British Steel Corporation: Finanaces (Hansard, 27 July 1982)

§ Baroness Elliot of Harwood
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne)
My Lords, the corporation's annual report and accounts for 1981–82, which were published on 13th July, show that the corporation incurred a loss of £358 million for the year compared with £668 million in the previous financial year. This represents considerable progress towards the corporation's target of achieving break-even before interest in 1982–83 and of returning to enduring profitability thereafter.

§ Baroness Elliot of Harwood
My Lords, I thank my noble friend for that reply. I apologise for the fact that this Question was put down before the crisis broke on Saturday. Is my noble friend aware that I very much hope that the events of Saturday will not hinder or impede the recovery of the steel industry which we are all so anxious should happen?

§ Lord Trefgarne
My Lords, as my noble friend Lord Cockfield said when he made the Statement yesterday, we very much hope that a solution to this problem concerning the United States can be found. We believe that it can be found and in that case there will be no effect upon British Steel.

§ Lord Davies of Leek
My Lords, is the noble Lord aware that we welcome the British Steel Corporation's view that by 1983 it can make a £79 million profit for the first time for a number of years? But is the noble Lord also aware that there has been a drop of 37 per cent. in demand for steel in Britain? Finally, can we not carry out a steel blitz by repairing the railway tracks of Britain and giving a boost to the British steel industry by making the railway tracks worth driving on?

§ Lord Trefgarne
My Lords, it is certainly the case that British Rail is an important customer of the British Steel Corporation, but of course—as in so many nationalised industries—British Rail's own capital plan needs to be carefully monitored.

§ Lord Cledwyn of Penrhos
My Lords, does the noble Lord agree that this most satisfactory progress which has been made by the British Steel Corporation is due in 123 very large measure to the remarkable efforts of the steel workers in steel works such as those at Llanwern and Port Talbot and other steel works in England and Scotland? Will the noble Lord give an assurance to the House that there is no possibility of further redundancies, with all the accompanying unemployment problems, in the next few months?

§ Lord Trefgarne
My Lords, it is certainly the case that since 1979—for which I have the figures in front of me—there has been a substantial reduction in the workforce of British Steel. As regards future job losses in British Steel, Mr. MacGregor has made clear to the workforce that the new plan envisages further general de-manning throughout the corporation's plants to cut costs and to improve productivity. The corporation is not yet in a profitable condition and for that reason I cannot rule out the possibility of further reductions in the labour force.

§ The Earl of Lauderdale
My Lords, would my noble friend not agree that while saluting the co-operation of the British Steel Corporation's workers we ought also to salute the work of the chairman?

§ Lord Trefgarne
My Lords, my noble friend is quite right to make that point. Mr. MacGregor's tenure of office has so far been remarkable and successful.

Viscount Rochdale
My Lords, can the noble Lord say to what extent the improvement in the finances of the corporation are due to improved technology?

§ Lord Trefgarne
My Lords, I could not put a precise figure on that aspect without further reflection, but certainly improved technology is one of the features of the corporation's new posture.

§ Lord Cledwyn of Penrhos
My Lords, perhaps the House will allow me to intervene once more, to ask the noble Lord whether he is aware that the reply he gave on de-manning is extremely depressing in view of the extensive de-manning that has taken place in the steelmaking areas of Wales, England and Scotland, with all the consequences to the communities living there? Can the noble Lord indicate what will be the extent of this de-manning? What kind of percentages are we talking about? When is an announcement likely to be made?

§ Lord Trefgarne
My Lords, the extent of future de-manning depends, among other things, upon the continued level of demand for the products of the British Steel Corporation, and it is not possible for me to put a figure on it at the present time. But if demand holds up, or even increases somewhat, then I hope that the figures will be kept as low as possible.

§ Lord Beswick
My Lords, may I ask the noble Lord two questions? How many more people will be declared redundant from the British Steel Corporation if the order for the Cunard ship goes to the Far East? Secondly, can he say why his noble friend who sits behind him does not include the chairman of BSC among the term "workers"?

§ Lord Trefgarne
My Lords, that last point would, I think, be a question for the noble Lord to address to my noble friend, perhaps in the bar, on some later occasion. As for the first part of the noble Lord's supplementary about the quantity of steel that might or might not be required for a replacement for the "Atlantic Conveyor", I cannot without notice answer that question in terms of tonnes or in terms of workers to be retained but I presume the numbers would be significant.

§ Lord Mackie of Benshie
My Lords, can the Minister say how much hours per tonne of steel produced have improved under the present régime, and how they compare with Germany and Japan, for example?

§ Lord Trefgarne
My Lords, I am afraid that I have not got figures for that in front of me; perhaps I should have and I will therefore happily write to the noble Lord with the figures if I can find them. It is certainly the case that the number of persons employed by the British Steel Corporation has sharply declined in recent years, but so too has the total level of production. The numbers of workers have declined rather more fast than the level of production, and thus the productivity has improved.

§ Lord Glenamara
My Lords, will the noble Lord take time off to visit the town of Consett in Durham, to which I have referred previously in your Lordships' House, to see the social, economic, and human cost of this "improvement"? Will the Government ensure that there are no further "improvements" in the accounts of British Steel at this kind of cost?

§ Lord Trefgarne
My Lords, no one doubts that in some of the towns where British Steel formerly had a major presence the social costs of what is really the decline of the world steel market have been very high. But the social cost of allowing British Steel to continue upon its original course would have been even higher.

§ Lord Ferrier
My Lords, would the noble Lord agree that railway electrification represents a considerable off-take of steel, quite apart from track replacement?

§ Lord Trefgarne
My Lords, I am sure my noble friend is correct.