HL Deb 13 July 1988 vol 499 cc833-46

3.17 p.m.

Read a third time.

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

Lord Morton of Shuna moved the amendment: Page 1. line 19, at end insert— ("( ) The Articles of Association of the successor company shall reflect the responsibilities of the Corporation to the Scottish economy.").

The noble Lord said: My Lords, in moving this amendment in the names of the noble Earl, Lord Selkirk, the noble Lord, Lord Grimond, and the noble Earl. Lord Perth, I should point out that yesterday evening the noble Earl, Lord Perth, told me that he wished to remove his name from the amendment. For the sake of clarity, it would be better if we dealt with it on the basis that the name of the noble Earl. Lord Perth, was not on this amendment. The reason that he wished to take his name from the amendment was the undertaking that the noble Lord, Lord Sanderson of Bowden, gave on behalf of the Government at the Report stage. I quote from col. 268 of theOfficial Report on 6th July 1988. He stated: I can assure the House that the terms of the corporation's 3rd December statement with regard to its integrated plants will he reflected in the prospectus which will he issued at the time of privatization".

I have put my name to this amendment because I have considerable doubt as to the value of that undertaking. A statement in a prospectus does not hind the purchasers of the shares. In my view, and I may well be wrong, it has no force. As a Scotsman I look at the Guinness affair and am slightly cautious of undertakings given by purchases of shares in companies. This amendment seeks to put the matter into the articles of association. It reads: The Articles of Association of the successor company shall reflect the responsibilities of the Corporation to the Scottish economy".

If it is in the articles of association. in my view it has at least some force.

The undertaking that the noble Lord, Lord Sanderson of Bowden, gave relates only to the possible sale of Ravenscraig as an alternative to closure. In other words, that means that in 1994 they will consider the possibility of selling to some private company. But by that time the strip mill will have been closed for five years and Ravenscraig will only have been producing slab steel, would not be an integrated plant, would not be an attractive proposition for anyone and would be offered for sale as one plant just producing slab with no strip mill and with coke ovens that were totally worn out because of the lack of proper renewal at this stage.

The main problem, however, about the government assurances on the future of Ravenscraig and their constant effort to decry Scots of all parties who have been rather dubious about these assurances is the chairman of the British Steel Corporation, Sir Robert Scholey. We had very moving assurances from the noble Lord. Lord Sanderson, on 6th July when he said: Ravenscraig has played a full part in those results"—

that is, the profits of £410 million. 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".

I then made an intervention and the noble Lord continued: 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 its 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. 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 …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 I 987" .—[Official Report, 6/7/88: cols. 265–66.].

The difficulty is that at the time the noble Lord was saying that, on the same day Sir Robert Scholey was telling the world who were listening to BBC Radio that he, Sir Robert Scholey, had told the Government that there was a probability that strip steel production would cease at Ravenscraig next year. That raises in Scottish minds the question of who is misleading whom. If Sir Robert says that there is a probability that the strip mill will close next year, it is difficult to fit that with the optimistic words of the noble Lord, Lord Sanderson of Bowden. I am sure, as we all would be sure, that the noble Lord believed what he was saying to be the position, but apparently somebody had misled him.

Sir Robert went on on the same day to say that nothing is for ever. He said: "We can give the Craig (Ravenscraig) no more assurance than anybody else". These are not the words of somebody who believes in the future of Scottish steel production. Unfortunately yesterday in another place the Prime Minister appeared to come down on the side of Sir Robert Scholey. That is why we in Scotland are interested in the future of Ravenscraig and demand that there should be some protection for it. We have known over the last years that the previous Secretary of State for Scotland has fought a very successful battle to keep Ravenscraig going. It is unfortunate that the Government at this stage want to wash their hands of the matter.

The importance of steel in Scotland needs no explanation from me. It has all been said on many occasions before. North Sea oil and shipbuilding are major consumers of steel in Scotland and there are many other consumers. The pricing policy now being run by British Steel is that steel is priced with transport costs out of Glasgow for sales in Scotland. If Ravenscraig closes, as the British Steel Corporation appears to want, will the pricing be from South Wales? If so, would Yarrows be able to tender successfully for the building of three frigates? Would the rig-building yards in Scotland be able to build oil rigs successfully?

For some time we have had before us the Arthur Young management consultants' report suggesting a possible strategy of privatisation into two units: one consisting of Ravenscraig, Shotton and Dalzell. This has never been properly discussed. It has just been brushed aside by Sir Robert Scholey and the Government. Such an approach would give some competition which will be sadly lacking from the new company. Privatisation as one unit seems to be a minimalist, short-term approach, an approach that shows no willingness to take risks. It is based on the approach of a few plants with the capacity only to produce the minimum that is required in a depression and with the idea of buying in steel from outside this country in the event of any expansion time. Will that help our balance of payments'?

The noble Lord, Lord Young. the Secretary of State, at Second Reading said: public ownership inhibits the spirit of enterprise [and that as] a private sector company British Steel will be free to grow and prosper and to play its full part in contributing to the wealth of our nation.—[Official Report, 26/5/88; col. 1015.]

I suggest that it is clear that the present management has no intention of growing and prospering. It is intending to retrench and take no risks. It will not play its full part in establishing the wealth of the nation by adding 12,000 to the number of the unemployed in Scotland. It apparently will just add to the list of closures of profitable plants in Scotland which the Government have managed to achieve. I am thinking of places such as Invergordon, the paper mill at Fort William and the closure of other plants in West Lothian. This is all because of a very short-term approach to industry, one that we on this side wholly disapprove of.

The amendment I move is a minimum to take account of the responsibility to the Scottish economy. It is a necessary amendment and I beg to move.

The Earl of Perth

My Lords, I rise because there was some misunderstanding about the amendment. My name, as the noble Lord, Lord Morton, said, was on the amendment and I was not happy that that should be so for reasons I shall explain.

Before I do that I should like to say that I go a long way with the noble Lord, Lord Morton of Shuna, on the various points he has made about the importance of steel for Scotland and also about our worry over the statement made by Sir Robert Scholey when announcing the outcome of the steel corporation's profits for the year.

Many of us have fought on the last two or three occasions, at Committee stage, Report stage and now, to involve Scotland in the operations of the new We did that pretty well at Report stage. For that reason I believe that the somewhat anodine amendment now proposed is not as good as that which we achieved at Report stage. That is a matter of opinion but I cannot support the amendment that is tabled today.

I recognise that it puts Scotland, as a name, into the Bill and that has its value. On the other hand, we received a firm undertaking from the Government at Report stage that they would do their best to ensure that the undertakings that had been given in regard to Scotland would be included in the prospectus. Even more important was the undertaking that in the event of there being a proposal by British Steel to sell the Ravenscraig complex—and I include the Hunterston section and stress that this is of great importance from my point of view—and the sale was on a commercial basis, British Steel would consider an offer from the private sector. That is of immense value. If such circumstances arose we may well have the two units for steel which the noble Lord, Lord Morton, suggested may be a good thing.

It is a question of judgment. Does one think that the Secretary of State—whom the House has just heard speaking about what he has succeeded in doing in relation to the Rover Group—with his skill in negotiations, will not be able to persuade the chairman of British Steel to include the undertakings in any prospectus? I believe that, on balance, it is right to opt for that undertaking and not for the amendment, which in a sense will supersede it. I hope that I have explained to the House why I believe that the earlier undertaking by the Government makes the amendment unnecessary.

3.30 p.m.

Lord Ezra

My Lords, in moving his important amendment, the noble Lord, Lord Morton of Shuna, has made two major points. First, he has raised the proper question of the importance of Ravenscraig to the Scottish economy. Its importance to the Scottish economy is one matter: its importance as part of the total of the British steel industry may be another. The two must he weighed up, and whether that has been done sufficiently so far is not clear. The second important issue he raised is whether the Government's proposal to privatise the steel industry as a whole is the best proposal in the interests of the nation.

Privatisation has long been propagated as a means of stimulating competition. If we are now to have a total British steel industry privatisation, following on a total British Telecom privatisation and a total British Gas privatisation, where is the competition within Britain? I believe that we should look at the issue again. In view of the enormous local importance of the location of particular steel plants, I believe that there is a strong case for considering whether the form of privatisation should be reconsidered. That is in the interests of localities and of stimulating competition. I believe that what was said by the noble Lord, Lord Morton, in support of his amendment was very important.

Lord Williams of Elvel

My Lords, I should like to support my noble friend's amendment. We have had a number of discussions on this and related issues at Second Reading, in Committee and on Report. The noble Earl, Lord Perth, says that he believes that he did pretty well on Report in obtaining certain assurances from the noble Lord, Lord Sanderson. In all kindness I must say to him, "Put not your faith in princes; your assurances are not worth very much".

I have no doubt that the noble Lord, Lord Sanderson, will include certain assurances in the prospectus. However, the fact that they are to be included will not bind any successor company for more than a certain period. A prospectus can look forward only for a certain period of time during the period of the offering. If and when the company is taken over, or if a shareholding of a controlling nature is established, those assurances are no longer binding and can be reneged upon at any moment.

What assurances do we have that a takeover will not occur? At Report stage we had an exchange between the Secretary of' State and myself about the articles of association to which the amendment refers. Having read the Official Report I conclude again, and it is confirmed, that at any time after privatisation the Secretary of State can walk along to the board of directors of the company and say, "We think that the special share should be redeemed. Do you think so?". That special share can then be redeemed; therefore, the day after privatisation British Steel plc can be taken over. There is no doubt whatever about that according to what the Secretary of State said and what, in spite of our efforts, is stated in the articles of association.

Even if one says that that is an unlikely event, that the Government are a government of good faith and intend to hold the share for five years so there will not be the kind of takeover or controlling shareholding that I have described, what do the assurances mean? Ravenscraig will be kept going subject to market conditions. One can say the same about Llanwern or Port Talbot; they will be kept going subject to market conditions. However, I must say to the noble Lord, as he must say to me, that if it is a question of shutting down Port Talbot or Llanwern he would have the Welsh upon his back, not only the Scottish. I am sure that he does not wish for that.

The assurances are feeble; they carry no convincing weight. The articles of association do not prevent an immediate takeover. The special share is turning out to be a sham. The only point on which we advanced at Report stage was mentioned by the noble Earl, Lord Perth. It is that if Ravenscraig is to be disposed of British Steel plc will accept a commercial offer from a company or, as I believe the expression to be, "a wholly private sector".

That means to say that presumably all foreign companies in which there may be a state shareholding are excluded. The major steel corporations in the United States and Europe have large state shareholdings, so one can assume that European steel companies are excluded. Who can imagine that a United States steel company will make a bid for Ravenscraig at the point at which British Steel plc has decided that it is no longer economic? I find that idea to be fanciful to the point of being ludicrous.

My noble friend has moved that the articles of association contain what I regard as a mild phrase about the responsibilities of the successor company towards the Scottish economy. If there is one point upon which the noble Lord, Lord Sanderson, and I agree it is that Ravenscraig should not he singled out. I should like to see included in the articles of association a provision along the lines suggested by the noble Earl, Lord Selkirk, in his intervention on Report, that the new company which is being launched forth into the world will try to steer the middle way between social responsibility on the one hand and entrepreneurial activity on the other. I should like to see something in the articles of association which would reflect the view of' the noble Earl, Lord Selkirk, on Report, and that would include South Wales and Scotland.

I should like the noble Lord, Lord Sanderson, to think very hard about my noble friend's amendment. I cannot accept the reasoning of the noble Earl, Lord Perth, that he is and we should be satisfied with what we have on Report. I do not accept that. I know that he understands that there is a difference of opinion and he understands my opinion as I understand his. I strongly urge your Lordships to support my noble friend's amendment.

3.45 p.m.

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

My Lords, in the course of the passage of this Bill through your Lordships' House, there have been three major debates wholly or partly concerning the future of Ravenscraig, and we are now engaged in a fourth. I understand your Lordships' concern despite the strong recent record of success of the British Steel Corporation which was highlighted particularly on Report when I gave some figures for losses in the 1970s.

This amendment is not acceptable to the Government. To start with the practicalities, I have no idea how one would define in terms that would be acceptable for articles of association, the responsibilities of the Corporation to the Scottish economy". What is in the best long-term interests of the Scottish economy is a matter of judgment and debate and certainly on this side of the House we would not lay claim to be industrial planners. We do not seek to dictate to companies what they should do. The Government's policy is to create a climate in which companies can prosper, and the success of that policy is plain for all to see. There is evidence of this in Scotland this week. Yarrow's orders for frigates, thanks to a good product competitively priced, is a clear example of that. Perhaps I may also add that there are good results from the Howden Group which have appeared in today's papers which also hears witness to that. There are record profits in Glasgow.

Furthermore, we would not accept that the corporation has special responsibilities to Scotland any more than it does to England or Wales, and here the noble Lord, Lord Williams, and I agree. The corporation's responsibility has to be towards its business as a whole. I might also add that the directors of the successor company will have a legal duty to act in the interests of the company and its employees as laid down in Section 309(1) of the 1985 Companies Act. There could be no place in the company's articles for a provision which conflicted with that basic duty.

Let us leave aside the practicalities, however, and turn to the principles that lead the Government to reject this amendment. I do not think that this amendment is concerned with making minor and technical changes to the Bill. What noble Lords would like it to do is to guarantee indefinitely the survival of the corporation's facilities in Scotland. It is wishful thinking to believe that all one has to do is put down a reference in the Bill, or in the articles, and that all problems are then resolved.

My experience in industry may be limited compared to many in your Lordships' House, but I know something about the responsibilities of directors. This amendment would be a legal burden on directors; it would confuse and deter potential shareholders and render it nigh on impossible to proceed with privatisation; it would be manifestly unfair to other parts of the British Steel Coprporation, as the noble Lord, Lord Williams, said: but what it would not do is contribute anything positive to the future of Ravenscraig. It would be just another of the political gestures which have bedevilled the steel industry since the war and the results since the end of the 1970s bear witness to that

The heart of the matter is this: should the successor company be free to run itself, in common with other private sector companies, by reference to the market in which it operates from a commercial point of view, and the Companies Act from a legal point of view; or should it be hound by additional political constraints imposed on it by Parliament

The issue is therefore one of principle and it goes directly to the core of the policy of privatisation. Governments are able to control and direct nationalised industries; that is obvious. Privatisation must involve relinquishing those powers of direction and handing them hack to the company. You cannot privatise a company, and leave the directors fully responsible for the success of the company with no backing from government, but at the same time saddle the company with additional responsibilities of a political nature. The directors of the successor company will not be accountable to Parliament through Ministers. They will be accountable to their shareholders, many of whom—and I emphasise this—we hope will be their employees. I am sure that the SLD Benches opposite, who supported the principle of BSC privatisation on Second Reading, can well understand that

It is time that noble Lords accepted that a sort of half-way house company which has neither the freedom of the private sector nor the government backing of the public sector would he unworkable.As the noble Lord, Lord Marsh—I am glad that he is here—said in Committee: one has only to look at the coal mining industry, the railway industry and indeed every one of the nationalised industries to see that wherever they have had to divert their activities from commercial ones to seeking to apply social disciplines, the workers and tax payers have suffered. It does not work because one can either run a social service or a business. The two cannot be mixed together. especially in what is probably the most competitive industry in the world today—or, at least, one of the most competitive". [Official Report, 20/6/88; cols. 525–6.] That is what the noble Lord had to say, and it is with that that the Government and I agree.

When the House debated this issue in Committee and on Report, I drew to the attention of the House the assurances given by the chairman of the corporation on 3rd December last year. As I said on Report, I assure the House that the terms of the corporation's 3rd December statement with regard to its integrated plant will be reflected in the prospectus. Following that debate, and in accordance with my assurance to the noble Earl, Lord Perth, sympathetic consideration is being given to the suggestion that the prospectus should additionally reflect the further assurance that if the corporation 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.

I believe that that is as far as the Government can go. Those assurances are very firmly on the record and will apply to the successor company following privatisation as they do now to BSC. We arc saying to BSC management that it is best placed to run British Steel and should be free so to do. We are not now going to second guess it and attempt to lay down terms of reference which are at best meaningless and at worse commercially damaging.

The corporation is a responsible employer. It is aware of its wider responsibilities—and I cite the activities of BSC (Industry) Ltd. as evidence of that. But at the end of the day the duty of its directors is to the well-being of the corporation and its employees as a whole and not to specific parts of its business in isolation. Nothing would be achieved by this amendment, except to undermine fundamentally the prospects for privatising British Steel. That would not help Ravenscraig, indeed, it would be likely to have the opposite effect. I regret that this amendment is unacceptable, and I ask the House to reject it.

Before sitting down, perhaps I may say something to the noble Lord, Lord Grimond, who asked on Report and who is not here today, and the noble Lord, Lord Morton of Shuna, who has asked now, whether the requirement in a prospectus is binding in law on those who accept the prospectus and bid for the company; and of course he instanced Guinness. The position is that the directors of British Steel, along with the other persons responsible for the prospectus, are liable in law if the prospectus contains any statement which is misleading.

The noble Lord, Lord Morton of Shuna, asked about pricing. The Glasgow pricing base would stay so long as there is a Scottish steel base. Thereafter, the position would have to be reviewed. I am sure that the British Steel Corporation and the Government would bear in mind the needs of Scottish industry. That is a wholly hypothetical situation. As regards Yarrow's and the order for frigates, frigates will need steel of a particular specification and obviously, for security reasons, there are no details. In practice, it is unlikely that the steel will come from Ravenscraig or Dalzell.

I conclude by saying that 1 understand very well the views of the noble Lord, Lord Morton of' Shuna, because we have debated the Bill week in and week out for the past four weeks. He mentions the closure of pulp mills, and so on. I find it depressing that he conveniently forgets that in the past year there has been a remarkable investment in Irvine which is to take the place of the Fort William pulp mill. That investment will secure the jobs of many people in Scotland. That is something 1 applaud; no doubt he will, too.

Lord Morton of Shuna

My Lords, the noble Lord, Lord Sanderson of Bowden, accuses me of conveniently forgetting. I have mentioned Invergordon on, I believe, three occasions and each time the noble Lord has conveniently forgotten that I did so. He has not managed to come up with any reason why a very new plant was closed when the Government would not change their mind.

Of course I remember, and know of, Irvine. It is interesting that a plant was built at Fort William—no doubt with a great deal of government money—and closed under this Government. Now another plant with the same purpose is to he built at Irvine, again with a great deal of government money. It would seem to be a waste of money to build two plants when only one is needed; but that is what the Government appear to approve of.

I should have thought the attitude of looking only at commercial realities and regarding industry as having no social content a curious one. If that view had been taken of coal and the railways, those industries would have stopped producing in 1939 or 1940 because they were not profitable. That might have made the war effort rather more difficult. As the noble Lord, Lord Ezra. said, there must be a social content. If Ravenscraig were to close and steel production ceased in Scotland, where would companies like Howden or Yarrow be able to compete? They would be buying materials from South Wales and having them hauled up from there. Would that be so much cheaper?

We have had this argument right through the proceedings on this Bill. I cannot see why the Government's obsession with privatisation as a monopoly always is such a great addition to the competitive nature of the world. I must therefore press the amendment.

3.53 p.m.

On Question, Whether the amendment shall be agreed to?

Their Lordships divided: Contents, 89; Not-Contents, 143.

DIVISION NO.1
CONTENTS
Addington, L Carmichael of Kelvingrove, L.
Ardwick, L. Carter, L.
Banks, L. Chitnis, L.
Basnett, L. Cledwyn of Penrhos, L.
Birk, B. Cocks of Hartcliffe, L.
Blackstone, B. Davies of Penrhys, L.
Blease, L. Dean of Beswick, L.
Bonham-Carter, L. Donaldson of Kingsbridge, L.
Boston of Faversham, L. Dormand of Easington, L.
Bottomley, L. Ennals, L.
Briginshaw, L. Ewart-Biggs, B.
Ezra, L. Nicol, B.
Falkland, V. Oram, L.
Fisher of Rednal, B. Parry, L.
Fitt, L. Peston, L.
Foot, L. Ponsonby of Shullbrede, L. [Teller.]
Gallacher, L.
Galpern, L. Prys-Davies, L.
Gladwyn, L. Rathereedan, L.
Glenamara, L. Rea, L.
Graham of Edmonton, L. Rugby, L.
Grey, E. Salroun of Abernethy, Ly.
Hampton, L. Seear, B.
Hatch of Lusby, L. Sefton of Garston, L.
Houghton of Sowerby, L. Serota, B.
Hughes, L. Shackleton, L.
Jacques, L. Stallard, L.
Jay, L. Stewart of Fulham, L.
Jeger, B. Stoddart of Swindon, L.
Jenkins of Hillhead, L. Strabolgi, L.
Jenkins of Putney, L. Taylor of Blackburn, L.
John-Mackie, L. Taylor of Mansfield, L.
Kilbracken, L. Tordoff, L.
Kinnaird, L. Underhill, L.
Kirkhill, L. Vernon, L.
Leatherland, L. Wallace of Coslany, L.
Listowel, E. Wells-Pestell, L.
Llewelyn-Davies of Hastoe, B. Whaddon, L.
Lockwood, B. White, B.
Lovell-Davis, L. Williams of Elvel, L.
Mackie of Benshie, L. [Teller.] Willis, L.
McNair, L. Wilson of Rievaulx, L.
Mason of Barnsley, L. Winchilsea and Nottingham, E.
Milford, L. Molloy, L.
Molloy, L. Winstanley, L.
Morton of Shuna, L.
NOT-CONTENTS
Aldington, L. Elliott of Morpeth, L.
Alport, L. Faithfull, B.
Arran, E. Fanshawe of Richmond, L.
Attlee, E. Ferrier, L.
Auckland, L. Forbes, L.
Bathurst, E. Fraser of Kilmorack, L.
Bauer, L. Gainford, L.
Beaverhrook, L. Garden of Parkes, B.
Belhaven and Stenton, L. Gibson-Watt, L.
Beloff, L. Gisborough, L.
Belstead, L. Glenarthur, L.
Bessborough, E. Goold, L.
Birdwood, L. Gray of Contin, L.
Blake, L. Greeenway, L.
Blatch, B. Gridley, L.
Blyth, L. Hailsham of Saint Marylebone, L.
Borthwick, L.
Boyd-Carpenter, L. Hanworth, V.
Brabazon of Tara, L. Hardinge of Penshurst, L.
Brain, L. Harmar-Nicholls, L.
Bruce-Gardyne, L. Harvey of Prestbury, L.
Butterworth, L. Henderson of Brompton, L.
Caithness, E. Henley, L.
Campbell of Alloway, L. Hesketh, L.
Campbell of Croy, L. Hives, L.
Carnegy of Lour, B. Home of the Hirsel, L.
Carnock, L. Hood, V.
Cathcart, E. Hooper, B.
Chelmer, L. Hylton-Foster, B.
Constantine of Stanmore, L. Ilchester, E.
Cork and Orrery, E. Johnston of Rockport, L.
Cox, B. Joseph, L.
Craigton, L. Kaberry of Abel, L.
Cranbrook, E. Kearton, L.
Cullen of Ashbourne, L. Kimball, L.
Davidson, V. [Teller.] Kinloss, Ly.
Denham, L. [Teller.] Lauderdale, E.
Dilhorne, V. Layton, L.
Donegall, M. Lloyd of Hampstead,L.
Dormer, L. Long,V.
Dundee, E. Lurgan, L.
Effingham, E. McAlpine of Moffat, L.
Elibank, L. McFadzean, L.
Ellenborough, L. Macleod of Brove, B.
Elliot of Harwood, B. Margadale, L.
Marley, L. Shannon, E.
Marsh, L. Sharples, B.
Merrivale, L Shaughnessy, L.
Mersey, V. Skelmersdale, L.
Milverton, L. Slim, L.
Montgomery of Alamein, V. Somers, L.
Mowbray and Stourton, L Stanley of Alderley, L.
Munster, E. Stodart of Leaston, L.
Murton of Lindisfarne, L. Strathcarron, L.
Nelson, E. Strathcona and Mount Royal, L.
Nugent of Guildford, L.
Orkney, E. Strathspey, L.
Orr-Ewing, L. Swinton, E.
Oxfuird, V. Terrington, L.
Pender, L. Teviot, L.
Perry of Walton, L. Thomas of Gwydir, L.
Perth E. Thorneycroft, L.
Porritt, L. Trunpington, B.
Portland, D. Vaux of Harrowden, L.
Rankeillour, L. Wigram, L.
Rawlinson of Ewell, L. Windlesham, L.
Renton, L. Wise, L.
Rochdale, V. Wolfson, L.
Romney, E. Wyatt of Weeford, L.
St. Davids, V. Yarborough, E.
Sanderson of Bowden, L. Young, B.
Sandys, L. Zouche of Haryngworth, L.
Sempill, Ly.

Resolved in the negative, and amendment disagreed to accordingly.

4.1 p.m.

Lord Beaverbrook

My Lords, I beg to move that the Bill do now pass.

The Bill before your Lordships today is a fairly short and a largely technical one. Before I make a brief review of the Bill, and of the passage it has had through your Lordships' House, I wish to thank noble Lords for the constructive manner in which they have debated the Bill, which is certainly not an easy one to get to grips with. In particular, the noble Lord, Lord Williams of Elvel, has given the House the benefit of his considerable experience in financial matters. and his probing amendments have caused the Government to consider with care some of the technical provisions of the Bill. I am grateful to the noble Lord, Lord Williams, for the care he has taken as is his custom with whatever business we are debating. I have also appreciated the way in which he has informed me outside the Chamber of his views. I have found it very helpful and I believe it has enabled your Lordships to consider the Bill in a very constructive way.

In some ways it is curious that, when we have a largely technical Bill before us, many noble Lords have devoted much of their consideration to amendments concerning the corporation's Scottish facilities. I shall not enter that debate now; but I note the deep concern which has been expressed on all sides of the House on this matter and I am sure that that concern will have been noted outside your Lordships' House. I much admire the tenacity shown by the noble Earl, Lord Perth, the noble Lords, Lord Morton of Shuna and Lord Grimond, and my noble friend Lord Selkirk.

It is not this Bill which is going to decide the future of Ravenscraig, or, come to that, of any of the corporation's facilities anywhere in the country. The future of the corporation and its successor can only be decided by the efficiency of the company, the quality of its products, and the state of the market which it serves and in which it operates. Statutory provisions have nothing to do with that, just as nationalisation has not prevented huge job losses in the industry. In public or private ownership the future of British Steel depends on its ability to compete in the market place.

This Bill will pave the way for the privatisation of the corporation. We have considered a variety of issues relating to the Bill during its passage, with particular emphasis on the financial and capital structure provisions. Your Lordships' House has also spent some time debating the articles of association of the successor company, and in particular the articles relating to the special share. Again, that is not a matter for the Bill, but I know it is one of concern to your Lordships. The effect of the special share will be to prevent hostile takeovers of the successor company during the first five years of its existence. It is right that the company should be given some time to adapt to the different environment of the private sector. Thereafter management must stand on its own feet. I believe that the House welcomes the concept of the special share and the associated limitation on shareholdings. I also believe that the House welcomes the assurance given by the corporation which I was able to report to your Lordships at Committee stage that pensions will continue to be provided on the same terms as at present, subject to and in accordance with the provisions of the existing trust deed. I believe that the demonstrates the manner in which the corporation shoulders its responsibilities to its employees.

Your Lordships' House is considering this Bill just a week after British Steel announced record profits of £140 million for the year 1987–88. I believe that the Bill and the privatisation for which it prepares the way must be seen in the light of those figures. So many times since nationalisation in 1967 the government of the day have had only bad news about the corporation to report to your Lordships, be it financial losses or plant closures. On many occasions your Lordships' House has been asked to approve measures which would enable the government to grant public funds to the corporation. How much things have now changed. As Sir Robert Scholey states in his review in British Steel's latest accounts: British Steel is confident of its ability to compete effectively in the steel markets of the world and to supply its customers, many of them major UK manufacturers, with steel delivered at a price and of a quality to help them to compete in their own markets. This involves maintaining the momentum of our drive to serve competitively the needs of the steel markets by providing products of high technological value on the basis of total management commitment to quality. backed by continuance of a carefully directed investment programme". Sir Robert also states in his review that, the business success that has been achieved by British Steel is due to the efforts of all v. ho are and have been involved in it-. I opened my remarks by thanking your Lordships for the constructive contributions during the passage of the Bill. With the leave of your Lordships I wish to bring my remarks to a close by offering warm congratulations to the management and workforce of the corporation on their excellent achievements during the past year. I very much hope that this is the last occasion on which your Lordships will be considering a Bill the subject of which is British Steel. It is time to bring to an end the political manoeuvcrings which have characterised the steel industry in the last 40 years in this country.

This is the end of an era for the industry. A new chapter is about to open. The time is right to return British Steel to the private sector. Your Lordships should now look forward to the privatisation which can take place as a consequence of this Bill.

Moved, That the Bill do now pass.—(Lord Beaverbrook.)

Lord Williams of Elvel

My Lords, as I said on Second Reading the Bill does not meet with our approval or affection. I believe that from the start the noble Lord, Lord Beaverbrook, and the Secretary of State have understood that. The Bill was not foreshadowed in the gracious Speech. It appeared as a sudden event. Some would say that there was a gap in the privatisation programme and British Steel happened to be at the top of a cycle.

Nevertheless, the Bill has been studied carefully by your Lordships. Although we feel there are still certain flaws in it—there are probably more flaws in the articles of association than in the Bill itself—we have probed the intentions of the Government as well as we can. We have elucidated certain matters: that is the job of your Lordships' House. This is a revising chamber. I believe that we have performed that role well in our consideration of the Bill.

As the noble Lord. Lord Beaverbrook, said, the British Steel Coporation has gone through some torrid times and has perhaps emerged from those difficult times. 1 remind your Lordships that it has come out under public ownership. It is an example of a successfully managed and successfully run publicly owned company. As I said at Second Reading, I cannot see reasons other than of dogma why the company should be brought into the private sector. Nevertheless, the Government have decided to do it and your Lordships have accepted the Government's will. It is therefore my duty to accept that verdict and in doing so I join the noble Lord, Lord Beaverbrook, in congratulating the management and workforce of British Steel on their efforts over the past few years and on the successes they have achieved. In addition 1 wish them well in the private sector. Although we disagree with the principle, we shall do our best when it is privatised to support the performance of the company because it will live in a competitive world.

Our thanks are due to the noble Lord, Lord Young of Graffham, the Secretary of State, and to the noble Lord, Lord Beaverbrook, who has so courteously and intelligently taken us through the different stages of the Bill. Our thanks are above all due to the noble Lord, Lord Sanderson of Bowden, who has borne the heat and burden of the day of the Scottish attack and indeed has had to bear it not once, not twice but thrice. I say to all noble Lords opposite that we are grateful for their courtesy and understanding. We hope they feel that we have performed the Opposition's proper task. We wish the company well and in doing so we accept the Motion.

The Earl of Perth

My Lords, at Second Reading I do not recall that I took any part in the debate. It did not seem to me that the Bill was a matter of concern. However, suddenly one became aware that what I would call the Scottish factor is of great importance and from that moment on, in Committee, at Report stage and even today, we have been working to try to ensure that both Ravenscraig and Hunterston are taken care of in the future. Of course one can never he guaranteed of anything in this uncertain world, particularly when it has something to do with commerce, but I should like to think that the Government have understood our anxieties. I especially want to thank the noble Lord. Lord Sanderson, for his understanding of the Scottish interests in this matter. Now British Steel is to go into a new era of privatisation. It has succeeded in its last year in its present form. I know it is the wish of one and all in the House that it will go forward from strength to strength. I wish it well.

On Question, Bill passed.