— (a). Subject to the necessary approval of the European Commission we propose to make the Port Talbot Travel to Work Area a special development area, and the Scunthorpe Travel to Work Area and the whole of the Newport Travel to Work Area, and the Cwmbran Employment Office Area, development areas. Firms in these areas will then be eligible for the full range of regional incentives including regional development grants and regional selective assistance under section 7 of the Industry Act 1972. Consett is, of course, already an SDA and the reductions in the coverage of the assisted areas which I announced last July should increase the relative attractiveness of Derwentside. The necessary Orders will be laid following receipt of the EEC Commission's approval. I am mindful of the need to complete this process before 1st August. The Government is aware of possible further redundancies in these and neighbouring areas—particularly Swansea—consequent upon the rundown at these steelworks or through related closures and will continue to keep a careful watch on the situation relative to the rest of the United Kingdom.

"The Government will make available any additional resources which may be needed for increased entitlement to regional development grants. The Government also plan the following expenditure measures which will be found from within the programme allocations for which my right honourable friends and I are responsible:

  1. "(b). Factory Building and Site Development: The Secretary of State for Wales has already announced a two-year programme of land acquisition, derelict land clearance, site development and factory building in those areas in South Wales affected by the rundown. For Consett and Scunthorpe, the Government will provide £19 million at 1980 public expenditure survey prices to enable the English Industrial Estates Corporation to increase building over the next 5 years—about two-thirds to Consett and one-third to Scunthorpe.
  2. (c). Derelict Land Clearance: Derelict Land Clearance grants of up to £10 million will be available in the 3 to 4 years beginning in 1981–82 for approved reclamation schemes at Consett and, to the limited extent there relevant, Scunthorpe, within the framework of the new system of local authority capital expenditure controls that will operate from April 1981.
  3. "(d). Manpower Measures: The Government recently announced a new scheme to provide assistance towards the cost of in-plant training, and this scheme will be of particular value to these areas suffering from steel redundancies.

"The Manpower Services Commission, in addition to its normal placing and training services, will be introducing certain new measures for steel rundown areas:

  1. (i) Work assessment/reorientation courses. Courses on job finding and retraining possibilities will be expanded.
  2. (ii) Small business training. Courses on how to start businesses will be expanded.
  3. (iii) Apprentices. Assistance will be provided through industrial training boards to help firms who take on first or second year craft apprentices made redundant by the steel industry.
  4. (iv) Youth Opportunities Programme: special attention will be given to the needs of these areas.
  5. (v) The Government is also considering the scope for extra assistance for unemployed people in these areas who move home to take up a job in another area."

My Lords, that concludes the Statement.

4.43 p.m.

Lord LEE of NEWTON

My Lords, the House will be grateful to the noble Viscount for repeating the Statement which was made in another place. Is the noble Viscount aware that as one looks through this long Statement one cannot find any new jobs in the areas affected by the steel closures? The Statement purports to be a remedial one to produce palliatives for the problems which the Government themselves have created. It does not pretend to get down to the root of the matter, which is the rapid decline of the manufacturing and steel industries of this country, a decline which has now reached crisis level. Of course, special development areas and development areas are a very good proposition. We used them for many years. But they are quite useless unless there are ample industrial investments, with orders to accompany them, which will enable firms to expand into the new areas which have been named in this Statement. We all know that industrial investment is falling and one cannot understand how the Government think that they can induce non-expanding industries to move into such areas.

There is a great contradiction in all this. Last year the Government cut down on the areas covered by special development area and development area designations on the grounds that they were too wide. Now, the Government, as they succeed in spreading misery, are increasing the number of these areas. One recalls that a huge investment was made not many years ago in the Anchor project in Scunthorpe; and in Llanwern the same thing applied. I would ask the noble Viscount—and he has told us on many occasions that this country is noncompetitive—how the Government expect to reach a position where we are competitive with overseas industries when we are running down huge plants like Scunthorpe and Llanwern to something like 50 per cent. capacity. It is completely and utterly impossible to achieve.

What is it that we are doing with the steel industry? Are we giving up any hope of expanding, when the present world recession is over, into the export markets that we once had? Are we even trying to produce sufficient capacity to meet the needs of our own manufacturing industries when once again they can hope to get to full employment and so on?—because, as things are now, I defy contradiction in asserting that the capacity that we shall have left will not suffice for our own manufacturing industry. What is it we are trying to do? Are we saying that we will rely permanently upon imports of cheap, dumped steel? Are we saying that there will be a continuation of the erosion of the manufacturing industries about which we have complained so often?

I should like to ask the noble Viscount what is meant by the words in the Statement: The Government is aware of possible further redundancies in these and neighbouring areas—particularly Scunthorpe … and will continue to keep a careful watch on the situation relative to the rest of the United Kingdom". Will the noble Viscount say precisely what that means? We all know that "keeping a watch" is one of the problems we have been encountering for a long time. We have been asking for action and not for people to keep a watch on the situation.

A little later, on page 3 of the Statement, we read: The Manpower Services Commission, in addition to its normal placing and training services, will be introducing certain new measures for steel rundown areas". May I ask whether the Manpower Services Commission are going to receive any more finance from the Government to do that? Present tendencies have been to minimise the amount which the Manpower Services Commission have been able to expend on this kind of thing.

A little later, the noble Viscount said on the question of apprentices: Assistance will be provided through industrial training boards to help firms who take on first or second year craft apprentices". Is the noble Viscount aware that the Engineering Training Board is now suffering a pretty substantial cut in its allocation? Yet now we see this. It is a most unsatisfactory kind of Statement. It does not begin to deal with anything tangible in the awful economic problems that we face. It is a mere palliative and the words mean precious little to anybody.

Lord ROCHESTER

My Lords, we on these Benches should like to join in thanking the noble Viscount for repeating this Statement. We accept that there is need for a radical restructuring of the British steel industry. I do not suppose that the noble Lord, Lord Lee of Newton, will thank me for saying so; but we think that the process now would be a lot less painful if the previous Administration had grasped the nettle earlier at the time when Sir Monty Finniston was chairman of the Corporation.

We welcome the remedial measures as far as they go and particularly the fact that Port Talbot is being made a special development area. We are glad to hear of the assistance to be given towards the costs of in-plant training and of the various measures to be introduced by the Manpower Services Commission under the Youth Opportunities Programme in facilitating the movement to other areas of unemployed people, in giving training in job-finding, in starting small businesses, in enabling craft apprenticeships to continue and so on. But, like the noble Lord, Lord Lee of Newton, I am not clear whether these new services are capable of being financed from within the resources already available to the Manpower Services Commission or whether additional money will be made available to Sir Richard O'Brien and his colleagues for this purpose. Perhaps the noble Viscount will be able to give information on that point both to the noble Lord, Lord Lee of Newton, and to me.

We have been told that more details of prospective job losses are now available, but no reference is made to these in quantitative terms in the Statement. May we be told how far, in determining the pace of rundown and the overall amounts of financial assistance available, account is being taken of the desirability of doing this on the basis of so-called natural wastage, voluntary early retirement, and so on? In particular, can we be given any estimate of the extent to which there will be enforced redundancies?

We have noted that Consett, which of course has been so dependent—as the noble Viscount well knows—on steel for its livelihood, is to be granted, as I worked it out, from between £12 million and £13 million for factory building and site development. The Statement makes no mention of Shotton. Of course there is still a first-class workforce available there going back to the days of John Summers. In that particular case, is there any information that the Minister is able to give us concerning the possibility of that workforce being employed under different ownership?

4.52 p.m.

Viscount TRENCHARD

My Lords, I thank the noble Lord, Lord Rochester, for saving me the trouble of reintroducing reality into the discussion on the Statement. Indeed, I echo his comment that if the previous Administration had shown more willpower in achieving the targets they themselves set for British Steel in the years in which they set them, we should perhaps have ceased at an earlier date to lose the share of market in British Steel. The further reality is of course that no serious commentator on the present situation is suggesting that currently the British Steel programme—which is no secret to the noble Lord, Lord Lee of Newton—based on a demand of 15 million tonnes a year is an under-estimate in the short term at least. Furthermore the capacity—and the noble Lord, Lord Lee, cannot have it both ways—that is being retained within the plan of the British Steel Corporation which produces the redundancies that I am speaking about, keeps plant capable of a very considerable expansion above that 15 million tonnes. All this has been announced previously and discussed many times.

Turning to the regional policy aspects, there has been no contradiction in terms of Government policy. We announced the criteria for the new regional policy and we are now applying it. We took the opportunity on taking office of getting the SDAs, DAs and IAs on a new basis, and getting them registered correctly within those grades. We undertook to review the changes in the national economy and in the regional economy, and to keep the gradings up to date from time to time. The position in Wales, outside these two main closures, was not so had as in many other areas of the country. That is why they were either of a lower grade already or were scheduled for downgrading on 1st August. My right honourable friend's Statement takes into account the future redundancies that will come about, and grades these areas objectively according to the grades that they will or should fit into in accordance with that policy. So there is no contradiction at all.

The noble Lord is right about keeping watch in relation particularly to Swansea and in relation to possible further redundancies. We keep watch. The regional policy is one of keeping watch and of reviewing from time to time; but in this particular case what the Statement means is that it is always very hard to judge in assessing prospective redundancies exactly what the effects will be in which particular travel-to-work area, and what knock-on effects—which have been raised in this House before—will actually take place. We have been pressed to anticipate redundancies and to change the gradings in order to do the most we possibly can for these areas well before the redundancies occur. One can only do that on an estimate; and since we have done it on an estimate, we shall of course keep watch on the situation as it actually develops.

As far as the Manpower Services Commission measures are concerned, not only will all the normal services of the Manpower Services Commission be applied but under each of the headings that I have given, special measures applying to steel remedial areas or special increases or augmentations will be applied and the MSC will be enabled to perform those extra duties in the steel remedial areas.

I do not think that the Shotton area is touched by this Statement at all. It has been touched by previous Statements which I will look up for the noble Lord and let him know about them. There is a big factory programme and an MSC programme going on in the area. As far as the question of the negotiations about which there have been press comment and other statements is concerned, I think that is a separate issue. I have no further news to add to that today.

Lord LEE of NEWTON

My Lords, with respect, I asked regarding the Manpower Services Commission whether they were going to be given any extra financial help in order to assist them to do that which the Statement says, and whether with the run-down which is taking place the amount of money that the Engineering Apprentices' Board, for instance, is getting will be increased.

As regards the question of what we did not do, which the noble Lord, Lord Rochester, and the noble Viscount mentioned, the great criticism that we had was that we were spending far and away too much money on special development areas. This was given as the reason why the Government were running them down. The noble Viscount has not answered my statement that the Government are undoubtedly changing course and increasing the number of development areas in being.

Viscount TRENCHARD

I thought I had made clear—and the Statement makes clear—that the resources will be found from the general departmental allocations which I mentioned. So far as the Manpower Services Commission is concerned, I made the Statement very deliberately, very clearly that it is going to be enabled to carry out augmented or additional services—more than it would otherwise be able to do. To go into the detail on all Government department's budgets over a prolonged period is not to answer the noble Lord's question but to mislead him. There is no question but that the headings of the items mentioned cover additional or augmented services of the Manpower Services Commission.

On SDAs the noble Lord is just not correct. Yes, we said there was a possibility and a need for major economy in the regional programme. That has taken place and these alterations to it are alterations upwards of a certain order in the total effect on cost; but the changes we made did not mean paying less money to special development areas. We maintained the grant at 22 per cent. for special development areas. We altered the development area grant a bit. The policy was designed to give maximum help in the areas of greatest need and not to spread it all over the country extending it to many areas which had no greater need than the average of the country.

Viscount RIDLEY

My Lords, I wonder whether my noble friend could perhaps clarify one point in his Statement. He said that £10 million was available for the clearance of derelict land on Consett and somewhere else. Is this money additional to what is now planned to be spent on derelict land clearance in England and Wales or is it at the expense of this programme that the £10 million will have to be found?

Viscount TRENCHARD

My Lords, the funding of the derelict land clearance is even more complicated than that of the schemes of the Department of Employment and the Manpower Services Commission, and I suspect that my noble friend in fact knows rather more about the proposed plans for the allocating of capital expenditure to local authorities. But perhaps I can help him by saying, first, that the local authorities concerned should be able to make use of the £10 million grant that is to be made available. It comes under Block 5 expenditure. These expenditure plans are, I know, still under consultation with local authority associations but the Government's objective is quite clear as regards this measure: that is that they wish, and believe they will be able, to make possible land clearance schemes to that value which otherwise would not be made possible.

5.3 p.m.

Lord BRUCE of DONINGTON

My Lords, may I ask the noble Viscount whether he will inform the House as to the precise reasons why it becomes necessary to obtain the permission of the European Commission for these measures to take effect? If there are such reasons they should be enshrined in an article in the Treaty, or in a directive or a regulation. The House would be greatly obliged, I am sure, to know why in these circumstances the EEC Commission should be interested at all. I do not know whether the Government intend these to go before the Competition Directorate, but if the noble Viscount is considering approaching that particular directorate for permission, may I ask the House's indulgence in reminding him that that is not always the most prompt directorate-general to deal with matters of this kind?

May I also ask the noble Viscount, in regard to the decision reached at the Brussels Conference of Foreign Ministers recently, on which some doubt was recently cast by the meeting of Fishery Ministers, whether the aim that he has suggested this afternoon to be incorporated in regulations will preclude the Government from making representations to the Community under the provisions of the Brussels agreement for further and more extensive aid from Europe for these areas, as a means of contributing in part to the deficit which this country bears in regard to its contribution to the European Economic Community?

Viscount TRENCHARD

My Lords, the answer to the noble Lord is Article 93(iii) of the Treaty of Rome, which has bound him and his colleagues in previous Administrations as it now binds me. The House may remember that, when we put our new alterations of the regional policy to the House, there was under this article the necessity to clear these measures with the EEC and to give them adequate notice. There is nothing new here; he and his predecessors did it; I have to do it and I anticipate no problems.

In relation to in any way prejudicing monies that we shall get from Europe generally for regional policy, and particularly for steel remedial areas—and I described those in some detail on 13th February at column 164—no, there will be no adverse effect and there will be no adverse effect whatsoever on the negotiations which are now starting in relation to the deal over the British contribution and the extra monies that may be available following that. The needs of these areas are indeed regarded as a very high priority by the Government, who, bearing in mind the statements of my right honourable friend the Secretary of State for Wales involving the expenditure of some £48 million, have now deployed some very considerable resources, in advance of the redundancies taking place, to do everything we can within the circumstances both financially and, much more importantly, psychologically, in training for possible new employment. We have done everything we can to soften and indeed to replace the cutbacks which are necessary, since we have to face realities in the steel, and in the British Steel, situation.

Lord LLOYD of KILGERRAN

My Lords, when the noble Viscount says he has done everything he can do in South Wales regarding these matters, does he include in that giving men who want to work space where they can work at low rents? In the area of South Wales which I know so well, the difficulty quite frequently arises that men who have been made redundant, sometimes with large sums of money, want to work but they cannot find the necessary space in which to carry on their constructive activities.

Viscount TRENCHARD

Yes, my Lords. One of the measures that I announced is indeed giving them extra training in conducting their own businesses if they have a skill of any kind. Factory space of every size is being considered and planned, and of course BSC (Industry) Limited, which is that part of British Steel which deals with attracting new and often smaller enterprises into converted or new facilities, is also spending money in this direction.

Lord DRUMALBYN

My Lords, can my noble friend confirm that assistance from Europe comes from two directions? I am not quite clear from what he said whether this is so. First, there is general assistance towards development in areas suffering from high unemployment and in need of development, and, secondly, from the Steel Directive, which allows for assistance, if I remember aright, in cases of redundancies and the general run-down of the industry. In that case, if I remember correctly, it is mandatory to report and to get the confirmation—I will not say permission, but at any rate confirmation—of the Commission to the proposals that are made. Is that what he meant by referring to the permission of the EEC?

Viscount TRENCHARD

My Lords, I think that my noble friend has the position clear. I think the noble Lord, Lord Bruce of Donington, was asking me why I had to get EEC permission for the package at all in relation to the regrading of assisted areas; and that is where the article in the treaty comes in.

Yes, my noble friend is quite right. There are two main sources of aid. One is the Commission and the other is the ECSC budget, which has been very heavily used in the case of Shotton.