Iron and Steel Board (Report)

Part of the debate – in the House of Commons at 12:00 am on 27 July 1962.

Alert me about debates like this

Photo of Hon. Richard Wood Hon. Richard Wood , Bridlington 12:00, 27 July 1962

I do not think that that is the position, because, as I have tried to explain, although I recognise that the increase in coal prices in Scotland certainly has an effect on the steel and other industries, that effect is relatively marginal, whereas the effect on the coal industry, unless there were selective price increases in Scotland, would have been very great indeed. As Lord Robens has recently announced, his objective is to see that the Scottish coalfield covers its operating cost whereas the interest charges will be borne by the other divisions. I should have thought that that was the basic minimum which the coal industry must attempt, and it is the objective which it has set before it. No doubt hon. Members will have the opportunity to make their views more widely known and to state them at greater length during the debate.

I was going on to mention the Report's reference to the fuel oil tax and its effects on the costs of the steel industry. As the House knows, this tax was imposed last year for fiscal reasons. It is very difficult—and I have spent a lot of time trying to do it—to make accurate and valid comparisons of fuel costs here and in Europe, but the studies I have made suggest that on average fuel costs for British industry, taking oil and coal together, are not heavier in this country than in the countries of our main Continental competitors.

I should like to say something about the negotiations now taking place with the European Coal and Steel Community. I think that the House wall expect me to say something about these negotiations, their implications for the industry and the possible future of the Board, and the effect Which they may have on our own pricing system. As the House knows, my right hon. Friend the Lord Privy Seal began the negotiations in Luxembourg last week. I hope that the House will forgive me if I first point out some of the differences between the Treaties of Paris and Rome which seem relevant to the questions which I have to pose.

First, the High Authority of the E.C.S.C. is financially independent and can impose levies, while the European Economic Community is dependent on its member governments for finance. Further, the High Authority has power to raise loans and to re-lend for investment, and to determine pricing rules. Secondly, and more important, the coal and steel Common Market already exists, whereas the Common Market for other commodities is still in the process of creation.

While there are similarities between the two Treaties, there are also differences of emphasis. Tariffs are to go in both cases, but they are to go more quickly in the European Coal and Steel Community, and my right hon. Friend has said that we would be prepared, by mutually agreed dates, to abolish all tariffs and quantitative restrictions. Secondly, Commonwealth questions are raised by both Treaties, but they look like being less difficult in the case of the Treaty of Paris than comparable questions for the European Economic Community. Thirdly, of course, under both treaties unfair pricing practices are not allowed.

If we accede to the European Coal and Steel Community, we shall find it necessary to make very considerable Changes in our pricing system. One of the difficulties which we shall have to overcome is the question of the transport element in our pricing requirements. The pricing rules of the E.C.S.C., as the House knows, require each undertaking to publish its prices. They also allow any undertaking to match, but not to undercut, the delivered price of any other undertaking in the Community. These pricing rules naturally have an effect on the system—our system at present—whereby maximum prices are determined by the Iron and Steel Board.

The Board would be precluded from fixing maximum prices and prices would come to depend on competition among the Community's undertakings. At the same time, non-discriminatory pricing and rules against uncontrolled undercutting would help to maintain stability.