§ Mr. Cryerasked the Secretary of State for Industry whether any scheme is in operation to reduce the steel casting capacity; and if he will make a statement.
§ Mr. ButcherThere are two such schemes currently in operation. Following a proposal first made in July 1981 by Lazard Brothers for a rationalisation scheme for the United Kingdom steel castings industry, discussions took place within the industry and it was decided to introduce separate self-help voluntary rationalisation schemes for different sectors in order to reduce chronic over-capacity. The Government are providing substantial assistance under Section 8 of the Industrial Development Act 1982 (formerly the Industry Act 1972) as well as certifying the schemes under section 406 of the Income and Corporation Taxes Act 1970 in order to ensure advantageous tax treatment of compensation paid to companies closing under these schemes. Lazards are acting as trustee and monitoring progress on both schemes. The first scheme, for the high alloy static sector of the industry, was introduced in March 1982. This involved 16 foundries in the sector—accounting for approximately 95 per cent. of United Kingdom open market production—five of these ceasing production, with the remainder paying a levy over five years as a contribution toward closure costs.
A similar scheme for the general sector was announced on 11 February by Lazards. This involved the closure of 10 foundries representing 25 per cent. of the relevant capacity of the sector which is the largest in the industry, representing 80 per cent. of all steel castings produced in the United Kingdom.
I should like to add that the Government welcome the schemes. While we greatly regret the resulting loss in jobs, radical action of this kind is essential to safeguard the long-term future of the industry.