HL Deb 09 January 1992 vol 533 cc1564-74

2.58 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)

My Lords, I should like to make a Statement on Ravenscraig. Yesterday's announcement by British Steel that it is to close its main Ravenscraig plant is hugely disappointing.

To anyone aware of the market conditions for steel at present it cannot come as a complete surprise that British Steel has had to take this regrettable decision. But it is particularly regrettable that British Steel has been unable to maintain the plant at least until 1994. My right honourable friend has pressed the chairman of British Steel to make public his assessment of the market conditions which justify the unwelcome decision.

The closure of Ravenscraig will bear hardest on north Lanarkshire. In the light of the recommendations of the Lanarkshire working group, substantial extra help has already been provided, and there is already a wealth of planning and activity in the area geared towards economic growth. The recent announcement that British Rail is to locate its Channel Tunnel rail freight terminal at Mossend is a welcome example. We have given priority to Lanarkshire in our spending plans, and have made available very substantial sums through Scottish Enterprise—£15 million this year and up to £25 million next year—to tackle the problems of the area and to help open up new opportunities. We have increased the capital allocations to local authorities in north Lanarkshire for factory building in the current year, and we have agreed extra resources for upgrading key motorway junctions in the area.

As we announced yesterday, the Government have also now completed their appraisal of the suitability of sites in north Lanarkshire for enterprise zone status. I am pleased to announce today that, following such appraisal, we have decided to support enterprise zone status for the area. We shall now seek the necessary agreement of the European Commission. An enterprise zone should bring major economic benefits to north Lanarkshire. Preliminary estimates are that net additional public sector investment associated with an enterprise zone of some £50 million over a 10-year period should secure 7,500 net additional jobs for the area.

Given today's news my right honourable friend will consider whether, as well as the very large programme of extra investment now proposed for north Lanarkshire, there are other ways in which its economic needs can sensibly be addressed. To that end the Minister responsible for industry in Scotland is to secure the effective co-ordination of efforts of the Lanarkshire Development Agency, the Scottish Office, Scottish Enterprise, Locate in Scotland, the local authority and British Steel (Industry) so that all the bodies involved play their full role in the economic regeneration of Lanarkshire.

We have no doubt about the impact of this very regrettable decision on the people and communities of Motherwell, in particular, and north Lanarkshire, but we have taken and will continue to take action and to invest in the economic development of the area. As in the cases of Consett and Corby—affected by earlier steel closures—we believe that Lanarkshire's prospects are by no means dismal.

3.2 p.m.

Lord Williams of Elvel

My Lords, the House will be grateful to the Minister for making his Statement, although I note in passing that the Statement was forced out of the Government by a Private Notice Question tabled by me and the noble Lord, Lord Ezra, on the Benches to my right.

This is a sad day for Lanarkshire. The Statement describes the decision to close the main Ravenscraig plant as "hugely disappointing". It is not hugely disappointing: it is utterly devastating. It is utterly devastating for the people of Motherwell and of north Lanarkshire. Are the Government really taking the matter as seriously as they should? It is a breakdown of government regional policy. The Lanarkshire Development Agency estimates that over 15,000 jobs will be lost as a result of the decision. Many of those who lose their jobs will never work again. Is not that a matter of public interest to which the Government ought to be paying more attention?

It is not enough to talk about Consett and Corby. Consett and Corby took between five and 10 years to re-establish themselves after the shutdown of the steel plants, and that was in times of economic growth rather than in times of recession. It also required massive infrastructure investment from central government.

Of course we welcome the decision to apply for enterprise zone status for north Lanarkshire. However, that will take an extremely long time. It will take months or even years for the community to re-establish itself. None of this appears to have been planned by the Government. Your Lordships will recall that on 3rd December 1987 the noble Lord, Lord Young of Graffham, who at that time was Secretary of State for Trade and Industry, made an announcement about the privatisation of British Steel. At col. 1141 of Hansard for that day he is recorded as saying: Those noble Lords with an interest in Scotland will be pleased to hear that the corporation will be putting out a statement today making clear that subject to market conditions there will continue to be a commercial requirement for steel making at Ravenscraig for at least the next seven years". That statement was made with the full authority of the Secretary of State. We now hear that the Government have no idea of the market conditions which have led British Steel to take its decision. Will the Government, in addition to insisting that a ministerial Statement has been made on market conditions, insist that the chairman of British Steel publicises and confirms that the Government agree with his assessment of market conditions which have led to the decision? No other solution will save the Government's face.

Secondly, were the Government consulted about the proposed closure and, if so, at what stage? If they were consulted, at what point did the chairman of British Steel say that closure was being forced? Did the Government see the analysis? Did the Government recognise their own role in creating the recession which forced the closure?

On 3rd December 1987 the noble Lord, Lord Young of Graffham, as Secretary of State, made a second Statement to this House: The corporation has also indicated that even if it should wish at some stage because of market conditions to close its steel-making facilities in Ravenscraig it would consider, on a commercial basis, any wholly private sector offer for those facilities as an alternative to closure". Is that commitment, which as I understand it was supported by the Secretary of State, being met? If so, will British Steel co-operate in exploring the possibilities for the introduction of new technologies such as thin slab casting by an appropriate private consortium? How long will the offer for sale be open? Will it be long enough for an incoming government to explore possibilities if the general election is to be postponed until as late as July? And will British Steel offer redundancy terms as good as those agreed on the closure of the hot strip mill last year?

This is a sad day for Scotland and it is a sad day for this country. If Ravenscraig is to be shut down over the next few months what will happen to Scunthorpe? What will happen to the plants in South Wales? As a result of market conditions and market forces are the Government prepared to see us go out of steel making altogether? This is yet another example of the Government hiding behind privatisation when difficult decisions have to be taken. The economy of Lanarkshire will be devastated as a result of a systematic attempt to break the Scottish economy, and this Government will suffer for it at the next general election.

Lord Ezra

My Lords, like the noble Lord, Lord Williams, I am obliged to the Minister for making the Statement in response to initiatives taken on this side of the House. I should like to put three questions to the noble Lord, some of which are similar to questions put by the noble Lord, Lord Williams.

The first question is in respect of British Steel having brought forward the closure of Ravenscraig in advance of the stated date of 1994. In the Statement the Government say that it is particularly regrettable that British Steel has been unable to maintain the plant at least until 1994. Therefore, I join with the noble Lord, Lord Williams, in asking whether the Government were advised well in advance of British Steel's intention because of the wide social and economic implications of the decision and, if so, whether they were satisfied with the reasons given.

I see that the Government have stated that they are pressing the chairman of British Steel to make public his assessment of market conditions. Does that imply that the Government were not aware of the detail of that assessment before the decision was taken? This is a very serious issue and it would be surprising if, even though British Steel is in the private sector, there was not full and detailed discussion with the Government in advance. The Government must presumably have been satisfied that it was the right decision to take. We need to know more about that.

Secondly, there is the question of whether an independent steel company in Scotland could have survived. That was an idea mooted a long time ago. Ravenscraig has been part of the large grouping of British Steel. We know from experience that the larger the grouping, the more the parts can suffer in difficult situations. However, had Ravenscraig been on its own, it might well have been able to carve out a market niche which would have enabled it to survive. So was that idea given serious consideration? If so, at what stages and why was it rejected?

Thirdly, the closure of Ravenscraig represents the virtually complete elimination of heavy industry in Scotland. There is now very little left, as I know from my own experience in the coal industry. Only one major coalmine remains. The change in the economy of Scotland may have been inevitable. Whether or not it could have been timed differently, we do not know. But is it not now time to have some clearly defined alternative industrial strategy for Scotland?

The Government have said that they will look in particular at the special region of Lanarkshire affected by the closure. Is there not scope now for taking a wider look at strategy for the industrial regeneration of Scotland as a whole?

Lord Strathclyde

My Lords, I suspect that the noble Lord, Lord Williams of Elvel, has been waiting a long time for this moment. He appears in the House like a vulture gleefully picking over the entrails of Ravenscraig. He has produced conjecture and false facts. He has not done his research; he has accused the Government of bad faith.

The noble Lord said that 15,000 jobs would be lost. That is untrue. There are 1,200 jobs which will be lost in September. We calculate that a further 1,200 will go, making a total of around 2,500, as a result of the announcement made by British Steel. The noble Lord criticised our proposals for an enterprise zone saying that it would lead to massive public investment. What was the investment made by British Steel over the catastrophic years of the Labour Government in the 1970s when British Steel was losing record amounts of money? That money came directly out of the public purse and from taxpayers. It did not help one little bit the long-term future of industry in this country.

The noble Lord brought into the argument my noble friend Lord Young at the time he was Secretary of State for Trade and Industry. Clearly, part of the undertaking made in the prospectus by British Steel was that it would seek to maintain the integrated steel plant in Scotland at Ravenscraig for as long as possible, subject to prevailing market conditions. We all know that market conditions have changed substantially, not only in this country but throughout the world. Market conditions in the steel sector are very difficult. There is fiat demand. As a result, excess capacity has continued to create fierce competition and low prices. Major competitors such as Krupp in Germany and Usinor Sacilor in France are also experiencing substantial falls in demand and prices. British Steel's interim results for the current year show profits down from £307 million to £19 million.

Both the noble Lords, Lord Ezra and Lord Williams, asked about the consultations that we may have had with British Steel prior to the announcement. My right honourable friend the Secretary of State was told by the chairman of British Steel on 20th December that British Steel would be making this decision and it was confirmed on Monday this week. There was no formal consultation in the sense that the Government had a direct role to play in allowing British Steel to make its decision. British Steel is a private company. It makes its decisions on commercial likelihood and in the interests of its shareholders. That is the only way in which it can make its decisions and it is the only way that a government should behave.

Both the noble Lords, Lord Williams and Lord Ezra, asked about the commitment to sell Ravenscraig. I understand that the undertaking that was given at privatisation will still be honoured. The noble Lord, Lord Williams, accused the Government of many things. I accuse the Labour Party of having no alternative. It has not come forward with any proposals. If a Labour Government were to be elected this year, they would do absolutely nothing to protect Ravenscraig.

3.16 p.m.

The Earl of Lauderdale

My Lords, as a former Lanarkshire MP may I ask my noble friend whether he recalls that the original decision to establish Ravenscraig strip mill was at least partly political and only partly economic? Indeed, the political decision—worthy as it was and I supported it—flew in the face of wider economic considerations.

Secondly, does he not feel that it is very late in the day to propose an enterprise zone? This is not a day on which I want to help the Opposition but I want to help Lanarkshire. Surely the enterprise zone project should have been put in hand two years ago when it first became evident that Ravenscraig might be closed down.

Thirdly, is my noble friend aware that the Government have a lot of clout with the offshore oil industry? There is a boom in Aberdeenshire, thanks to engineering and other ancillary activities produced by the North Sea oil industry. Can the Government now use some of that clout to create employment in Lanarkshire? Can some effort be directed to pressing the offshore engineering industry on the one hand and electronics on the other into north Lanarkshire? The most likely future for north Lanarkshire lies in new industries, not the old ones.

Lord Strathclyde

My Lords, I welcome the words of my noble friend Lord Lauderdale who is a past Member of Parliament for Lanarkshire. He is right to highlight the fact that political decisions tend to be made for political reasons rather than for sound economic reasons, which are the ones which have the greatest possibility of success. My noble friend questioned whether the enterprise zone should be brought in now. For the past few years the Lanarkshire working group has been in operation. It has undertaken an in-depth study of what would happen in the area if British Steel were to withdraw. It has stressed a practical approach to reverse the damage done to the Lanarkshire economy. The creation of new jobs in Lanarkshire is best done by increasing private sector investment in the area. We look to the Lanarkshire Development Agency, supported by Scottish Enterprise, to take the lead in implementation of the LWG early action programme.

The various agencies in Scotland will do what they can to encourage the private sector to come to Lanarkshire. I am confident about regeneration. Lanarkshire has many good assets: central location, good communication links, natural and man-made visitor attractions and a dynamic development agency. An enterprise zone will further enhance the area's prospects for recovery.

The Earl of Halsbury

My Lords, can the noble Lord confirm my memory of those matters? The origin of the tragedy at Ravenscraig was misconceived central planning. There was to be an automobile assembly plant next door which Ravenscraig would supply with rolled steel strip on very advantageous terms. That plant was never built and from that time on Ravenscraig was redundant.

Lord Strathclyde

My Lords, the noble Earl simply highlights what happens in centrally planned economies. It is a lesson to us all to see what has occurred in the past few years in Russia and Eastern Europe.

Lord Monkswell

My Lords, the Government will be aware, as we all are, that there are currently three production sites for bulk steel production in this country: Ravenscraig, Llanwern and Redcar. On the closure of Ravenscraig there will be only two sites. Have the Government asked the joint chiefs of staff about the ability of our defence forces to defend steel plants in the event of a threat to national security and thus to maintain British steel production as a national strategic resource?

Lord Strathclyde

My Lords, British Steel has confirmed that it sees no difficulty in being able to provide steel in this country for the foreseeable future.

Lord Monkswell

My Lords, will the Minister answer the question that I put? Did the Government ask the joint chiefs of staff for their opinion?

Lord Strathclyde

My Lords, the Government do not believe that there is any shortage of steel for strategic purposes.

The Earl of Onslow

My Lords, would it not have been better to have shut down Ravenscraig a long time ago? We have listened to a lot of Scots complaining—they are quite extraordinarily good at it—and asking English taxpayers for money. It is true that the Scots are over-represented in Parliament, are over-subsidised by the central government and are extremely good at complaining. Surely, the successes of the Scottish economy are the IBM factory in the central belt and silicon glen. Those are what Scotland should be proud of, not out-of-date, redundant steel mills.

Lord Strathclyde

My Lords, British Steel is not subsidised by the taxpayer, whether he is Scottish, English or from anywhere else. It is a private company supported by its private shareholders. The best future for the area is for people to invest in their own enterprise and to use the natural talents that are already produced in the area.

Lord Stallard

My Lords, will the noble Lord accept that I do not wish to follow the racist comments of the noble Earl, Lord Onslow?

The Earl of Onslow

My Lords, perhaps I may—

Noble Lords


Lord Stallard

My Lords, I can honestly say that I have far more experience of Ravenscraig and its forebears than he ever had or will have. I can speak from experience. I do not wish to refer to the political football about what the Labour Government, the Tory Government or anyone else did. I am anxious about what will happen now to the workforce. A number of people whose livelihood depended upon Ravenscraig and who had been expecting to be able to depend upon that livelihood for another few years yet will now be cast on to the scrapheap with no prospects. As the noble Earl, Lord Lauderdale, said, discussions regarding an enterprise zone, a planning zone and so on should have taken place long ago if there were fears that Ravenscraig would close. We know from the Corby experience that it takes many years to get such a scheme off the ground.

Nothing that the noble Lord has said today will reassure those fellows, who are asking, "When did the Government know that the pledge that Ravenscraig would not be closed before 1994 would not be honoured?" Did they know it when conferences took place in Scotland as recently as just before Christmas last year on alternative proposals put to the Government in the hope that they would be able to exert some influence on the employers and on the steel federation to try to protect those jobs until 1994? Had it been known then that there were only two or three weeks to go, the discussions would have taken place in a completely different context. The Government would have been expected to do much more.

Nothing that the noble Lord has said will assuage people's fears. I do not believe that the Minister has taken into account the devastating effect that the closure will have on that part of Scotland. It has been a depressed area for many years in the previous history of cold mills at Ravenscraig. We are going straight back to those days now. The noble Lord says that he can hide behind privatisation and do nothing. The people expect the Government at least to be constructive, to tell the truth, and to say, "We didn't know that this private company was going to put you on the scrapheap so soon. We shall try to find out the background and come back for further discussions."

Lord Strathclyde

My Lords, the noble Lord says that nothing that I have said will reassure the workforce at Ravenscraig. However, I am not sure that anything that the noble Lord said will reassure anyone either, even the rest of the Labour Party. Will the Labour Party renationalise British Steel? Clearly, it has said that it will not. The answer is that it will do nothing for the people of Ravenscraig.

I am uniquely interested in what happens to the working community of Motherwell and north Lanarkshire. That is why we have made the announcements that we have over the past 24 hours. That is why over the past couple of years we have had the Lanarkshire working group which has produced a report. That is why we have offered substantial extra finance for the area to allow for regeneration and to give those people the hope that they need.

Baroness Faithfull

My Lords, is the Minister aware—I do not see why he should be—that I was at Consett the night that Consett closed? I believe that 13,000 men were out of work overnight. I understand that the enterprise zone set up there has been so successful that the men in Durham say that they prefer what is going on now and that they are much happier. Is that not likely to happen at Ravenscraig?

Lord Strathclyde

My Lords, some personal experience is always useful in this House. It is my great wish that in Motherwell we shall see a far more diverse economic base which will allow the area to prosper in the way that other steel areas have prospered.

Lord Stoddart of Swindon

My Lords, is the noble Lord aware that his answer to my noble friend Lord Williams was rather long on insults but short on measures to deal with the real problem? Is he aware that the only vultures in the steel industry are those who, with the encouragement of this Government, battened on the steel industry after nationalisation and took everything they possibly could from it? Will he now answer the question put to him by my noble friend Lord Williams? What is to happen to the remainder of the steel industry in this country bearing in mind that the noble Lord himself said that profitability had dropped from £307 million a year to £19 million at present? Will British Steel continue to close plant after plant until it reaches parity?

Lord Strathclyde

My Lords, the natural question to put to the noble Lord is this: will he and his party renationalise British Steel? That is the logical approach. The future of British Steel is up to the management of British Steel and its shareholders. The chairman of British Steel has said that he believes that the future of British Steel and its integrated plants at Redcar and Llanwern will be assured.

Lord Stoddart of Swindon

My Lords, if the Government were to go to the country, they would soon find out what the Labour Party's answer is, because we should then be in government.

The Earl of Lauderdale

My Lords, do the Government agree that they do have power, which they do use, to lean on the oil industry to steer orders in a particular direction? Surely, that is a power which can be used to assist north Lanarkshire into a new age without encroaching on political issues about the politics of interventionism.

Lord Strathclyde

My Lords, through the massive new resources that we have put into the hands of the public bodies that we shall be concentrating on north Lanarkshire, we shall be encouraging new businesses and new enterprises to invest in Lanarkshire and its people.

Baroness Robson of Kiddington

My Lords, I am a great believer in private enterprise. The Minister said that British Steel took this decision because it was in the interests of the shareholders. Is the Minister aware that I believe that any private company should also keep in the centre of its decision-making the interests of its workforce and that in view of the assurances given to the workforce about 1994 it has been let down?

Lord Strathclyde

My Lords, I am not responsible for British Steel. The Government are responsible for the economic well-being and performance of this country. We believed that the best way of assuring that was to make the announcements that we made today. Those will lead to the regeneration of north Lanarkshire.

Lord Mackay of Ardbrecknish

My Lords, does the Minister agree that the decision, although highly unwelcome, has been inevitable some time? Mr. George Younger and Mr. Malcolm Rifkind while each was Secretary of State for Scotland made strenuous and at the time successful efforts to keep steelmaking in Lanarkshire. However, it was inevitable that the problem of market forces would in time act against Ravenscraig and that day has now come. Will the Minister say how long it will take the Government to obtain clearance from the European Commission for an enterprise zone? I believe that the matter must go to the European Commission. Will the Minister also bear in mind the need for funding from the Government or from British Steel for the rehabilitation of hundreds of acres of land in north Lanarkshire used by the steel industry? Although it has been environmentally poisoned it could easily be rehabilitated and made attractive to incoming investors.

Finally, will the Minister confirm and underline a point he made earlier? It is that we are not talking about the loss of 15,000 jobs, as the people who wish to talk down Lanarkshire and Scotland have been so quick to do during the past two days, but about the loss of some 3,000 jobs. Bad as that may be, it is not nearly as bad as the loss of 15,000 jobs, which gives an even blacker impression of the economy of north Lanarkshire than it deserves.

Lord Strathclyde

My Lords, my noble friend Lord Mackay speaks from personal experience. He was a Minister in the Scottish Office during the 1980s when so much work was done to ensure that Ravenscraig could stay open. However, as he recognises, that time has now come to an end. The setting up of an enterprise zone requires approval from the European Commission. I am not sure exactly how long it will take to obtain that, but it will be a considerable period of some months.

British Steel has said that it will raze to the ground the current buildings at Ravenscraig and that it will sell the land to public bodies at a peppercorn price so that redevelopment can take place. My noble friend Lord Mackay was absolutely right in saying that we are not talking about the loss of 15,000 jobs. That would be a veritable tragedy. We are talking about the loss of 2,500 jobs. We always regret the loss of jobs but the best hope for those people is to find new jobs to promote enterprise in the area. That is the best way for their future to be assured.

Lord Carmichael of Kelvingrove

My Lords, the Minister will know that I live in the area and that I am familiar with it, as is the noble Earl, Lord Lauderdale, who was an MP for the area. It was hit badly by industrial dereliction in particular during the interwar years. Ravenscraig was to be one of its saviours. However, whether true or not, the general feeling in Scotland, in particular in the Ravenscraig area, is that the chairman of British Steel, Sir Robert Scholey, never wanted to keep Ravenscraig going. Indeed, his behaviour before the Select Committee on Energy was not in line with someone who really wanted to keep the steelworks going.

I wish to ask the Minister a number of questions. Can application for the designation of the area as an enterprise zone be speeded up? Can the abolition of the East Kilbride Development Corporation be delayed in order to assist the application? Lanarkshire desperately needs a good technical college. Can central institution status be given to Bell College? Can application for an enterprise zone, to be dealt with by Mr. Allan Stewart, be speeded up? Although a great deal has been delegated to the local authority for further study, a great deal more could be done if Mr. Stewart took the matter in hand and dealt with it personally.

Lord Strathclyde

My Lords, the noble Lord, Lord Carmichael, has a positive approach. We shall speed up as much as possible the application to the European Commission for enterprise zone status. We have already allocated substantial funds to East Kilbride, to the Lanarkshire Development Agency and to a variety of other public agencies. We shall be doing everything that we can to bring together all the different strands in a group chaired by my honourable friend Allan Stewart in order to co-ordinate the long-term regeneration of the area.

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