Mr. Ian MacGregor: Remuneration (Hansard, 21 May 1982)

Lord Bruce of Donington
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Minister of State for Defence Procurement (Viscount Trenchard)
My Lords, an initial payment of £675,000 was made on 1st July 1980 to cover the three-year period agreed for Mr. MacGregor's tenure 879 as chairman of the British Steel Corporation. That payment would be refundable in part if Mr. MacGregor were not to complete his full term in post. Two further payments will be made, totalling between nil and £1.15 million depending on the performance of the corporation under Mr. MacGregor. But these two payments do not fall to be assessed or made until mid-1984 and mid-1985. A document setting out the details of the various payments, and the criteria by which those related to performance will be assessed, was placed in the Library of the House on 15th April 1981.

Lord Bruce of Donington
My Lords, while thanking the noble Viscount for that reply, may I ask whether he will confirm that the criteria against which some judgment will be formed as to whether Lazard Fréres should receive nothing or £1é15 million remain precisely the same as those that were stated by his right honourable friend the then Secretary of State in the debate on 15th May 1980? Is he aware that in the Financial Times of yesterday there appeared the statement: the performance fee to be paid to Lazard Frères in New York at the end of the chairman's contract next year will depend, inter alia, on progress in hiving off segments of BSC to the private sector"? Is the noble Viscount aware that that was not one of the criteria that were originally set out by his right honourable friend? Will he confirm that this is not part of the criteria against which Mr. Ian MacGregor will be required to work?

§ Viscount Trenchard
My Lords, the noble Lord remembers well those times, as I do, because on 14th May 1980 we had quite a long debate on this subject. The criteria—and they have not been changed—are those which were issued on the date that I mentioned, 15th April 1981. The noble Lord should refresh his memory on them because heading No. III is "Privatisation". That is one of the four criteria which the committee will judge and in that respect the article in the Financial Times is correct. Not having read the full article, I cannot answer exactly, but if he will read criteria III again in the document, which is still in the Library, I think that his memory will be refreshed.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that the information that he has just given is information that has been on the record for a very long time? The supposed new criteria, which the supplementary question mentioned, would seem to flow naturally from the terms that were laid down in the White Paper that was issued at least two years ago.

§ Viscount Trenchard
My Lords, I am aware of that. I do not know exactly what is the noble Lord's purpose in tabling this Question at this time. I well remember that on 14th May in this House he suggested that my then right honourable friend the Secretary of State for Industry had made an ass of himself; and at column 311, in the same debate, I suggested that time would show, and: that it will not be he who will be seen to have made an ass of himself ". 880 I believe that the progress of British Steel under Ian MacGregor—and there will be the provisional results for 1981–82 out in a matter of weeks—will be shown to vindicate my then right honourable friend's very wise judgment in getting a man of immense knowledge and drive to try to arrest the huge losses of British Steel, which were running at £1.3 million a day in 1980–81.

§ Lord Davies of Leek
My Lords, while paying respect to the expertise of Mr. MacGregor, does the noble Viscount not think that it may be an appropriate moment to review the ideology of this fanatic rush to the privatisation of much of public property? Does he not realise that private enterprise in some sections has had so much public money that we have now established a new principle; we are subsidising private enterprise by public money? In other words, we are going in for the "Lakerisation"—if I may invent a word—of all kinds of industry that pretend to be private and live on the public purse.

§ Viscount Trenchard
My Lords, we on this side believe that the evidence is clear that the charge on the taxpayer and the public purse of the public sector as a whole is still far too large. The progress that has already been made at this stage by taking a chairman from the private sector, in the United States in this case, is already evident even in the second half of the last year that has been published. Losses before interest declined from £1.3 million a day in 1980–81 as a whole to £0.8 million a day in the first half of 1981–82. I believe that the progress will continue, and one part of the job, and one of the criteria, is privatisation.

Lord Morris
My Lords, may I ask my noble friend whether he believes that this is the correct forum for discussing the contents of a very able man's pay packet?

§ Viscount Trenchard
No, my Lords. In answering a question, however, I wanted to try to put matters into perspective.

§ Lord Molloy
; My Lords, would the noble Viscount the Minister agree that this might be the forum to discuss the pay packets that they do not now get of 160,000 British steelworkers who have lost their jobs since Mr. MacGregor took over? I should like the noble Viscount's answer to that. There are many people who have examined the situation of British Steel and acknowledged at the time that world demand was diminished. But is the Minister aware that that demand is now creeping up and that perhaps the criteria he referred to ought to be re-examined by all sectors of British Steel and the Government, and in particular the Iron and Steel Confederation of British Industry, which is the trade union side, so that a united endeavour can be made to see that British Steel is not finished off?

§ Viscount Trenchard
My Lords, all I will say is that the very unhappy position of British Steel when Mr. MacGregor took over, when it was literally bleeding to death through a major artery which no Government could have sustained, has now been 881 sustained, albeit there have been decisions which I know Mr. MacGregor has found disagreeable to take to ensure that the corporation becomes more competitive and to bring forward the day at which real jobs can again be created.

§ Lord Sherfield
My Lords, would the noble Viscount agree that Mr. Ian MacGregor is doing an excellent job as chairman of the British Steel Corporation, and so far at least has earned every penny of the emoluments that he has received?

§ Viscount Trenchard
I entirely agree with the noble Lord's sentiment.

§ Lord Kennet
My Lords, will the Government nonetheless bear in mind that there are still many people who are willing to do their best for a flat rate?

Lord Bruce of Donington
My Lords, is the noble Viscount aware that I still stand by the remarks that he was kind enough to quote from the debate in which I participated in May 1980? Is he also aware that, at the time that that appointment was made, it was not envisaged that there would be the mass redundancies on the scale already referred to by my noble friend Lord Molloy? Is he also aware that one of the performance statistics that will presently be revealed is that there are 38,000 more redundancies yet to be expected?

§ Viscount Trenchard
My Lords, I will certainly accept what the noble Lord says, that neither he nor I on 14th May 1980 were looking at market estimates for steel which were anything like as depressed as the eventuality has in fact produced, so that the task that Mr. MacGregor has had to face was even more formidable than anybody in this House at that time realised. It is a remarkable performance, in view of that, that progress is already evident and that more will be evident.

§ Baroness Gaitskell
My Lords, does the Minister recall that the moment that Mr. Ian MacGregor stepped into this country 20,000 men lost their jobs in the steel industry?

§ Viscount Trenchard
My Lords, I do not know what the noble Baroness would have wished Mr. MacGregor to do with losses of £1.3 million a day. I believe that without the appointment of a man of his calibre and character, and without the determined progress that lie is now achieving with a united team at British Steel, the ultimate redundancies in British Steel would have had to be much greater. As I say again, I believe the day on which real progress can once more start has been brought immeasurably nearer by Mr. MacGregor and his team.

§ Lord Underhill
My Lords, would not the Minister agree that it is fairly simple to close down works and leave towns like Corby and Consett completely derelict, but more important is that there should be measures to provide work in those areas, and apparently that that must be done by some form of public enterprise?

§ Viscount Trenchard
My Lords, I think that many steps have been taken in those areas in very difficult circumstances, but Mr. MacGregor himself has started surveys of every form of additional market that British Steel might be able to meet. Those of us who mentioned at the time of his appointment that he was essentially a builder and a constructive man have had our thoughts also well borne out; but we have to get to the end of an appalling recession in steel and to get the corporation competitive before that forward progress can really show.