HL Deb 06 July 1988 vol 499 cc254-69

3.4 p.m.

Report received.

Clause 1 [Vesting of property etc.of British Steel Corporation in a successor company]:

The Earl of Perth moved Amendment No.1:

Page 1, line 14, at end insert — ("( ) The successor company shall not dispose of any property or plant whether by sale or long lease in Scotland without giving the Secretary of State for Scotland opportunity to comment.").

The noble Earl said: My Lords, I beg to move the amendment standing in my name. Perhaps 1 may first recall the amendment which I moved at the Committee stage. In that debate I asked that any sale of anything by the British Steel Corporation out of Scotland should first be referred to the Secretary of State for Scotland for his approval. During the debate various noble Lords suggested that I had gone too far in asking for such a commitment. On the other hand, many of your Lordships recognised that there was a very grave problem here for Scotland because, after all, steel is a basic industry and is fundamental to its wellbeing.

Noble Lords further accepted that profit should not be the sole criterion in a case such as that. Your Lordships will recall that, despite our efforts to find common ground, we went to a Division. The Division was close but we lost. It therefore occurred to me that we ought to try to find something which was not quite so restrictive. That is what this amendment does. It asks that there should be no disposition of plant, machinery or property in Scotland without discussion with the Secretary of State for Scotland.

I and the other noble Lords who have subscribed to this amendment feel that this is something which it is proper to ask. While it does not give the Government any power of veto over the sale, it gives them a chance to make comments, in a manner that does not in any way upset the private activities of the British Steel Corporation. It does not take away from the corporation's powers but it ensures that it will talk to the Secretary of State for Scotland before it acts.

There is a further point that I want to develop and I think it is of almost equal importance. Noble Lords may recall that in the previous debate it was mentioned that the Secretary of State for Scotland, on the very day when we were having our debate on the amendment, had sent me a letter. I had not received it by the time the debate took place. I do not wish to go into that happening at the moment. I wish to quote from the letter because it is public knowledge; it was placed—and I fully agree now that this should have been done— in the Library.

In that letter, dated 20th June, the Secretary of State said to me: the Corporation"— that is, the British Steel Corporation— has also indicated that, even if it should wish at some stage, because of market conditions, to close its steel making facilities at Ravenscraig, it would consider, on a commercial basis, any wholly private sector offer for those facilities as an alternative to closure". That is of tremendous importance. If it could in some way be substantiated—that is the wrong word—or inserted, for example, in the prospectus, I for one should feel very much happier about how things stand. That would dispel my great fears—which I know are shared by many of your Lordships—that otherwise something like what happened in the case of the British Sugar Corporation and the closure of Cupar might take place. Noble Lords will recall that the British Sugar Corporation closed Cupar and blocked the possibility of the Scottish farmer ever growing sugar beet again. That was to the advantage of the British farmer, but it really was not good enough. The profit motive was the only factor involved and we had no chance to arrange for a sale elsewhere.

The point made in the letter is a very valuable one. I very much hope that something of its essence can be incorporated in the prospectus. People may say that the British Steel Corporation, after all, has already made all these statements. They may wonder why we are asking for anything else. But, clearly, the answer is very simple.Whatever statements the corporation may have made, and whatever its real intentions at present may be, it cannot bind its successor. But if something is put in a prospectus, the situation is different.

I move the amendment standing in my name and those of the other noble Lords whose names are down to it on the Marshalled List. But at the same time I ask the Government whether they will incorporate the sentence which I quoted from the letter of the Secretary of State of 20th June in any prospectus for the new corporation. I beg to move.

Lord Grimond

My Lords, I support the noble Earl, Lord Perth. I do not intend to repeat the positive arguments for the amendment which he outlined in Committee, and which he has deployed today in support of a rather different amendment. However, I think it aims to achieve much the same result.

The only points I wish to make are that I very much agree with the noble Earl as regards the letter of the Secretary of State, which I think is of great importance. But the noble Earl rightly points out that whatever the Secretary of State may write in a letter it is not the same as having it written into a Bill or Act. Therefore, to my mind, although the letter of the Secretary of State is welcome, it does not remove the necessity for the amendment.

I point out to noble Lords that the amendment is exceptionally mild. It does not threaten the Government or the British Steel Corporation in any way. It merely states that the Secretary of State for Scotland should be given an "opportunity to comment". That cannot be said to be a wrecking amendment, or even a revolutionary amendment. But I think that it is a reasonable suggestion as regards a matter that, were it to happen, would be of vital importance to Scotland.

I shall try to answer the main objection which, as I understood it, was made to the rather more drastic proposal of the noble Earl in Committee; namely, that if any such provision as this was written into the Bill, it would deter people who may be inclined to put in an offer for the British Steel Corporation when it is privatised. I do not think that that argument can be sustained. In several Bills concerned with privatisation there have been provisions for a "golden share." That clearly gives the Government power to intervene, if necessary, in the national interest. That has not prevented privatisation going forward. It has not deterred people who thought they could make a profit from coming forward and making a bid.

Further, I understand that several countries have provisions by which the assets of their companies cannot be disposed of simply at the whim of a foreign take-over. I think that at this moment there is a prospect of a Finnish company coming to the Stock Exchange and making an issue in this country in which, either through its articles of association or through Finnish law, it is laid down that 50 million shares will be held in Finland. I understand that no one feels that that is a complete bar to a successful issue in this country. There are other companies which, either through their articles of association or through the law of their domicile, have restrictions of some kind.

Finally, I point out that should there be any question of the sale or long lease of property or plant in Scotland, it is almost bound to involve the Government. At this very moment the Government—although no doubt they hope to keep out of the matter—are in fact becoming involved in the controversy between British Coal and the South of Scotland Electricity Board. Therefore they would be bound to become involved in such an issue. It seems to me much better that notice should be given so that the whole matter is not left to the last moment, so that it can be properly discussed and various alternatives suggested, or, if it becomes necessary to close down a plant with subsequent absolute loss of employment in a certain area, steps can be taken to lessen the blow.

I finish by pointing out that this does not prevent either the steel company from ceasing to manufacture or ultimately from disposing of its property. The amendment by itself only states that before that happens the Secretary of State for Scotland shall be given an "opportunity to comment". Surely, that is reasonable.

3.15 p.m.

Lord Stodart of Leaston

My Lords, I read the amendment on the Marshalled List with some interest. My immediate reaction on reading it was to ask myself whether it in any way was comparable with what took place with regard to the closing of the British Sugar Corporation factory at Cupar. I was immensely interested to discover that the noble Earl, Lord Perth, was so far obviously on the same wavelength on this subject as myself.

I was a Minister at the sponsoring department of the British Sugar Corporation in those days—the Ministry of Agriculture. I remember the chairman of the British Sugar Corporation, Sir Gerald Thorley, saying that he wished to close down, for economic reasons, the sugar factory at Cupar in Fife. As the noble Earl has said, it thereby became no longer possible for farmers in Scotland to grow sugar beet.

In passing, I should say that I think that one would find hardly a farmer within the orbit of that sugar factory at Cupar who would not say what a blessing it was that it was closed. The farmers would also say that it has enabled them to grow far more profitable crops than uneconomical sugar beet, such as vegetables for human consumption. But that is by the way.

But if anyone imagined that the intended closure of the sugar beet factory at Cupar would go unnoticed by the Scottish Office, he can quickly disabuse himself. The red telephones started ringing at frequent intervals and the Scottish Office was understandably extremely concerned about the matter. That is why, although I totally accept the description of the noble Lord, Lord Grimond, of the amendment—that it is extremely moderate—I say to him with the greatest respect that it is unnecessarily moderate. I cannot conceive with the little experience that I have had, and which I have described to your Lordships, that such an amendment is necessary at all.

Lord Morton of Shuna

My Lords, I do not have the recollection or the detailed knowledge of farming of the noble Lord, Lord Stodart of Leaston, to enable me to talk about the sugar factory at Cupar. But I know of a more recent closure of a factory where the Government had invested a vast amount of money and where the Secretary of State was suddenly taken by surprise at the decision to close it. That was the Caterpillar company where, much to the annoyance of the Secretary of State, a closure decision was implemented. Perhaps it is that kind of situation that we wish to prevent happening in this case.

Certainly the British Steel Corporation has received a certain amount of public money in the past and there is a need to take the social consequences into account, as the Secretary of State tried to do in the case of the Caterpillar company. However, he could do nothing to prevent that closure as he had not been informed of it before the decision was taken. I support the amendment.

Lord Trafford

My Lords, I spoke at Committee stage on this matter and I shall not repeat my comments. However, there are several points which are worth making on the new amendment. I agree that it is very moderate—so moderate as to be almost unnecessary. It is practically inconceivable to me that such a major change could take place in Scottish industry without the Secretary of State for Scotland either being aware of or being forced to comment—most probably over and over again—on the matter.

I shall not repeat previous arguments which have been put forward about the problems of the sale of British Steel with its ankles shackled and so on. That does not arise with this amendment. However, I wish to raise two points. First, when the noble Earl, Lord Perth, introduced the amendment he commented on the fact that the Secretary of State would have to have the opportunity to make remarks about the sale of property, plant or machinery. That seems to me to be an extensive range of affairs for a Secretary of State to comment on. Apparently even bits of machinery could not be sold without the Secretary of State becoming involved in some way. I am also unsure about what the term "long lease" means in the amendment. That is an arguable proposition.

I accept that those are relatively minor technical points dealing with the wording of the amendment. I do not wish to debate the question of what they mean. However, I wish to pick up a point which was raised by the noble Lord, Lord Grimond, when he referred to previous privatisations and the so-called golden share. To me that seems to be a different kettle of fish to what has been proposed in previous amendments or in some respects what is proposed in this amendment. The fact that there are major or large shareholders is a different matter from that of attempting to tie into an Act of Parliament specific prohibitions on a company. It is for those reasons that I have made my comments today.

Baroness Elliot of Harwood

My Lords, I support the amendment moved by the noble Earl, Lord Perth. It would mean that the authority which we wish the Secretary of State for Scotland to have would be mentioned on the face of the Bill. If that were not the case, the company might by subjected to the kind of takeovers which go on all the time these days, which I find difficult to follow and often disagreeable. The amendment simply states that the Secretary of State shall have the final word in such matters. The amendment should be supported wholeheartedly.

Lord Taylor of Gryfe

My Lords, the question of the golden share has been introduced in our debate. It would give veto powers to the Government as holders of the share. That is not implied in the amendment which is now before us. The amendment suggests that the Secretary of State should be made aware of any drastic or fundamental changes in the private company and given the opportunity to comment on them. Members of your Lordships' House may feel that he will have the opportunity to comment in any case. If that is so, why should not we write it into the Bill? The noble Lord, Lord Morton of Shuna, has described instances where decisions affecting the Scottish economy were made in Detroit or elsewhere and in which the Secretary of State for Scotland had a substantial financial interest but was not invited to comment. A case in point is that of the Caterpillar factory.

Overshadowing our discussion on the amendment is the Ravenscraig question and the future of the Scottish steel industry. Perhaps I may say to the Government that Ravenscraig has attained a symbolic importance in Scotland. It represents one of the monuments of Scottish industry. The fact that the fate of that important and basic industry could be decided without comment from the Secretary of State for Scotland is unacceptable in Scotland. In the last few years the Government have attempted to better their miserable electoral performance in Scotland. Rejecting this amendment will do nothing to help that cause.

It was said earlier in your Lordships' House that if the provision was written into the Bill, and subsequently into the prospectus which will be isssued to attract investment to the privatised company, it will inhibit private investment in the industry. However, in the privatisations of both British Telecom and British Gas it was stated in the prospectuses that if there was a change of government, the Labour Party was committed to the rcnationalisation of the industry. That is a fairly drastic comment to make in a prospectus for an industry which is about to be privatised. It is much more drastic than the moderate amendment of the noble Earl, Lord Perth, which simply says that the Secretary of State for Scotland will be invited to comment on any fundamental change in the Scottish ecomomy which involves the steel industry. I therefore suggest that the amendment would do no harm and, if I may help the Government in this matter, there might be a great advantage to them in terms of their political fortunes in Scotland in accepting the amendment.

Lord Gray of Contin

My Lords, I have listened with great care to the noble Lord, Lord Taylor of Gryfe.I suggest that, whatever the failings of the Conservative Party in Scotland, it does not need guidance from his party as to how to put things right.I was particularly interested in the point he made about previous nationalisations.He may well be right.However, he is vastly experienced in the world of finance.Over the years I have no doubt that he has given valuable advice to many companies.Wearing that other hat, I wonder what his advice to a company that was interested in purchasing British Steel would be in terms of having to contend with the stipulation which the noble Earl, Lord Perth, seeks to include in the legislation.I venture to suggest that he would tell his client to go very cannily and he would be right to do so.

The main point at issue is the principle of privatisation.Those who have spoken against the amendment are opposed to that principle, whether it be the privatisation of steel or of any other industry.The noble Earl, Lord Perth, who in Scottish terms is a bonnie fighter, was bound to return at Report stage with an amendment slightly diluted from that which he had proposed at the Committee stage.I suggest that the arguments which he puts forward are very similar to those which he put forward earlier when his amendment was worded rather more strongly.

We should pay great attention to the excellent contribution made by my noble friend Lord Stodart of Leaston, who has a wealth of experience in the farming industry. He highlighted just how ridiculous it would be to make any comparison between what the noble Earl, Lord Perth.seeks to do now and the question of farmers growing sugar-beet in Scotland.I thought that that point was made most effectively.

For my part I see no point in accepting the amendment. It will unquestionably weaken the legislation.It will prejudice the ultimate success of the company. Therefore, I hope that my noble friend will resist the amendment.

3.30 p.m.

Baroness Strange

My Lords, I rise to support my noble kinsman and clan chief the noble Earl, Lord Perth. It seems to me that it would be a very small concession from Her Majesty's Government for the Secretary of State to be allowed to comment on any future sale of property or other assets by British Steel. This is a free country and we are all entitled to free speech. Surely the Secretary of State for Scotland should also be entitled to free speech.

I believe that this is not a wrecking amendment, but indeed a very helpful one. I hope that Her Majesty's Government will see it in that light.

Baroness Carnegy of Lour

My Lords, I do not believe that the Secretary of State for Scotland requires any prompting from this House or by the Bill to take the opportunity to comment on any question of the closure of Ravenscraig or the sale of any piece of machinery owned by British Steel in Scotland. It is rather strange that many noble Lords have spoken this afternoon in a rather negative and frightened way about the future. I am not sure whether or not it is appropriate to mention that British Steel has announced its profits today. It has doubled its profits and is now the most profitable steel industry in Europe. It seems to me that we should be talking positively about the contribution of we Scots to the manufacture of steel in Europe and in the world.

The amendment would write into the Bill that our Secretary of State alone—not any other Secretary of State; not the Secretary of State for Wales, for Trade and Industry or for Employment—should be allowed to comment.He may say that he does not want something to be so. But that is all that he would be able to do— to comment. It seems to me a somewhat trivial amendment; but it was moved, I know, with no trivial purpose at all. Nor was the previous amendment moved with any trivial purpose. The intention is to speak up for Scotland in your Lordships' House and in the country. I wish to be second to none in fulfilling that aim. However, I do not want to act in a negative way. We should all be proud of what the steel industry has achieved today and want to see Scotland playing its major part in the future.

The Earl of Selkirk

My Lords, this is an immensely crucial point in the history of Scotland. It was about 120 years ago that steel became the central feature of the industrial development which has taken place. Now that local supplies have disappeared raw materials will come from abroad. That is a very big change, the extent of which I do not think can readily be foreseen.

Perhaps I may remind the House that there was a time when Coatbridge was the vulcan of Great Britain. It was an extremely unpleasant experience; the sun was never seen at all. Equally, nearly half the boats in the world were built on the Clyde. That was an immensely formidable element in the country.

Why is that important? The first reason is that changes of ownership cannot take place secretly without anyone knowing. I do not know whether it is an absurd story, but certainly it was gossip when I was at the United Nations. It was said that the site and the building of the United Nations was all settled in a night club in Philadelphia. That kind of thing can happen. There is nothing in company law to stop it if that is what is wanted. What we are saying is that it must be known.

Why is it important that it should be known? Perhaps I may put it in this language. There are two approaches to industry in Scotland. One is the pure economic approach: success at any price. The other is the recognition that all industry has a social basis and that if it does not have a social basis it will not succeed economically. That is a distinction which divides the country and has done so for many years. I think both are wrong. No industry can succeed purely on economic grounds or purely on social grounds. There should be a combination of the two. That is what we have tried to achieve in the country in a great variety of ways. It is of the utmost importance.

That, as I understand, is the motive of my noble friend Lord Perth in putting forward this amendment. He is saying that anything which fundamentally affects steel is of immense social importance to the country. That is the implication of the amendment. It does not matter how it works; that is what it means. It is a warning that the social implications of any change in the steel industry will be of great moment to the whole country.

That is why I think that it is worthwhile to make a comparison with the golden share. It is perhaps a rather distant comparison but it has the same implications. The disposal of property is something that cannot be allowed to slip past without the officer in charge, the Secretary of State, recognising all its implications for employment and labour. One may say that he will know about it. I have given one example to show that he might not know; it might be sprung on him. The amendment represents a small step. I believe that it is worth the Government's while to recognise that it is one which should not be overlooked.

Lord Hughes

My Lords, I should also like to support the amendment and to comment briefly on some of what has been said by its opponents. For instance, the noble Baroness, Lady Carnegy of Lour, referred to the profits announced by British Steel today of some £400 million. Although a substantial part of that follows government example in the disposal of profitable assets it remains a very substantial increase in the normal profits of the enterprise.

The noble Baroness went on to say that Scotland would wish to play a part in the continuing prosperity of the steel industry. It has been made abundantly clear that the interest of those of us who support the amendment is in the future of Ravenscraig. If Ravenscraig is disposed of, Scotland will have no opportunity to play any part in the steel industry, because the last of it will have gone. It may be that at the end of the day that will happen. But, as the noble Earl, Lord Selkirk, has said, it ought not to happen secretly.

The noble Lord, Lord Gray, has rather changed his statements on this matter. On the last occasion he argued against the previous amendment because of the possibility that the next Labour Government would have Mr.Benn as its Prime Minister. That possibility did not seem to raise many hackles on either side of the House.

The noble Lord, Lord Marsh, in a thundering speech against the amendment, said that if the previous amendment of the noble Earl had been carried one could not give away British Steel to private interests. That would seem to indicate that in his view the part that Ravenscraig is playing and would play in the enterprise was such a major part that its possible retention would kill the chance of privatisation. I think that the results indicated today of a profit of £400 million would certainly make that extremely unlikely.

I served for a spell of some seven years as a Minister in the Scottish Office. The then Secretary of State, the late Lord Ross of Marnock, gave me a very free hand in deciding what I should do with amendments because I had very little Back Bench support in this House and almost had to attempt to achieve some kind of Scottish coalition to get legislation through the House. One thing I never accepted was to put forward the argument which so frequently appeared in the brief prepared by the civil servants: "This amendment should be resisted because it is unnecessary. The Secretary of State would do this in any event". I used to argue that if the Secretary of State was willing to do it or would do it that was the best possible reason for accepting the amendment.

In those days amendments along these lines came from this side of the House, which was occupied by the people who at the present time sit on that other side of the House. I hope therefore that if the Minister is not to accept this amendment, he will find a better reason than to say that it is unnecessary because the Secretary of State would do it in any case.

Lord Carmichael of Kelvingrove

My Lords, in the short time that we have been debating this amendment perhaps more Scots have been brought into the discussion than have spoken in any other debate that I have known in this House. As has been said by a number of speakers, the reason is that in Scotland this is an emotive subject. There is much reason for it to be so. The industrial revolution in Scotland was built largely on steel. That steel should be seen as important is extremely pertinent to the psyche of Scotland. While we do not believe that therefore we should have steel for ever, there is a feeling of betrayal when such an important industry is suddenly whipped away without any thought or representations being heard from the body of people who are in charge of the political machinery in Scotland.

It is interesting that, as I reckon it, 12 people from Scotland, including myself, have already spoken on this Bill, and one noble Lord from Wales has also contributed to the discussion. The proportions are something like eight to four. Almost as many people spoke in favour of this amendment as the Government have Members from Scotland in the other House.

This is an extremely modest amendment but that does not mean that it is not important to Scotland. None of us doubts that the Secretary of State will know what is happening; it is unlikely that such an organisation would suddenly close down without his knowledge, although my noble friend Lord Morton of Shuna raised the question of Caterpillar. More than one government were rather let down by what happened at Linwood. The various groups who came into Linwood did not co-operate as well perhaps as they should have done, even in terms of giving information to the Government. Singer in Clydebank came as a fairly sudden surprise. After having been in Scotland from, I think, 1890, the company suddenly decided to pull out. The decision that it would no longer stay in Scotland was made in somewhere like Milwaukee.

There is a feeling that the fate of many important industries is decided without any reference to the social background and the circumstances in which they were built. I believe that it was the noble Earl, Lord Selkirk, who said that economic and social forces must go together and that the one is dependent upon the other. To run something purely on a profit-and-loss account basis for any length of time with a sustained effort can lead to great difficulties. It is quite true that some of the most successful companies in Britain over the past 100 years have been those that paid particular attention to the community in which they operated and to the welfare and betterment of their employees. With the more enlightened companies perhaps that era is returning.

It has been repeatedly said that this is not anything like as draconian an amendment as the one moved earlier by the noble Earl, Lord Perth, which was only lost by 11 votes. I think that it was suggested during the debate that the amendment gives the Secretary of State the right to interfere even if small pieces of machinery were to be sold. The noble Earl, Lord Perth, made quite clear in his earlier speech that he was speaking about fairly large sums of at least £100, 000. We are all intelligent people; we do not expect the Secretary of State to be bothered with the sale of the occasional winch or narrow-gauge locomotive. We are talking about fairly big money and fairly big decisions. They are decisions in which the Secretary of State should he involved because they will affect the fabric of the country.

If, after having discussed the matter, the Secretary of State feels that there is nothing that he can do—which may very well be the case, because if a decision has been firmly made he may not be able to advance any arguments to persuade the people who are running the operation in a purely commercial way to act otherwise—nevertheless some time will have been gained.Surely the Secretary of State will always be able to influence matters—for instance, the run-down towards closure—so that some amelioration can take place or use his offices to find other outlets for the work.

What has come through the whole of this debate—and I am sure that noble Lords from parts of the country other than Scotland must be aware of it—is that a great deal of heat has been generated on this subject in Scotland. That is for very important, historic and indeed punishing reasons. I have a great respect for the noble Lord, Lord Gray of Contin, who comes from the north, but I only wish that he had as much feeling for the lowlands of Scotland as the lowlanders have for the highlands of Scotland, because this is an emotional subject. That is why we should feel a great deal better, as I am sure would the people of Scotland, if this mild but rather important amendment were included on the face of the Bill. I certainly give all my support to the noble Earl, Lord Perth.

3.45 p.m.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

My Lords, before turning to the subject of this debate, I should like to apologise to the noble Earl, Lord Perth, for making public reference during the Committee stage debate to the Secretary of State's letter to him on this matter before he had received it. I shall not go into the reasons, but I can assure him that this will not be a precedent either for my department or for the Government. I apologise to him unreservedly.

Much concern has been expressed during this debate about the future of the corporation's Scottish facilities after privatisation. I understand that Ravenscraig and the other associated Scottish steel plants hold an important place in Scotland, as indeed the noble Lord, Lord Carmichael has said. The corporation, which is a responsible employer, recognises the place which Ravenscraig holds in the community. The corporation has also placed clearly on the record the important place which Ravenscraig holds in its business. The chairman of the corporation issued a major statement on 3rd December last year in respect of British Steel's five integrated plants. Noble Lords will be familiar with its content but I shall repeat it because it is an important statement and this is an important debate.The chairman said that: subject to market conditions, the corporation expected that there will continue to be a commercial requirement for steelmaking and continuous casting at the corporation's 5 integrated plants for at least the next 7 years". Such a statement would have been inconceivable just a few years ago. The corporation's present confidence is the product of a sustained effort by its management and workforce to turn the business into a viable, competitive enterprise. The results of that effort are apparent in the corporation's latest annual results that have been announced this morning. The corporation has made a net profit of £410 million in its last financial year. Its turnover has risen to more than £4 billion.

I have to say to the noble Lord, Lord Taylor of Gryfe, when he talks about miserable performances that he might like to have a look at the miserable performance of a loss of £117 million in 1976–77, a loss of £513 million in 1977–78 and a loss of £357 million in 1978–79.

Lord Taylor of Gryfe

My Lords, I am sorry to interrupt the Minister but I can recall no reference to "miserable performances" in anything that I said. Perhaps I may just say to him, while he is committing the corporation to seven years of Ravenscraig, that that commitment does not necessarily fall on the new company which is being formed.

Lord Sanderson of Bowden

My Lords, the British Steel Corporation and its chairman issued a statement on 3rd December as I have stated. I believe that the British Steel Corporation chairman and his board are people of honour and of their word. I accept of course what the noble Lord said about miserable performances. He was talking about the political miserable performances of some political parties in Scotland. I am referring to the result of the Conservative Government's efforts to turn the British Steel Corporation round into a profitable company which these results truly demonstrate. I warmly congratulate the corporation's management and workforce on that excellent achievement.

Ravenscraig has played a full part in those results. It has made a full contribution to the corporation's success. I find it curious that against that background—strong profits, healthy demand and assurances about the future from the corporation—noble Lords should choose to cast doubts on the future of Ravenscraig.

Lord Morton of Shuna

My Lords, does that mean that the Government and the British Steel Corporation are withdrawing their threat that the hot strip mill at Ravenscraig is guaranteed only until next year?

Lord Sanderson of Bowden

My Lords, the noble Lord, Lord Morton of Shuna, asked a question about the hot strip mill at the Committee stage. I repeat the assurance that the British Steel Corporation gave: namely, that until next year, 1989, there will be a continuance of the hot strip mill at Ravenscraig. The noble Lord knows that as well as I do.

I have to say that highlighting Ravenscraig in this way does it a positive disservice. It implies that the plant is unable to stand on it own feet; that it needs special treatment. That approach would be a great mistake. If there had been special treatment for privileged parts of the corporation during the last few years, it would never have emerged from the perilous situation it was in at the start of this decade. The only criterion that an industrial business can have for the continued operation of a plant is that that plant remains competitive and makes a positive contribution to the organisation as a whole. That has been the position of Ravenscraig during the past financial year and the corporation expects, subject to market conditions, that that will remain the position for at least seven years from December 1987. I do not think we can ask for more than that.

This amendment has been presented to the House as a moderate proposal which asks very little of the Government. At first sight it may seem innocuous enough. But when I listened to the arguments put forward in its support it became clear to me that the real aim of those who support the amendment is to provide some form of special protection for Ravenscraig by imposing a measure of political involvement in its future.

The aim of privatisation is to return British Steel to the private sector where it should operate on the same terms as other private companies. If another private sector company wished to dispose of property in Scotland it would not have to refer its plans to the Secretary of State for Scotland for comment before going ahead. Why should British Steel be subject to different treatment? There are many other firms with an important presence in Scotland. We do not accept that singling out Ravenscraig in this manner is conducive either to the future of Ravenscraig or to the Scottish economy as a whole. Furthermore, it is no use pretending that by restricting the Secretary of State's power of intervention to one of comment only, the amendment does not impose much of a restriction on the freedom of action of the successor company. In practice, it would be taking the issue out of the commercial domain and into the political one. British Steel has suffered too much from that approach since nationalisation in 1967.

What I find particularly disappointing is the belief, which clearly underpins this amendment, that it is within the power of governments to reverse unfavourable economic tends simply by telling companies what to do. The Government do not wish to act as the corporation's alternative management: far from it. The consequences of that approach would be calamitous. It is for the company to formulate and carry through plans according to the commercial situation in which it operates. At present the corporation judges that there is a continuing commercial requirement for steelmaking at all its five integrated sites. That is a commercial judgment and it is a much better indication of the future for Ravenscraig than it has been possible to make before.

British Steel has gone even further than that in an effort to reassure those who are concerned about Ravenscraig. As my noble friend the Secretary of State for Trade and Industry told your Lordships on 3rd December, the corporation has also indicated that even if it should wish at some stage because of market conditions to close its steelmaking facilities at Ravenscraig it would consider, on a commercial basis, any wholly private sector offer for those facilities as an alternative to closure.

I do fully understand the noble Earl's concern to safeguard the Scottish interest. The Scottish economy has faced major restructuring over the past decade and I recognise that this has in some respects necessarily been a very painful process. But Scotland is now increasingly sharing in the national prosperity brought about by this Government's economic policies. Today's results prove that. British Steel is playing its part, as today's excellent results amply demonstrate. A short time ago British Steel was a massive drain on the nation's resources, as I have indicated. Now it is a symbol of national regeneration. I believe that for the Government to attempt to influence the corporation's activities in Scotland would be wrong. I understand why some noble Lords wish to do so, but I believe that to be a misplaced concern. The future of Ravenscraig is now much brighter as part of a competitive, enterprising organisation than it was a while ago as part of a loss-making industry. I am confident that British Steel will do well in the private sector and that Ravenscraig has a key part to play in this. The noble Earl, Lord Perth, has made his point with great conviction, but I hope that he will understand that the amendment is not acceptable to the Government. Therefore I must ask the House to reject it.

Lord Hughes

My Lords, perhaps I may ask a question before the noble Lord resumes his seat. I popped up quickly so that I could ask my question while he was still on his feet. I did not want to interrupt him while he was making his statement because he had already been subjected to two interventions. However, twice during his remarks he emphasised the fact that the British Steel Corporation a year ago said that Ravenscraig would continue for seven years. Assuming—as I believe I am right in assuming—that the Government intend to privatise some time before that six years has elapsed, what effect would the remaining period mentioned in the British Steel Corporation's statement have on the successor company?

Lord Sanderson of Bowden

My Lords, as I understand it, I believe that the noble Lord, Lord Hughes, with leave of the House, is asking what guarantees there are that the privatised company will fulfil the obligations which are implicit in the statement of 3rd December 1987— not a year ago. When the prospectus for the new privatised company is produced—and this is on record—the statement which was made on 3rd December will be reflected in the prospectus.

The Earl of Perth

My Lords, first. I thank the noble Lord, Lord Sanderson, for his apology about what happened last time. I had had it already in writing from him and the Leader of the House had also written. I did not want to go any further except for one matter and that has now been met. I was most anxious that it should not be a precedent for the future. The Government have given that undertaking and so on that basis let us forget it and let me say "thank you".

I first wish to thank all those who have supported my amendment. I could not have done half as well myself or thought up so many excellent arguments as they have produced. It would be invidious to say which of the many points made was the most forceful; they all were.

I must comment on what the noble Lord, Lord Stodart, said, which was that farmers are so glad that they no longer have to grow sugar beet. That is not my experience and I must declare an interest for I used to grow sugar beet and many round me were of the same opinion. I do not know whether the noble Lord ever goes to Cupar these days but it is a sad sight. There is that great factory lying idle. To the noble Lord, Lord Gray, I would say that I am not against privatisation. I do not think he has any right to say that many of the other speakers are of that opinion.

I should like to suggest what might be a possible way of obtaining what we ask for in the amendment and perhaps even more. The noble Lord, Lord Sanderson, drew attention to the various statements and safeguards that have been made by the British Steel Corporation over the last several months and years. He referred in particular to the statement of the Secretary of State for Trade and Industry on 3rd December. It is a vital statement about the British Steel Corporation being ready to consider offers in the event of its having to close. I agree with many noble Lords that we should not he too pessimistic. Never mind, one must think of good times as well as bad.

What I have mind is this. Is it possible for the Secretary of State for Trade and Industry, with all his skills of advocacy, to talk with the chairman of the British Steel Corporation and find a form of words which will give effect in the prospectus to all the recent reassurances? That would include the fact that the Secretary of State for Scotland must know what is happening? If that can be done, as was hinted by the noble Lord, Lord Sanderson, in reply to the noble Lord, Lord Hughes; if it can be made clear that there will be no closure; if all the other good statements made by the British Steel Corporation can be included in the prospectus in an appropriate form of words, perhaps we shall obtain what we want.

If the noble Lord, Lord Sanderson, is able to help me in that respect I believe that we should consider whether that half a loaf, three-quarters of a loaf or perhaps a whole loaf may mean that we need not press for a Division.

Lord Sanderson of Bowden

My Lords, with the leave of the House, I should like to repeat what I said to the noble Lord, Lord Hughes. I can assure the House that the terms of the corporation's 3rd December statement with regard to its integrated plants will be reflected in the prospectus which will be issued at the time of privatisation. The undertaking given by the corporation to consider on a commercial basis any wholly private-sector offer for steel-making facilities at Ravenscraig as an alternative to closure is clearly on the record.

The noble Earl, Lord Perth, asked whether the Government will be ready to discuss with the chairman of the British Steel Corporation the inclusion of various parliamentary undertakings being in suitable terms incorporated in the prospectus. I can say that if the noble Earl is prepared to withdraw his amendment I shall be happy to give that undertaking to him on behalf of the Government.

Lord Grimond

My Lords, is it in order for me to ask the Minister a question?

Noble Lords


Lord Grimond

My Lords, as someone ignorant of the law I should like to ask the Minister whether he can assure the House that a requirement in a prospectus is binding in law on those who accept the prospectus and bid for the company.

Lord Sanderson of Bowden

My Lords, with the leave of the House, I need to take advice on that matter because there is a question as regards what is included in the prospectus. However, at this stage I am saying that the Government will discuss the issue of the various undertakings being incorporated in the prospectus in suitable terms. It is an offer to discuss, as the noble Earl, Lord Perth, wishes. I have given that undertaking.

Lord Hughes

My Lords, with the leave of the House, I should like to remind the Minister that, irrespective of how binding an undertaking may be, one can look hack to what Guinness undertook to do of its own volition and how speedily it abandoned that thereafter.

The Earl of Perth

My Lords, I believe that what the noble Lord, Lord Sanderson, has said, goes a long way. The question raised by the noble Lord, Lord Grimond, is one of law. I am quite clear that if one has an undertaking in the prospectus one will follow it through. I believe that we should be well advised to accept the offer of the Government, knowing the powerful advocacy of the Secretary of State and that he will act in the spirit of what we want and what appears here. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.