Orders of the Day — European Community (Steel Industry)

Part of the debate – in the House of Commons at 9:46 pm on 23rd October 1979.

Alert me about debates like this

Photo of Hon. Adam Butler Hon. Adam Butler , Bosworth 9:46 pm, 23rd October 1979

I was saying that we have not debated this matter for nine months and that since then the prospects for the steel industry had not improved. Indeed, the British Steel Corporation, in common with the rest of the European steel industry, is still not generating the funds needed to make an adequate return to the taxpayer for the massive investment which has to be made in the business and to justify a continuing high level of expenditure.

Furthermore, unless the corporation ensures that it is viable and competitive, it can neither rebuild its home market share nor secure vital export orders. The Government have made it very clear to the House on a number of occasions that we are determined that viability should be restored as quickly as possible and we look to management to achieve the targets that they were set, both by the previous Administration and by this Government.

Steel is an international business, and it is now clear that we cannot proceed in isolation from what is happening in the rest of the world, and, in particular, other parts of the European Community. The House has frequently paid tribute to the anti-crisis measures introduced under the guidance of Commissioner Davignon. I accept the need for them, if temporarily, because I am a firm believer in the free market philosophy. But I remind the House that these measures were not intended to provide a permanent cushion of protectionism. They were designed as part of a wider plan to tackle the problems of the European steel industry. They were conceived to create a breathing space while steel undertakings could carry through their own restructuring plans consistent with Community general objectives. I believe that those crisis measure were welcomed by the corporation, private producers and, indeed, the unions.

If this restructuring does not take place, the stronger steel producers will refuse to renew the measures and we shall lose the opportunity for orderly change in our own industry. I do not believe that that is an empty threat, as Ministers who were previously involved in negotiations on steel matters within the Community will readily recognise.

We in the United Kingdom have come a long way down the restructuring path and are well ahead of most other European countries. The previous Administration published a White Paper and endorsed moves in this direction, though it seems to me that when the going became tough they did not stick to their last, or follow the logic of their own arguments. Even so, I must remind the House that in the last two years 5 million tonnes of steel-making capacity has been eliminated, with the loss of about 15,000 jobs which, if we add the losses in British Steel Corporation product mills at the finishing end of the business, amounts to some 24,000 jobs.

Among the closures that were accepted under the previous Administration were operations at Hartlepool, East Moors, Ebbw Vale and a number of others. It is a long list and there is no rejoicing about that. I believe that I am stating a fact when I say that it was under the Labour Government that the Corporation announced its proposal to discuss with the TUC committee the future of iron and steel making at Corby.

The British Steel Corporation's current production capability of some 22½ million liquid tonnes a year compares with an actual output of over 26 million tonnes in 1971. In the last decade no other European country has actually reduced capacity and output by as much as we have. Indeed, some countries have expanded their capacity. Despite the low level of demand that has prevailed since late 1974, other member States still seem to be thinking about how they should respond to present problems. That is not a healthy situation.

It is because of this lack of positive action throughout the rest of the Community that the Commission has proposed the decision which we are debating, in its latest form, tonight. Throughout Europe, capacity utilisation is, on average, just under 70 per cent. Under-utilisation of capacity has been exacerbated by the coming on stream of large plants in this country and elsewhere, because construction was well in hand before the depression in the steel market.

The Commission, after consultation with the member States last year, set general objectives for the European steel industry. It sees the State-aids decision as a means of preventing member States from using aids in a manner which could stand in the way of such Community objections.