Orders of the Day — Steel Industry

Part of the debate – in the House of Commons at 12:00 am on 23rd May 1972.

Alert me about debates like this

Photo of Sir John Morris Sir John Morris , Aberavon 12:00 am, 23rd May 1972

The hon. Gentleman has misunderstood me. I am not saying that this is anything more than approval on account, but I am going on to say that of this approval on account of £200 million, £80 million has already been approved and the only additional money is £120 million. When the Minister reads my statement he will realise that there is no disparity between what I have said and the position of the corporation. The Government should not try to mislead the House as they have sought to do in this statement.

Let me go on as quickly as I can—[HON. MEMBERS: "Hear, hear."] The Minister is not anxious for me to deal with a prospectus which is not wholly fair and frank. He will be told about these matters in a moment. For some reason or other we have been told where the major investment is taking place, not for the future, but going right back to 1970, and the figures range from those for 1970 to those for 1974. The figures for three of those years are for past expenditure, and the figure for only one year represents expenditure for the future. The total sum is £570 million.

Pangs of jealousy were felt in many parts of the country on learning of some of the places listed as receiving assistance, but let me examine some of the figures. For Llanwern there is a total of £90 million, but of that £80 million has already been approved, which means that there is only £10 million of new money to come. We are very much better off at Port Talbot. Perhaps this is due to the efforts of the local authorities, the works council and my colleagues in the House. Of the total of £45 million, £20 million has already been approved, which means that £25 million is new money.

We were envious of the total of £250 million for Scunthorpe, but of that sum £240 million—all but £10 million—has already been approved. Of the £130 million for South Teesside, half has been approved. Of the £55 million for Ravenscraig, £30 million has been approved. In the provincial Press those totals caught the headlines, but in the cold glare of day they sound very different from what the Minister sought to put before the House. We are told that the Minister has a great deal of financial expertise and a knowledge of the finance of industry. But I hope very much that when he next has the privilege of making such a statement, he will consider whether it is this kind of prospectus that he would put forward for private industry. Has there here been an attempt, unwittingly perhaps—I may be too charitable—to try to baffle the steel industry and the constituencies?

My quarrel with the report is what is contained in three or four lines. All the information that we have is that the Joint Steering Group has come to the conclusion—and this is approved by the Government—that the industry should by 1980 aim at an increase in its capacity to a level within the range of 28 million to 36 million ingot tons. In the Minister's statement, the one handed out, we are told that the British Steel Corporation agrees with that. But it was only after the Minister was questioned that he thought it fit and right to put the gloss on the statement he had made, the only statement of his original remarks, by saying that the Corporation veered towards the top end of the bracket, but that it accepted the forecast that has been put forward. Only then did he think fit to add that. What does the House think of this poor, veering Corporation, punch-drunk after the exhortations of study after study, and grasping this lifeline like a condemned criminal reprieved on condition that he serves a light sentence?

On 19th March of this year, weeks before the Minister's statement, we were warned by the Sunday Times: The possibility of a zero growth steel industry for Britain is the shock proposal which Industrial Secretary John Davies will put before the Commons within the next few days. That newspaper was wrong. We did not have it in the next few days but had to wait almost two months, and the Secretary of State did not come to the House to make the statement. If I may coin a phrase, he ducked it. He has also ducked today's debate. He is the man responsible for setting up the Joint Steering Group. It is he who should be answering the debate tonight.

The Sunday Times anticipated that The bottom of the range will be close to the 30 million ton mark, representing barely any increase at all from present day capacity. The Sunday Times was far too optimistic, because the figure at the bottom of the range is 28 million tons. So far as it can be ascertained—there is no fine art in this—present capacity is about 27 million tons. We are told that is all right because this is a realistic assessment. Is it not better to be realistic and, as my hon. Friend the Member for Flint, East (Mr. Barry Jones) said, better to aim for a realistic assessment?

But what confidence can the House have in an estimate which has a range of 25 per cent., with the bottom end a mere 28 million tons, and this to be achieved over a period of eight years from now? That is merely 1 million tons from the present capacity of the industry. The top of the range is only 25 per cent. higher. What confidence can there be about that? If we were told how the Steering Group achieved this basis, perhaps we could have had a much better and more informed discussion today, but we have been denied that information. All we are told is contained in the bare lines in the Minister's statement, which are not even sentences.

Much more important than our deliberations is that the prolongation of this uncertainty will cause the good will of the steel workers—they are the most important people of all—to be put at risk, and any trust that remains will certainly be at risk. Those workers have experience of redundancy after redundancy over the years. They know that in the years that lie ahead there are yet more redundancies to come. It makes their future so much easier when they know, first, that there is an efficient and proper policy to bring new and vital industry to those areas and, second, that if redundancies are to take place they will take place against a background of rapid and substantial expansion. In that atmosphere it is so much easier to persuade any workforce that there is a credible policy which can carry the confidence of the workers.

It is perhaps a trite saying that the industry has had a cyclical pattern, but over the years all of us who have taken part in debates—in my case over the last 13 years—have experienced, discussed and debated this matter. It was the Secretary of State who said on 24th May, 1971, that the industry moved in rather large bounds. Unfortunately they are not always bounds forward but are bounds in the same place. They share some of the characteristics of a rocking horse; there is the illusion of movement but not real advance. There should be the confidence to invest in the national interest if the industry is to meet the inevitable demands of the future—we are told there will be demands and dynamism after our entry to Europe—and the industry should be prepared for whatever situation may arise.

Recent years are littered with examples of the part that iron and steel imports have played in every balance of payments crisis. In 1955 our deficit on current account was £313 million and iron and steel imports were £99 million. In 1960 the deficit was £255 million and imports were £101 million. In 1964 the deficit was £376 million and imports were £106 million. In 1967 there was a £298 million deficit and imports were £120 million. That is the past situation and I am confident that it will be repeated time after time. A lesson we should have learned is that the imports of iron and steel products in crisis years have amounted to one-third to one-half of the balance of payments deficit current account. These are articles which are produced in this country. Imports in 1955–56, 1960 and 1964 contained between £40 million and £80 million of what could be called extra steel blooms, billets, bars and notably sheet to supplement domestic capacity. Those are the lessons that I thought we had learned from the past.

Many strictures have been said about the joint steering group. My right hon. Friend the Member for Newton asked on what basis it had been set up. Other hon. Members have commented that it is a constitutional monstrosity. However, there are respectable precedents for having a body of this kind. I had the privilege of chairing one of these steering groups for the railway industry. We set out our conclusions in 60 pages or more in a White Paper which was placed before the House and was debated. The whole exercise was chaired by a Minister.

There are good reasons from time to time for carrying out such an exercise where there is serious concern within the industry, where there is need by a Government Department to know the condition of the patient and perhaps the need to weedle the industry to accept particular medicine from a Government. But if there is to be this departure from responsibilities it must be on a temporary basis, and the sooner this kind of machinery is out of the hair of the British Steel Corporation the better.

Those responsible for the industry and the Statute—I checked it this afternoon to refamiliarise myself with the details of the Act—are the industry and, charged with specific responsibilities delineated in the Act, the Minister. With a body of this kind in existence year after year, we blur the edges of responsibility, we fudge the responsibilities, and there is an alibi for both sides if anything turns out contrary to expectations.

On 24th May the Secretary of State said: I am anxious to disengage from excessive involvement in the management problems of the Corporation."—[OFFICIAL REPORT, 24th May, 1971; Vol. 818, c. 76.] Then on 16th December, 1971, the Under-Secretary of State, who is no longer a member of the Government, said: By definition, if the report is in my right hon. Friend's hands, the work of the steering group comes to an end and there is no change from the original position."—[OFFICIAL REPORT, 16th December, 1971; Vol. 828, c. 973.] There it is. I hope that from the Under-Secretary's speech tonight will emerge a firm, clear and unequivocal statement about when this joint steering group is coming to an end. I think we are entitled to know.

I again quote from the Financial Times: It is at this stage that the joint review, instead of being a relatively harmless exercise, could become positively harmful to the industry. What are the real reasons for the necessary investment being denied to the industry? There is no time to go into Lord Melchett's plans, but the Sunday Times said "Government slashes Melchett's plans." Indeed, it perhaps stems from the article in the Economist which suggested that it would be so much better to import from a lower-wage country like Japan rather than produce in the United Kingdom. We know that expenditure on the public sector is contrary to the whole philosophy of the Government.

Lastly, the reason why the stop date on any determination by the Government is 1974 may be the possibility of our entry into the Common Market. We know that the Steel Corporation's production is 50 per cent. more than that of its nearest EEC producer. The point was put last year in an official answer by the Commission to a Dutch Member of Parliament stating that State monopolies are incompatible with the goals of the Common Market and should be modified. We have been told time after time by the Chancellor of the Duchy of Lancaster that the size and status of the steel industry is not in question. It is very much above the 13 per cent. size advocated by the ECSC. Whatever may be the position about the present size and status of the industry, we want to know about the future. Is it because there is a bar to future investment that the Government cannot give any definite announcement to the House that they are in a position to give approval to what will be needed after 1974? I remind the House—this may be the real truth why there is a stop date in 1974—of the document of 4th May of the Common Market in which it was said that The British Government's existing powers to control BSC investment programmes will"— after entry into the Common Market— be subject to the overriding authority of the Community. That is perhaps the real reason why the Government are unable to tell us anything about what will happen after 1974.

The Government have lost the opportunity of ending uncertainty, of giving a message of confidence to the steel communities and of protecting the future trading position of this country. The industry's management and work force have a proud record and a high degree of partnership and skill. As one hon. Member has said, time is not on the Corporation's side.

We are wholly dissatisfied with the mouse which emerged from the Minister's statement last Monday and with his pathetic speech today. I invite my right hon. and hon. Friends to vote for the Motion.