Three-Day Working Week

Part of the debate – in the House of Commons at 12:00 am on 10th January 1974.

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Photo of Mr Donald Coleman Mr Donald Coleman , Neath 12:00 am, 10th January 1974

Most right hon. and hon. Members will have had brought to their attention examples of how crazily the introduction of the three-day week has affected industry and commerce. Although I intend to speak mainly about the steel industry, perhaps I may be permitted to draw to the attention of Ministers some of the ridiculous anomalies in my constituency.

I have had representations from the dental profession and from dental technicians about a crazy anomaly that has arisen as a result of the regulations brought in by the Government.

It would appear that if a dental technician is engaged in his practice under the same roof as a dental surgeon or dentist he is exempted from the regulations and works normally. However, if he were to move and work in one of the commercial dental laboratories, which carry out 95 per cent. of the work of all dental practices, he would find himself caught up with the three-day working week. This is a stupid anomaly, particularly when it occurs in places where the work done is, so I am told, wholly for the National Health Service. This, of course, means that there is a discrimination against the NHS patient, as opposed to the private patient.

Another anomaly referred to me affects those who are engaged in small businesses, and in shops such as ladies' hairdressers. I am glad that some help, although rather meagre, has been given to them by the Government, but what is the position in respect of rates? These people are not able to operate then-business full time. Is there any possibility of their being given some amelioration in rating? If that is so, can the local authorities also have an understanding that the loss of revenue in that respect will be met from Government sources?

The main burden of what I want to say concerns the steel industry. The problems confronting it have always been threefold—international, structural and economic. The present dispute concerning the availability and utilisation of energy, and the Government's handling of the economic situation in general, are likely to do irreparable damage and greatly aggravate any future solution to the steel industry's problems.

The steel industry is in no position to relax its investment drive. Not only is finance required to increase capacity ; it is required for new production techniques, to meet consumer demand for an increasingly diversified range of products, for social requirements and for better environmental protection.

Financing in the industry had to meet two criteria—volume and continuity. Any investment programme must have a financial plan extending over several years and be capable of guaranteeing its completion. In February 1973, the Secretary of State for Trade and Industry issued his White Paper on the 10-year development strategy for steel. This report, although belated and inadequate, recognised the need for the developing strategy with investment to enable the British Steel Corporation to make a vital contribution to economic growth and at the same time, to assure Britain's place among the major steel producers of Europe and the World. On 17th December 1973, the Chancellor of the Exchequer, in his crisis measures, announced that the BSC—the only nationalised industry to be affected—would have to slash £70 million from its 1973 capital programme. The reaction of the chairman of the corporation, Dr. Finniston, was to say: We have to invest capital if we are going to produce for the future. If you really believe you have long term prospects, the thing not to do is slash capital investment. And one thing you certainly do not do is to cut one of the essential components of the economy, which is steel. The steel industry is one of the few industries with a positive balance of payments. These capital investment cuts and the broader energy crisis brought about by the Arab oil output reduction will certainly have to bring about a basic reassessment of the corporation's investment strategy. Of course, should the overtime ban in the coal mining industry be really prolonged and result in the cooling and collapse of coke ovens, the sum needed to rebuild them would be twice the cuts suffered in the Government's capital cut-backs. If damage to blast furnaces, and so on, is calculated, a phenomenal sum would be required even to get the steel industry back to the present level of production.

The effect of the increased oil prices on high density oil-using plant, such as open hearth furnaces, is likely to make them even more inefficient in comparison with the blast furnace/BOS route than previously, and it would certainly speed up the closure of the plants at present operating that kind of furnace.

It is one thing for steel workers to come to terms with rationalisation and closures on an overall development strategy, but it is quite another for them to accept them without consequent development and capital investment. The relationship between the steel industry-one of the commanding heights of the economy—and the economy itself works both ways. A basic industry like steel is so tied up with the level of economic activity that it is hypersensitive to the periodic stop-go pattern which has been imposed upon the economy.

Foreign competition is not only simply a question of structure and efficiency: it extends into pricing, imports and exports, and is now exaggerated by the world shortage of steel-making capacity to meet demand. Without international agreement during the world energy and resources crises regarding the availability and utilisation of commodities, the situation as a whole will deteriorate.

Not only is international trade in a bad way ; the domestic economy is plummeting into the worst period we have seen since before the war. Without soundly-based economic growth and international agreement on energy and basic materials such as iron and steel, long-term stability in financial investment in the steel industry is bound to be seriously damaged. If the steel industry is, as it is said to be, the economic barometer of the economy, the position we find it in today means that we in this country could well be doomed.

The corporation, as has been said, has reduced steel output to the level of 50 per cent. of normal operations in order to conserve its dwindling coal stocks. It will not be possible to sustain this level for more than a few weeks unless there is a speedy settlement of the coal and railway disputes. Let everyone understand clearly that the cry to the Government is, "Put aside your pride and see to the resolving of these disputes, which are destroying the industrial capacity of the country."

The remaining stocks of coal in the steel industry would have to be used largely to prevent blast furnaces and coke ovens from going cold. Rolling mills at present will be able to keep going a little longer only if supplies of ingots and semi stocks can be obtained, which it is clearly difficult to do as there is a world shortage and the transport difficulties arising from the railway dispute are also holding up the dispatch of finished steel. Electric arc steel making is seriously affected by a 35 per cent. cut in electricity usage. This type of steel making accounts for 20 per cent. of the corporation's output, and production will be substantially reduced by the cut in electricity supplies.

The corporation has decided to keep all its 226,000 employees on a guaranteed week—for the time being. This decision, however, can only aggravate the situation that the corporation finds itself in. It is at present losing £13 million a week, and with the cutback of 50 per cent. that figure will be inflated. The weekly wage and salary bill amounts to another £10 million, and when it is coupled with the massive increase which the corporation will have to pay for energy supplies, such as oil, the seriousness of the financial implications becomes even clearer.

Members of the TUC Steel Advisory Committee have had to fight hard for the continuance of the guaranteed weekly wage in discussions about the energy problem facing the BSC and the corporation's forward plans. In the immediate short term the jobs of at least 100,000 BSC employees are at risk. In the long term, if closures are forced, the plants might not re-open and jobs will not be available for the men involved.

Yesterday, in what was recognised by both sides of the House to have been a great and responsible speech, my right hon. Friend the Leader of the Opposition urged the Prime Minister to consider the need for a more flexible approach towards the dispute in the mining industry. I have tried to show that it is vital to the steel industry that a settlement comes sooner rather than later. We cannot afford to have the Prime Minister rigidly regarding phase 3 as the Hatter regarded his castle. The Prime Minister said that it is not too late yet to come to a settlement. Let his own words penetrate his own thinking.