§ Mr. Lathamasked the Secretary of State for Industry what representations he has received from the director—general of the Engineering Employers Federation regarding the effect on engineering firms of proposed price rises for steel, following the advice of the European Economic Community Commission that prices should be raised further in 1982; what reply he has sent; and what action he proposes to take.
§ Mr. WakehamThe Director—General wrote on 7 December 1981 in his capacity as Chairman of the Council for Mechanical and Metal Trade Associations expressing concern at the effect of increasing steel prices on the engineering industries.
My right hon. Friend replied that a combination of surplus steel production and plummeting prices had led the 135W European Coal and Steel Community to declare a state of manifest crisis in October 1980 and introduce mandatory production quotas to permit a necessary recovery in steel prices, which had been forced down to totally uneconomic levels. Steel prices have increased throughout the Community, where they had been below levels in the United States of America and Japan, so that the United Kingdom steel consuming industries should not thereby have been put at a competitive disadvantage. Despite rises during the second half of 1981 steel prices are still only a little higher than in 1977, whereas prices in other industries, such as mechanical and electrical engineering, have risem between 70 and 100 per cent. in the same period.
The Government fully support the Community measures being taken to restructure the Community steel industry and bring capacity into line with demand in conjunction with the phasing out of State aids. Significant progress has been made by the BSC, and other member States are required to act similarly.