Iron Works, Normanby (Closing)

– in the House of Commons at 12:00 am on 20th July 1959.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Legh.]

10.40 p.m.

Photo of Mr Hilary Marquand Mr Hilary Marquand , Middlesbrough East

After more than six years of attempted denationalisation a certain number of iron and steel companies, not including among them any of the major steel companies, have been sold back to private enterprise. Thirteen companies, including the most important in the country, have had their ordinary share capital sold back, but none of their prior-charge securities, thus leaving the directors in control of more than £200 million of public capital without any accountability to Parliament. Finally, 13 companies remain which are still wholly owned by the nation. One of these is the Normanby Ironworks, situated in my constituency.

Hitherto, this undertaking has employed 465 persons of all grades, including clerical and managerial staff. About 450 of these are wage-earners, the majority of them blast furnacemen. On 8th July, the Iron and Steel Realisation Agency, which owns the share capital of this undertaking, announced that the works was to be closed down at the end of this week. In other words, less than three weeks' notice was given to the men, many of whom had worked almost the whole of their working lives at this plant, who were to lose their jobs and had to try to find others in an area which is already stricken by unemployment caused by the Government's restriction of investment in other industries.

When one asks why so short a notice was given to the workpeople and their unions in circumstances where there was to be not merely some recession of trade but the whole undertaking was to cease, one is told that there is a risk, if people are told too soon in advance, that the workpeople will melt away and one will lose production and involve oneself in the last few months in very heavy losses. But surely, when a works is to be completely closed and all production on this site abandoned for ever, a longer time could have been given for consultation, at any rate with the union concerned if not with every one of the workpeople on the plant, for a planned tapering off of the work.

There is the greatest dissatisfaction in the area that men had so little notice that their whole livelihood was to come to an end in so short a time. As soon as he knew about it, the General Secretary of the Blastfurnacemen's Union stepped in and negotiated compensation for redundancy for the workpeople concerned. I propose to say no more about that aspect of the matter. A negotiated agreement, fortunately, has been made with the general secretary and accepted by him. Therefore, it is not for me to comment about it. I propose to say nothing, either, at any length about the efforts which I know the Ministry of Labour is making locally to take account of all the qualifications of every one of the men concerned and to try its best, in a difficult situation on Tees-side, to find them alternative work. But I think that I am entitled to ask a question about the salaried staff.

If the Blastfurnacemen's Union is looking after the workpeople to the best of its capacity in negotiating compensation for redundancy, and the Ministry of Labour is trying to find alternative work for them, what about the salaried staff? I believe, and hope that the Economic Secretary will accept it, that as this works is wholly owned by the nation, the Realisation Agency and the Government together should accept responsibility for trying to find work for salaried staff, technical men and managers alike, in the public sector of the iron and steel industry which they still control and which is still quite substantial. If not, they should give them every possible help to find work in the private or semi-private sector of the industry.

I want also to ask a question which is being asked widely on Tees-side: is there to be any payment in compensation to the directors for loss of office, about which we have heard a great deal in recent months in respect of other companies.

Finally, what of the site on which this works has been operating? I apologise for not having given notice to the hon. Gentleman that I was to ask this question, but will he draw the attention of the President of the Board of Trade to the fact that this works has been operating on an admirable site, having a large deep-water wharf which could be of great value to some other industry? If the production of iron there is to be abandoned, can we hope that the works will not be allowed to be derelict and to rust away and cumber the ground with all sorts of unsightly industrial remains, but will be cleared and offered by the Board of Trade to some other industry which could make use of the admirable site?

There is no time available for me to say any more about those aspects of the problem. What of the reasons for closing the works? Why was no considered statement or explanation given by the Agency or the Iron and Steel Board, which has been involved in consultations about this matter? Why did they make no considered statement public to the nation? Here is a publicly-owned company, which has been doing valuable work in the past and which has been nationally owned for nine years or more, now to be closed down and abandoned. Why cannot we have, and why did we not have, from the Government, or the Board, or the Agency, or all three together, a considered statement of the reasons?

Is this operation part of the general policy of the Government, to render no account to the nation of the progress of the nationally-owned companies? The Economic Secretary to the Treasury and I have already had an exchange of questions at Question Time about the position of this nationally-owned concern, but only purely financial information was given. These companies, which are still owned by the nation and which have not been sold, are treated as if they were in the hands of the receivers and of no account.

As we have said in a pamphlet issued by the Labour Party about the steel industry, this is the worst conceivable form of public ownership. That the Government are guilty of a breach of trust in the way they have handled this section of the steel industry is proved by the fact that the Economic Secretary is here to answer the debate. I am sorry for him. He is in a very awkward position. The proper Government representative to be here is the representative of the Minister of Power, who has responsibility for the overall policy of the steel industry in this country. But it is left to the Economic Secretary.

Because this sector of the steel industry is nationally owned, and because it is owned by the Iron and Steel Holding Realisation Agency, which is responsible to the Chancellor of the Exchequer, we get a purely financial treatment of the affairs of these concerns, instead of expert treatment by a Minister who has available to him staff who know the production and problems of the steel industry in all respects.

We are told that the closing of this works is necessary because there is a general decline in demand for hematite iron, which is what this works has been producing. When did that decline in the demand for hematite iron begin? To the best of my information, up to only fifteen months ago demand for hematite iron from this works was reasonably good. Indeed, during the last six or eight weeks or so, with some general improvement in the steel and metal industries generally, there has been an improvement in demand for hematite iron.

Was a decline for that comparatively short period a sufficient reason for the closing of this works? In any case, before that decline began the directors of the firm had submitted to the Agency proposals for the modernisation of their plant for bringing it up to date and for getting rid of the old hand-charged furnaces and putting in modern mechanical plant which could have made it up to date and efficient.

These plans were rejected, and rejected more than fifteen months ago when the decline in demand for hematite first took took place. Why? In the meantime, the Report of the Iron and Steel Board, which was presented to Parliament only a few days ago, shows that other producers of hematite iron during 1958 and 1959 have been allowed to expand their plants and modernise them. We read on page 42 of the Report that in 1959 the Millom Hematite Ore and Iron Co., Ltd., which operates a similar plant on the West Coast of England, was able to complete an ore-crushing and screening plant.

We read on page 45 of the Report that the Millom Hematite Ore and Iron Co., Ltd., has been engaged during 1958 and 1959—it has completed it during 1959—in the replacement and enlargement of its blast furnace, a boiler and the construction of a turbo-alternator. Here is a firm on the West Coast of England which was sold back to private ownership in September, 1958, which has been permitted and encouraged by the Iron and Steel Board to go ahead with the modernisation of a hematite iron concern. The nationally-owned concern on the East Coast of England is not allowed to do that although it put forward proposals to that effect.

Is there a deliberate policy—this is what we want to know on Tees-side; I was there last weekend and met many of the people concerned, and this is what men are asking—by the Government or the Iron and Steel Board, or both, to abandon hematite iron production on the North-East Coast and concentrate it on the North-West Coast? If so, why? If not, is the agency prepared to inject new capital into the one remaining hematite producer which is still in Middlesbrough, also in my constituency, namely, the firm of Gjeers Mills, which operates a works known in the district as the Ayresome Works?

Is the agency now prepared, having turned down the proposals of the Normanby Works for improvement of production and having closed it, to provide new capital for the modernisation and improvement of the Gjers Mills works and, therefore, to continue the production of hematite iron on the North-East Coast, and, if possible, absorb some of the men displaced by the closing of the Normanby Works?

These events have caused grave misgivings in the minds of many people on Tees-side, and we hope that this evening we may have an answer to some of our questions. I say "we", because my hon. Friend the Member for Cleveland (Mr. Palmer) is also greatly interested in this subject. Many workpeople living in his constituency have worked in the Normanby Iron Works, and, more important than that, there exists in his constituency an important steel works which is still nationally owned and he will say more about that. He will be glad of the opportunity, if he can catch your eye, Mr. Speaker, to ask what is the future of the iron works in his constituency as well.

10.54 p.m.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Cleveland

The Economic Secretary knows my interest in the Normanby Iron Works. It is true that it is in the constituency of my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand), but it is on my boundary and a number of my constituents work there. I would add my voice to the vigorous protest which my right hon. Friend has made about what I think is the very shabby treatment of iron and steel workers at this plant.

Last year in a similar Adjournment debate to this, I protested about the surprise decision to withdraw the subsidy which had hitherto been paid for iron ore mining in the Cleveland area. I had no satisfactory answer from the Parliamentary Secretary to the Ministry of Power, but the result of that decision was that in my constituency, in East Cleveland, one mine closed and others went on to short-time working, and, just as in the case of the Normanby Iron Works, there was no proper period of warning.

Therefore, I have the right to put this question to the hon. Gentleman on behalf of my constituents: what is to happen to the Skinningrove Iron Works in Cleveland? We are bothered about this question because the plant is in the possession of the Realisation Agency of the Iron and Steel Board. It is an important but isolated iron and steel works, which provides the bulk of employment in East Cleveland. The plant has not been fully modernised, though I happen to know that those who direct it would like it to be modernised. I am sure they have plans to that end, but apparently the Realisation Agency will not permit them. Is this works to be the next sudden victim?

All I would say, finally, is that if that is to be the case, my constituents and the trade unions have a right to be told. If there is to be rationalisation in the North-East in the matter of iron and steel it should not be a secret plan.

10.56 p.m.

The Economic Secretary to the Treasury (Mr. F. J. Enroll):

I would like to begin by describing the background to the closure, of the Normanby Ironworks, the need for which I need hardly say we all regret very much. The fact is that the works are obsolete and the plant has reached the end of its useful life. The three blast furnaces were last rebuilt in 1900, 1906 and 1923 respectively. The furnaces would not, in any event, last very much longer, and there was some doubt about the possibilities of the restarting of at least one of them after damping down for the holiday period. Production has been running at a rate of about 60 per cent. of capacity, which is not an economic rate of production with obsolete plant, and, moreover, much of the production had to be stockpiled.

The works employ rather less than 500 people. Closure must always be a matter for regret, but the closure is taking place against a much less gloomy background than was apparent a few months ago. At the June count unemployment among men and boys on Tees-side showed a further fall. Those unemployed then amounted to 3,800, or 2·9 per cent., as compared with 4·1 per cent. at the beginning of the year. There are reasonably good prospects for a further fall at the July count. The right hon. Gentleman was good enough to say that the Ministry of Labour has been doing its best to make arrangements to do all it can to help those discharged from Normanby to find alternative employment.

The right hon. Gentleman referred to the possibilty of replacing the works. Suggestions have been made by the company from time to time during the last twenty years about the possibility of rebuilding these works. During the lifetime of the Agency some tentative proposals were made, but they were not of a kind which could be developed into a worthwhile proposition. There were various reasons for this. Rebuilding would have involved very heavy investment, perhaps six or seven times as much as the cost of the undertaking on nationalisation. The demand for haematite iron has not been increasing in recent years, and the output needed could be provided elsewhere more economically than at Normanby. Extensions of capacity have, in fact, been provided by the Agency through its other subsidiaries and by private enterprise.

The Iron and Steel Board, which is the statutory authority for looking after the provision and maintenance of adequate capacity, found no objection to closure on supply grounds, since there was evidence that there would be ample capacity even after the closure of Normanby. Those who advocate investment of the taxpayers' money in a new iron works at Normanby are advocating investment not only to create employment at Normanby, but also to create unemployment or underemployment of men and capacity elsewhere—possibly in places where unemployment is no less serious than on Tees-side.

Capital development at Normanby would have been a very expensive proposition compared with capital expenditure at other works engaged in the production of haematite iron. At the Barrow Works, operated by the Agency, a £1¼ million investment produced an increase of 190,000 tons capacity. But it was estimated that to rebuild Normanby at a cost of several million pounds would produce capacity of only 290,000 tons. I could give figures of other capital investment programmes for comparable works where a much greater increase in capacity would be produced by a much smaller investment.

The right hon. Gentleman referred to the short notice given about the closure of the works. Impending closures always raise difficult problems of timing, notices and consultation, and it is seldom possible to arrange all these to the satisfaction of everyone, but everything possible was done in this case to minimise the inevitable difficulties. The possibility of a closure has been around for more than two years now and the works have been kept going much longer than would normally happen. At the request of the management, and out of consideration for the employees, the Agency enabled the company to struggle on for nearly two years longer than would otherwise have seemed possible.

It was uncertain how long the furnaces could reasonably be kept going, and it was only very recently that a firm decision to close had to be taken, especially in the light of the difficulties that would arise in attempting to restart the furnaces after the holidays. It would have been wrong before this to create uncertainty and anxiety in the minds of employees by rumours of impending closure. As soon as the decision to close became inevitable, a representative of the union was informed in advance of the public announcement in confidence, and, naturally and properly, he respected that confidence.

Consultation on keeping the works going would have served no useful purpose, since the possibility was not a real one and discussion would have merely prolonged uncertainty. The course of events reduced the period of notice so that it was rather shorter than would normally be reckoned desirable. Even so, rather more than a fortnight's notice has been given and the workmen will, with the paid holidays, be receiving pay for four weeks from the date of the announcement. In addition, the closure comes at a time when the unemployment situation in Tees-side has considerably improved and when prospects are brighter than they were a few months ago.

The right hon. Gentleman referred to the question of redundancy payments for the salaried staff. I am glad to say that negotiations are in progress, as are similar negotiations for the workpeople, and as such negotiations in respect of redundancy payments of salaried staff are taking place, it would be inappropriate to enter into details.

I can assure the right hon. Gentleman that no question of compensation for the directors has arisen. All the directors are part-time, and two of them are already full-time directors of another subsidiary of the agency.

On the point raised by the right hon. Gentleman about the salaried staff being found other jobs in the nationalised sector of the industry, the engagement of staff is a matter for the companies, but I am advised that it would be wrong to hold out hope of employment for the staff in the local subsidiaries of the Agency, although all efforts will be made to find other appointments for them.

Then the right hon. Gentleman referred to the question of whether the Agency was proposing to abandon haematite production in the North-East. I can assure him that the Agency has no such plans, nor has it plans for modernising Gjers Mills. The question of further investment will need to be looked at in the light of the demand—supply situation, the economics of investment and the effect on the disposability of the undertaking. There is no question of abandoning production on the North-East Coast.

Photo of Mr Hilary Marquand Mr Hilary Marquand , Middlesbrough East

May I remind the Economic Secretary that competing firms on the North-West Coast have been, and are being, modernised.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

I would remind the right hon. Gentleman of the economics of the matter, as well.

The hon. Member for Cleveland (Mr. Palmer) referred to the Skinningrove Works, where a considerable amount of investment has taken place since the war and further proposals may come forward. I cannot deal adequately with the problems of Skinningrove in the course of a short Adjournment debate.

The right hon. Member for Middlesbrough, East referred to the future of the site of the works. I appreciate his apology for not having given me longer notice. Had he done so, I should have done my best to make inquiries of the Board of Trade. I will take up the matter with the President of the Board of Trade in the morning and draw his attention to the site, if his regional officers are not already fully aware of its existence and the facilities mentioned by the right hon. Gentleman.

I cannot pretend that a debate such as this can be regarded as satisfactory by anybody. It gives me a great sense of disappointment to have to talk about the closing down of a works, whether old or new, with all that is involved. From what I have said I hope that everyone will realise that the right course has been chosen. A difficult decision has been made. If there is any fault to be found, it is that we took so long before we made it. But I think it was right to delay matters as long as possible to give the men concerned the best possible chance of finding other employment.

Question put and agreed to.

Adjourned accordingly at seven minutes past Eleven o'clock.