HC Deb 27 July 1988 vol 138 cc276-7W
Mr. Fallon

To ask the Chancellor of the Duchy of Lancaster when the Monopolies and Mergers Commission report on the British Steel Corporation will be published.

Mr. Maude

The report is published today.

The Monopolies and Mergers Commission was asked to investigate and report whether the British Steel Corporation could improve its efficiency and reduce its costs, except in so far as that question related to, or might involve consideration of, strategy decisions agreed with Her Majesty's Government in relation to the corporation.

The commission concentrated its investigation on the corporation's two largest operating groups, Strip Products Group and General Steels Group, which together contain the five integrated steelworks where the bulk of the corporation's steel production takes place.

The commission noted that the corporation had moved from a net loss of over £1 billion in 1980–81 to a profit of £38 million in 1985–86. In commending this very considerable achievement, the commission said that it had been secured partly by reductions in capacity and manpower but more significantly by more than doubling manpower productivity over that period. The corporation had re-established its position in the world steel industry, with a range of products which for the most part compared well with that of its competitors. The commission found that the corporation was thus in a new situation. Furthermore, the European Commission ended state aid for steel on 31 December 1985, with the result that all future financial requirements carried interest at market rates. While observing that this had to be seen in the context of the strategy decisions which inevitably affected the corporation's capacity utilisation and hence its efficiency, the commission noted that the strategy still left the corporation with a wide discretion to improve its efficiency. Stock control, maintenance and monitoring of quality performance were identified in particular by the commission as subjects meriting closer attention.

The commission made 48 recommendations for improving the corporation's performance and attached priority to those concerning the determination of the investment programme; the review of stocks; the study of maintenance procedures; quality standards and delivery performances. Notwithstanding its other comments and proposals, the commission observed that the corporation was right to be proud of the efforts of its work force and management in moving from the period of massive losses to the profitabilty achieved in 1985–86, and sensed a determination at all levels in the corporation to continue to improve performance.

In view of the delay in publication I am asking the corporation to respond to the commission's findings as quickly as possible.