British Steel and Scotland (Hansard, 14 January 1991)

§ The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)
My Lords, the future of British Steel's assets is a commercial matter for the company, which must be able to take the operational decisions it considers necessary to ensure its continuing competitiveness. We have, however, encouraged British Steel to give full and careful consideration to any case for investment in its Scottish plants and to any offers it may receive for any assets 978 which might become surplus to the company's requirements.

The Earl of Selkirk
My Lords, is my noble friend aware that Scotland has one of the most successful blast furnaces in Europe and that its record of production in terms of man-hours for every tonne of steel produced is unique? What is behind the company's decision? Is there any reason to believe that that monopoly has taken no account of social considerations in the area of its works or that it is moving entirely out of that part of these islands?

§ Lord Strathclyde
My Lords, I fully understand my noble friend's concerns. However, they are commercial decisions best left to the company itself.

The Earl of Selkirk
My Lords, surely for a monopoly in such a position money is not the only consideration. There are also fundamental social considerations, and trade unions and others who are engaged in such work should not be kept in the dark.

§ Lord Strathclyde
My Lords, the Government have continually encouraged British Steel to be open with the facts and to bring forward its figures. The Government have not been slow in bringing forward their own initiatives, having commissioned a report from the Scottish Development Agency and set up the Lanarkshire Working Group, which will be chaired by the Scottish Office. The Government do not take their responsibilities in this matter lightly.

The Earl of Selkirk
My Lords, can the Minister assure the House that no other mill in that part of Scotland will be closed? If the mill is closed, how will the company provide the steel required by the oil industry which is fundamental to Scotland and which will not be provided from elsewhere?

§ Lord Strathclyde
My Lords, whether or not other steel mills or companies owned by British Steel are closed will be for British Steel to decide in the light of economic considerations. It will also depend on the guarantees that British Steel has given in the past concerning the future of those companies. As for the point made by my noble friend about seamless tubes for the North Sea oil industry, I understand that there is considerable over-capacity in that particular product throughout Europe.

§ Lord Carmichael of Kelvingrove
My Lords, is the Minister aware that his right honourable friend the Secretary of State for Scotland is asking almost exactly the same questions as the noble Earl, Lord Selkirk; namely, will British Steel be frank and tell us whether it intends to destroy the plant so that a competitor from abroad cannot use it? Is he further aware that just the other day British Steel announced that it would be closing one of the blast furnaces for six months? Neither we nor the unions have any information but the belief is that there is a strong possibility that the Clydesdale tube plant will go out fairly soon and, as the noble Earl, Lord Selkirk, said, that would result in no British-produced seamless tubing for the North Sea industry. When it is an expansionist base, does he agree that that appears to be quite crazy economics?

§ Lord Strathclyde
My Lords, I fully concur with the noble Lord regarding the words of my right honourable friend the Secretary of State. I do not believe that anybody in this House would disagree with the decision to ask British Steel to be as open as possible with its figures so that we can make a proper assessment of whether the plant should close. British Steel has said that it will co-operate fully with the SDA report. We will welcome that. I have already answered my noble friend Lord Selkirk on the question of seamless tubing to the effect that there is already considerable over-capacity of that particular product throughout Europe.

The Earl of Halsbury
My Lords, can the Minister confirm that Ravenscraig—which I understand is what we are talking about—was originally built because of a misunderstanding that a large automobile factory would be built alongside it? That never materialised. Does he agree that Ravenscraig has therefore been a non-starter owing to the transport costs involved in sending steel from Scotland to the South of England?

§ Lord Strathclyde
My Lords, I cannot confirm the original reasons for building the Ravenscraig steelworks. However, I can confirm that at the moment we are talking about the closure of the hot strip mill at Ravenscraig and not the steelworks itself, which will continue and is guaranteed to continue working for some years.

§ Lord Marsh
My Lords, given that British Steel is now a publicly quoted company responsible to its shareholders, what is the basis upon which ministers feel that they have to defend or oppose its commercial policies in this House?

§ Lord Strathclyde
My Lords, I have maintained that commercial decisions are for the company itself. That does not mean that I disagree with my noble friend Lord Selkirk when he says that quite clearly we have a responsibility to the people of Motherwell. That is why ministers set up the Lanarkshire working group and asked the SDA to come forward with its report on the future of the steel industry in Scotland, which is a legitimate function of responsible government.

§ Lord Jay
My Lords, will the Minister answer the other question asked by my noble friend? Is it true that British Steel is not merely closing down the plant but is refusing the sell it to any other enterprise which might be willing to operate it? Would that not be restrictive practice?

§ Lord Strathclyde
My Lords, as I understand it, if that is a restrictive practice it is a matter for the Director General of Fair Trading. Furthermore I understand that no buyer has come forward to purchase the hot strip mill at Ravenscraig.

§ Lord Williams of Elvel
My Lords, does the noble Lord accept that the reasons why ministers have a responsibility are, first, that a number of assurances were given by ministers and the company on privatisation—assurances which still hold and are underwritten by the Government—and, secondly, that there would be social problems of an enormous 980 magnitude were Ravenscraig to be sucked up? That is a matter for government. Will he tell us what has happened to the assurances about the future of Ravenscraig that were given at privatisation and debated at great length in this House?

§ Lord Strathclyde
My Lords, for once I think I can agree with the noble Lord. Yes, the Government have a responsibility, given the enormous importance for employment prospects in the Lanarkshire area and the statements made by past Secretaries of State for Trade and Industry and by British Steel itself prior to privatisation—various commitments given shortly before privatisation—that steelmaking facilities at Ravenscraig and the rolling mill at Dalzell will continue in operation at least until the end of 1994. I understand that the commitments made in the past have been fulfilled by the company.

The Earl of Selkirk
My Lords, does the Minister deny the statement by British Steel that on no account would it sell Ravenscraig or any hot strip mill?

§ Lord Strathclyde
My Lords, I am not aware of any definite statement by British Steel to the effect that it would not sell anything on any account. As a government we have taken the position in the Scottish Office that we will encourage British Steel to give full and careful consideration to any case for investment made by anybody who wishes to invest in those particular plants.