Before I call the Secretary of State for Industry, may I inform the House, as I did earlier, that far more hon. Members have indicated a wish to speak than I am likely to be able to call? I hope that hon. Members will not come to the Chair, because that will not help. If speeches are short, far more hon. Members will be called, but that is dependent on the House's response.
I want to start by trying to set the steel dispute in a wider context. We in this country are in relative economic decline. Only a generation ago, our wage earners, salary earners and pensioners had a higher standard of living than those in practically every other country. Now the wage earners, salary earners and pensioners in many other countries have higher standards of living than do ours.
That is not because of any lack of talent in this country. Nor is it because all our economy is uncompetitive. Many of our manufacturing firms, large and small, are world-leaders. The City and our commerce, distribution, invisibles and agriculture are all, in general, excellent. But the good performance of many is offset by the bad performance of some, and our average is less good than that of our rivals. That is why we are in relative economic decline.
Governments must take much of the blame. We have relatively low pay, relatively low pensions and many relatively inadequate public services because too many people have been allowed—perhaps even encouraged—by Governments to ignore the economic reality that jobs and earnings—and the public spending made possible by them—depend upon customers and upon being competitive.
Nationalisation has actually helped to breed indifference to the customer and to competitiveness. Management has been, and is, patchy, ranging from the brilliant to the poor, and unions have often not understood the link between competitiveness and satisfied customers on the one hand and pay and jobs on the other.
Unions, in order to obtain higher pay, tend to threaten private employers with bankruptcy and public employers, nationalised or State, with disruption and damage to the public, and they tend to threaten employers, regardless of the demand for the product or service, regardless of the demand for their labour and skills, regardless of the profit or loss of the employer, regardless of the scope for increased productivity and regardless of the freedom of union members to move in search of higher pay if they can get it elsewhere. The word "regardless" is near the heart of the British disease.
Unions often force private employers to choose between the immediate disaster of a long strike if they resist or the deferred disaster of crippled competitiveness and squeezed profit if they give way. What British unions in general tend to demand, and extract, from employers is all too often something for nothing—increased earnings regardless—a demand for higher pay without a readiness to co-operate in financing that higher pay by higher productivity. The result of such pay increases is higher unit costs and so higher prices, tiny real profits, blunted competitiveness and therefore fewer jobs and lower pay and pensions than would otherwise be possible.
Employers, including the Government when they are involved, have tended to give way under the pressure of strikes or strike threats. Moreover, the public have come to see giving way as the decent and normal thing to do. The Government are called upon to "settle it"—meaning to give way—often with the taxpayers' money.
The results have been lamentable for the people of this country. We have, largely because of a widespread "something for nothing" attitude, lost competitiveness, lost jobs and lost the better pay, better pensions and better public services that we could have had and that most of our neighbours have. We have all too often bought peace at the cost of jobs, pay and pensions.
The steel dispute is a classic example of several aspects of the British disease. The background is nationalisation and centralised decision-making. The BSC management, successive Governments and the steel unions united in over-optimism. What is now seen to have been a too-ambitious expansion plan was launched Almost immediately, demand turned round and began to fall.
The previous Government postponed the necessary closures, though they allowed some, so that what could have been earlier, but fewer, redundancies, at a time when there were more other jobs available, has built up to a larger number of redundancies at a time when there are fewer other jobs available.
I understand and sympathise with the steel workers. I have made it known to Mr. Sirs that I am willing to see him if he asks to see me—though not as part of the negotiations; that is for the BSC and the unions. The steel workers have seen an optimistic steel management, and they now see what may seem a pessimistic one. One of the disadvantages of nationalisation is that a single, central management judgment tends to be made, whether it be optimistic or pessimistic.
The truth is that home demand has fallen. The British economy has been pretty stagnant. British cars and mechanical engineering, both big steel users, have declined. Our steel prices have been, and are, high, our steel quality is not universally good, and there are many competitors, old and new, to fight for our markets at home and abroad.
So there is no escape. Demand has fallen, but the BSC proposes to keep a substantial reserve of spare capacity to meet increased demand when it comes.
I repeat that I sympathise with the steel workers, but it really is not sensible for them to insist upon higher pay regardless of whether productivity is improved.
My right hon. Friend talks of his sympathy for the steel workers. I should like to draw his attention to a card that I received today from the family of a steelworker—and I should think that many of my hon. Friends have received similar messages—thanking me for bringing up the subject of whether the steel men are afraid to go to work across the picket lines. The card reads:
Yes, they are afraid of crossing the picket lines—if they do they have been threatened that their union cards will be taken away. Sheer Blackmail, I say, by the Communists who are, I'm sorry to say, getting a strong hold in Corby. It's frightening when you see your husband afraid to go to work—one panics about the future…For God's sake do something.
I wonder whether my right hon. Friend can give hope to my correspondent and to tens of thousands of other people in the country that the Government will overcome this tyranny.
Before the right hon. Gentleman leaves the question of demand, will he recognise that it was not only in this country that there was this mistake and the overestimate regarding demand but that it occurred in countries; which have privately owned industry and publicly owned industry, and that it was endorsed by the Government of which he was a member?
I would not dream of denying either proposition; they are undeniable.
I was saying that the steel workers were really not being sensible in insisting upon higher pay regardless of whether productivity was improved, because their employer is bankrupt. The British Steel Corporation and the unions are the negotiators but, as I understand it, BSC's original offer was not 2 per cent., as widely quoted, but 2 per cent. to honour a commitment made the previous year and up to a further 10 per cent. from the negotiation and implementation of improved productivity at local level.
The right hon. Gentleman really should get rid of this myth that in fact there was on offer of 10 per cent. The BSC is well aware that there was no possibility of 10 per cent. under the offer it was making, and it was made on the basis of a 1 per cent. decrease in manpower for a 1 per cent. increase in wages. Let us get the position straight.
The hon. Gentleman is really not contradicting what I am saying. There is a large increase based on productivity to be obtained. The BSC certainly offered it and is offering it.
The average steel worker is paid about£110 per week gross. The offer now is of 8 per cent. in return for a central agreement to facilitate improved productivity, plus 4 per cent. from local lump sum bonus schemes. The BSC is so confident that these schemes will yield at least 4 per cent. that it guarantees this as a minimum payment one the schemes are agreed. Also, it offered an advance payment of 4 per cent. during the current quarter to encourage people to negotiate the schemes by 31 March 1980. The lump sum would be worth more than£50 in each quarter for the average steel worker, and increases from productivity schemes of the traditional kind would still be available on top of all this. In other words, the BSC offers the chance to earn a pay rise of at least 12 per cent.
I ask the House and the steel workers to look at the prospects. They could be good. Look at the equipment: it is now as modern as any in the world. Look at the high levels of output achieved on the Continent and at the high levels of pay they finance.
The offer will enable average steel earnings to rise to£124 gross per week.
Yes, including overtime. But the unions will not at the moment sign the agreement on which the 8 per cent. offer is conditional and they will not agree to the conditions for the 4 per cent. payment. They want the 8 per cent. without strings and 5 per cent. as an advance payment against local bonus schemes. They accept the principle of those schemes, but they provide no assurances at all.
So it is not just a matter of 12 per cent. against 13 per cent.
Does the right hon. Gentleman accept that the most difficult time to negotiate a productivity agreement is when markets are collapsing and falling, and that the only way to overcome this at this time is to restrict imports of steel, which will make possible a bigger market and therefore give flexibility to negotiate on greater productivity and a largerwage increase?
I should like to go one stage further in my speech before I answer the hon. Gentleman's proposition. I ask him to wait until I get to that stage in my argument.
The BSC's offer envisages that the extra money would be earned by the steel workers. This is important on two counts. First, it really is not reasonable to ask taxpayers—and all workers, including the low paid, and all pensioners are taxpayers, and the steel workers are taxpayers—to continue to pay a large subsidy to steel workers when the steel workers have the chance to earn more for themselves. Taxpayers, many of whom are paid much less than steel workers, are this financial year providing£1,800 for each steel worker towards his average earnings of£5,500. Taxpayers will have paid by the end of this financial year about£4,000 million for steel, and are being asked to pay a further£450 million in the next financial year. There can be no doubt that taxpayers have played, and are playing, their part.
The second reason—and I come to the proposition that has just been put to me by the hon. Member for Caernarvon (Mr. Wigley)—why a further subsidy from the taxpayer, whether it is a direct one or by way of bearing the continuing losses that would follow from the hon. Gentleman's proposition of import controls without immediate improvements in productivity, is not sensible or even good for the steel workers themselves is this. Steel is an internationally competitive industry. Customers have a very wide choice. They will not necessarily buy British. There are examples of really competitive manning levels in the BSC—for example, the Thrybergh Bar Mill—but there are too few of them. In general, the BSC is overmanned and uncompetitive.
Yet steel unions—and apparently the Labour Party want once again to defer the time when the steel industry becomes competitive. This may be intended to be kind to steel workers, but it is not. Every year that they defer becoming competitive their rivals move ahead. Their competitors, their rivals, are increasing their productivity faster than British steel workers are. Their competitors are accelerating ahead. Every year that the British steel industry does not catch up leaves us not the same distance but fur-their behind; and the result of being left further behind is that the industry will have to shrink even further, there will be fewer jobs, and better pay will be further out of reach. Each delay will destroy more steel plants and more steel jobs.
I follow the right hon. Gentleman's argument, but has he taken into account the social consequences of his policy? May I ask him to take into account the Shotton situation? It may have come to his attention this week that an additional 1,000 jobs are likely to be lost, which added to the 6,500 already to be lost, gives a huge total indeed. Does the right hon. Gentleman think it wise—indeed, is it not foolish?—that within the short space of three months nearly 8,000 people should be put on the dole? Is not this one of the falsities of his argument?
The hon. Member for Flint, East (Mr. Jones) was a member of the Government who, in the end—I pay credit to them for it—bit the bullet and brought to an end steel making in several towns that were mainly dependent for employment on steel. All credit to them. We critise them for delaying the decisions and we criticise them for changing their tune now that they are in opposition. It is right for the Government to take action to mitigate the social consequences of these decisions. The Government have shown, in the announcements made by them about Shotton and Corby, that they do not wish to avoid that obligation in any way. Of course we shall fulfil it.
We have had interventions from three Labour Members representing Welsh constituencies, and they have talked about jobs. Has my right hon. Friend seen on the tape that Signode Steel, an American company, has stated today that because of the steel strike and secondary picketing it has pulled out of a project to build a big plant and create many jobs in Swansea? Will my right hon. Friend please get across to Labour Members how much damage the strike is doing to the economy?
Yes, I have seen that information. I fear that that lost oppor- tunity will not be the last, and they will not be the last jobs to be lost if the strike continues. I am arguing that increased productivity is intensely in the interests of the steel workers.
The pressure to become competitive depends upon steel workers accepting that it is in their own interests to become competitive. If taxpayers find more money the steel workers will be lulled into thinking that they need not become more competitive. Yet, despite all these arguments, it will be presented—it is being presented—as cruel and stupid not to put in some more of the long-suffering taxpayers' money to buy peace yet again. But it is neither kind nor sensible to buy peace. It would be another step on the downward path, a big step, because some managements and many unions would think that they could still go on ignoring economic reality.
That is what this strike is about—ignoring or not ignoring economic reality. It is not about higher pay. There was not much difference in money between the figures being discussed when the negotiations broke down. The significant difference—it is a big one—is where the money comes from. As I have said, the choice is whether the money comes from the taxpayer—who will already have found£4,000 million by the end of this financial year—or from higher earnings through higher productivity, better work practice, better management and better manning at all levels. It will not do to pay lip service to higher productivity but insist on the extra wages regardless, and then to insist on more wages for higher productivity on top. Unit costs would rocket, making us even more uncompetitive.
The question is not about higher pay. The question is whether the higher pay is in return for something or for nothing. Should the steel worker get something real in return for giving something real or should he get something real in return for the promise of something real? That is the question.
It is not enough to promise to achieve higher productivity. It is a sad fact that there have been agreements before—like the one in January 1976—in which managements and unions promised to collaborate to achieve higher productivity. Nothing much has happened. The gap in productivity between us and our competitors is wider than ever, despite all our huge investment and modern plant and despite the promises. This time both sides must reach an agreement that will produce results.
It is said—no doubt it will be said again today—that I take management's side. The very use of the concept of "sides" is another symptom of the British disease. There is a common interest—of pensioners, of workers, of managers—in industry being competitive. The more taxpayers' money has to be used to finance loss-making industries, the less there is for the taxpayer and for public services. I speak, or I try to speak, for all the interests concerned—for steelworkers, for steel management, for steel users, for steel suppliers, and for pensioners and for taxpayers.
This dispute is really tragic self-injury by the steel workers. The clash is between one group of workers and much larger numbers of workers whose jobs in other industries are being, or will be, damaged by this strike. This dispute is a clear example of the British disease—a demand for higher pay without a readiness to co-operate in financing that higher pay by higher productivity.
This dispute is an example of the reasons why British wages, British salaries, British pensions and British public services are poorer than they could be and poorer than they are in many countries abroad. This dispute will inevitably lead to fewer steel jobs and an even smaller steel industry; and yet, if a sensible settlement is reached that the British Steel Corporation can finance within the money available from customers and taxpayers, there is real hope of a competitive British steel industry paying its way and paying good earnings for good output. That is the prize.
Where does the Labour Party stand? Does it stand for the interests of everyone, or is it part of the British disease arguing in favour of something for nothing? I hope that it stands where we in the Government and those on the Government side of the House stand—for everyone. Opposition Members may mock, but it is we on this side of the House who stand for the interests of the pensioners, the wage earners, the salary earners, the taxpayers and the steel workers.
This debate takes place as we enter the third week of a dispute in the steel industry that is of such potential danger to the whole of the British economy that I am astonished that the Secretary of State should at this stage have made so thin an offering to the House and that he should have gone back on all the basic principles which have governed Government and the industry in past years. [Interruption.] We are dealing with the first national strike in the steel industry for 53 years. Does not the hon. Gentleman think that that is important? Does he not want to know why, when for 53 years a moderate trade union has not called for a national strike, it has called for one now?
On one matter I agree with the Secretary of State. It is impossible to isolate this debate from the dispute. This is not a dispute between management on the one hand and unions on the other. This is a dispute between the Government and the unions. [HON. MEMBERS: "Is it?"] It is perfectly true. Before Christmas I gave the right hon. Gentleman the chance to refute a story in The Guardianthat he wanted to foment a strike in the steel industry. I accepted his refutation. But, in his initial suggestion of a 2 per cent. increase, however phrased, in real terms, he was saying that that was the only money on the counter. That suggestion would have led any sensible person to assume that a strike was exactly what the Secretary of State was after.
This dispute arises out of one major decision—the decision by the right hon. Gentleman that there will be no further support for the steel industry and that it must break even starting in March 1980. That is the cause of the dispute.
The right hon. Gentleman asks about the cause of the strike. He is repeating what the TUC has said. To paraphrase him, is he not now saying that this is a political strike? Is that his view, and is he in favour of political strikes?
I said that this is a strike between the Government on the one hand and the unions on the other. The hon. Member for Christchurch and Lymington (Mr. Adley) can make it as political as he likes. No doubt he will.
What is new about all this? My predecessor, the right hon. Member for Chesterfield (Mr. Varley), said in the House that part of the then Government's policy was that
the financial objectives of the BSC should be to break even by the financial year 1979–80."—[Official Report, 22 May 1978; Vol. 950, c. 1105.]
Our requirement for BSC to break even is for one year later.
I shall answer if hon. Gentlemen will give me a little peace and quiet in which to do so.
The right hon. Gentleman knows—if he does not, it is simply because he is deaf, since it has been said to him over and over again—that there is a difference here. There is all the difference in the world between being told by BSC that it hopes to break even by March 1980, saying that that is an excellent idea and that it should be a target, and putting a rigid handcuff upon the industry and refusing it any further money in the light of the current conditions, many of which were imposed by the right hon. Gentleman and the Government.
Is the House to understand, therefore, that the reference to it being Government policy for BSC to break even was meaningless when my predecessor used it? He did not refer to a forecast by BSC; he referred to it being Government policy for BSC
to break even by the financial year 1979–80.
Of course it was Government policy that it should break even, but the economic conditions that occurred after that—mostly attributable to the right hon. Gentleman and the Government Front Bench [HON. MEMBERS: "What about the world slump?"] Hon. Gentlemen shout about a world slump. I will deal with that in a moment—I intended to do so—and we shall see exactly where we are on that issue.
Let us examine what the Secretary of State is saying—[Interruption.] Perhaps hon. Gentlemen will do me the courtesy of listening to me telling them what the right hon. Gentleman says. The Secretary of State says that labour productivity is at the root of the trouble in the steel industry. He says that productivity is not good enough. After his statement on Monday on the steel dispute, he was asked whether he would agree—as the unions seem to want him to agree—to an inquiry into the steel industry. He replied, and rightly, that there had been a report by the steel sector working party of the NEDC and that that was a sufficient inquiry.
I pointed out last Monday that, according to that report, from 1975 to 1978—I do not think that it goes further than that—there had been a rise in labour productivity of 16 per cent. Part of the right hon. Gentleman's case is international comparisons. He says that our labour productivity is not as good as that of other countries. After referring to the labour productivity of 16 per cent., the report continues—
The right hon. Gentleman is very impatient, bearing in mind the fact that he accused me of misquoting and denied last Monday that the report spoke of 16 per cent. productivity. Perhaps the right hon. Gentleman had better listen. The report says:
International comparisons of labour productivity are open to many criticisms—differing definitions of the industry, the extent to which sub-contractors are used etc.
In other words, there is no real standard of comparison between the two. The report says—and this is the important point on which the right hon. Gentleman intervened a moment ago—that, though productivity had risen 16 per cent. since 1975, it was still 13 per cent. below the 1973 level. That is the point the right hon. Gentleman made.
However, the right hon. Gentleman's memory seems to be failing from time to time these days. Perhaps he has forgotten what 1973 was like. It was the year of the Barber boom. It was the freak year in which there was a 7 per cent. rise, in real terms, in GDP. It was the year in which money was printed so fast that one almost felt that forgers had got hold of it. That is the basis of the 13 per cent. If the right hon. Gentleman is advocating that we go back to the Barber year, I do not think he will take the House with him.
I agree—so do the unions—that we must improve productivity. It has never been part of my case that we should not. However, the right hon. Gentleman said that, following the agreement of 23 January 1976, nothing much had happened. Nothing much has happened, except that the union has voluntarily agreed that its manpower should be cut by 35,000 men. Is that the "nothing much" that has happened? About 35,000 families are involved in redundancies, and the Secretary of State says that nothing much has happened.
Does my right hon. Friend appreciate that this afternoon I have received a communication from the Welsh director of the British Steel Corporation, Mr. Peter Allen, indicating that there will be nearly 7,000 further redundancies at Port Talbot and 4,500 more redundancies at Llanwern? Does my right hon. Friend recall that the Secretary of State did not even refer to these matters? What kind of a Minister is he?
Nor did the Secretary of State point out that, as a result of those closures, which have nothing to do with the immediate dispute in the steel industry, 21 pits may be idle and mine workers will be out of work. [HON. MEMBERS: "Tell that to Mr. Sirs"] Hon. Gentlemen should take note that Mr. Sirs has impressed the country. He has shown that he is extremely careful, cautious and very moderate. The country appreciates that.
In the light of the figures, how dare the Secretary of State say that the union has not co-operated in the attempts to get productivity moving? There has been an increase in productivity partly because the unions have been willing to accept self-discipline and appalling hardship.
The right hon. Member has called in aid a number of reports. Perhaps he has not read the Scholey report on the steel industry which was referred to in The Timestoday. That report followed a visit by the unions and management to Japan. It is an important report which probably indicates more clearly than anything else the challenge to the British steel industry, and yet the publication of the report was vetoed by the union representatives.
It was vetoed by the union representatives—if one must use emotive language—because the British and Japanese steel industries are not on all fours. The Japanese industry is composed of a wider group than our industry, and fair comparison could not be made.
Is it not fairer to compare like with like? There is a new complex in Redcar where the manning levels and productivity compare favourably with those anywhere in the world. That is what British steel workers do when they are given the machinery.
The Scholey report was not published because there was no agreement between the unions and the management in the delegation to Japan. In a single plant there was a discrepancy of 7,000 workers.
The Secretary of State is impertinent to tell the men who have accepted appalling redundancies that they are not playing their part. The unions agree that there should be better productivity; but better productivity does not necessarily mean that there should be a contraction of the industry. That is what the Secretary of Sate is after, and that is the difference between him and the unions. I have no doubt that the Secretary of State's view is based upon the Treasury forecast for 1980 to which reference is made in the NEDC report.
The Treasury forecasts that there will be a fall in gross domestic product in 1980. That is certainly one of the indicators of demand in steel. The report gives other reasons, all of which are within the competence of the Government, and some are part of the Government's central economic policy. The report refers to the strong rising tide of imported finished manufactured goods. Part of the difficulty is caused by the Government's failure even to contemplate regulating the growth in imported manufactured goods.
The report states:
The rapid rise in the imports of finished manufactured goods into the United Kingdom is a very worrying development for the United Kingdom industry.
We have heard not one word from the right hon. Gentleman about how he proposes to deal with that. The report continues:
The high exchange rate combined with a rate of cost inflation above those of our major competitors is reducing the profitability of our export business.
Those factors are well within the Government's competence and are affected by their central economic policy.
Even in the light of that, perhaps especially in the light of that, we should be aiming not for contraction but for a general expansion of the steel industry. I shall explain what I mean. Last year the demand for United Kingdom steel amounted to 17 million tonnes. The Government's requirement that steel production be contracted to 15 million tonnes is a deliberate policy of refusal to meet existing customer demand.
The Secretary of State likes to claim that he is the invisible man. All I can say is that for an invisible man he casts a large shadow. He talks in terms of pure profit. He does not talk about the importance of the industry. He is denying the resources necessary to the steel industry, and that is forcing the industry to contract production from 17 million tonnes to 15 million tonnes. It seems that the right hon. Gentleman agrees with me.
In view of the statement by the right hon. Member for Chesterfield (Mr. Varley) when he was Secretary of State that the steel industry should reach break-even point in 1979, will the right hon. Gentleman address his mind to the central issue of how the industry is to reach a break-even point even by 1984?
My right hon. Friend the Member- for Chesterfield (Mr. Varley) was in receipt of the hope and aspiration of the British Steel Corporation that it would break even in the economic circumstances of that time. It is interesting that the Secretary of State has not been able to quote a statement by my right hon. Friend the Member for Chesterfield in which he applied the rigid ultimatum now being issued by the Secretary of State, and the right hon. Gentleman's officials have examined every statement and utterance by my right hon. Friend.
The contraction is a deliberate act of Government policy. I cannot imagine anything more foolish and futile at this time. Perhaps the House is unaware of the inter play and interlocking of issues. We are told that we face one of the most dangerous international situations since the war. What are we to do?
Exactly. That is the Government's policy. We shall have to rely upon foreign steel. I suppose that next the Government will refuse to continue the production of titanium if no profit is made so that we can rely on Russian titanium. Such an attitude is more than stupid. That is the right hon. Gentleman's philosophy.
The right hon. Member is dealing with an important issue. Of course, if the contraction of the industry as envisaged weakened our capability to maintain our defences, the position would be very serious indeed. I have drawn my right hon. Friend's attention to the matter and he has given assurances that there is no risk of that. If the opposite were proved, there would then be a case for intervention.
The right hon. Gentleman and I are old enough to remember when, in the 1930s, the Government cut down on steel production in Jarrow. By 1939 there was not enough steel being produced in Jarrow. He knows that as well as I do.
We are not only concerned with defence. The Secretary of State is very keen on international comparisons when they concern labour productivity, even if the report which he blesses states that it is impossible to make such international comparisons. It has to be taken with the reservation that I quoted.
As far as I know, there is no group of companies on the Continent that has broken even in steel making. One group of steel makers in West Germany made a profit of 3 per cent. last year. All the others are losing money. In most of West Germany, and in the whole of Belgium, France and Italy, the steel-making concerns are so much in the red that, according to the NEDC report, not one of them expects to break even before the end et 1981 at the earliest. Yet the Secretary of State talks about profits.
The right hon. Gentleman should look again at the figures and at the operating costs. He is taking into account all the costs, including notional interest. The majority of steel-making concerns in Europe are subsidised up to the hilt, in particular by the subsidies on coking coal. If the subsidy on coking coal given in West Germany were given in Britain, the difference would be£135 million. With that, I would expect a settlement of the dispute in the steel industry very quickly. That is the real difference.
Labour productivity is only one of the many factors necessary in steel making. The report loved so much by the Secretary of State, and on which he tells us to base our words, bears me out. It states:
Most importantly the emphasis of the studies has been on all aspects of efficiency—plant and equipment, use of materials as well as labour, since one cannot be satisfactorily studied without reference to the others.
That is correct. That is why Labour Members are appalled when the Secretary of State takes such a small view of the industry. When the Secretary of State talks about productivity, he is really talking about wholesale sackings.
During the debates last year, I pointed out that everything was interconnected-steel, shipbuilding, motor cars, the NEB, regional aid, and so on. They all dovetailed in together. The right hon. Gentleman's philosophy does not accept that there can be an economic plan for the whole country. He compartmentalizes everything, whereas all those industries are interdependent and interrelated. Thus, when we deal with steel, he sees the decision as though it were a commodity in a supermarket—"Please may I have a million tons of steel?"
This issue is central to the whole economy. If British steel goes, British manufacturing goes, together with its many industries, including coal. That has been proved by the South Wales decision today and the closure of pits that will follow the 11,000 redundancies in the steel industry. That will be catastrophic in terms of national wealth and in human terms. It will result in the death of whole communities up and down the country. We heard—I wish the Secretary of State had told us himself—about the troubles which will afflict South Wales, an area that is hit over and over again by the same policies and the same lack of a general economic approach.
Because of the Secretary of State's policies, men may never work again in the areas in which they work today. That happened before the Second World War, and it could happen again. That is the position with which we are faced. That is why we take this view. That is why workers in other industries will not be impressed by the Secretary of State's attempt to try to put a wedge between them and the steel workers.
The right hon. Gentleman spoke of steel workers' pay being subsidised by other workers. They feel—I have heard it said up and down the country—that a 2 per cent. offer in new money is an insult. They are right. Also, they well understand that the continuance of steel making safeguards their own livelihoods. They know that there are certain industries which must be safeguarded, and which they are prepared to see safeguarded.
All the Secretary of State's attack on the cost of steel making applies to the far greater cost to the taxpayer and other workers in Britain of protecting farming. If the Secretary of State has a mind to try to save the taxpayers that cost, I suggest that before putting forward such a proposal he should have a word with the Minister of State, whose brother, the president of the NFU, might have a totally different view on the matter.
The Secretary of State is quite unaware of how much the rest of the economy depends on steel. He is like a man who, observing a fire in a building, which is in danger of burning down a whole town, refuses to call the fire service because it might cost the taxpayer money.
The answer to that is twofold and is contained in the sector working party report. First, there is the import penetration of finished goods and, secondly, there is the subsidy on German steel making.
The Secretary of State asked me a question on Monday. I replied in the affirmative but he was so busy asking me the question that he did not notice what answer I was giving. He asked whether I would agree that the taxpayer should pay more. The answer is "Yes, of course." That would also be the taxpayer's answer.
Interestingly, the report of the sector working party, which the right hon. Gentleman is so keen that we should observe, agrees with me. On page 8 it urges the Government to
support our steel industry in no less favourable a manner than that adopted by the Governments of countries with whom it has to compete, especially the ECSC countries".
When are we to have that subsidy on coking coal in this country—£135 million worth of it? When are we to ensure that that coking coal does not come into this country at subsidised rates?
The point about the taxpayer having to support the industry, having to give more money to it, comes up again and again in the report. It says, for example, that
future sales will be based increasingly on quality rather than quantity.
The report goes on to explain what that means. It says that
the industry needs to attract and retain more skilled people, engineers and technicians, to work in the increasingly technically sophisticated industry of the 1980s".
How on earth is that objective to be achieved, and how on earth are the necessary research and development to be obtained, unless more money is available? It cannot be achieved within the nil cash limits set by the right hon. Gentleman.
There is one other point to which should like to refer, and it occurs on page 3—
The right lion. Gentleman referred to a nil cash limit. We are providing£450 million from the taxpayer in the coming financial year, on top of£700 million this year.
I was talking about how much the right hon. Gentleman would have available for research and development, and the answer is nil. He should work it out for himself. Perhaps he has forgotten again.
On page 3, the report says:
Major public expenditure will be required to ameliorate the social consequences of these changes.
This is a very costly business. The right hon. Gentleman mentioned the£450 million and the£700 million, pointing out that the rest of the workers of this country subsidise the steel workers of this country to the tune of£1,800 a year per head. The fact is that about 80 per cent. of all the expenditure in the steel industry during the past five years has been on capital investment. But never mind: the right hon. Gentleman says that it is to pay for the workers' wages.
Let the right hon. Gentleman take that£1,800 a year, which he says is being used to subsidise the workers in the steel industry, and then proceed to tell us what the costing shows if he then weighs that against the loss of tax of those who are made redundant, the unemployment benefit to those who are made redundant, and the redundancy payments. He will find that keeping them at work is not only the thing that the workers in all the industries in our country want; it also happens, in pure financial terms, to be the best possible basis.
The right hon. Gentleman is trying to slide out of the Government's responsibility for the strike. I agree with him as to its dangers. I think that I speak for my right hon. Friends when I say that, in purely parliamentary terms, we shall expect a weekly report from him, every Monday from now on, on what is happening in the industry. He must be prepared to be questioned, as hard and as toughly as he has been during this week, every single week as long as he allows the dispute to continue.
In the meantime, we are facing a position which may destroy our economy. It is as dramatic and as simple as that. That is why I call upon my right hon. and hon. Friends to oppose the Government in the Division Lobby tonight, so that perhaps tomorrow we may have a new Secretary of State for Industry.
On a point of order, Mr. Deputy Speaker. In view of the fact that a document has been circulated in the course of the debate dealing with the slaughter of the steel industry in Port Talbot and Llanwern, and in view of the fact that that has been ignored totally by the Secretary of State in his speech, would it be in order to ask for leave of the House to be given to him to comment further on this document?
The House has listened to a very courageous speech from my right hon. Friend the Secretary of State for Industry, but there have not been any reasoned arguments form the right hon. Member for Deptford (Mr. Silkin) in favour of an amelioration of the position. The Secretary of State was right when he said that the question is one of ignoring or not ignoring economic realities. I sense that even Labour Members are aware of the economic realities facing us.
The right hon. Member for Deptford mentioned keeping people in work in the steel industry. I can understand that concern, but the consequences of this are high overheads, low productivity and high costs of production. He also spoke about help for those people. I hope that my hon. Friend the Minister, when he replies, will refer to the EEC social fund and to the funds available from the European Coal and Steel Community to ameliorate the redundancies. I hope that he will mention the new jobs that must be created. The nation must ensure that it does not have an overmanned steel industry.
The right hon. Member for Deptford mentioned two firms. I think that he had in mind Dutch and German firms. He also referred to the OECD statistics. I referred to them in the last debate on the industry, pointing out that the steel and engineering industries in France, Germany and elsewhere were on their feet and moving into a profitable position. The fact that this has not been achieved in recent years—and certainly over the last five years—in Britain must be taken into account by hon. Members.
Last night I met some Swiss reporters. I believe that one or two Labour Members also met them. I was in Switzerland only last week. Frequently I go to Germany and France. Most people say to me during these visits "Why is your steel industry in Britain knocking itself, why is your engineering industry knocking itself, so that, when we place orders with you, you cannot deliver? Britain is now reaching the end of the road. Unless there is continuity with people on the bench in the rolling mill, in the forge, and on the mass production line in the car industry, it will not be possible to export the goods which provide the wealth for the standard of living that our people want.
As I mentioned in the debate last December, as a result of disputes and our inability to deliver, our car production 10 years ago was double what it is now. I have tabled a parliamentary question on this matter and I hope to receive elucidation from my right hon. Friend the Secretary of State.
In previous debates I have referred to the paper presented by Alastair Burnet in which he says that the world looks at Britain as a nation of consumers rather than as a nation of producers. Hon. Members on each side of the House must acknowledge the position and help to give confidence to the steel industry and to the British Steel Corporation. There are Sheffield companies which are still reeling from the consequence of the disputes in the engineering industry and in the car industry. Many citizens are already having second thoughts about the confidence that we showed in British Leyland a few weeks ago. The steel industry, as a result of the present dispute, is losing orders, and particularly export orders. This inevitably means loss of jobs. I urge the right hon. Member for Deptford and others to review the situation, although I understand that a debate is a heated occasion.
I heard the hon. Gentleman's speech in December when he commented on industrial unrest and I replied to him during the debate. Although he mentioned some industries where there was industrial unrest, we are talking about an industry which, as my right hon. Friend the Member for Deptford (Mr. Silkin) mentioned a few minutes ago, has not had a major dispute of any kind for many years. Something very serious has happened to provoke a group of very moderate workers to take such actions. Does that not strike the hon. Gentleman as odd, and will he comment on it?
If the right hon. Member will allow me to pursue my own line of thought, I shall willingly stand later and answer a further question if I do not answer him. If I am allowed to make my speech in my own way, we shall proceed more quickly.
A feature of the Sheffield dispute has been the existence of kangaroo courts, and clandestine agreements with management and the private sector and perhaps with shop conveners and shop stewards, and the branch secretaries, of the Iron and Steel Trades Confederation, the Amalgamated Union of Engineering Workers, the Transport and General Workers Union and the General and Municipal Workers Union. In the national press, British management within the private sector has expressed its apprehension of the press statement produced yesterday by Bill Sirs. Certainly the Morning Telegraph expressed that view. The management knows that it must make a return on capital invested by shareholders. During the last 10 days management has learnt, and is learning, to live with the power of the kangaroo court.
I can show the hon. Member for Sheffield, Hillsborough (Mr. Flannery) a letter and a statement that appeared in the Morning Telegraph two days ago. It was stated that a manager of a company had had to visit such a court but was turned away and rejected two hours later. I shall send that information to the hon. Member for Hillsborough afterwards.
The difference in Sheffield between this winter and last winter is that a Conservative Government, backed by Conservative Members, are appalled at this demonstration of industrial anarchy. Last winter, under the previous Labour Government, Sheffield was at best paralysed because the Labour Government to a certain extent condoned that anarchy through their close affiliation with the trade union movement, and particularly through those Labour Members who are closely affiliated to those unions. Admittedly, in Sheffield that dispute did not involve the steel industry directly, but other industrial activity did affect it indirectly. Last winter, law-abiding citizens resented the anarchy and as a result they chose a Conservative Government. They expect a Conservative Government to take steps to prevent wildcat anarchy striking the shop floors of our industries.
I shall reiterate the words of the Secretary of State: that it is a matter of great regret that Bill Sirs—a member of the NECD working party which has produced a very adequate report—has been drawn into the strike. Members of this House all know that he can only reflect the view of his executive. He can call on the loyalty of his own members, and he will do so in Sheffield, when he calls on his members in the private sector in Sheffield to strike at the end of this month. It is for him to judge how much resentment will be caused in the private sector. As a Conservative Member, and as an individual who has for 40 years been employed in one way or another in one special steel factory—
In 1947 I had the choice of taking a job outside Sheffield when the Socialists were nationalising that industry. However, I decided to use my management expertise to develop the industry while working for Sheffield. It is regrettable that the sons of many of those who work in Sheffield today have deliberately chosen to use their ability and talents in Canada, the United States of America, Australia and elsewhere. The rewards here are not great enough. Twice this week I have spoken to groups who have pointed out that the attitudes of the Socialist Government drove young men of ability away from Britain. Hon. Members have taken me off my track. However, we must find men of ability to manage the large undertakings that have been developed, including the British Steel Corporation. I am afraid that many of those men of ability have left Britain.
I do not want to exacerbate the situation and I do not believe that any hon. Members wish to do that. I would hope to work towards a reconciliation. I agree with my right hon. Friend the Secretary of State that the management of the British Steel Corporation must negotiate with its own unions. In the private sector, the Government can use facilities such as ACAS. That body maintains a continuous dialogue with the private sector. I therefore appeal to those on strike, and to those who will be dragged into it, to consider the consequences both for themselves and for their families. They may not see it, but unless all of us can patch up the dispute there will be difficulties.
The hon. Member for Hillsborough and I have obviously been in touch with Mr. Scholey, who is a Sheffield man and who is number two to Sir Charles Villiers. I have attended meetings with Mr. John. Pennington, who has discussed the problems of the Sheffield steel in- dustry with local Members of Parliament. Those who read the Morning Telegraph will have seen John Pennington's reply to an article written by Bill Sirs about the reasons for taking strike action. The horrible reality is that the onetime profitable Sheffield steel industry made a loss of£25½ million last year.
Having been instrumental in bringing in new plant and equipment, I know that it takes time to work towards a break-even point, let alone a profitable situation. The Secretary of State has referred to the offer of 2 per cent. The Opposition said that it was an insult, but we know that, with productivity deals and so on, it could amount to between 12 and 16 per cent. During the last 10 years, there have been occasions when, in the so-called non-quoted companies, employees have accepted a freeze in their wages in order to maintain those entities. A hundred years ago, there was an occasion in the history of my company when the employees went on very much reduced wages to see that company through.
When a company is making losses, it is madness to expect the bankers or shareholders to tolerate excessive wage payments in order to keep an overmanned industry going. But if there has to be change and reduction it should be gradual, and that is up to the management of British Steel. It is not the concern of the Secretary of State.
Does the hon. Gentleman, in this day and age, expect steel workers to accept that philosophy, particularly in the light of the enormous redundancies announced today and in the light of those that have already occurred in the steel industry?
The hon. Gentleman is illogical. To expect wage increases without orders and when the industry is facing redundancies is muddled thinking.
The object of this debate is to help to clarify the situation. In the British Steel Corporation, public sector employees, whether management or on the shop floor, have been on to a good thing. My guess is that, job for job, a comparison of wages in the private and public sectors will show that workers in British Steel have been at an advantage. It is, therefore, madness for workers in the private sector of the steel industry to follow the instructions of the confederation to go on strike.
There has been talk of profitability. In Sheffield the private sector has had a difficult time, but over the past 10 years, by and large, it has made reasonable profits and certainly much better than the British Steel Corporation. It has, therefore, shared in the expansion and the improvement noticed in other countries, especially within the EEC.
In the Financial Times this morning, and in other financial commentaries in most newspapers, it has been suggested that the rate of wage increases is going much too far. Although there is no going rate for wage settlements, there is always an average, and increases have been too high. Average earnings in November were 19·2 per cent. higher than a year earlier—and that is compared to 17 per cent. until October. If one group of workers is awarded a pay claim, another looks for the same, irrespective of the recommendations of Clegg.
The hon. Gentleman mentioned his speech in December when he spoke of the changes in the Sheffield-Rotherham area and "Operation Spear". He will be aware of the record-breaking achievements in my constituency, which is close to his. Part of the deal to achieve that performance involved massive redundancies and, therefore, financial benefit. But that benefit was experienced a few years ago and was not matched in the period covered by the hon. Gentleman's figures. The wage increases that steel workers enjoyed a year ago did not come anywhere near the national average.
Since he knows Europe well, the hon. Gentleman should recognise that the record-breaking steel workers, some living in his constituency and many in mine, do not have wages anything like their counterparts in Europe, whose industrial performance is inferior to theirs.
Twenty or 25 years ago, Britain was sixth on the world list for purchasing power per man hour worked. I understand Britain dropped to thirteenth and we are now sixteenth. Britain is certainly well below other Community countries. This trend applies equally to the steel industry.
The hon. Member for Rother Valley (Mr. Hardy) referred to Germany. Some of my constituents came to England during the Second World War and in the 1920s and 1930s. In the past few months I have been asked whether the Government realise that the fear of inflation that existed four years ago could cone back again. It has been said that not enough people in the country realise the consequences of rampant inflation. I hope that the experience of Germany will not be repeated here.
I have been on my feet for too long and I apologise.
I ask the unions, and the management and the chairman of British Steel, to think carefully about the consequences of their actions. The trade unions must work responsibly with management. Quite frankly, in this country, whether management or workers, we must resolve our difficulties and stop the anarchy that invaded and destroyed Sheffield last winter, and which could upset the private sector of the steel industry this winter.
I welcome the Employment Bill of my right hon. Friend the Secretary of State for Employment and the introduction of the ballot. I only regret that there is no machinery at present for a secret ballot in the steel industry. It is too difficult to impose this at this late stage, but I believe that, had there been a secret ballot, the workers in the steel industry might have voted differently. It would have given them the opportunity to have the right leaders on the shop floor and the chance for second thoughts.
I hope that everyone will work towards reconciliation, and that Sir Charles Villiers and his financiers can work out how they can afford a reasonable offer. I believe that 12 to 16 per cent. is enough, and there is a difference of only 1 or 2 per cent. If a settlement is not reached, the steel industry will suffer the most.
Before I call the next speaker, may I say to the House that 28 right hon. and hon. Members have indicated their wish to speak, and there may be others. The Chair has no authority to impose a limit on speeches, but it would be immensely helpful and fair to the House if there could be a voluntary limit; and that is no reflection on the next speaker. Mr. Enoch Powell.
Unlike the hon. Member for Sheffield, Hallam (Mr. Osborn) and, I imagine, most hon. Members who will catch your eye in the course of the debate, Mr. Deputy Speaker, I do not represent a steel constituency. In the rolling hills of County Down, steelworks are conspicuous by their absence. However, it is not a subject that concerns only steel constituencies. It concerns steel consumers as well as steel producers; it concerns every section of the community and every part of the kingdom. What touches all should be debated by all, albeit with due brevity.
Whatever may be the correct figure of the monetary increase offered to the BSC workers in the range that has been mentioned—and the range has been from a derisory 2 per cent. to a highly speculative 14 per cent. or thereabouts—there is no doubt that it represents a real reduction. Against a background of 17 per cent. to 19 per cent. inflation, which is not expected to fall in the near future, what we have been talking about, and what BSC and its employees have been talking about, is the proposition of a severe real reduction in remuneration.
It is on the basis of the results of BSC that it is argued by those who made and sustained the offer that the real reduction should be accepted. I believe we should accept that that argument is unrealistic and illogical. Because an employer is unable to make a profit with the labour that he is employing, that is no more reason for that labour being paid less than the competitive market rate in real terms than if he were to say to his suppliers of raw materials "You must give me your raw materials now at less than the market rate because I find I am making a loss. I am not making a profit: so I want cheap raw materials. I do not expect you to sell your raw materials at the market level; I claim to have them cheaper."
I am reluctant to give way to the hon. Gentleman, especially at this stage. I hope that he will forgive me, because I should like to make a fairly simple argument.
I believe that that approach is economically unsound and illogical; and if the action of the steel workers were purely a response to that approach, then emotionally, if not in other ways, it could be understood. Presumably, it is the primary function of trade unions—whether or not collective bargaining and collective withdrawal of labour serves it in reality is a different question—to secure as far as possible that their members receive what is the going rate, not in a particular firm but for the labour and the skills in that labour market. So, if that were all, I should wholeheartedly say that the steel workers were in the right in this matter.
But, of course, the strike is about more than that. Whatever may be the form of the strike, it is not only about remuneration. It is also about numbers employed. The numbers employed are at issue in the dispute as much as the rate at which they are to be employed. Now, the numbers employed and the rate—the demand and the price—are interdependent variables. One depends upon the other: the higher the one, the lower the other, and vice versa. Nor can it be otherwise. A trade union can decide that it will go for a given wage, but it cannot then decide that it will also go for a given volume of employment. Alternatively—the hon. Member for Hallam cited a historical case—it can go for a given level, place and circumstance of employment, but it cannot then specify the wage at which it will secure the outcome it desires.
Economically speaking, it is possible to opt for only one alternative, not both. When the steel workers say that they are going both for a given wage—the going wage, the competitive wage—and also for a given level of employment—or, I shall put the matter more carefully, if they say that they claim to negotiate with the BSC both the rate payable and the numbers employed—then, in the second half of that claim, they have passed from the economic sphere into the political. The right hon. Member for Deptford (Mr. Silkin) recognised that fact openly. I wondered that he did it so openly. At the beginning of his speech he said that "this is not a strike between the workers and BSC but between the steel workers and the Government."
The reason why I am doubtful either that that is fully true or that the right hon. Gentleman meant to accept it in that form is that I do not believe that the Labour Party, as the parliamentary and political representation of the trade unions, regards the trade union movement as exercising a claim to govern. For that is what is happening as soon as it is said that "this is a strike between the workers and the Government". From that moment, and in that context, it becomes a claim on the part of organised labour to take decisions on taxation and borrowing—decisions which lie at the centre of parliamentary government—out of the hands of the House and put them into other hands. Unless I am much mistaken, from the inception of the Labour Party that is a deduction which it has forsworn and whatever we may hear about 2,000 Trotskyists and so on, I am prepared to believe that the Labour Party is as committed parliamentary as any other party in British politics.
Therefore, a grave issue is raised—above all, if I may say so with respect, for hon. Members around me—by the second aspect of the steel dispute. This House is the place—and the only place, because it represents all the interests involved—where the decision can be taken whether or not the power of the State to tax, borrow or create money should be used in order to secure the maintenance of a given level of employment in a given industry in a given plant.
Yet there is an even larger conflict implicit than that between organised labour and the parliamentary commitment of its political representatives. This, in the end, is a strike not only against the Government. In so far as it is concerned with maintaining the level of employment and the pattern of employment, it is a strike against reality.
There are two courses—not alternative courses, for they may becombined—for which a demand is made. First, that profitable industry—there is nowhere else from which the real resources can be drawn—shall be laid under further contribution to maintain the present level of employment in the steel industry, or, at any rate, a higher level of employment than would otherwise be maintained. The second possibility, which could be combined with the first, is that we should begin to build walls around ourselves, that we should decline to import where we can import with advantage, that we should consume our own smoke, so to speak, and create the necessary extra demand by building a ring-fence around this country's economy.
Whichever course we take, or both, we are setting ourselves not in conflict with this Government or any Government but with reality. For we can be sure that, however high are the walls that we build, reality outside will break them down. As fast as we restrict our imports, so fast will other countries be obliged to restrict their imports from us. The attempt to match the consequences of shrinking trade will then lead us on to raise those barriers higher until the time comes when the evidently self-defeating process would have to be abandoned.
I hesitate to interrupt the right hon. Gentleman in the flow of his eloquence, but I should like to ask him why such a trade war would be as disastrous as he forecasts. There has been a net deficit on our trading account for the last 25 years, and we must gain if all trade were frozen.
We have not been in net deficit, because there is no such thing as a net overall deficit. We have been in a net trading deficit, which has been balanced on capital account. That is what has happened. However, that fact does not entitle us to say that we can indefinitely maintain employment in the present pattern of our productive industries by refusing the trade relations with the rest of the world which that pattern implies.
As the hon. Member for Plymouth, Sutton (Mr. Clark) has offered me an excuse, I should like to offer an interpolation or footnote. A good deal of the talk about competitiveness and comparability is sheer words—totally misleading, a will-o'-the-wisp. To take an example from history, it was not the efficiency of the Bombay cotton mills which caused the cotton manufacturers of Lancashire at the end of the last century to demand that restrictions should be placed upon Indian exports to this country. Nor is track': ever governed by comparative statistics—so many tons per man-hour or week: it is governed through the channels of trade by means of the exchange rate, which reflects the whole pattern and economic reality of the world in which we live and trade. That is why these attempts to compare ourselves with the Japanese, and then say "How terrible it is that we are only one-sixth as good as the Japanese and no wonder we are in a mess", are sheer delusion.
To bring this footnote to an end, there is yet another point. It is this. Provided we face reality and accept the consequences of what we are doing, we have a perfect right to decide in this country whether we will so conduct our affairs that we attain Japanese rates of productivity, with all that that implies, or not. We are free to choose, but only provided that we choose honestly and openly in the light of the facts.
I turn finally to another expression that was used by the right hon. Member for Deptford. He said we were "facing the fact that workers and their children in the next generation would not be doing the same work in the same places". That is the reality which we are attempting to deny. That is the reality against which the strikers, by implication and ultimately, are attempting to strike. Yet this is not something new. It is something which has happened at varying rates and over differing lengths of time throughout our industrial history, that men have not again worked at the same work, nor their children at the same work and in the same places.
I do not think that even the most detached observer can suppose that the British steel industry, with its present size and pattern in this country, is experiencing a temporary dip—hard times during which the industry should live off its fat or borrow until it gets over the hump and back to normality. I do not believe that that is the picture, nor do I believe that that is how the British steel industry sees it. Surely we know that we face a major alteration in the size and nature of the British steel industry to fit the rest of the pattern of a British economy which can survive and prosper in coming years.
That being so, there rests not only upon the leaders of the unions but upon those most closely connected with them in this House, and on everyone, a duty of understanding, of comprehension and of leadership, which will enable us, without losing faith in representative parliamentary government—yes, and without losing faith in the collective bargaining processes of labour—face, instead of vainly attempting to fight, the reality of the future.
I have had the pleasure of catching your eye, Mr Deputy Speaker, on four occasions in steel debates, but I feel a certain amount of trepidation in following the speech of the right hon. Member for Down, South (Mr. Powell).
I followed the cogency of his argument about the interdependence of the level of wages and the numbers employed in the steel industry. I also read his recent article in a newspaper a few days ago. Certainly I go along with the overwhelming majority of his comments. He is right to point out that any industry, when it buys labour, is in the same position as it is when it purchases any other goods. When the British Steel Corporation purchases labour, it must expect to pay the going rate in the same way as it pays the going rate for coking coal. Of course, when faced with an increase in the price of that coking coal, if it regards that price increase as excessive, it seeks to try to cut the consumption of coking coal or find alternative ways of minimising the excess cost. Therefore, if the price of labour were to rise excessively, the BSC would understandably seek to try to cut the cost of that labour in some way. Here is the direct correlation between the size of the industry and the employment within it and the size of the wage rate.
I represent a constituency in which there is one town which depends entirely on steel. Obviously, I have a vested interest in the future of the steel industry on behalf of that town. Recognising that there is a clear interdependence between the numbers employed in the steel industry and the wage rate, I feel, as do the overwhelming majority of steel workers in my constituency, that if a choice must be made it is far more important, in these difficult times, to ensure that there are jobs to go to than that the high cost of the labour prices them out of jobs altogether.
I turn specifically to the present dispute. It is sad and regrettable that this strike has occurred. In my view, there is no enthusiasm for it. I maintain that if the Iron and Steel Trades Confederation had confronted its members with a ballot, as has been the case with other unions, such as the National Union of Mineworkers and the National Union of Blastfurnacemen, there would not have been a vote in favour of the strike.
It is my view that unions should ballot their work forces, and a union such as the Iron and Steel Trades Confederation, which is a novice on strike action, has a responsibility to its members, particularly when they are threatened with the difficult world steel situation of the present time.
I believe that the Iron and Steel Trades Confederation was relatively near to achieving a settlement with the British Steel Corporation last week, but because it was negotiating with the BSC during a strike it was more concerned with ensuring that the wheels and mechanics of organising the strike were being oiled than with trying to arrive at an agreement with the corporation. I am sad that the ISTC has walked out of negotiations so early in the dispute. There was still room for talking, but, understandably and rightly, the BSC wanted to ensure that it was not giving away money that it did not have.
I received a petition with more than 700 signatures before the strike took place, and every day I receive a large number of letters and telephone calls from those who are involuntarily on strike. Inevitably, with the closed shop, and when the politics of fear reign in an industrial dispute—
As one of six hon. Members representing upwards of 20,000 steel workers, I can say that I have not had one letter or telephone call deploring the position of the unions in the strike.
I can only say that I make myself available to my constituents and advertise the fact that I want to hear their views. I hope that other hon. Members do the same.
I turn to the negotiations and the offer that the British Steel Corporation has made. There is a myth about the 2 per cent. The British Steel Corporation, I readily concede, was wrong in the method that it used to advertise the pay increase that was on offer. There was a considerable amount to be gained by the unions negotiating productivity agreements. The corporation tailed abysmally to indicate to its work force what was available. There were, of course, strings attached, but, as everyone recognises, the BSC is bankrupt. The corporation is right to elicit from the trade unions agreements on demanning and flexibility.
There has been some debate in the Chamber and elsewhere about international comparisons. One cannot help noting that an international comparison in the NEDC sector working party report on manual workers shows that it takes 10·9 man hours in the United Kingdom to produce one tonne of crude steel, compared with 5·9 hours in West Germany. There are other international comparisons. One is bound to accept that there is considerable—
I hesitate to interrupt the hon. Gentleman, because I admire his youth and courage in supporting his Government, but is it not a tact that this Government, like the previous Labour Government, should have realised years ago that the Japanese were producing steel by a method that was immaculate in comparison with ours? Does not the hon. Gentleman think that the main responsibility for this situation belongs to the employing section of the steel industry? Does not he agree that we should have discovered years ago why the Japanese were able to produce steel in this fashion and brought those ideas to the British steel industry? Is not that the responsibility of the chairman and management. and not of the men?
The hon. Gentleman has raised a number of subjects. I cannot comment on them in the time available. I accept that many mistakes have occurred in the steel industry through no fault of the employees. If the hon. Gentleman's Government had taken some remedial action only four or five years ago, there would have been an opportunity to overcome the problems that we now face. I agree that mistakes of the past are part of the reason for present difficulties.
I float again my idea, put to the Secretary of State recently, that, if there is to be no opportunity through the union mechanism for the workers to be consulted, the British Steel Corporation, having failed abysmally to sell its productivity scheme, might consider sending a letter from the chairman to all employees setting out what is at stake, the background and the reasons why it is not possible to pay something for nothing. My experience in my constituency shows that realism does exist. The steel industry in Scunthorpe has slimmed down and lost 2,800 jobs. The workers want to ensure that no further jobs are lost and that a viable steel industry exists in the area. I believe that the workers would respond favourably to the corporation. One cannot make a fairer offer.
I am sorry that this normally moderate union, usually so willing to talk and negotiate, should have abandoned the negotiating table so early and so readily. The union is now plainly out of its depth. Control of the strike has effectively passed from reasonable men of common sense to those who see an opportunity in the strike to confront the Government. The flying pickets, the extremists and the fellow travellers who jump in on any dispute have been waiting for an opportunity. It is unfortunate that a moderate union should be in the forefront carrying with it those fellow travellers who have decided to use the strike. Those fellow travellers are no friends of the steel workers, whose best interests will be served, as I accept from my right hon. Friend the Secretary of State, by a rationalised and viable steel industry.
I am normally sceptical of ACAS as a body. I shall reserve my judgment, in the hope that it may be able to pinpoint some common ground. If, however, ACAS fails, there may be a role not for the Secretary of State for Industry but for the Secretary of State for Employment to see both sides to try to identify areas of common ground. It must be made clear that in such circumstances the Secretary of State has no honey pot available. This is a bankrupt industry. The sooner the union recognises that the days of beer and sandwich negotiations at No. 10 Downing Street, with a worthless cheque to follow, are over, the better. Those negotiations in nationalised Indus- tries in the past have led the steel industry and the country into the difficulties that we face.
The unions say to the corporation that the Government will lose this dispute. Implicit in that claim is that someone will win the dispute. But there will not be any winners. There can be only losers. This country will lose and is, indeed, already losing. The steel industry will lose and is, indeed, already losing. I can give an example. Immediately the strike threat occurred, the engineering industry in my constituency, which uses steel, sought to obtain steel before the picketing started. It had to obtain steel from abroad. It had to sign a contract for 12 months to carry it over the strike difficulties.
Those engaged in the engineering industry had stockpiled steel during the period between the strike threat and the time when the strike began. That is understandable. There were jobs in that industry to be protected and preserved for the benefit of the country's economy. For better or worse, a contract has been signed to obtain steel from abroad This means that orders for home-produced steel have been lost for a year, if not for ever. Even if the strike were settled tomorrow, some orders will have been lost for ever to the British steel industry.
I wish that the union would recognise this situation. I wish also that it would recognise that it is not the Government who are threatening to take away jobs from the industry. It is the action of the union itself that is doing that. This normally moderate union is threatening future employment prospects. The country will lose. The steel industry will lose. There can be no winners. The worst losers of all, through this dispute, can only be the steel workers.
I believe that I represent as many steel workers in the House as does the hon. Member for Brigg and Scunthorpe (Mr. Brown). I can tell him that I have received no letters complaining that steel workers do not support the strike. The hon. Member for Sheffield, Hallam (Mr. Osborn) talked about the people of this country voting for the Tories. They certainly did not vote for the Tories in Sheffield. Nor did they vote for the Tories in South Yorkshire. The hon. Gentleman cannot have heard about the Socialist republic of South Yorkshire.
I assure hon. Members that when I was on the picket line on Monday morning the workers were solid in their support for the strike. It is untrue to say that if a ballot were taken the workers would vote against the strike. I am not opposed to a ballot. But it is Conservative Members who would get a shock. When the Secretary of State said that he speaks for the steel workers, I can only say, having listened to them, that he does not speak for them. They want to know when the right hon. Gentleman intends to intervene in the strike in a positive sense, instead of in the negative sense of setting cash limits and telling the industry to balance its books in a way that the Government know is totally impossible.
I am not surprised that the strike is solid, considering the redundancies that face the industry, topped off by an offer of 2 per cent. It was certainly not 10 per cent., as the Secretary of State said. The offer was 2 per cent. That was not a wage increase but a consolidation. It was offered in the face of almost 20 per cent. inflation. What do the Government expect? Do they think that workers will not strike when they are put in that position?
Nothing makes me so angry as hearing people telling workers that they cannot have something for nothing. When have workers ever had anything for nothing? They have earned every penny that they have, and they have produced the nation's wealth. They are the only wealth producers. It is an insult to workers to tell them that they cannot have something for nothing.
How would hon. Members react if one third of them were made redundant and those who remained had their wages frozen? It was not long ago that hon. Members were clamouring for a much greater wage increase than that sought by the steel workers.
There are many factors in the steel industry strike, apart from the workers. For example, there is the EEC and all that that means to our steel industry. The purpose of the EEC is to facilitate multinationals. It is doing exactly that. It is having a bonanza in Sheffield.
Will the hon. Lady give credit to the EEC for the support that it is giving to redundant workers? Is she aware that over£7 million from EEC funds has been provided for Shotton alone, plus the arrangements that have been proposed by the Commission, which are known as the Davignon proposals? They have been continued with the support of the Government. They have been largely unchanged. Their purpose is to help the British steel industry as well as the steel industries of our EEC partners.
That is a policy not of helping our steel industry but of buying jobs extremely cheaply. I forecast that in five, six or seven years Britain will be buying steel from the very multinationals which are investing their money in South America and South-East Asia. That policy is being aided and abetted by Conservative Members. It is a cheap way of slimming down the industry.
I am convinced that Conservative Members want a slimmed-down steel industry. There have been two debates in the House that have turned on who should control investment in the steel industry, namely, Great Britain or the EEC. In those debates it was clear that the Tories wanted a slimmed-down steel industry because they and many of their friends have their money invested in the multinationals that will have the rake-off in due course.
Who was it who voted against our losing control of our investment in the industry? It was Labour Members who voted against that, not Tory Members. As we know, there is a worldwide steel recession. Virtually all the steel industries in the world are losing money. We know that when there is a recession it is always basic industries, such as steel, that are hit first. In common with other hon. Members, I believe that the workers have been set up for the strike and that the British Steel Corporation is the Government's tool. The corporation is being used by the Government in their attempts to slim down the steel industry. The corporation is using the workers as scapegoats.
Let us consider the facts. We should bear in mind the record of management. For example,£353 million was thrown away on abortive schemes, according to a secret British Steel Corporation document of December 1979. First, there was the Finniston folly of the Hunterston direct reduction plant in Scotland. That cost£54 million. In 1976 the financial secretary of the corporation argued against that investment. His argument was overruled. The plant was built four years ago and it is still in mothballs. Why has it been in mothballs since it was built?
As a result of the plant remaining in mothballs, one of the ore terminals has 33 per cent. too much capacity. Therefore, another£17 million has been written off, making a total of£71 million.
We have seen£37 million go down the drain at Redcar. It was planned to build three giant blast furnaces. Only one has been built because of the recession. The second furnace is still in nieces beside the plant. There is only one blast furnace operating, not three. All the facilites at the plant are much greater than those that are needed.
We have seen the closure of three perfectly good medium-sized blast furnaces at Clay Lane. They are now redundant. That has resulted in abortive expenditure of£37 million. Those are not all the examples by any means. Let us not blame the workers for everything. There are many others involved in the industry.
Interest charges are seldom, if ever, mentioned. The current loss amounts to£307 million, but£217 million stems from interest charges. No one said "The industry is bankrupt. You will have to take less by way of interest." The only people who have been told to take less are the workers.
Subsidies are another factor. We are told that every British taxpayer pays£30 a year to subsidise the steel workers. That is untrue. It must be remembered that£20 of each£30 goes straight to the moneylenders. It is only the remaining£10 that goes to the steel workers.
There is talk about whether the British steel industry is able to compete. Can we compete with the Continentals and the Japanese? We can compete if we are allowed to do so on equal terms. It is interesting to consider the subsidies that the German industry receives. There are hidden subsidies, such as maintenance charges. Those subsidies are not shown in the accounts. There are subsidies for apprentices that are not shown. The coking coal subsidy in Germany is£25 a tonne, whereas it is£6 for the United Kingdom steel industry. How can that be said to be fair competition?
The targets that the Government set for the industry on 3 July are totally impossible. They mean that the industry will have to operate at a profit during the 1980–81 financial year. It will have to do so after depreciation and interest charges have been taken into consideration. That is a complete impossibility. That approach, plus the pay offer that was made to the steel workers, was what triggered off the strike.
The workers will face redundancies, and towns will be blighted. There will be massive unemployment in areas and towns that are dependent upon the industry. Towns such as Corby will be blighted, as Jarrow was blighted in the 1930s. The workers will face a pay freeze. The offer of a 2 per cent. increase was nothing but a pay freeze. All those factors are tied up with the Davignon plan. The ultimate aim is to restructure the industry and to phase out excess capacity.
There is excess capacity now, but will that exist in five or 10 years' time? I forecast that by that time we shall have a steel industry that is no longer able to support our manufacturing base. My right hon. Friend the Member for Deptford (Mr. Silkin) argued that we did to coal exactly what we are now planning to do to steel. In adopting that approach to coal, our indigenous fuel, we made ourselves reliant on an imported fuel. We know where that led us.
Even more important, where are we to find the skilled work force when the industry has been run down? That work force cannot be produced again overnight. The Government's policy is a disaster for the working people, because they are being asked to carry the can. It is also a disaster for those who work in the industry and the British people as a whole. Unless the workers win the present struggle, we shall end up without a steel industry in the accepted sense.
No doubt the Government thought, when they took on this union, that it was easy meat. The union had always been co-operative, steel had been stockpiled and the industry was in financial difficulties. But the Government did not reckon with the fact that the steel union would get the support of other unions, and they may have bitten off more than they can chew. I hope that they have.
If the struggle is not won, we shall lose our steel industry and many jobs. To whom will we lose those jobs? We shall lose them to the sharks in the multinationals and the sharks on the Government Benches.
The hon. Member for Sheffield, Brightside (Miss Maynard) voices a viewpoint totaly different from mine in that she gives encouragement to the strikers in the hope that they will win. No doubt many hon. Members in the House will put forward contradictory viewpoints. In her speech the hon. Lady made one point that is of central importance to my Front Bench colleagues. Referring to her visit to the picket line, she said that she had gained the impression, from talking to the pickets, that they wanted to know whether the Government would intervene.
The message from my right hon. and hon. colleagues on the Front Bench should make it crystal clear that the Government will not intervene. If there is a suggestion that additional funds can be found, I agree that the strike will drag on and do much more damage than has already occurred.
One of the problems surrounding this dispute is that people try to draw parallels—perhaps only in their minds—between what is happening now and what happened in 1974. The impression seems to be that, provided the dispute continues and the workers become tougher, the Government will come forward with additional finance. But in 1974 the coal industry—I and many other hon. Members said this at the time—wasmerely following the increase in the price of oil imposed by the Organisation of Petroleum Exporting Countries, and we faced a strong demand for energy as a result of what happened in 1973. Therefore, the price of energy inevitably increased. There was a strong market.
On this occasion, the strikers have taken on an employer which, at present, has a very bleak future and which is unable to pay the extra money if it is to sell its product competitively in the world market. For this reason, the offer that has been put on the table by the corporation, and which is regarded by it as being as much as it can afford, should be accepted as precisely that.
The House will know that I have spent many years in the industry. I am now associated with a company that makes melting electrodes. If the industry prices itself out of its existing markets, the investment during the years since the 1950s will have been totally wasted.
The problems facing the industry today are an amalgam of three separate issues that have come into conjunction and created this unhappy situation. The closure programme, wages, and a collapsing market have come together as one issue. On the one hand, they have demoralised people in the industry, and, on the other hand, they have deprived management of any degree of flexibility.
The Government's first essential commitment should be to allow management to manage. No one in the House is competent enough to run the steel industry. It is essential that we, as politicians, allow the management that has been appointed to get on with the job.
The first priority of management is to reduce the capacity of the industry to take account of the collapsed market. It is the view of management that we should be talking in terms of an industry that produces 15 million tonnes per year. With the new plants that are now available to the industry, that output could be expanded, easily and rapidly, to about 20 million tonnes per year should the need arise.
I dislike saying this in the presence of the hon. Member for Consett (Mr. Watkins), because he and his constituents bear a dreadful burden at present, but the older plants, even though as separate entities they could make money, now cost the corporation about£250 million per year in overheads. That sort of burden, added to the other problems the industry faces, is one that must, wherever possible, be removed.
Is not the logic of the argument of the hon. Member for New Forest (Mr. McNair-Wilson) that plants should be closed down even when, as the plant at Consett does, they meet the criteria for viability and continuation laid down by the Government? If so, is not that a ludicrous argument?
I entirely agree with the hon. Gentleman. He knows that I have great affection for his town and the plant there. I know it well. But the tragedy is that we have built dinosaurs, in a natural desire to re-equip the industry, but those dinosaurs need to be operated at about 80 per cent capacity to break even, let alone make a profit. Consequently, plants such as those in the constituency of the hon. Member for Consett have to be closed down so that the work can be fed into these new investments. I agree that it is a tragedy to see viable units picked off, one at a time, to keep new investment going. This is the logic of "big is beautiful" that we inherited after the war.
I remember going to Brussels and talking to people who had been to Japan and being told that this was the only way to make steel and that we needed great integrated works. We have done that. The result is that when the market disappears one is left with a white elephant on one's hands which costs a fortune in capital interest charges, and plants such as that at Consett have to be closed down to make ends meet.
The hon. Member for Penistone (Mr. McKay) has raised a very important point. I do not think that anyone can make the prediction he has asked me to make. If we look at "Prospects for Steel" produced by the corporation in April 1978, we see that it states:
the Board of the Corporation has set management a financial objective of operating on a break-even basis by the end of the financial year 1979–80.
I agree that we are dealing not with an exact science but with forecasting, which, at best, is a fairly doubtful art. But the current philosophy is that we must rid ourselves of the£250 million weight on our balance sheet and try to utilise the new plant as much as we can. That is why the right hon. Member for Chesterfield (Mr. Varley), when Secretary of State for Industry, said in 1978:
In present market conditions, the Corporation has substantial over-capacity…neither the Corporation nor the country can afford the cost of the mounting over-capacity that would result from unchanged policies."—[Official Report, 22 March 1978; Vol. 946, c. 1512.]
The right hon. Gentleman saw clearly, as have all Secretaries of State, that if the industry was to break even, or make a profit, we had to reduce capacity to the level of the market. There is no point in producing steel that we cannot sell profitably. We should just have to find the money from elsewhere and we would end up in the sort of situation to which the right hon. Member for Down, South (Mr. Powell) referred.
The aim is to get productive capacity to 15 million tonnes and to have the work force reduced almost overnight to 100,000. That is the second leg of the argument. We are telling those who have given their lives to the industry that what should have been done over a period of 12 years has to be done in a matter of months and that 52,000 people have to be made redundant.
Protests of the sort that we are seeing now are the natural reaction, but there is no alternative to that logic.
Like so many others, the hon. Gentleman talks about the market as though there is a divinely ordained level of world need for steel. That is nonsense. The NEDO report shows that the new capacity in developing countries will not come on stream fast enough to meet their needs. There will be a world market, quite apart from the home market.
The hon. Gentleman's basic argument that there is a fixed market for steel to which we must accommodate ourselves—and I notice that it is always an accommodation downwards—is nonsensical.
I wish that it was not always an accommodation downwards. When I left the Iron and Steel Federation, the capacity was 26 million tonnes, almost twice the present level, but the best forecasts at the moment are that 15 million tonnes of productive capacity, with the ability to expand by another 5 million tonnes, is probably the right size for the British steel industry.
I agree with the hon. Member for Sheffield, Heeley (Mr. Hooley) that there is no single figure. The aim is to produce steel that can be sold competitively in the market. No other criterion can govern the size of the industry.
We hope that the industry will become more productive, but we must be honest and admit that we shall never again be in the big league of steel producers. Even if we get the productivity figure of 183 tonnes per man per year that the chairman of the BSC has mentioned we shall still be in a different league from the Japanese and other producers.
However, I was saddened to see that the chairman of the BSC was quoted in The Times today as saying about the current problems:
I am not even mentioning the Japanese steel industry because they are in a class by themselves.
When one remembers the investment on the North-East Coast, much of which is more modern than any Japanese plant, it is a tragedy that the chairman should have to make that remark. I hope that what he fears will not prove to be the case.
The second argument revolve's around wage levels. I shall not dwell on that because it has been discussed by other hon. Members. We are talking about an offer of 12 per cent. with strings, and the argument between the union and the management is whether the strings should exist. I do not think that the figure that the management believes will eventually be arrived at is much different from what the union hopes to get, but the management wants to see some sort of control over the way that the money is to be paid.
We must face the fact that flexibility, craft with craft, and craft with process, and flexibility over demanning are matters which any management ought to have on the table in bargaining negotiations. If the BSC is pressurised into paying money without a degree of flexibility, the position of those who have jobs in the industry will, in the long run, be under- mined. Frequently, we shall be keeping people in work who might want to retire or leave and who would not be replaced. We shall find it almost impossible to get down to a work force of 100,000.
Will my hon. Friend make clear that when we talk of flexibility we are talking not only of demanning but of the possibility of transferring people within works? That is often impossible because of the lack of inter-union co-operation.
My hon. Friend is right. If the strike goes on for another 10 days or more and the private sector is involved, the bulk of the skilled men in the industry will have lost£600 or£700 in wages which may never be recovered. It will certainly take them a long time to get back to where they are at present. My fear is that when the strike ends many of those men will have no jobs to return to. The strike will inevitably increase the temptation for those who use steel to import it and to be completely secure in their second line of supply. I hope that none of those possibilities occurs. It would be a tragedy if any did.
Given the situation facing the industry, those who seek to find a King Canute, whether in the shape of my right hon. Friend the Secretary of State or anyone else, who can persuade the tide of commercial reality to go away are doing a disservice to everyone in the industry. If we end the strike, we can still go forward with a modern industry and not only hold markets but capture new ones. Going on, to deliver ourselves vicious, self-inflicted wounds, will only hurt everyone connected with the industry.
I repeat what I said to the Secretary of State earlier, when I indicated that I was deeply shocked that he chose not to mention the savage redundancies that are apparently to take place at Port Talbot and Llanwern. There are to be 7,000 redundancies at Port Talbot and 4,500 at Llanwern, and my hon. Friends from West Wales are all too well aware that alternative jobs are just not available for those who are to be made redundant. The Secretary of State's attitude was callous and amounted to a dereliction of duty. The steel workers and their families will draw their own conclusions, but I believe that for generations to come the name Joseph will stink in the nostrils of the people of South Wales.
The hon. Member for New Forest (Mr. McNair-Wilson) referred to dinosaurs. We have one at Llanwern which is to be decimated, showing that further inroads are being made into the original strategy of the BSC. The hon. Genleman said that there was to be concentration on those plants, but even sonic of them are to be decimated. It is criminal to adopt that sort of industrial strategy at Llanwern.
Much play has been made of international comparisons, and it is alleged that West Germany produces 220 tonnes per man per year. A number of figures are being bandied about at the present time, and presumably the ones that have been given to me are as good as any others. About 9,000 people are employed at Llanwern, and the weekly tonnage for this year averages 40,000. If one does a bit of simple arithmetic—in other words, divides that 40,000 tonnes by the 9,000 workpeople and multiplies it by the 52 weeks—one comes to a figure of 230 tonnes which is slightly above the German figure. The figure for the work force includes all the ancillary sections—canteen workers, maintenance staff, and so on—so the issue is not quite as simple as some people like to make out.
The essence of the debate is the national steel strike, the first that has taken place in this country for about 54 years. The second feature of it, about which Labour Members have repeatedly complained, is that the Secretary of State is refusing to intervene in the dispute to bring about a solution and a return to work.
We have to ask ourselves how this strike came about. We have been told many times that it started with the obscure offer by the British Steel Corporation of 2 per cent., and one of two conclusions can be drawn about that. It was either deliberately provocative or it was inane. My feeling is that some weeks ago the steel trade unions would have settled for a very modest figure indeed, but after the way in which they have been treated in recent weeks their attitude has hardened.
We were told recently that the rate of inflation was about 17½per cent. It is probably much more now because of all the new increases in the pipeline. There is the 29 per cent. increase on gas, and there are to be substantial increases for electricity. The price of petrol seems to be increasing almost every week, and there have been massive increases in mortgage rates and value added tax. Steel workers and their families have to live in the real world. The increased cost of sending children to school is a big factor in my area. Many children travel in from the countryside to our schools in Newport, and they will be affected by the increased transport costs, let alone the additions for school meals.
We know, too, that there is a worldwide steel crisis. As my right hon. Friend the Member for Deptford (Mr. Silkin) said, throughout the world profit in steel is almost non-existent, yet it is at this time that the Secretary of State has chosen to impose the most stringent financial controls on the British Steel Corporation.
Many people are querying the Government's motives. They wonder whether the Government are trying to bring about a confrontation. We know from evidence that a similar attempt was made in the early 1970s with the Post Office workers, and the steel workers, who have been modest in the past and moderate in their demands, may have been considered to be easy pickings.
The fact must be faced that the Government may have miscalculated. Steel workers and miners live in integrated communities. In my area many ex-miners are now steel workers, and when I toured the picket lines at the various plants in the Newport area at the beginning of last week I found, as I said earlier, that attitudes had hardened and that a new, more militant spirit was emerging. It seems to me, therefore, that already the Government's policy is turning moderates into militants. I should not have thought that that was their objective, but that is what is happening in practice, and in the struggle that lies ahead that solidarity will grow.
I referred earlier to the fact that the Government might be acting according to some predetermined plan, and there has been mention from time to time of the Ridley plan of a year or two ago, for the steel men then were cited as one of the groups that could be safely taken on. We know that many manufacturing firms throughout the country have built up their stocks of steel. One could almost imagine some weeks ago Sir John Methven of the CBI telling his members "Stock up, boys, there is going to be a national steel strike."
If this confrontation has been deliberately sought, as seems likely, all I can say is that it is a despicable action for any Government to take, even this one. As numerous hon. Members have said, this strike is bound to do a lot of damage. The workers lose pay as a result of it, bills mount up and they get into all manner of difficulties. As for the steel industry itself, which is already in a parlous condition, orders could be lost and confidence further undermined. Other industries will suffer. There is British Leyland, which is walking a tightrope at the present time. There is a major washing machine manufacturer in South Wales, Hoover, which could be in difficulties if steel supplies dried up. We have had trouble over tinplate for Metal Box, and so on. And, of course, we all know that the country will suffer very much.
For the steel workers, this is now very much a life-and-death struggle. They feel now that they are striking against the Government. In other words, it is a political strike, and they are adopting an attitude of "no holds barred". Who can say that they are wrong? There is every indication that this dispute could be a long-drawn-out one.
Why does not the Secretary of State intervene to bring about a settlement? He has full powers to do so. Under section 4 of the Iron and Steel Act 1975, for
instance, it is provided that he may give directions
as to the exercise and performance by the Corporation of their functions…which appear to him to affect the national interest.
This strike is more than likely to affect the national interest. All I ask this afternoon is that the Secretary of State should use those powers. We know that in a week or so the private steel industry is likely to come to a stop. What is more, if the Government are not prepared to intervene to bring about a negotiated settlement trade unions everywhere—of coal miners, railwaymen and so on—will decide to back the steel workers. The strike will then become very much a political strike against the Government. I say to the Secretary of State, intervene before it is too late.
To introduce a little light relief into the debate, may I say that I saw in the newspaper today that it is my right hon. Friend the Secretary of State's birthday? I wish him many happy returns. I expect that he would have preferred to do something other than speak in this debate on his birthday. He may approve of that part of my speech, but whether he will approve of all of the rest of what I am about to say I am not certain.
I want to deal with the steel industry under two heads: first the strike and then the future plans for the industry. I am certain that it is wrong, automatically or immediately, to buy off a strike. In the past few years we have bought off far too many strikes. When a demand is being made for a wage increase that is too high, there should not be an immediate giving way. Therefore, I do not feel too badly about there being a strike, although I am sorry that the steel workers felt that they had to take action.
Once there is a strike, we have to concentrate on ending it. It is useless for the Government to say that they have no responsibility. Ministers come to the Dispatch Box every day and answer questions about the nationalised industries. Members of Parliament are always told that Ministers have a broad policy responsibility, even if not a day-to-day responsibility. Yesterday there was an announcement about the increase in gas prices. It cannot be right for a Minister on one day to say that he will increase the price of nationalised gas, that it is his duty to do so, and for another Minister on another day to say that a strike in an industry has nothing to do with him. My right hon. Friend must recognise that there is a Government responsibility.
That is a very potent intervention. I am coming to that matter. If the Government do not accept responsibility for the industry, they are not accepting their responsibility to the community. The community responsibility that is placed on the steel industry and others, and therefore on the Minister, is that in a strike he and the corporation must get the community on their side. How can the Minister help to do that if at the same time he is saying to the country that it has nothing to do with the Government? Whose responsibility is it if it is not finally the Government's responsibility?
I can understand my right hon. Friend saying that he is the paymaster, the man who has to find the money. He is not entirely, because it is the Chancellor of the Exchequer, at the end of the day, who has to do that. The Minister may not want to be in a position where he can be pressed to find more funds immediately. But that does not apply to the Government as a whole.
Are the Government trying to make the Secretary of State for Employment a eunuch? Has he to sit there and do nothing and say nothing? I hope he is doing something in private and that soon he will be doing something in public. In all Governments in recent years, the Secretary of State for Employment, because of the spread of nationalised industries, has had to take second place to Ministers in charge of nationalised industries. Can anyone imagine that Ernest Brown, who was Minister of Labour when I was a young man, would have taken that attitude or would have accepted it if he had been told in the Cabinet that he could do very little? Can anyone imagine that Mr. Ernest Bevin would have allowed himself to have been in that position? The sooner that we realise that a Secretary of State for Employment has to be allowed to carry out his duties, the better.
The Secretary of State for Industry told me recently in answer to a question that ACAS was independent. It is no more independent of the Department of Employment than is the Manpower Commission. There is an overall responsibility to the Minister. I understand that an ACAS report on the steel strike has just been published. I hope that the Secretary of State for Employment will receive a copy of it and that it will be available to my right hon. Friend the Secretary of State for Industry. I hope also that both those Ministers and the Cabinet will consider the report to see what opportunities it provides for further negotiation between the two sides.
My right hon. Friend said that there was only a narrow margin between management and the unions; it was not the amount that was in question but whether the amount came out of productivity. I do not argue against that. I want some realism to be shown. Never in recent years, when a productivity deal has been sought, has it been obtained in full. On many occasions there has been no spurious productivity deal. But if, in this case, there is a chance of getting some of the productivity deal, not necessarily all of it, my right hon. Friend should take the chance and settle. I hope that the unions will be realistic enough to recognise this and will make clear to their members that there must be some productivity content in the settlement, in their own interest and in the interest of the industry. Only from increased productivity can real money increases be obtained.
In the past few months in the public sector there have been rises of 24 per cent. for the nurses and 22 per cent. for the miners. The miners' productivity record is not as good as that of the steel industry in recent years. In local government there has just been a settlement of 14 per cent. in which there is no productivity element. That is not so different from the 12 to 14 per cent. which is being discussed at the moment for the steel workers. We have just heard that national earnings have gone up 19·2 per cent., so a 12 to 14 per cent. settlement in the steel industry would be worth having.
In 1974 we missed the boat with the miners when we could have settled. At that time I made strong private representations, as did some of my hon. Friends. Now I am a little more grey-haired and do not make private representations without making public representations, because otherwise they do not get me anywhere.
My right hon. Friend may think that it is good to be a politically strong man, but if the strength of Samson brings down the pillars of the whole temple what good is there in being a strong man? Our engineering industry depends on steel. The engineering industry has already had one blow this year—the strike which went on for weeks—and it cannot take another for long. We shall destroy our manufacturing base if we allow this strike to carry on for weeks. Some people may feel that we have done something. I do not know what that something will be, other than our being brought nearer to disaster.
How are we to get more cash for the industry as a whole? The Government have already accepted that if it included a productivity deal, a 12 per cent. increase could be conceded. That goes beyond the cash limits, but such an increase would not affect the steel industry for at least six months. The industry will not run into trouble until it has paid such wage increases for some time.
The Labour Party suggested that the steel industry should undergo a capital reorganisation when it had come into profit. I give my right hon. Friends the opportunity to do better than that. They should reorganise the steel industry's capital before it comes into profit. It does not make sense to close down plants and not reorganise the industry's capital. It is good free enterprise doctrine, in any case, to reorganise capital. If a company gets into trouble in the City of London, the value of that company's shares is likely to be halved. It has happened many times, and in the end the shareholders get a better return on the half value of their shares than they would have done on the original shares.
I know that we are discussing loan capital, not equity capital. But such a write-down scheme would make money available because less would have to be paid out in interest. There are plenty of precedents for such a reorganisation. We did it with the coal industry and the railways. Unhappily, we have had to do it with many nationalised industries. That does not say much for nationalisation.
Finally, there should not be such a massive steel cutback as has been proposed. We may need the steel industry, as we needed the shipbuilding industry during the war. We ought to be prepared to put some of the industry into mothballs rather than have a total closure. We should close some of it down but be ready, when the time comes, to open it up again. That does not mean that there should not be permanent closures. There should be a balance struck on timing and on plant redundancies between the considerable cutbacks that are proposed and the possible needs of the future.
I am delighted to follow the hon. Member for Rutland and Stamford (Mr. Lewis). I declare an interest as managing director of a company that uses steel. I thought that I would be making the first plea in this debate on behalf of consumers. However, the hon. Member for Rutland and Stamford pre-empted my plea by making a similar plea.
The Government should understand that this dispute does not merely affect steel workers and the British Steel Corporation. It affects thousands of engineering companies, many of which are small. We have been given to understand that the Government wish to champion the cause of small companies. I do not know what has happened in the big companies, though I have been intrigued by the comments on the great stockpiling of steel that has taken place. As someone involved in a small company, I know that there is no way in which we could have afforded to stockpile steel for months in advance in anticipation of a steel strike and in the hope of beating it.
The Government had better understand that if they do not do something to settle the strike shortly not only the British steel industry but large sections of British industry outside steel will be adversely affected. If a company such as mine which supplies components to many other companies is unable to supply those other companies, they will go under as well. That would happen even if those other companies were not direct consumers of steel.
I hope, therefore, that the Government clearly understand the importance of achieving an early settlement. The Government must not stand by in the role of a redundant referee ignoring the fact that they themselves have set the rules of the contest while the Prime Minister and the Secretary of State for Industry can be heard cheeering on the management of BSC.
It is the view of the leader of the Liberal Party and of many of us in Opposition that the country needs far clearer economic planning than it is currently getting. We appear to be floating along on an economic cloud hoping that everything will come right in our pursuit of some doctrine or theory which might be known as the "Joseph theory adopted by Thatcher".
The country appears to be in exactly the situation it was in in 1978–79, lacking the kind of leadership that would show the country where it is going and how it is to get there. It is not sufficient for leadership to be expressed in platitudes which tell us we cannot have this or that. It will take more than platitudes to persuade the country that it is getting the kind of leadership to which it believes it is entitled.
To be fair. the Labour Government told the steel industry that it must break even in 1979. When the right hon. Member for Deptford (Mr. Silkin) spoke for the Opposition today, I intended to intervene. However, he made my point and my intervention was unnecessary. When the Labour Government told the British Steel Corporation to break even by 1979, what was the rate of inflation then? Furthermore, when this Government told the BSC that it must break even by March 1980, what was the rate of inflation then? The facts need to be stated. Since both those declarations were made, the rate of inflation has galloped upwards and forwards at an alarming rate and will soon approach 20 per cent.
I am interested in the hon. Member's argument. Will he take on board the fact that—as I tried to make clear from the steel sector working party's report—no other European country expects its steel producers to break even until at least the end of 1981?
I am grateful for that intervention. The right hon. Gentleman quoted that relevant factor in his capable speech today. It was a better speech than we heard from the Government. I do not always take that view, but I certainly took it today. The Government must realise that this galloping rate of inflation puts a tremendous burden on the finances of the British Steel Corporation, just as it does on the finances of any other industry. Interest rates also have their impact. Vast sums are being paid by the BSC in interest rates. Interest rates affect prices and cash flows. That means that it is more difficult, within a given period, for an industry to break even than if those economic factors did not apply.
How does the hon. Member reconcile his argument that the Government should put in more taxpayers' money, and therefore increase borrowing, with his desire to reduce interest rates?
I hope to persuade the House that those factors are compatible and that there is another way of tackling the problem.
It is common sense for any industry at least to break even, and the steel industry is no exception. The argument is about at what speed an industry should be expected to break even. It is difficult to understand why the British steel industry should be expected to break even at a greater pace and within a shorter period than the steel industries in other countries.
Productivity must be increased. There is no point in producing something which cannot be sold. There is no point in a consumer buying at a higher price than is necessary. By the same taken, the labour force must be reduced substantially. The argument is about the time it takes for those changes to occur.
I do not often agree with the right hon. Member for Down, South (Mr. Powell). He is due to address my Rotary club, and I have declined to attend. However, I agreed with him when he said that one cannot expect the men in the steel industry to accept increases which are not reasonably compatible with the rise in the cost of living. I am appalled by the way in which the British Steel Corporation management has handled the negotiations. I cannot understand what the management representative was thinking of when he went to the negotiating table with an offer of 2 per cent. It would have been better for him to offer nothing on the ground that the industry was bankrupt and could not afford anything. Whoever was daft and stupid enough to offer 2 per cent. should be sacked. No man can be expected to accept 2 per cent., or even 8 per cent.
We must reach a settlement which reflects all the conditions to which I have referred. I accept that the industry is in a bad way and that the settlement cannot be in line with the national average increase. The steel workers must also accept that. However, it is ridiculous to ask the workers to accept 2 per cent., or even 8 per cent., when the national average is about 19 per cent.
I hope that we can look at the problem realistically. The situation has worsened, because within days of the 2 per cent. offer being made it was increased to 8 per cent. That showed how ludicrous, stupid and silly was the original offer.
I am aware of that, and that is why I hope that somebody will do something about the idiot responsible for the negotiations on behalf of the British Steel Corporation.
The BSC should start to think of making an offer of between 12 per cent. and 14 per cent., with or without Government intervention. We should create a partnership between the management and the unions. Such a partnership cannot be created by attaching impossible conditions to wage settlements. Partnerships are created by showing employees in an industry that we have confidence in them that they will honestly attempt to achieve the target set for them. It may be argued that targets set in earlier negotiations were not achieved. However, if the British steel industry is to have a future it must have a new beginning. That means that we must have the co-operation of the work force. Somebody should have the sense to see that new wage deals might mark the commencement of a new deal for British steel instead of an ending.
I would be an idiot not to understand that if the person supplying me has to pay more wages to make a product I shall have to pay more for that product when he sells it to me. Of course I understand that.
People will not pay a higher price than they need to pay for steel. That is one of the factors that the union must take into account when understanding that it cannot achieve as much as the national average increase in wages. The Government should tell the British Steel Corporation to settle at between 12 per cent. and 14 per cent., without strings, and guarantee that if increased productivity is not achieved they will pay for the difference between an 8 per cent. and a 14 per cent. settlement.
The Government must consider that proposition and my plea for a new attitude. They must show the unions that they are prepared to trust them to have a go at achieving increased productivity. They must prove that trust by providing financial backing.
The Minister asked whether I am suggesting that the British taxpayer should pay more. In relation to nationalised industries, the Government resemble a holding company. It is not unusual for a holding company to set the losses of one company against the profits of another.
Yesterday the Government announced a tax on old people keeping warm. They announced that the price of gas is to be increased this year by almost 30 per cent., with further increases each succeeding year. The increase is in excess of that required by the British Gas Corporation. Increases in the price of electricity have also been announced. A massive profit will be earned by the gas industry. The British Gas Corporation has not sought that profit and the Government probably did not take it into account in their last Budget calculations. Why could not the profits of one nationalised industry be set off against the losses of another?
I shall not give way. I know what the Minister of State will say. He will say that the taxpayer will have to find the money that he would not have had to find if he had recouped the gain. But the taxpayer will have to pay those profits anyway. That has already been decided. He has no option. The charges will take place. It is not an extra tax that is being placed on the taxpayer. In view of that, the only argument is about how they are used.
I shall give the hon. Gentleman the facts. If the profits of one industry are offset against the losses of another, in 1980–81 we shall still have an external financing limit—that is to say cash limits—for the nationalised industries of about£2·7 billion.
There is nothing divine about that. The amount of money involved is minimal compared with the vastly excessive profits that will be dragged out of the British taxpayer—certainly the consumers of gas and electricity. Since the Government are in the position of a holding company, it would not be improper for a Government who believe in free enterprise to use the principles of free enterprise in their attitude to the finances of British industry.
The strike must be settled quickly. It must be settled in a manner which is fair and honourable to all concerned. The record of the British steel worker is a proud and good one. That should be taken into account by the Government in their settlement plan. I plead that common sense should prevail. The Government should get away from their inflexible attitude of monetarist policies and the attitude that nothing shall shake them from their pursuit of them.
There are times when Governments have to intervene. The time is when Britain faces a situation which could bring to a halt virtually the whole of our manufacturing industry. If the Government do not have a role and a responsibility to intervene at that point in history, I fail to understand their role and motivation.
We have listened to speeches from my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) and the hon. Member for Rochdale (Mr. Smith). Both hon. Members have made a vast and immense contribution to the debate. I do not mean that in a jocular sense.
My hon. Friend the Member for Rutland and Stamford said that he did not feel that there was much to be gained from criticising his own Front Bench in the corridors of power. In my experience, there is not much to be gained from criticising it in this place either. He said that as yet he did not have many grey hairs, but I bear witness to the fact that one can get grey hairs by doing what I am about to do. My hon. Friend made an excellent speech. He approached the problem as a politician and dealt with it in all its realities. He did not confine himself to dealing with it solely as a business man, and he is a very successful one.
The hon. Member for Rochdale, who speaks for the Liberal Party, is a successful manufacturer, with a real interest in his business. He was able to use his experience of dealing with production, buying and selling, and labour relations, and combine that with his skill as a politician. Above all, we must speak here as politicians. We can add to our skills as politicians over a wider breadth than just a knowledge of trade unionism or of industry or commerce. We must use our responsibilities as Members of Parliament.
The Secretary of State's statement on the steel industry on Monday was valuable. He gave an admirable background to the events leading up to the strike. He reminded us of the agreement which existed four years ago between the British Steel Corporation and the TUC steel committee. He stated succinctly that the steel industry had to be rationalised. That had been agreed by the TUC. It had to be turned into a profitable, high-wage, high-productivity industry. My right hon. Friend said that during the last five years investment by the Government and by the industry itself, to the tune of£2¼billion, had been poured into the industry. The British Steel Corporation has been modernised, but it is not yet efficient.
I do not disagree with my right hon. Friend's clear summary. He said that redundancies are now required and that 50,000 men must be lost from the industry. Fifty thousand men lost to the industry may mean that number lost in life itself. I have seen that happen in the coal industry. In my constituency I have spoken to men who have talked about being put on the slag heap at 50. No economist or politician will persuade them that it is all part of the grand economic plan. There is a certain amount of dismay amongst them.
As I have said before, when we contemplate economic plans, Government plans or corporation plans involving rationalisation of an industry which involve men losing their jobs, redundancy payment is not the whole answer. We have a wider responsibility. It is a social upheaval in some quarters of the country of earthquake proportions. It is, indeed, a tragedy. It is a body blow to any work force. Nevertheless, however tragic, however big and however awful it will still happen. Redundancies are one side of the question. That is one body blow to take. But some people cannot take that body blow and might react to it.
I wonder how many of my colleagues in the House have been out of work and been unable to get a job. I am one of those who have, and it is etched on my mind. It must sometimes show that it is etched on my mind. I know what it is like to be out of work. I can never see an unemployed person without sympathising with him and realising that I should not be a politician if I did not have a duty to help him.
I do not wish to introduce too much emotion into a debate which has been fairly clear of emotion. Hon. Members have sought to introduce a solution to a tragedy—the steel strike—which is looking us in the face and which could become much worse. One body blow is that of redundancy. The other is that of inflation and the pay award that is being offered to the steel workers.
My right hon. Friend, who is an honest man, said that the British Steel Corporation is bankrupt. He is right. The corporation cannot afford to pay more than 2 per cent. The offer was raised to 8 per cent. and then to 12 per cent. with productivity strings. That was fair enough. However, I should not have done it that way. I regard that as ineptitude. If I were still active in a large corporation, as I once was, I should not have expected to see persons who made such offers, and who took such an approach to a key issue, still doing their jobs. They would have been retired early.
The Iron and Steel Trades Confederation will not accept this final offer, and we must ask why. I do not yet know. I have not had an opportunity to talk to Mr. Bill Sirs. I want to know that my Government have sought that opportunity—I understand that today they have sought such an opportunity—because I want to know what is the argument of Mr. Sirs and his members.
There has never been a clean strike, and as days go by strikes get dirtier. We hear all the horror stories about anarchists and Trotskyists who are coming out of their cells to make capital out of a strike that gets dirtier day by day.
But there was a reason why, on the first day, the offer was turned down. We understand from Mr. Sirs' statement that he did not accept the BSC's measurements on productivity. I have heard him talk about it on the radio. The unions believe that the BSC may have some other figures which can be played around with, if I may use that phrase. We have heard about the interest payments of£188 million a year. We have heard about the higher cost to the BSC in a year as a result of wing British coal—£135 million. These are charges on the industry. They are figures taken into account when considering the wage award that can be made at a time when inflation is running at 18 per cent. I am being very calm about this. I am throwing in a few figures because there are two sides of the argument, and I do not care which side of the Chamber they come from.
The workers, so I understand, do not feel that they should bear the cost of the plant closures, or at least they feel that this cost should be taken out of the pay calculations with which they are being confronted. They feel that much of BSC's investment has been a mistake. They are right, of course. We all know that much of it has been a mistake. We know that some of it is a false investment and that the management calculation of the market was wrong. Hence, BSC must be contracted still further to get the productivity that is being sought, quite rightly, by the Government and by the BSC. I do not dispute the arguments that I hear about the need for productivity, so that we can earn more, sell more and be more competitive and so that eventually we can afford very much higher wages.
The workers have also had their failures, although not so much in terms of false estimates. The productivity has not been there. We know that productivity has increased a little and that at present the steel industry is doing better than the coal industry. There has been absenteeism. There have been disputes on demarcations. There have been un-official disputes.
My right hon. Friend has, with great persistence, told us that last year the losses of the British Steel Corporation were equal to£1,800 per man in the industry. He then argued, with cool logic, that therefore£1,800 of the pay of the steel workers has to be made up by£1,800in taxation from the other workers in the country. It is cool logic, but it is too cool by half for me. It really is. I cannot accept it.
I was always taught that there were no bad soldiers, just bad officers.
The£1,800 argument is not even logical, because the loss cannot be set off merely against labour charges. It has to be set off against labour, raw materials and capital.
I understand. My logic is not so cool that I would not be able to pursue even my own argument on it, but I think that I have made my point.
The workers in the steel industry are on strike, in a hopeless cause, I think, but they feeel misused. I have met them, although I do not sit for a steel constituency. It was the right hon. Member for Down, South (Mr. Powell) who said that we are all concerned with steel, whether or not we use it. It is the bedrock of British industry.
Steel workers come to see Members of Parliament. I have seen them, and I have been very impressed by them. I have never met such moderate, encouraging workers. I should like to be able to work with them, because they encourage one. Therefore, I feel that we must almost bend over backwards to see what has gone wrong. Why are they feeling misused? Why are they bruised? Why are they feeling disillusioned? Why—perhaps worst of all—is their morale low? That is the worst thing that can happen to an army.
I remember being told that we lost Singapore not because the guns were pointing the wrong way but because British morale had gone to rock bottom. I am worried now that in the steel industry morale should be so low. No wonder they are on strike. They feel that their backs are to the wall, and they think that there is nothing left for them. Something, therefore, is wrong.
The Government have said that they will not intervene. I accept that the Government should not intervene in pay negotiations. I have accepted that principle in recent years. That is the job of management and unions together. But I would argue that there is a case for an intervention now, if only to find out the real causes of the trouble, which are much wider than just a pay dispute. Let us have intervention soon, before there is even greater disturbance in the economy.
That is what ACAS is doing. It is trying to establish—[Interruption.] My hon. Friend has made a point that is well worth answering immediately. The point that I seek to put to him is that this is what ACAS is doing at the moment. It is trying to establish what the problems are. One of its roles is to consider this. Will my hon. Friend leave it to ACAS?
I have already talked about low morale. I am aware of the concern of the public over what is happening. In this Chamber we hear hon. Members, such as the hon. Member for Rochdale, talking about the problems that their businesses face. We heard the hon. Gentleman say that he cannot afford to stockpile steel, and so on. We hear what is said by the small business man. We know, therefore, that there is great concern in all sectors of the community, and not least among the general public. There is great concern also among the workers in the industry who are on strike. I believe that ACAS can do the job but that we have reached a stage when it needs help from above. The Government should not stand aside now.
The dispute is not just about pay. Pay is crucial, of course, at a time of high inflation, and especially so when steel workers see high pay awards being realised by other workers around them. They see such pay awards being made in areas in which productivity does not even arise. Rationalisation and redundancy mean social upheaval. As I said earlier, it is happening on a tremendous scale in certain steel towns. It is here that the Government have a role to play, quite apart from any economic argument.
Where there is social upheaval and change, there is a need for retraining and for a new infrastructure. There is a requirement for new jobs and new factories. I saw this in Wales at the end of the last war, with the rundown of the coal industry. It cannot be, it must not be, it should never be, left to industry and management alone to do this. This is not the role of a nationalised industry. This is the Government's role. How to face the social problems caused by an upheaval such as this is a matter that goes much wider than the role of the appointed members of a nationalised board.
I am not advocating any climbdown by the Government—I am very glad to see my right hon. Friend the Secretary of State back in his place—but perhaps there could be a slowdown in regard to the redundancies that seem to be required. There should be a reappraisal. Let the Government get together with both sides and talk about it. I believe that when the issues are put to them in this way we shall find that we are dealing with rational men. Above all, I want the Government to talk to the men in the industry. There is so much that needs to be done. We have to see that we do it, and that we do it properly.
I could not help thinking of Lord Robens and the task that he faced over 10 years in the coal industry. I checked on my facts last night, and I was staggered by what I found. In 1960, when he went to the coal industry, there were 602,000 men on the rolls of the collieries of this country. Eight years later there were only 285,000—without a strike. In 1968 alone, 25,000 men were made redundant. In his book "Ten Year Stint", Lord Robens wrote:
The success of the industry cannot be measured just in terms of productivity or profit and loss, but much more in the handling of a vast army of men facing redundancy and unemployment.
My right hon. Friend the Secretary of State—and he is a friend, because we knew each other before I came into the House and I have a high regard for him—has expounded a harsh policy that is based on economic reality and on market pressures. I do not object to that and I accept the argument that the facts relating to productivity and profitability are real. However, there is another side to my right hon. Friend. He does not really need reminding of it. He is a man of understanding and of great sensitivity and compassion. I remember when he was talked of as the "big spender". As a Tory, I remember how we stumped the country, proud to proclaim that we had this man in our team who spent so much on the social services and—
The hon. Member for Canterbury (Mr. Crouch) has made a realistic speech. I regret that the Secretary of State for Industry was not—obviously for good reasons—in his place to hear some of the speeches made by Conservative Members. The first and essential priority, which is the essence of the debate, is to settle the steel strike. It is not a strike that affects only steel workers but one that affects all sections of the community. That point has been raised by many hon. Members.
The Secretary of State defends his policy of non-intervention by claiming that he is not the management. But in his speech on 13 December he said:
I am not the management—[Interruption.] No, I am the representative for the time being of the owners of the industry."—[Official Report, 13 December 1979; Vol. 975, c. 1578.]
So be it. As a representative of the owners of that industry, I urge him in the light of the speeches that we have heard to inject a spirit of good will into the dispute at so crucial a stage. As the hon. Member for Rochdale (Mr. Smith) mentioned, the Secretary of State should, as a first step, adopt a more flexible financial break-even timetable to enable the BSC to fulfil its obligation.
The question before the House concerns not merely the steel industry but the whole of our economic and industrial future, because steel lies at the heart of all our economic activities. In particular, the coal and tinplate industries within my constituency are dependent on steel. It is no exaggeration to say that no aspect of our economic life will be left unaffected. We face a very grave threat to our economic well-being as a nation, and the indifference of the Government is a dereliction of their duty to the country. For the Government to pretend that the issue of wages and redundancies is a local matter for the BSC is a serious abnegation of responsibility, not only because they are owner and banker but because the Government and the taxpayer could be involved to the extent of hundreds of millions of pounds.
The Government persist in pretending that it is a balance sheet problem for the British Steel Corporation to solve, but the effects of redundancy pay, unemployment benefits, losses of tax revenue and regional development programmes could greatly affect the country's balance sheet. The Government's instruction to the BSC to break even within a short time limit is the most emphatic intervention in the corporation's affairs. It is that instruction that has contributed towards the present crisis. Therefore, the Government cannot excuse themselves by standing aside from the very dispute that they helped to create.
Sooner or later the Government will have to take more positive and realistic action before irreparable damage is done to the whole of British Industry. Their decision depends upon how anxious they are to preserve steel-making in Britain. It also depends on how the Government regard steel workers in comparison with other workers in the public sector. That point was brought home by the right hon. Member for Down, South (Mr. Powell) in his realistic and fair speech.
The Government should ask themselves the important question why steel workers, whose organisation has been a byword of moderation over the years, should suddenly change overnight from a small army of moderates to a small army of militants. I believe that that point was made earlier but I have repeated it. The short answer is that the workers feel that they are being asked to carry an unfair share of the steel industry's difficulties and that they have paid for that share with many sacrifices. Those workers have paid, for example, through their co-operation over plant closures and loss of jobs, and through an investment strategy to which they were not party and which, with hindsight, appears grossly over-optimistic.
I can recall a number of steelworks closing in my own constituency under the pretext of rationalisation. I can recall the call for demanning in the interests of greater efficiency and competition. That is not a new word but an old one. There is no body of workers that has co-operated more fully on these important issues than the steel workers.
For example, at Port Talbot there is a work force that extends throughout West Glamorgan and West Wales. The manpower at Port Talbot has, in recent years, fallen from 17,000 to its present total of about 12,000. I was closely involved in the many deputations from the West Wales steel action committee which sought new investment in Port Talbot. I can testify to the readiness of steel workers to work in full co-operation with the BSC in facing all its problems. It is fully realised that we are in the midst of a world steel recession, but the BSC programme has varied from extreme optimism to exaggerated pessimism. The steel dispute is becoming bogged down with all manner of statistics and complex percentages which are challenged from day to day.
We have already heard references to the NEDC iron and steel report of 1980. It says:
Labour productivity has now risen 16 per cent. since 1975".
It then gives a warning:
International comparisons of labour productivity are open to many criticisms—differing definitions of the industry—the extent to which sub-contractors are used, etc.
This is an authoritative NEDC report that warns us to beware of comparative statistics.
I take note of the appeal to be brief, but I wish to mention one figure. The new estimate concerning BSC is for a capacity of 15 million tonnes a year. My right hon. Friend the Leader of the Opposition mentioned earlier today that he hoped that that fact would be brought out, but that is only BSC's estimate of its share of a much larger market. An output of 15 million tonnes would barely support the domestic demand and would not put us in a position to respond when world demand picks up, as I am confident that it must. It would be disastrous to reduce capacity to such an extent that it would jeopardise our chances of meeting a rising market. It is therefore essential to protect our capacity. In the light of the investment of millions of pounds in the steel industry, there is every reason to safeguard modern plants such as Port Talbot and Llanwern so that they can cope with the expansion when it comes.
I conclude by re-emphasising that the urgent issue before us is the settlement of the strike. On 13 December 1979 the Secretary of State said:
the Government have responsibility for doing what is practicable to remedy the social consequences of industrial change"—[Official Report, 13 December 1979; Vol. 975, c. 1579.]
The hon. Member for Rutland and Stamford (Mr. Lewis) was also frank enough to admit that in his speech, and I am glad that the Secretary of State is indicating assent. He should accept his own challenge. At this juncture he could go a long way towards dealing with the consequences of the industrial changes that we are
facing, especially in the steel industry, and enter into a meaningful discussion with both sides. In recent hours Mr. Bill Sirs has offered an olive branch. The Secretary of State could help to establish industrial peace in an industry that deserves better treatment from the Government.
I agree with the hon. Member for Gower (Mr. Davies) that it is a tragedy that workers so conscientious, a union so moderate and a leader so responsible as Mr. Sirs should have got themselves into a strike for a pay claim which the employer, being bankrupt, cannot possibly meet and the result of which can only be to destroy jobs and diminish the earnings of those employed in the industry. The same union, however, is negotiating constructively the new manning levels at Shotton and, no doubt, in South Wales which will enable those works, after the strike, to operate competitively.
It is a tragedy without a hero and without a villain. In this version of Hamlet there is no King Claudius, but there are Rosencrantzes and Guildensterns lurking in the wings—those seeking to extend the strike to the private sector, where there is no wage dispute between employers and employees.
In North Wales terms, because Shotton must be wrecked, Brymbo must also be wrecked. In the Welsh TUC there are those—perhaps the busiest—who are seeking to politicise the strike and turn it into a challenge to the Government and the industrial policies that they were elected to carry through.
In view of the interesting speeches of my hon. Friends the Members for Canterbury (Mr. Crouch) and Rutland and Stamford (Mr. Lewis), I must make it plain, that, although I am a member of the interventionist wing of the Tory Party and supported the industrial policies of my right hon. Friend the Member for Sid-cup (Mr. Heath), I have no hesitation, although a great deal of sadness, in supporting the Government's present industrial policies, and the Conservative Party as a whole is closely united in that.
We believe, sadly, that it is no longer possible to have open-ended subsidies in order to keep non-competitive industries going. We say that being only too well aware of the consequencies for whole sections of British industry and those employed in them. It is better to have amputation without anaesthetic than spreading gangrene.
The job losses resulting from the withdrawal of tax-financed subsidies may be—and I freely admit that they are—politically unacceptable, but, alas, they are economically inevitable. The laws of politics can be made to bend but those of economics cannot. The Labour Party knows that, and many Labour Members will say it in private, although not one will say it in public.
The Labour Party's role in this tragedy is that of Queen Gertrude—guilty silence and complicity in wrongdoing. Above all, its role is complicity in the fostering of the ancient myth, as false, dangerous and obsolete as human sacrifice, that a worker owes to his union a loyalty that transcends his interests, the well-being of his fellow citizens and even common human decency. It is the unthinking acceptance of that myth that has led reasonable men and women into action that cannot possibly benefit them, which will damage the interests of their fellow workers in other industries and will be increasingly difficult to sustain at the cost of ever more flagrant affronts to common human decency.
Must this strike be allowed to run on to its bitter end, to the inevitable collapse after two, three, four, five or six weeks of pointless heroic existence on those freezing picket lines? I have no doubt that, had a democratic vote been taken at the beginning of the strike, there would have been an overwhelming "No". I have no doubt that if another vote was taken in a month or so, it would be to call off the strike. Equally, if the vote was taken now, it would probably be a vote for continuing the strike, because at this stage attitudes have hardened.
In theory it is right to leave the matter to the board of British Steel to sort out. The trouble is that the board is no longer credible, due partly to the way in which it has been treated by successive Governments but also, I must say, to the maladroit way in which it handled the pay round at the opening stages.
My right hon. Friend the Secretary of State for Industry may not be the union's pin-up boy. He has an awkward in- sistence on telling plain, unvarnished truths—his taste for that perhaps amounts to a disease—but at least he has no problem of credibility. He has made it plain that there can be no more money on the table. Is not the problem now to convince the unions that that is so?
Might it therefore not be worth while for my right hon. Friend, perhaps flanked by the Secretary of State for Employment—as it were, the sugar on the pill—to ask Mr. Bill Sirs to come and see him? He would have not merely to say that the door is open but positively invite him to come and see him. He could tell him once and for all that there is no more money for pay rises beyond what the industry can produce by more production and more profitable output. He could then see, sympathically with Mr. Sirs, what can be done to get him and his union off the hook.
Perhaps the Government owe that one further effort to the steel men. Like the other workers in this country, they have never been clearly told, even by Ministers in this Government, that no one can hope to maintain, still less improve, his standard of living in inflationary, uncompetitive Britain unless he makes a direct contribution to curbing inflation and making his own industry competitive.
Nothing in the debate has been more depressing than listening to the spokesman of the Liberal Party, the hon. Member for Rochdale (Mr. Smith), giving his prescription for dealing with Britain's problems, which was merely to pour more money into uncompetitive industries.
I shall be brief.
At this juncture the paramount need, certainly for all of us with steel constituencies and, I would have thought, across the board, is to ask ourselves how the strike can be ended. On the one hand, we have the whole of the public sector industry involved, which is led by one of the most moderate unions in the land. Strike action has not been taken lightly. Therefore, we must ask why a highly responsible leadership has been driven to despair. At this stage, how can the dispute be ended? Do the Government have any ideas for ending it? Those are the questions to which I hoped the Secretary of State would address himself in his brief opening remarks.
On the other hand, there are management problems. If we ask anybody with experience of industrial relations, he will tell us that the 2 per cent. approach had the finesse of an elephant with four right feet. The management are the prisoners of the Government, shackled by the need to break even on a ridiculous and unattainable time scale, as some of my hon. Friends and myself told the chairman of BSC last July when he maintained that it was achievable. The tragedy today is that, if BSC is asked when it will break even, it cannot say. That is the reality. It is a ship sailing on a course without knowing its destination. What it does know is that there will be many casualties on the way. Therefore, the industry is shackled by the need that it cannot give away what the Secretary of State calls taxpayers' money without his consent. There are two immovable forces.
One matter that I should like to make abundantly clear to the right hon. Gentleman—unless he is aware of it already—is that the steel workers cannot be starved out. The sooner that is realised, the better. The Government are the paymasters and the bank managers and, at some stage, whether they like it or not, they will have to intervene. The question concerns the timing and the manner.
Perhaps the Minister who replies to the debate will tell us whether any contingency plans have been made by the Government for intervening. Have the Government thought of the possibility—indeed, the inevitability—of the need to intervene at some stage? I shall not opine about the machinery, whether it is by a court of inquiry, arbitration, an inquiry or even a cosy chat with a Minister, but I find it odd, as the right hon. Gentleman revealed to the House last Monday, that he has had discussions with the corporation but that at no stage have there been discussions with the leadership of the unions. Instead, we have been told by the Secretary of State and by the Prime Minister—although the right hon. Lady is not as close to the matter as is the right hon. Gentleman and I forgive her for that, if for nothing else—with parrot-like repetition, about the one-sided facts. So far, the Secretary of State has not been inclined to provide an opportunity to call in the leadership of the unions and ask those moderate unions what is the difficulty and why the strike is being maintained.
At some stage, whether the right hon. Gentleman likes it or not, before all the country's industry is affected—because we are discussing not only the problems of the public sector steel industry but the whole of British industry, which will be affected sooner rather than later—he will have to take steps to intervene. As I told the House on Monday, and I hope it will forgive the repetition, I find it illogical and inconsistent that, on the one hand, there is massive intervention by the insistence of the bank manager of the industry that it should break even—there could be no greater intervention than that—and yet, on the other, the industry is deprived of resources. The right hon. Gentleman knows that the industry cannot act without his consent and without resources from him.
I find it odd that the remainder of the BSC proposals for Port Talbot and Llanwern that were announced shortly before the debate started and which were contained in a document circulated to hon. Members by BSC should be totally ignored by the Secretary of State. Those proposals will affect 11,000 workers in Port Talbot and Llanwern and thousands of workers in the coal industry, without taking into account the cumulative factor of a whole range of other people. The whole of South Wales will be a distressed area if the proposals go ahead. When such an announcement is made, the right hon. Gentleman owes the House the privilege of a passing reference to the problem. Or do not 11,000 men count one iota in the minds of the Government and the Secretary of State?
To the surprise of the whole House, the right hon. Gentleman sat down—totally unexpectedly—without mentioning the problem. To one man, those proposals mean 100 per cent. unemployment. To 11,000 people, they mean 11,000 per cent. unemployment when it is all added up. Although the view has been expressed that of all the alternatives this was the least horrific, the tragedy lies in the time scale that is to be followed on the insistence of the Government about the break-even point.
Everyone in the industry and in South Wales knows that there is no possibility for the Welsh Office, the Department of Industry, BSC or anybody else to provide the alternative employment that will be required by August. That is the time scale that has been imposed. For the moment, the Secretary of State is the steward of this great industry—indeed, he is steward for a good part of British industry. I hope that he will recognise that, apart from the interests of the taxpayer, there is a wider interest—that of the whole nation. There could be no greater tragedy than to allow a great industry to bleed to death because of the lack of time to reorganise it. This is an industry which has caught the most severe bout of pneumonia possible because of the market recession, the problems in Iran and the problems of the world depression. Little time has been provided to allow the industry to adjust, and I regret very much the stance of the Secretary of State.
I follow the right hon. and learned Member for Aberavon (Mr. Morris) in expressing the hope that before the debate ends we shall have an indication from the Government of the way forward as they see it. I share the right hon. and learned Gentleman's view that the House was a little surprised when my right hon. Friend sat down without offering any thought about the next stage. I have difficulty in making my speech because I am looking forward to the speech of the Minister who will wind up the debate and, no doubt, complete the second half of the act.
My right hon. Friend got us off to a good start by pointing out the context in which the debate is taking place—the decline of demand for the market, the need to readjust the industry to that demand and the extent of the support that is required from the taxpayer. However, he did not even make a virtue of that necessity. He did not re-emphasise the Government's commitment to the industry. About£450 million of taxpayers' money has been allocated to support the industry in the next year. Therefore, presumably, my right hon. Friend does have an idea about the size of the industry. To many people in industry, the size of the manufacturing base that the Government envisage in the various industries is a crucial question.
My right hon. Friend has done a great service by creating a new atmosphere in the country, an atmosphere under which management is once more compelled to assume its responsibilities for managing its industries. I admire very much the way my right hon. Friend has sought to detach the Government from day-to-day interference in management decisions. He need not have any fear that he is weakening that stance or detracting from the credibility of the climate that he has successfully sought to create by admitting that the Government had some responsibilities in these matters—for example, for the appointment of the board of the British Steel Corporation. He must express a view as to whether he is satisfied with the manner in which members of the board carry out their duties, and if he expresses no view we must assume that he is satisfied.
We want an indication of how the Government see the next stage of the dispute developing. What steps are available to bring it to an end? This is a very serious matter for all industries that make use of steel stocks. These stocks, despite all the rumours, are not very high in many of our large manufacturing industries—quite apart from the smaller ones which cannot afford to stock up in any case.
There is great doubt about the actual strategy of the British Steel Corporation and a relevant reference has been made in this debate to the fact that we have landed ourselves with two huge modernised plants necessitating the closure of a lot of viable smaller plants in order to divert more work into these huge plants. Thereby we have lost flexibility, not only in the type and size of billets we produce but also in supplying customers in certain areas. Certainly we in the West Midlands have suffered from the disappearance of the Bilston works. Horror stories abound about the difficulties experienced as a result of shunting billets around the various works trying to get them milled down to the right size. The industry has got itself into an inflexible mould as a result of decisions taken by previous Governments.
There is also grave doubt about how much the expenses of that development should be visited upon the steel workers. I do not think that any attempt has been made so far by the Government to tackle that aspect. They have not explained how they see it, what proportion of the cost they feel should be allocated to that wrong decision, how the costs should be shared or by whom they should be borne. A Select Committee of this House has cast considerable doubt on the forecasting capabilities of the BSC.
Anyone who is faced with a contracting industry—unfortunately we have many such industries, including the motor car industry, in which I am vitally interested—needs some assurance of the basis and commitment of that industry. Is there a base and is there a commitment? When those questions have been answered, we can start to build. From all accounts the steel industry has a very constructive union that would wish to build from something, but people need to have confidence that there is a commitment before they commit themselves. My hon. Friend the Member for Rutland and Stamford (Mr. Lewis) referred to the need for leadership in this situation, and I hope that that is exactly what the Minister of State will provide when he replies, because it is necessary for the Government to state how they see the situation and the way in which it will develop.
There is another grey area about these figures. The hon. Member for Rochdale (Mr. Smith) made a valid point that the interest rates had increased recently and that the inflation rate was higher than at the time of the orginal decision regarding the allocation of money. Also, the fuel crisis has worsened. There are social costs involved in closures, and I wonder how these have been put into the balance sheets. I realise that that is far too complicated a matter for a winding-up speech, but someone must make the effort to explain to the people involved so that the situation can be understood, allegiance can be secured, and there will be a willingness to pick up tools again. This is a simple man management problem which we, as politicians, should understand.
Then there is the question of negotiations. It is quite right that the Government should not be involved in pay negotiations. I certainly would not wish to try to tell someone how to conduct such negotiations, but certainly there is a tradeoff between jobs and pay, which was the burden of the speech made by the right hon. Member for Down, South (Mr. Powell). There is a negotiation between pay and jobs, and I cannot understand how these two have become divorced. I cannot understand how the closures came through first and agreement was sought on those, and then suddenly, at a later stage, a pay negotiation was brought forward—at a level which I found incredible, even bearing in mind the fact that the corporation is bankrupt.
To my surprise, this Government raised benefits—almost a soon as they came into office—by a higher level than is now proposed for people who are actually in productive work. There is an expectation set in the cash limits for local government servants and civil servants that there should be an increase in the amount of money available of about 14 per cent. regardless of how it is divided between jobs. That emphasises what I have said. There is a negotiation there and these are jobs where, by definition, productivity is extremely hard to identify and measure, let alone secure. It is very difficult for a steel worker to understand how he should be initially offered so much less than people who are not necessarily contributing to the same extent. An attempt must be made to explain where the basis of negotiation lies. I hope that the winding-up speech will give an indication of how the Government see this.
I suggest that the foundation for the Goverment's approach to the next stage should be a clear statement of commitment, whatever size of industry is decided upon. Why does the Secretary of State not proclaim the fact that he has provided£450 million of taxpayers' money? That must have been done on some assumption. What was it? Let us say that we are trying to support people in difficult circumstances and help with readjustments. The Secretary of State must tackle the question of the management of the corporation and he must be seized of the need to link the negotiation on jobs with that on wages.
Finally, we all want to know the Government's reaction to some of the distasteful scenes associated with secondary picketing. Why has no action been taken? Please let us be positive and show that we understand the situation, that we have a commitment and that we are doing something about it.
I am grateful to be called so early in this debate—I feel quite honoured. I begin by pointing out that I believe that it was the intention of the Government to provoke a confrontation with the steel unions in the event that they, the Government, could not get a settlement on their terms. I draw my proof from a document that has already been referred to in the debate—the Ridley report, which was leaked in The Economist.
That report said:
The Conservatives intend to demand that each nationalised industry achieves a set rate of return on 'capital employed'. This rate of return, once laid down, would be 'totally inflexible'. If managers did not achieve it they would be replaced.
It went on to say:
The eventual battle should be on ground chosen by the Tories, in a field they think could be won, railways, British Leyland, the civil service or steel.
Those were the terms of reference set for Sir Charles Villiers when this Government took over.
As proof that that was the objective, I quote the right hon. Gentleman the Secretary of State, who, following the publication of that article, said:
It is the job of our policy groups to analyse the options and to put forward a range of choices for consideration. Some of the ideas in it will no doubt survive and become policy. Some will not.
This one did. That is why we have an industrial action that is shaking the country. But people will not be fooled. The problem is that whereas the Government believe that this pretence will fool the people, workers in the industry are becoming increasingly bitter. They are being held responsible for the British Steel Corporation's difficulties. Of the£327 million lost last year,£207 million was interest payments and only£119 million was trading losses, but those losses are put down to the activities of the workers in the industry.
The£207 million interest payments stems directly from the 10-year strategy, laid down in 1973, which set as an objective a capacity of 38·5 million tonnes. But everyone got it wrong. Politicians and management, and now the workers in the industry, are being required to pay the price. The price is a low settlement and a massive level of redundancies.
It was not the workers who took the decision on the massive level of imports of steel. Imports of coated steel last year amounted to£250 million. Against the interests of my constituents,£12 million worth of pig-iron was imported last year. Indeed,£1,000 million of steel was imported. These decisions were taken not by the workers in the industry but by management. It was not the workers who decided on the level of increased penetration by private sector operators. It was not the workers who set the 15 million tonnes capacity objective. That objective was set without consulting the ISTC and the National Union of Blastfurnacemen.
It was not even the management, in many areas, who took these decisions. It was not the Steel Industry Management Association which did so. Only a few weeks ago, in a statement on the business strategy of the corporation, the association said:
The business management philosophy is unacceptable to the corporation's middle managers and the association believes that the deep retrenchment now being proposed has been too hastily adopted and will needlessly further the process of failure compounding failure until the common heritage is virtually destroyed.
That is a voice that has not been heard in many debates or from the Government. The operative word is "destroyed". That is what is happening. This whole action is seen as destruction by the workers in the industry. They have had to cope with closures at Ebbw Vale, Hartlepool, East Moors, Shelton, Glengarnock, Bilston and, later, Corby and Shotton, at a cost of 30,000 jobs. Now they are required to save another 30,000 jobs with the closures at Port Talbot and Llanwern and the rape of Consett. So the screw turns as the Secretary of State sets these crude objectives which everyone realises cannot be met. Yet Government Members, apart from a few of them, have not had the guts to get up and challenge those objectives, as they should for the benefit and the protection of the industry.
As these objectives of the Secretary of State are being required to be met, BSC comes back again and demands 12,000 more jobs and suspension of the gauranteed working week, and makes a promise of 2, 5, 6 and 8 per cent.—a permanently mobile figure—in the belief that this will draw the steel workers back to work. It will not achieve that. That is what creates the bitterness, and the sooner the Secretary of State realises it the sooner everyone will be able to return to work.
What creates further bitterness are the television appearances of the Secretary of State for industry and his right hon. Friend the Prime Minister, in which they tell people that 16 per cent. settlements are available. Those levels of settlement are not available to many British Steel Corporation workers. Workers on the picket lines in my constituency complain passionately about the statements that have been made. The Secretary of State and Sir Charles Villiers refer to average wages of£104 a week, which could lead to settlements of£121 a week, if approved by the ISTC and the NUB, but those are not the levels of wages paid in my constituency.
The great majority of steel workers in Workington earn between£75 and£85 top-line gross. When they are told that they earn sums of£25 and£30 in excess of those figures, they believe that they are being misled and that the people of this country are being misled. That is why there is bitterness. Their case is being misrepresented. One can feel the heat of the anger of people on the picket line.
In the weeks prior to returning to the House, I visited the workers on the picket line. I have watched day by day as this bitterness has built up. This weekend, when I go back to my constituency, I shall once again visit the picket lines. These are moderate men. They are not extremists. They are not people who, according, to some statements by the media and by politicians and others, are allegedly politically motivated. They are the men of the regions where all the great steelworks are situated. They are the men from the industrial heartland of this country. They are men who have suffered as many of us, even on the Labour side of the House, who have perhaps enjoyed some privilege in life, can never understand and never will understand. They are the people who keep the machinery of the country in operation. They are the people who are now suffering hardship. A bond and a fraternity exists among these workers that many people will never understand. That is what gives them the strength to go out day after day and stand on the picket lines, in the hope that the Secretary of State will see sense and make a compromise in their favour.
I appeal to the Secretary of State to look upon these people for what they are. They are real people, not plastic people. They are people of great determination. They are solid people, the men of England who have fought for it for generations. The Secretary of State is now saying that a settlement must deny them their pride. They will not give in. One day the Secretary of State will have to come back to the House and make a statement which implies a compromise. The sooner that day comes, the better. We will then be able to sleep in peace, in the knowledge that we have some government.
I shall resist the temptation to follow the politicising of the dispute by the hon. Member for Workington (Mr. Campbell-Savours). I understand the feelings of hon. Members whose constituencies are solely steel constituencies, such as Consett. I recognise the problems that they face. I have to say to those hon. Members and to the right hon. Member for Deptford (Mr. Silkin) that I represent an engineering constituency. It was formally a shoe town. It changed to engineering without any Government subsidy. Engineers in my constituency, given a choice, will not buy British Steel. Every hon. Member should recognise that the reason why they do not wish to buy British Steel products is that the quality is poorer than that of those from the Common Market. That is a hard fact of life that Bill Sirs, Sir Charles Villiers and others have to take on board.
I had no intention of participating in the debate. However, I feel compelled to do so having listened to the Front Bench speakers and the contributions that have been made by Back Benchers. It is no good the hon. Member for Workington and Labour Members representing South Wales constituencies saying that union members are standing on picket lines. The unions should be putting forward proposals for the necessary productivity increases. The industry is in desperate need of improved productivity. I say to the unions "Get off the picket lines and get down to negotiation." If Mr. Bill Sirs, whom I do not know personally, is half as good a man as Terry Duffy, whom I do know personally, he should be able to contact management and negotiate on productivity.
If the management is incapable of meeting the unions and sorting out the problem, and if management is saying to my right hon. Friend that the social costs in South Wales have to be considered—and that seems to be the burden of the propositions put forward from the Labour Benches—let the management of the British Steel Corporation explain to my right hon. Friend that the dispute has to do not with steel-making but with social costs.
The hon. Member for Kettering (Mr. Homewood) has to face the problems that will be presented by Corby. However, he knows that the hon. Members who represent the constituencies of Northampton shire are prepared to face the problems of Corby. We shall ensure that we do our best to offer assistance. There is an opportunity for the steel makers of Corby to find alternative employment.
For a start, they can come into the engineering industry in Northampton. There is skilled work available and a shortage of skilled workers. Northampton is not very far from Corby. If the management of the British Steel Corporation has the problem to which I have referred, it should express it to the Government. If it does not do that, my right hon Friend is right to say that he is not the management of the corporation any more than he is the management of British Rail or of any other nationalised industry. Competent as he is, he is not an industrialist.
Yes, the same applies to Rolls-Royce.
My right hon. Friend is not an industrialist. He is a politician. I do not believe that he has settled the size of the steel industry. He has taken a financial figure, and quite rightly so, as any top manager would do. He has set a target of£450 million. The next stage is for management to use that figure to deter- mine the appropriate size of the industry. That is the correct approach.
I represent an engineering town. Britain depends more on the engineering industry than on the steel industry.
The hon. Gentleman should not make sedentary comments and laugh in that manner. This is too serious a problem for that sort of attitude. We can live on imported steel if we have to do so. Of course, we do not want to do that. Labour Members such as the hon. Member for Sheffield, Heeley (Mr. Hooley) should learn something about the engineering industry before they interject.
If the management of British Steel and the unions cannot solve the problem, the time will come when the rest of British industry will have to look to the Government to solve the totality of the problem. However, I accept that my right hon. Friend is right in what he has done to date. He is right to insist that it is for management and the unions to negotiate and to solve the problem.
I make one final plea to Opposition Members. I ask them not to politicise the problem. I recognise their sincerity, but they will do a grave disservice to the steel industry if they use it as a political football.
I am the first hon. Member to be called in the debate who has colleagues who are on strike. I have listened to some remarkable speeches during the debate. They were speeches that I did not expect to hear from the Government Benches. I heard Conservative Members calling for what my right hon. and hon. Friends have been urging—the intervention of the Secretary of State in the dispute. That is a means of bringing an end to a disastrous situation that faces not only the steel industry but industry generally. It could be the means of destroying British manufacturing industry. I applaud and compliment Conservative Members who have made such speeches. They have made an excellent contribution to the debate. They have placed the House in the position of being able to be proud that it is the forum of the nation.
On Monday the Secretary of State concluded the exchanges in the House following his statement about the dispute in the steel industry by saying that he was not involved in the negotiations. He has repeated that today. He has stated that the unions have not asked to meet him. It is appalling that he has waited for the unions to ask to see him. I am glad to hear—I hope that this will be confirmed—that Ministers are to meet Mr. Bill Sirs, the general secretary of my union. When they meet him, they will find that he does not match the description offered by the hon. Members for Northampton, South (Mr. Morris) and Brigg and Scunthorpe (Mr. Brown)—namely, someone without understanding and responsibility. Bill Sirs has a deep appreciation of all the factors that affect the industry and those who are engaged in it. He is a man who has a responsibility within the industry. Let no hon. Member attempt to denigrate the role of Bill Sirs in the dispute.
The Government must enter into the dispute to bring the parties together. Unless they do so, it will be disastrous for the whole of British industry. The right hon. Gentleman spoke on Monday about lower-paid workers in other industries having to pay more than£1,800 from their taxes to subsidise the high earnings of each steel worker. That is dangerous nonsense.
In the December issue of the journal Accountancy, Emile Woolf explained how much steel workers' efforts were contributing to the creation of wealth, as opposed to the Government-sponsored myth that the taxpayers are funding huge losses.
Last year the employees of the British Steel Corporation created, for the nation, wealth to the value of£1,163 million. That is added value, after allowing for costs, materials, fuel, services and so on. Out of that£1,163 million, BSC paid to the Government corporation tax of£7 million, income tax of£228 million and national insurance contributions of£170 million. The interest on Government loans was£102 million. The total amount paid to the Government by the steel industry was£507 million. If£21 million is deducted for Government grants received by BSC, the total amount paid to the State by BSC in 1979 is£486 million. So, despite BSC's mismanagement of the industry, the steel workers contribute far more to the State than the£309 million loss that is held against the industry. I hope that the Government and the Secretary of State will not perpetuate the myth about those who work in the steel industry being subsidised by the rest of the taxpayers.
Finally, I refer to the situation facing us in West Glamorgan and Gwent. We are told that there is to be a manning reduction of 6,883 workers at Port Talbot and a reduction of 4.454 at Llanwern. This is the contribution of the steel workers to making BSC a thriving and profitable industry. This weekend I, not the Secretary of State, will bump into people faced with these redundancies. They will be the redundant. That will be the reality of the contribution the steel workers have made to the nation and the prosperity of their industry.
It is the responsibility of the Government to become involved in the dispute. It is the responsibility of the Government to bring the parties together so that the amicable relations that we have always enjoyed in the industry can be restored.
When the settlement comes, let the Government take the lead by setting up an inquiry into the industry so that we can discover, and bring out, what has gone wrong. Let us see the reasons why the thousands employed in the industry, and the thousands dependent upon it, face a bleak future. It is the duty of the Secretary of State to achieve that. If he is unable to rise to that duty, let him get out.
Despite the comparatively sparse attendance in the House—I think that there have been about 25 Members present throughout the afternoon, perhaps a little more, perhaps a little less—this has been an important and interesting debate. But it has been yet another of those significant debates that have taken place during the past decade and a half that I have been in the House that are essentially about the rate of industrial change in the United Kingdom.
The context of today's debate is the rate of industrial change in the steel industry. On other occasions the context has been the rate of industrial change in the shipbuilding industry, the motor car industry and so on. Yet the essential problems remain exactly the same.
If the country accelerates the necessary economic change sufficiently rapidly to meet the economic criteria, it can be certain that it will face significant social problems. On the other hand, if we delay economic changes to the point where many of the critics of economic change on the Opposition Benches are satisfied that the social damage is minimised, the social damage is not minimised. The social damage is often just as great, or, indeed, greater. The real wealth of the nation, capable of dealing with such problems and available to do so, has been diminished because we have failed to grasp the nettle in time. As a nation we have done that time and again, in steel, shipbuilding and many other industries.
We face a serious situation. That is why my right hon. Friend the Secretary of State has rightly said that the balance must be tilted and the economic criteria must be dominant. Unless they are, the capacity of this nation to meet its legitimate social aims will be so gravely imperilled that there will be few real resources left to meet those aims.
Unlike my right hon. Friend the Leader of the House, I am not an expert on the arts, but I recall a medieval artist—I think that it was Van Breughel the younger—who painted vast gloomy canvasses in which bodies writhed in anguish, and in listening to the debate I have not been able to help reflecting that the withdrawal symptoms of a nation being taken off inflation are massive compared with the withdrawal symptoms of a heroin addict.
We have repeatedly told major sectors of our community, such as steel and shipyard workers, that over the past 15 years we have produced an annual growth in real income of about 2 per cent. or 3 per cent., but year after year the nation has gone through the phenomenon of what I call the cascade wage-price effect. We bluff ourselves that the growth is perhaps 8 per cent. or 10 per cent. It has increased annually, and now we are in the realm of national self-bluff of the order of 20 per cent. to 25 per cent. We bluff ourselves that that is so and we pay up. The immediate effect is a short-term benefit for the one small group, but there is a damaging and serious effect for the nation as a whole. The greater the rate of inflation, the greater and more serious is the damaging effect for the nation.
We have been asked to consider the balance between the possibility of meeting the steel workers' demands through productivity and through other ways, essentially by some form of cascade subsidies. We are presented with a clear example of where the real challenge to the British steel industry is to be found.
At a recent conference in Amsterdam, a senior official of Nippon Steel presented a fascinating paper in which he described his company's reaction to the energy crisis that Japan started to face several years ago and is still facing. The point on which the House should reflect is that that man said that by improving productivity and material usage from about 81 per cent. to about 88 per cent. his company increased its net output of steel by about 8 million or 10 million tonnes—half the national output of the United Kingdom.
That may be disputed, but in explaining how that result was achieved the official said that within the considerable labour force of Nippon Steel 30 voluntary groups of workers spent their own time night after night and day after day working out improved productive processes for the company's steel operation.
When we are up against that, there is little point in Labour Members saying that British steel workers are up against the Government or the BSC. As the right hon. Member for Down, South (Mr. Powell) said so eloquently, the workers are up against economic reality, and there is no escape from that.
Labour Members have understandably argued the plausible and persuasive case that a country with a great industrial history cannot imagine itself not producing steel. That is understandable. But I recall that in 1971, when I had the privilege of visiting Japan to talk to some of its senior industrialists and Ministers, I was struck by a remark that was made to me by a Minister of State in the Japanese Government. He said "By the end of this century, we in Japan will probably not be making ships or steel." I was profoundly struck by that and I asked "What will you be doing?", to which he replied "We shall be the world's leading nation in information technology, because by the end of this century information will bear the same relationship to industrial power and wealth as steel did in the nineteenth century."
This is not the time for me to describe what has been done in Japan, but I draw the attention of the House to what is happening. Within the Western world today, within the OECD area, despite our slump and stagnation, there is one part of the OECD area where prosperity reigns undiminished. It is an area employing 26 million people. Taken by itself, that area is the sixth richest country in the world, if we define it as a country, and within the last two years it has created 1 million new jobs. Also, I think I am right in saying that it is an area in which no steel is produced, or, if some is, it is not the major steel-producing area of that continent. I am referring to California.
California probably has the highest per capita income in the world today. That per capita income, that wealth, is based on information technology. It is based on the exploitation of silicon. And I would add, with reference to what the hon. Member for Neath (Mr. Coleman) said about added value, that right in the heart of my constituency about 700 to 800 employees create output to the value of£100 million every year. They are producing computers.
I am arguing that this is the way the United Kingdom has to go. I am not arguing that we should attempt in any serious sense to diminish or demolish the steel industry, but if we go on pouring hundreds of millions of pounds of the taxpayers' money into steel, shipbuilding and automobiles and neglect this area, in which for Western Europe as a whole—I saw the figures from Dr. Anderlea's paper the other day—a market of 25 billion to 30 billion dollars is foreseen by the end of 1985, we shall regret it. This is an area which appeals to us as a country, with all our skills, our science and our brains. This is the area to which we should be applying our industrial effort, our investment effort and our national effort.
I do not in any way suggest that these are complete alternatives. The problem that we face today will not go away. We obviously have to use a higher degree of skill in settling the massive industrial relations problem with which, as a country, we have saddled ourselves, because obviously we cannot dispense with the steel industry in a short time. But, if we succumb to the temptation which my hon. Friends the Members for Canterbury (Mr. Crouch) and for Rutland and Stamford (Mr. Lewis) put before the House and retreat significantly, we shall only make the next stage infinitely more difficult, and we shall equally make it infinitely more difficult for the country to make the necessary change of direction which, in my opinion, it must now make if by the end of the twentieth century we are to restore our national wealth and our per capita income and make and sell to the rest of the world the information technology that the world requires.
I think that historians looking at the United Kingdom could well argue that we, above all, were the people who created the trading world. We, in the seventeenth, eighteenth and nineteenth centuries, did more probably than any other country of the developed world in Europe to develop the concept of a world market. They might say that the British at the end of the twentieth century, paradoxically, forgot that the world market existed and that that was the beginning of their most serious industrial decline.
We have been talking about productivity. The London correspondent of Nihon Keizai Shimbun, the Japanese equivalent of the Financial Times, in comparing productivity in the Japanese steel industry and the British steel industry, pointed out that the comparison was three times more favourable to steel than it was to his newspaper, and his newspaper was produced with one-tenth of the labour employed on the Financial Times.
We need to get the human reality of the situation into perspective. There is a danger of the Government losing touch with the steel industry. We have heard in this debate some forthright speeches from the Conservative Benches, and the Minister of State may be able to produce a speech which will educate the Secretary of State. I respect the communications net that informs the Tory Party of the feeling in the country on certain aspects of our national life. I hope that the Tory Party in turn respects the communications that Labour Members have with their constituents in the steel industry. When we speak about the determination of steel workers, we know what we are talking about. We are in touch with them on the picket lines, in the committee rooms, in their homes, in the schools where we meet the children and in the shops where we talk to the steel workers' wives, and we know that from our experience over the years the steel workers will not give in.
Equally, we observe the Secretary of State. We see his addiction to ideas, his delight in ideas. They tend to change every now and again, and I am sure that they will change again, but the problem is what to do meanwhile. I would not—and I would so advise my constituents—rely on a change of heart on the part of the Secretary of State. I do not think that the steel workers will move. Therefore, somebody in the Government has to think very hard about who is going to move. I shall speak brutally, frankly and in personal terms about the possibilities here.
The chairman of the British Steel Corporation has not very long to serve. The centre of gravity of his affections and loyalty lies in the banking world, and his peers, by whom he feels himself to be judged, are in the City. The chief executive and deputy-chairman, I am sure, still considers himself as a possibility for the succession. There are bad relations between the chairman and the deputy-chairman, publicly declared not many weeks ago and not healed today. Is it likely, therefore, that the chief executive will blot his copybook with the Government by telling the chairman firmly "We must make a settlement"?
I would advise Bob Scholey to forget about whether his copybook will remain clean with the Government and to tell the chairman frankly that a deal has to be made with the unions and to get on with it. Whether it has been Dr. Grieve's fault or Peter Broxham's fault, or whoever is to blame for the appalling hash in the conduct of negotiations, I do not know and I am not concerned to explore. What is absolutely clear is that in major strategic issues affecting the whole future of a vast and important industry which has an impact on the whole economy, when it comes to the point of leadership it is for the people at the top to see where their responsibility lies.
I understand, and the House has heard, the Secretary of State's point of view. I think he is deeply wrong. I think he will realise that and declare himself to be wrong, but I am not sure that it will be in time. So I conclude with this appeal to the chairman, and, probably more important, to the chief executive, to act and to act soon.
The situation today can be likened to the period which led to the 1926 general strike. I was disappointed when the Prime Minister did not accede to the wishes of many of my hon. Friends to recall Parliament so that we could have debated the steel industry two weeks earlier. The situation has been brought about by a Government who are incapable of correctly assessing the situation and, because of their policies, are incapable of doing anything about it. By the withdrawal of subsidies and the enforcement of strict cash limits, the Government are forcing the steel industry into self-annihilation. By inisisting on a rationalisation programme in an impossible period, the Government are pushing the industry towards industrial chaos.
The cost to be paid for Government and management mistakes and lack of investment prior to nationalisation is being thrust upon the steel workers.
This problem started with a written answer by the Secretary of State for Industry to a question from the hon. Member for Ruislip-Northwood (Mr. Wilkinson). The Secretary of State said:
I have set the corporation the target of operating at a profit in the 1980–81 financial year after providing for depreciation and interest. To reinforce this target, the cash limits for 1980–81 will be set at a level intended with internally generated funds to cover fixed investment and other essential capital requirements. The Government do not intend to finance operating losses."—[Official Report, 3 July 1979; Vol. 969, c. 537.]
The trouble started at that point.
That written answer sounded the death knell of British Steel as we know it. It meant that the BSC had to reverse its record of losses in a few months when remedial steps should have been taken over many years. The announcement meant a reduction of the work force from 153,000 to 100,000, with closures and partial closures at Consett, Hallside, Scunthorpe, Llanwern, Port Talbot, Corby, Shotton and Cleveland, and it meant reductions in surviving plants.
The social consequences of this are that whole towns and communities will be economically devastated. The ripple effects will be tremendous. Eleven collieries in Wales will close with a loss of 8,000 jobs. What of the firms that supply British Steel and the National Coal Board? The NCB estimates that there will be a loss of£24 million worth of business among the firms which supply the coal industry, with the consequent loss of jobs.
Mention has not yet been made of local authorities which depend upon rates from industries and firms. It will be difficult for them to offset further deprivation in families already affected by loss of work.
What had the Prime Minister to say about this when she was questioned a short time ago? Her reply was that closures were long overdue. Such was the concern shown by the Prime Minister. If the Secretary of State for Industry has become the Pontius Pilate of this tragedy, the Prime Minister will become the Marie Antoinette of British politics.
The Conservative Party's manifesto said:
We shall continue to see that adequate resources are found for the public sector, particularly the productive public sector. We shall continue with the modernisation of coal and steel industries that are so important to Wales.
That promise has been broken by the complete devastation of that area.
Let us not forget that this strike is about the wage offer. It was not initially about closures. The strike is the result of the derisory wage offer of 2 per cent. funded by consolidation. Only those working overtime would benefit from overtime payment in an industry which has to shed 53,000 jobs. On an offer of 3 per cent., management had the audacity to tell the workers that they should forgo their guaranteed wage. The guaranteed wage had been hard fought for. The productivity deal in the offer was based upon uncertain factors.
This problem can be likened to the situation which obtained some time ago at Ford. During discussions on sanctions against Ford, the Tories went gleefully into the Lobbies to vote against the then Labour Government for the retention of such sanctions. The Tories now bemoan the fact that we have this problem today.
How can we expect men in the steel industry—on top of closures that will lead to the loss of at least 100,000 jobs, not 53,000—to accept a derisory wage increase of 2 per cent.? That is why the steel workers in my constituency believe that the strike was engineered simply to allow the Government to dismantle the steel industry, give it to the National Enterprise Board and so command 51 per cent. of the shares. That is what has happened in other industries and that is what the workers believe is happening to the steel industry.
Much play has been made of comparative production figures. Those comparisons do not compare like with like. France loses£32 per tonne, Italy£21, Belgium£20 and the British Steel Corporation£17. We should take those comparisons into account. The ISTC has calculated losses due to mismanagement, Government decisions and other factors. They include a subsidy of£135 million for coking coal, the loss in the engineering dispute costing£23 million, and the Clyde port authority problems costing£6 million. Finance for social purposes cost£10 million and overtime£80 million, despite claims about over manning. Internal problems cost£188 million. The total cost of those factors and the Tory Government's mistakes is calculated to be£543,044,700. Taking that into consideration, the steel industry made a profit of£250 million in the current year. It is obvious that the steel industry is in difficulty, but it is in need of help, not surgery.
Must we accept that Britain is a dumping ground for the rest of the world? Is it not time that we looked at the import of cars, refrigerators and special steels? The special steels industry is important to my constituency and it will probably run into trouble because of the level of imports. That is not the fault of the workmen, because they are excellent. It is not the fault of the product, because that also is excellent. It is not the fault of the pricing, because the market is the same as that in the rest of the world. Foreign steel industries, I am led to believe, are subsidised. Against that we cannot compete.
The Government's inactivity is nothing short of criminal. They are inert and inept. Are they unable to comprehend what is happening, or have they decided deliberately to take on what they believe to be a weak union? A moderate union has become militant and it will never be the same again. In Yorkshire the ISTC and the NUM are fused together, and the Government should bear that in mind. The Government are out of their depth and incapable of the flexibility necessary to deal with the situation.
The BSC's industrial relations section made a serious misjudgment of the problem. How does it expect the work force to react when faced with the closure of one-third of the industry and a derisory pay offer? Great play has been made by the Secretary of State of the argument that the Government are the custodians of taxpayers' money. If they believe that, why do they not test the theory and go to the country to find out what people really believe?
We have had a deeply serious debate about a deeply serious issue. The issue is deeply serious not only now but for the future of Britain and the British economy. The most disappointing speech was made by the Secretary of State for Industry. He gave no commitment to the steel industry. He gave no indication of his view about the future size, scope and flexibility of the industry. Indeed, his message was that the strike will continue.
If the strike is to continue, so must the Secretary of State's statements to the House and our ability to question him about the damage that will be done to the British economy. The debate has been interesting in a number of ways. Several Government Members, who are not mavericks, who have long experience of the House and made grave and honourable speeches, left us in no doubt of their feelings about the Government's handling of the problem.
In earlier debates the Minister of State has tried to make the point that there is an identity between the Government's policy on steel and that of the previous Labour Government. We reject that. However, the objectives could be the same, so long as the Government give an assurance that it is not their intention to denationalise the BSC. I believe that the objectives are the same, even though the Secretary of State said that the Labour Government flinched from dealing with problems.
My right hon. Friend the Member for Ebbw Vale (Mr. Foot), my right hon. Friend the Leader of the Opposition and other senior members of the Opposition grappled with the problems. No one can deny that. The Secretary of State said that the previous Labour Government failed to deal with the problems. The Minister of State said that the policies of the Labour Party and the Conservative Party were the same. They cannot both be right. If they are, the implication is that the Government are also failing to grapple properly with the problems. In any event, we refute that argument. The policies are not the same. There was no deadline. There were no enforced closures. There was no refusal to finance BSC. There was no insulting wage offer to union members in that industry, and there was no 17 per cent. rate of inflation. All those are major differences in the recent history of BSC and the two Administrations.
I hope that before the Minister of State completes his notes on his speech he will ask himself a question. If there has been no real change in policy, why is there now a strike in BSC? There was never a national stoppage under the Labour Administration. This is the first stoppage in the industry for more than 50 years. More than half a century of good, moderate trade union activity has been brought to an abrupt halt within 12 months of the Government taking office. That is the reality, and it is a measure of the difference of approach to the industry by the Conservative Party and by the Labour Party.
My right hon. Friend the Member for Chesterfield (Mr. Varley) and other members of the Opposition gave sustained support to the industry and to the people working in it. That is a major difference, given the complete lack of commitment by the Secretary of State. There was also a clear, fundamental and important difference in the time scale, which was rightly emphasised by my hon. Friend the Member for Penistone (Mr. McKay).
There was also an absolute difference in the relationships between the previous Government and both sides of industry. The Secretary of State does not seem to want any contact with the unions. It is a disgrace that there is now a national stoppage in the industry and that the Secretary of State has had no contact with the leaders of the unions. He has maintained his obdurate, obstinate and unbalanced stance. Far from being evenhanded, he has taken a completely unbalanced view of the circumstances in BSC, and we condemn him for that also.
I concede that there may be some measure of agreement about the state of the industry. Time and again in the debates hon. Members from each side have made the point that attempts to compare productivity on an international basis have no rational base. There are no like statistics on an international basis from which to make valid comparisons, any more than there are on manning levels or wage levels in the different industries. The comparisons just are not valid. Nowhere was this more clearly clearly demonstrated than in the article written by Bill Sirs in The Guardian on Monday of this week.
We would not agree with the Secretary of State, either, in talking about the state of the industry—that it will be possible to make the kind of progress that we would agree is necessary—unless there is consent from those in management and those in the unions, representing both sides of this major corporation. It is only by the adoption of an agreed approach to these problems that we shall get over the real difficulties that exist.
Even though objectives may be the same, and even though there may be some measure of agreement, there is no agreement on the issues that I have briefly outlined. The Government have undertaken the ruthless pursuit of the goal of massive redundancies on a time scale which, I understand, has been criticised this week, in a debate in Strasbourg, even by the Commissioner for Social Affairs of the EEC, who says that he is not aware of any need for this kind of time scale for the rundown in terms of EEC policy. I understand that he said that he believed that the Conservative Government were trying to achieve in about six months what the EEC policy allowed for in three or four years.
Having just come back from Strasbourg, I can say that that is not the gist of what the Commissioner said. Indeed, it was precisely the subject that was due to be debated tonight and was delayed.
I apologise to the hon. Lady.
Is it any wonder, against this kind of background and in these circumstances, that trade unions—and not only trade unions but wholecommunities—will fight? I am amazed that Conservative Members should be so surprised about the position. Of course people will fight. Will they not fight in South Wales? Will they not fight in Consett, in Shotton and in Corby? Will they not fight in Scotland?
Would not people in the City whose interests were affected fight in such desperate circumstances? Would not Lloyd's brokers fight? Would not people in the stock market fight for their interests? Of course they would. Indeed, they may fight in many ways on a much less fair basis than the stance that has been taken by the unions in the British Steel Corporation in this disastrous situation. We certainly are not surprised about the fight, about the attitude and about the determination, and about the hardening of that attitude and that determination, in the time in which the strike has been in effect.
The unions have been criticised for a number of attitudes and for a failure to react to the circumstances which prevail in the BSC. My hon. Friend the Member for Workington (Mr. Campbell-Savours) made the point that the unions were never considered, that they were never taken into trust, when decisions about investment were originally taken. The unions are now being held responsible for decisions that were taken over their heads and for decisions which were taken in circumstances in which they were never consulted. They are now being asked to pay a very high price indeed for those decisions being wrong.
In the last two years, in this industry 35,000 redundancies have taken place. The Secretary of State said that there had been no contribution from the unions to—wards solving the problem. That is absolute and utter rubbish. The trouble is that he is asking them now to make a contribution that is out of all proportion to the situation in their industry. As my right hon. Friend the Member for Deptford (Mr. Silkin) said, manning is only part of the problem of productivity in the industry. The organisation and utilisation of materials on the scale used in the BSC—bottlenecks, ordering policy, energy conservation policy—
I shall tell the hon. Gentleman what it has got to do with it. If a 10 per cent. saving could be made in that area, it would wipe out the trading deficit in the British Steel Corporation. It would amount to a saving of£180 million to£200 million a year. That is the importance of that point, and many of those things could make a major contribution if tackled properly.
I am not blaming the Government, but these issues are not the responsibility of the unions in the industry. There are other contributions to productivity in the industry that should be looked at seriously. Jobs are being sacrificed willy-nilly. My hon. Friend the Member for Consett (Mr. Watkins) knows very well that such suggestions were made to the workers in Consett. I also know about it because I live on the edge of his constituency. Those workers were told to get rid of over manning, to improve their productivity and flexibility, and to accept this and that. They did so and they have made the plant profitable. Yet still they are told that the plant will be shut down.
I am grateful for the opportunity to make a second brief intervention in an hon. Member's speech. I should like to give my hon. Friend some information and figures. The Consett works have become profitable. In September they made a profit of£24,000, in October£110,000 and in November a profit of£340,000. The figures that are available for December indicate that that process will continue. Furthermore, the rate of productivity, expressed in terms of production per man year in tonnes, is about 100 tonnes above the British average and is comparable with the best in Europe.
Against that experience, and against the raising of hopes only cruelly to dash them when workers respond so effectively, is it any wonder that the unions have said that enough was enough? Even if that were not the case, there are other serious difficulties that prevent the industry from becoming profitable within the time scale envisaged. The chairman of the BSC recently wrote to my hon. Friend the Member for Kettering (Mr. Homewood) saying that even in circumstances where arrangements have been made for orderly markets the prices which are obtainable are insufficient to give an acceptable level of return to even the most efficient plants in Europe. In other words, market forces are not operating. Those are the world and market circumstances as regards steel production and steel sales. Bearing in mind a massive world recession, that makes nonsense of the supposition that within the time scale envisaged it makes sense to force the British Steel Corporation into the black by the end of the financial year.
Even if we were to set that aside and if we were to agree with everything that the Secretary of State has said—which we do not—is it credible that against an inflation rate of 17 per cent. any union could accept the offer made to the major unions in the industry? It is absolute rubbish to suggest that that was ever on. We conclude that either there was the most grotesque mismanagement, as my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) has said, or that there was some other motive for making the offer in that way. I do not know which it is, but, either way, those who made the offer and those behind the situation in which it was made could have almost predicted the outcome. That is the reality of the situation. There is no way in which a rational position can exist in the British Steel Corporation with that kind of policy.
We are told that£450 million is a lot of taxpayers' money and that that is at risk. But there is much more than that at risk, and the Government cannot say that the events that are putting the money at risk came up suddenly. There was plenty of warning of trouble building up. There was no quick or rash decision by the unions involved, and most people in the country saw the trouble brewing a long time ago.
Although the Government exalt taxpayers almost above the national interest in this case, we are much more interested in the national interest as a whole. My hon. Friend the Member for Neath (Mr. Coleman) absolutely destroyed the nonsensical argument that the Secretary of State advanced about taxpayers contributing£1,800 to wages of steel workers. It is absolute and utter rubbish and the Secretary of State knows it.
I shall not give way to the hon. Gentleman, who has not been present for most of the debate and who, since he came in, has not been able to keep his mouth shut. It is a pity that he did not cone here and make a speech if he wished to contribute to the debate. The Government have been looking for speakers.
The Secretary of State's position is identical to that of the chairman of British Steel. Is that divine providence, an accident, or has it been engineered? The Secretary of State says that he wants even-handedness, but there is nothing even-handed about his approach. He is taking sides in the most dictatorial way possible.
The hon. Member for Canterbury (Mr. Crouch), in a brave and hard-hitting speech, and the hon. Member for Rutland and Stamford (Mr. Lewis) brought a little reality and common sense to the situation with regard to the national interest. I agree with the hon. Member for Bromsgrove and Redditch (Mr. Miller) that the Secretary of State's speech showed an absolute lack of leadership. We are told that taxpayers have to be considered above all others, but is it in the taxpayers' interests if we consider the closure costs and the redundancy, unemployment and social security payments?
The national newspapers are in no doubt about what the national interest demands. The Sunday Times, The Guardian and other writers and commentators believe that the national interest would be best served by the Secretary of State taking action to resolve the dispute. The maintenance of a strategic industry such as steel must be in the national interest. The Government are committed to increasing defence expenditure, but how can we maintain a defence capability without a steel industry in the United Kingdom? That is a risk that we are running because of the Government's policies.
What about other major industries—British Rail, British Shipbuilders and British Leyland in the public sector, and in the construction industry, Metal Box Limited and others? Is the survival of investment in those industries not in the taxpayers' interests? We should consider what is happening there.
The NCB has been given about£170 million by the Government this year. It is losing about£6 million a week while the dispute goes on. British Rail has an investment of about£430 million. BSC is British Rail's second largest customer—and while the strike continues BR will lose about£2 million a week. British Shipbuilders' building programme, with a subvention from the Government of£250 million of taxpayers' money this year—even if the Government get off their backsides and get it more orders—is bound to be jeopardised by the national steel strike.
The right hon. Gentleman says that he cannot intervene. He intervened in the case of British Leyland and of Rolls-Royce. It did not take him long to intervene there. That was the best noninterventionist approach that we have seen for a long time in the House. Similarly, it did not take him long to intervene in the circumstances of the NEB shortly after he entered office.
By forcing BSC into the present position, all the investment of taxpayers' money,£1 billion or more, is put at risk by the intransigence of the Secretary of State. He knows that as well as I do. Of course, much more investment in the private sector is also being jeopardised. He is taking a massive gamble with taxpayers' money. That is the reality. He is talking as though£450 million, in the context of the industry, is a great deal of money. That is nonsense, too. The reality is that BSC has fixed assets of about£3,000 million. That money is public investment and public property. It has a turnover of between£3,000 billion and£4,000 billion every year. The sum of£450 million is not large when it is set beside those figures—it is less than 15 per cent. of the turnover, or of the fixed assets of the corporation as a whole.
Let us have no more of this misleading of the public over investment and taxes. The reality is that£450 million is small beer in comparison with the risks that are being taken with other public investment in major industries.
The Minister of State misquotes me. I did not say that it was not very much. I said that it was not very much in the context of the figures—the investment and turnover of the industry. The hon. Gentleman need not bother trying to misquote me and getting it on the record like that.
The Secretary of State is taking a gamble. Most speakers in the debate have taken the view that the strike will have to be settled. Somehow and at some time, we need an end of the dispute. The Secretary of State did not say anything about how he thought that might happen.
I would not listen to the hon. Member, who, apparently, seems to be incapable of keeping quiet.
Is it the case that the Secretary of State expects the union to change its position? Does the Secretary of State want to teach the union a lesson? Does he want further to demoralise those who work in the industry, the management as well as the workers? Is that what he is prepared to risk? Is he willing to risk wrecking the industrial economy of the country as a whole—our engineering industry and the other industries that I have mentioned? Those are serious gambles to be taken at this stage of world recession, with our deepening industrial recession. To take such a gamble is the most reprehensible behaviour by the right hon. Gentleman and his colleagues.
Hon. Members ask what we would do. If we were in Government, there would be no national steel strike in present circumstances. That is the best answer to that question. Certainly, we would at least have given a few more kind words to the attempt by ACAS to achieve some mediation. The Secretary of State did not do this in his response on Monday to questions from some of his hon. Friends.
The hon. Member for Canterbury and others have suggested that the Secretary of State should call both sides of the industry together in tripartite discussions. Why not? What would be so reprehensible about that? It would not be portrayed as a great climb down, but as a sensible, practical approach to a major national problem. That is how people would recognise such an action. The Secretary of State has advanced no good reason why he should not take that approach rather than that embodied in the commitment by the Prime Minister to a 1922 Committee meeting before Christmas that no action would be taken by the Government to resolve the strike if one took place.
The Secretary of State is fond of saying—and he has said it many times in the last few days—that the BSC is bankrupt. I do not know whether that is constitutional nonsense, but I assume that if it is true the Secretary of State has certain responsibilities to act. He has made this point several times, so we are entitled to ask him what action he will take. Why does he not have a capital reconstruction of the industry? If a private sector company was bankrupt, the bankers might insist on that. Therefore, if the Secretary of State wishes to pursue this analogy he should get on with capital reconstruction of the corporation. There is no reason why he should not take that approach if he really believes that the BSC is bankrupt.
We do not believe it. We think that the Secretary of State is trying to browbeat the trade unions, frighten the public and generally adopt a stance which will not only colour industrial relations in the steel industry for years but will colour the attitude of the trade union movement as a whole towards this Government's approach to the industrial problems that we face. We do not know why any Government in their right senses should want to take that risk so early in their life in office. That is another question that we hope the Minister of State will answer tonight.
The Prime Minister and the Secretary of State for Industry are fostering self-interest and greed—and I do not mean personal self-interest. In the Budget they gave away£4·5 billion in tax concessions,£1·5 billion of which went to 6 per cent. of the community in this country. The Government can find£1·5 billion for 6 per cent. of the population, yet incredibly they can only find£450 million for one of our major strategic industries. That is a comparison the Government ought to think about. They have reduced the amount of money—compared with last year—being made available to the BSC at a time of rising inflation. That puts their funding of the industry in some kind of perspective.
We believe that it is the responsibility of the Secretary of State to act. We believe that it is his duty. It is in the national interest. I advise him to call together both sides of the industry and to get tripartite discussions going. He and his right hon. Friend the Prime Minister, in already difficult economic circumstances, have let slip the dogs of economic war. They will be responsible for the havoc that results.
Having listened to the hon. Member for White-haven (Dr. Cunningham), I am delighted that the Opposition are not in Government. In the time available to the hon. Gentleman, which was considerable, the House heard nothing but a lot of platitudes and a firm indication that the Opposition, if in Government, would continue to pour money regardless into British Steel.
Opposition Members have chosen in this debate to give support to the idea that this strike is a strike against the Government. I prefer to adopt the view of the right hon. Member for Down, South (Mr. Powell), who said that it is a strike against reality. I would go further and say that it is a strike against the community as a whole, including the steel workers themselves. [AN HON. MEMBER: "In my town, they are the community."] That is correct. It is a strike against the community as a whole.
There are no winners in this strike. The first Member to give weight to the view that this is a strike against the Government was, predictably, the right hon. Member for Deptford (Mr. Silkin). We accept that he and his hon. Friends are here for the politics, and the country should not be surprised. [HON. MEMBERS: "What is the hon. Gentleman here for?"] Their supporters should be well pleased, for that is why they were elec- ted. That is why I was elected. I was elected to fight the political battle across the Floor of the House. That is what representative democracy is about.
What those who believe in representative democracy find increasingly worrying and, I believe, will not tolerate is when those militant tendencies—or, should I say, "trendencies"?—take the political battle out on to the streets and into the factories. This strike did not start as a political strike. It should not be a political strike. I was almost tempted to say that it was too serious for that.
I shall not give way. I have hardly begun my speech.
Nothing could be more serious than a real political strike—which this is not—when a faction in our society refuses to accept the ballot box as a way of choosing the Government of this country. The Government were elected by secret ballot with an almost unprecedented swing and with a massive majority. [HON. MEMBERS: "Not in the steel areas."] They were elected to carry out a positive programme to reverse the trend towards a militant Marxist State. That is one good reason why we were elected. We were elected to safeguard democracy.
If the hon. Gentleman is seriously concerned about maintaining the decencies of parliamentary democracy, as are most of us, if not all, in the House, he has an obligation to deal in accuracy and truth. Will he therefore explain to the House a matter that is far more relevant than any we have so far heard from him? How can he have gone around the House and outside saying that the BSC is right at the bottom of the league in terms of profit and loss per tonne or in terms of return on capital when the answer I obtained from his Department yesterday demonstrates that that is not true?
I shall come to that. The answer that was given to the hon. Gentleman referred to 1978.
We were elected to protect the freedom of the individual from bullying and intimidation, from whatever quarter, and to enable him to go to work as he chooses. That is why we shall push through the House the Employment Bill, with all its important provisions.
We were elected to clear up the economic mess left by years of Socialism. We were elected to reverse the trend of relative decline and decay of industry and to offer to all who work in British industry the chance to prove that British is best.
"Best" is a product which, for a start, competes with its rivals and provides good value. It is able to do that if it is the right quality at the right price and is delivered on time. Even those on the Opposition Benches will now begin to understand how that argument is linked with steel.
In all, "best" gives the customer what he wants when he wants it, and does it better than competing products. Does not the strike have its origins in that—namely, from attempts to ensure that British Steel is best? That is what we all want, including the Government, the corporation, the unions, Sir Charles Villiers and Mr. Bill Sirs. Only those who would undermine and destroy our economy are against that idea. It is they who seize any opportunity to exploit our present problems or to fan discontent.
The Opposition want to ensure that British Steel is best. Of course they do. Their pronouncements in 1978 made that clear. They have been quoted today and in previous debates. I was not sure whether the hon. Member for Whitehaven was agreeing that the policies are the same. However, I believe that the objectives are the same. The difference between us is the determination to put them into effect. The question is whether there is a readiness on the Opposition Benches, as there is on the Government Benches, to face reality.
The best-value steel cannot be produced and sold by an industry which is inefficient. It cannot be produced competitively with out-of-date plant. That is why, I regret, Shotton has to close. The cost of steel cannot be brought down to competitive levels when plant is under-utilised. It can be produced competitively in modern plant only if that plant is properly loaded. That is why the contraction of the British steel industry has to take place. It is essential—I take up the theme of the White Paper introduced by the Labour Government in 1978—for capacity to be brought more into line with demand. It is essential to put production into the works with the most modem plant.
Generally our plant is modern. It is not as modern as we might like it to be when we consider the competition, but it is generally modern. That is due to the£2¼billion of capital investment that the taxpayer has put into BSC in the past five years.
Some Labour Members were critical of my right hon. Friend for not mentioning the corporation's announcement today concerning its thinking about the plants in South Wales. I must remind the Opposition that the announcement of contraction was made on 11 December and we debated steel in the House on 13 December. Today's announcement by the corporation contains its thinking on the future for two plants—continuing to keep them open, or a slimming down. However, that is subject to further discussions with the unions.
Another ingredient is needed to bring BSC in line with its competitors.
Yes; if I can lay my hand immediately on the press release, I shall be able to do so. The British Steel press release makes its position clear. [HON. MEMBERS: "What does it say?"] Right hon. and hon. Members on the Opposition Front Bench can read it just as well as I can.
Another ingredient is needed to get BSC into line with the competition. Its labour force must be at least as productive as those of its competitors. This is well recognised by management and unions. Many productivity figures are bandied about. If Opposition Members read the NEDC report, as the right hon. Member for Deptford claimed he had done, they will see that the figures all point to the lower productivity of workers in BSC compared with their principal competitors.
I wonder whether the Minister would explain his argument in relation to productivity as it affects the employees at the Rotherham works? My hon. Friend the Member for Rother Valley (Mr. Hardy) and I have never failed to remind the House that these men are world beaters; they have broken world production records many times. How do they increase their productivity still further before they can have a proper wage increase? That is a matter that needs to be explained.
I entirely agree. That is a matter for negotiation between the management and the union. If no productivity gain can be made—which is extremely unlikely—some other arrangement must be made. But that is not a matter for me. That is something for management and unions to negotiate.
The official Opposition spokesman, the right hon. Member for Deptford, finally gave us his party's recipes. The first recipe was for an expansion of capacity, when he had previously admitted that there was a serious decline in the steel industry throughout the world. The right hon. Gentleman chose to second-guess the corporation's management. That is the habit of Socialist politicians. However, I remind him that, although the Conservative Government in 1973 and BSC management of the day were way out of line in their forecasts, and were bidding for production of 36 million to 38 million tonnes a year in the early 1980s, the Labour Government were elected in 1974—I do not hold the right hon. Member for Deptford personally responsible for that—and suggested that capacity would rise to 44 million tonnes a year in the early 1980s. As the right hon. Gentleman's Government were wrong on that occasion, I do not think we need to listen to his recipe today.
The other recipe is to keep the steel workers at work, within a ring-fence of import controls, living off the taxpayer. That is something that we totally reject. Yet the right hon. Gentleman and a number of Opposition Members expect the Government to find more money. That would mean passing the cap round yet again.
On the question of second-guessing and checking the accounts of the corporation, is the Minister aware that it was using experimental commodity accounts compiled by the Central Statistical Office without the knowledge of that office and that in the following quarter the Central Statistical Office revised BSC's figures by 20 per cent.? Unless the Department of Industry checks that sort of calculation, the most colossal howlers will continue to be made.
There have been a number of views on the estimates of the BSC, but I have seen none suggesting that the corporation is far off the mark.
Even if the BSC gets down to the level of 15 million tonnes, there will still be surplus capacity in plants that are partially mothballed or still under-utilised.
One must ask those who want to spend more money where they suggest it should come from. The hon. Member for Whitehaven does not think that£450 million is very much. Let me tell him that it equals about 1p on the basic rate of income tax. In May the electors voted for a reduction in income tax, which they got, not for an increase.
Would those who want the Government to put in more money want it to come from profitable businesses? Should they be asked to dig into their funds, to cut back on their investment and to impoverish themselves so that they in turn have to come to the Government to be bailed out or go bankrupt and turn their employees out of their jobs?
Must the money come from the disabled or from reductions in pensions? Will Labour Members give up hospitals or schools in their constituencies? Will the right hon. Member for Chesterfield (Mr. Varley) give up the new general hospital in his constituency? Will the hon. Member for Whitehaven give up his two new schools? Will the Leader of the Opposition give up the two schools that are under construction in his constituency so that the Government can put more money into the BSC? They will not. They sit there dumb because they know that they would fight any such proposals.
Would the money have to be borrowed, with the result that more money is taken away from the private sector, jobs are put at risk and interest rates are kept high or pushed even higher? Would the mortgage payer want that?
Those are the realities of the economic situation. If Labour Members want us to spend more money on British Steel, they must realise that it has to come from somewhere. If it is borrowed, it will affect interest rates and mortgage rates.
That is the stark choice and the reality that the Labour Government never faced. From everything said in the debate, it is clear that they would not face up to it if they were in power now. They were good on words but never in deeds. That is why the BSC and our economy face the problems confronting them today. So much blame attaches to the Labour Government.
No. I have only 13 minutes left and I have been generous with my time.
Why does the corporation not have the cash to pay its workers? It has been caught up in a vicious spiral of industrial disputes and their consequences, which are almost more vicious than the pay and prices spiral. Because of the interdependence of our economy, no industrial activity can take place in isolation. A strike in one industry, company or factory has repercussions elsewhere. To adapt the well-known saying of the right hon. Member for Huyton (Sir H. Wilson), one man's strike is another man's job loss. As proof, what has been the experience of the corporation in 1979 alone?
Order. For the last time, the Minister has made it clear that he is not giving way. Therefore, he must be allowed to address the House, and I must ask the right hon. and learned Member for Aberavon (Mr. Morris) not to rise again. In view of what I have said, to get up a third time would be offensive to the Chair.
On a point of order, Mr. speaker. Surely I am allowed to put a point of order. Certainly I have no intention of intervening again in the Minister's speech, but may I ask for your guidance? Surely it is the practice of this House that a Minister replying to a debate should seek to reply to the debate.
The effects on the British Steel Corporation during 1979 of the strikes of others were very serious indeed. The road hauliers' strike cost it£50 million, the engineers' strike£23 million, and Hunterston, covering the jobs of 60 people,£6 million. The total during 1979 from those three strikes alone was£80 million, approximately 10 per cent. of the corporation's wage bill. If that money were in the till now, it might be available for paying out.
The steel workers, because there is not the money to meet their wage claims, are taking it out on the road hauliers and the engineers. There are 6,000 road hauliers laid off at the moment, and the engineering workers are faced with the same dread prospect. This is not just a short lay-off, a temporary loss of jobs. Because of this strike, BSC will already have lost business, as my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) pointed out in an example from his constituency. The effects of the strike have already been damaging. That is all the more reason now for a settlement as soon as possible.
Hon. Members have rightly questioned how the Government see the development of the situation. First, my right hon. Friend the Secretary of State for Industry put on record what the offer has been and what the rival claim has been, and, despite the attempts of Opposition Members to pretend that the offer still stands at 2 per cent., it is a 12 per cent. minimum offer—yes, with important strings attached.
I deny that the Government are not involved. Of course they are. The Government have been involved for years as the provider of public funds for the industry. This year they have provided£700 million, and in 1980–81 they will provide a further£450 million. But we have a responsibility to the taxpayer, as I reminded my hon. Friend the Member for Rutland and Stamford (Mr. Lewis). We have and are endeavouring to use the means at our disposal to ensure that we have a viable steel industry, no longer dependent upon public charity. That is what the previous Administration wanted.
Ministers have kept themselves closely informed of developments. We have welcomed the involvement of ACAS. That is its purpose. It is an independent body, set up for the purpose of advice and conciliation. Now Mr. Sirs and Mr. Smith have written to the Prime Minister to ask whether she will see them. She has replied in a letter to them that she would be happy to see them, but she advises, rightly, that they should see my right hon. Friend and the Secretary of State for Employment, and a meeting will take place at an early date.
The invitation has been made to them, and my right hon. Friend was prepared to lay aside every engagement to respond to the approach from Mr. Sirs and Mr. Smith. But let me make clear that this meeting will not be a negotiating meeting; negotiations are and must remain the responsibility of the two parties to the dispute. Because it was the practice of the previous Administration to take negotiations out of the hands of the parties to a dispute, the tendency has arisen for management and unions to shrug off their responsibilities.
As I understand it, the trade unions want free collective bargaining. They rejected the pay policy of the previous Government, and the Labour Party never ceases telling us that that is one reason why it was defeated at the polls. The trade unions have free collective bargaining now between themselves and the steel management. They have to live together in the future and they must work out that future together.
I was questioned on several matters, and I must correct some of the information which has been put across, particularly about the comparative performance of other steel industries on the Continent and elsewhere. In 1978 the figures showed losses for all the European industries, but in the first half of 1979 profits were being made in Holland and Germany. The Belgian company, Cockerill, reports that it is moving towards profit. In Luxembourg losses have been sharply reduced and there is a movement towards profit. This is the change-round in 1979, partly because steel production was at a record rate in 1979. It was up 5 per cent. in England, yet the record for the British Steel Corporation was, if anything, worse during that year than it was before.
The debate has revolved around the strike and the corporation's plans for restructuring. It has been about the strike and its threat to jobs now and in the future. It has been about the contraction of the industry brought about by the need to reduce capacity to bring it into line with demand and all that that means for certain steelworks and, again, jobs. Of course there is worry; there is great anxiety; there are some bitter feelings and a fear for the future. This is understandable. Yes, there are those feelings in my constituency because there is alarm about the future among all those workers who are not in the British Steel Corporation, who are not parties to the dispute, who wonder why they should have to suffer. Their jobs look increasingly at risk as the strike continues.
What of the men who will lose their jobs because of steel closures? They, too, argue that it is no fault of theirs. I do not attempt to apportion blame. It is a mixture of factors which brings about the need for contraction: management not having the strength to fulfil its responsibilities, the Government not allowing closures and continuing to pour in public money, which serves only to delay, making the situation worse in so doing and unions resisting demanning. All these factors have come together in the steel industry and as a result there can be no doubt that redundancies are inevitable.
The Government fully accept their responsibility to help with the social consequences of the closures. The Government have not been ungenerous in making money available for this purpose. But they cannot and will not go on pumping taxpayers' money into British Steel either to enable it or to encourage it to go on operating inefficiently and unprofitably.
The future of British Steel will be assured, provided that it can compete on price, on quality and on delivery, and compete profitably. The modern plant is there. Its future is linked with the settlement of the strike. And the settle-
|Division No. 140]||AYES||[10.00 pm|
|Abse, Leo||Ellis, Raymond (NE Derbyshire)||Lamond, James|
|Adams, Allen||Ellis, Tom (Wrexham)||Leadbitter, Ted|
|Allaun, Frank||English, Michael||Leighton, Ronald|
|Alton, David||Ennals, Rt Hon David||Lestor, Miss Joan (Eton & Slough)|
|Anderson, Donald||Evans, Ioan (Aberdare)||Lewis, Arthur (Newham North West)|
|Archer, Rt Hon Peter||Evans, John (Newton)||Lewis, Ron (Carlisle)|
|Armstrong, Rt Hon Ernest||Ewing, Harry||Litherland, Robert|
|Ashley, Rt Hon Jack||Field, Frank||Lofthouse, Geoffrey|
|Ashton, Joe||Fitch, Alan||Lyon, Alexander (York)|
|Atkinson, Norman (H'gey, Tott'ham)||Flannery, Martin||Lyons, Edward (Bradford West)|
|Barnett, Guy (Greenwich)||Fletcher, Ted (Darlington)||Mabon, Rt Hon Dr J. Dickson|
|Benn, Rt Hon Anthony Wedgwood||Foot, Rt Hon Michael||McCartney, Hugh|
|Bennett, Andrew (Stockport N)||Ford, Ben||McDonald, Dr Oonagh|
|Bidwell, Sydney||Forrester, John||McElhone, Frank|
|Booth, Rt Hon Albert||Foster, Derek||McKay, Allen (Penistone)|
|Boothroyd, Miss Betty||Foulkes, George||McKelvey, William|
|Bottomley, Rt Hon Arthur (M'brough)||Fraser, John (Lambeth, Norwood)||MacKenzie, Rt Hon Gregor|
|Bradley, Tom||Freeson, Rt Hon Reginald||Maclennan, Robert|
|Bray, Dr Jeremy||Freud, Clement||McMahon, Andrew|
|Brown, Hugh D. (Provan)||Garrett, John (Norwich S)||McMillan, Tom (Glasgow, Central)|
|Brown, Robert C. (Newcastle W)||Garrett, W. E. (Wallsend)||McNally, Thomas|
|Brown, Ronald W. (Hackney S)||George, Bruce||McWilliam, John|
|Brown, Ron (Edinburgh, Leith)||Gilbert, Rt Hon Dr John||Magee, Bryan|
|Buchan, Norman||Ginsberg, David||Marks, Kenneth|
|Callaghan, Rt Hon J. (Cardiff SE)||Golding, John||Marshall, David (Gl'sgow, Shettles'n)|
|Callaghan, Jim (Middleton & P)||Gourlay, Harry||Marshall, Dr Edmund (Goole)|
|Campbell, Ian||Graham, Ted||Marshall, Jim (Leicester South)|
|Campbell-Savours, Dale||Grant, George (Morpeth)||Martin, Michael (Gl'gow, Springb'rn)|
|Canavan, Dennis||Grant, John (Islington C)||Mason, Rt Hon Roy|
|Carmichael, Neil||Hamilton, James (Bothwell)||Maxton, John|
|Carter-Jones, Lewis||Hamilton, W. W. (Central Fife)||Maynard, Miss Joan|
|Cartwright, John||Hardy, Peter||Meacher, Michael|
|Clark, Dr David (South Shields)||Harrison, Rt Hon Walter||Mellish, Rt Hon Robert|
|Cocks, Rt Hon Michael (Bristol S)||Hart, Rt Hon Dame Judith||Mikardo, Ian|
|Cohen Stanley||Hattersley, Rt Hon Roy||Millan, Rt Hon Bruce|
|Concannon, Rt Hon J. D.||Haynes, Frank||Mitchell, Austin (Grimsby)|
|Conlan, Bernard||Healey, Rt Hon Denis||Mitchell, R. C. (Soton, Itchen)|
|Cowans, Harry||Heffer, Eric S.||Morris, Rt Hon Alfred (Wythenshawe)|
|Cox, Tom (Wandsworth, Tooting)||Hogg, Norman (E Dunbartonshire)||Morris, Rt Hon Charles (Openshaw)|
|Craigen, J. M. (Glasgow, Maryhill)||Holland, Stuart (L'beth, Vauxhall)||Morris, Rt Hon John (Aberavon)|
|Crowther, J. S.||Home Robertson, John||Moyle, Rt Hon Roland|
|Cryer, Bob||Homewood, William||Mulley, Rt Hon Frederick|
|Cunliffe, Lawrence||Hooley, Frank||Newens, Stanley|
|Cunningham, George (Islington S)||Horam, John||Oakes, Rt Hon Gordon|
|Cunningham, Dr John (Whitehaven)||Howell, Rt Hon Denis (B'ham, Sm H)||Ogden, Eric|
|Davidson. Arthur||Howells, Geraint||O'Halloran, Michael|
|Davies, Rt Hon Denzil (Llanelli)||Huckfield, Les||O'Neill, Martin|
|Davies, Ifor (Gower)||Hudson Davies, Gwilym Ednyfed||Orme, Rt Hon Stanley|
|Davis, Clinton (Hackney Central)||Hughes, Mark (Durham)||Owen, Rt Hon Dr David|
|Davis, Terry (B'rm'ham, Stechford)||Hughes, Robert (Aberdeen North)||Park, George|
|Deakins, Eric||Hughes, Roy (Newport)||Parker, John|
|Dean, Joseph (Leeds West)||Janner, Hon Greville||Parry, Robert|
|Dempsey, James||Jay, Rt Hon Douglas||Pavitt, Laurie|
|Dewar, Donald||John, Brynmor||Pendry, Tom|
|Dixon, Donald||Johnson, James (Hull West)||Penhaligon, David|
|Dobson, Frank||Johnson, Walter (Derby South)||Powell, Raymond (Ogmore)|
|Dormand, Jack||Johnston, Russell (Inverness)||Prescott, John|
|Douglas, Dick||Jones, Rt Hon Alec (Rhondda)||Price, Christopher (Lewisham West)|
|Douglas-Mann, Bruce||Jones, Barry (East Flint)||Race, Reg|
|Dubs, Alfred||Jones, Dan (Burnley)||Radice, Giles|
|Dunn, James A. (Liverpool, Kirkdale)||Kaufman, Rt Hon Gerald||Rees, Rt Hon Merlyn (Leeds South)|
|Dunnett, Jack||Kerr, Russell||Richardson, Jo|
|Dunwoody, Mrs Gwyneth||Kilroy-Silk, Robert||Roberts, Albert (Normanton)|
|Eadle, Alex||Kinnock, Neil||Roberts, Allan (Bootle)|
|Eastham, Ken||Lambie, David||Roberts, Ernest (Hackney North)|
|Edwards, Robert (Wolv SE)||Lamborn, Harry||Roberts, Gwilym (Cannock)|
|Robertson, George||Stallard, A. W.||Wellbeloved, James|
|Robinson, Geoffrey (Coventry NW)||Steel, Rt Hon David||Welsh, Michael|
|Rodgers, Rt Hon William||Stewart, Rt Hon Donald (W Isles)||White, Frank R. (Bury & Radcliffe)|
|Rooker, J.W.||Stoddart, David||White, James (Glasgow, Pollok)|
|Ross, Ernest (Dundee West)||Stott, Roger||Whitlock, William|
|Ross, Stephen (Isle of Wight)||Strang, Gavin||Wigley, Dafydd|
|Rowlands, Ted||Straw, Jack||Willey, Rt Hon Frederick|
|Ryman, John||Summerskill, Hon Dr Shirley||Williams, Rt Hon Alan (Swansea W)|
|Sandelson, Neville||Taylor, Mrs Ann (Bolton West)||Wilson, Gordon (Dundee East)|
|Sever, John||Thomas, Dafydd (Merioneth)||Wilson, Rt Hon Sir Harold (Huyton)|
|Sheerman, Barry||Thomas, Jeffrey (Abertillery)||Wilson, William (Coventry SE)|
|Sheldon, Rt Hon Robert (A'ton-u-L)||Thomas, Mike (Newcastle East)||Winnick, David|
|Shore, Rt Hon Peter (Step and Pop)||Thomas, Dr Roger (Carmarthen)||Woodall, Alec|
|Short, Mrs Renée||Thorne, Stan (Preston South)||Woolmer, Kenneth|
|Sllkln, Rt Hon John (Deptford)||Tilley, John||Wrigglesworth, Ian|
|Silkin, Rt Hon S.C. (Dulwich)||Tinn, James||Wright, Sheila|
|Silverman, Jullus||Torney, Tom||Young, David (Bolton East)|
|Smith, Rt Hon J. (North Lanarkshire)||Varley, Rt Hon Eric G.|
|Snape, Peter||Wainwright, Edwin (Dearne Valley)||TELLERS FOR THE AYES:|
|Soley, Clive||Walker, Rt Hon Harold (Doncaster)||Mr. Donald Coleman and|
|Spearing, Nigel||Watkins, David||Mr. George Morton.|
|Spriggs, Leslie||Weetch, Ken|
|Adley, Robert||Colvin, Michael||Hamilton, Michael (Salisbury)|
|Aitken, Jonathan||Cope, John||Hampson, Dr Keith|
|Alexander, Richard||Cormack, Patrick||Hannam,John|
|Alison, Michael||Corrie, John||Haselhurst, Alan|
|Amery, Rt Hon Julian||Costain, A. P.||Hastings, Stephen|
|Ancram, Michael||Cranborne, Viscount||Havers, Rt Hon Sir Michael|
|Arnold, Tom||Critchley, Julian||Hawksley, Warren|
|Aspinwall, Jack||Crouch, David||Hayhoe, Barney|
|Atkins, Rt Hon H. (Spelthorne)||Dean, Paul (North Somerset)||Heddle, John|
|Atkins, Robert (Preston North)||Dickens, Geoffrey||Henderson, Barry|
|Baker, Kenneth (St. Marylebone)||Dorrell, Stephen||Heseltine, Rt Hon Michael|
|Baker, Nicholas (North Dorset)||Douglas-Hamilton, Lord James||Hicks, Robert|
|Banks, Robert||Dover, Denshore||Higgins, Rt Hon Terence L.|
|Beaumont-Dark, Anthony||du Cann, Rt Hon Edward||Hogg, Hon Douglas (Grantham)|
|Bell, Sir Ronald||Dunn, Robert (Dartford)||Holland, Philip (Carlton)|
|Bendall, Vivian||Durant, Tony||Hooson, Tom|
|Benyon, Thomas (Abingdon)||Dykes, Hugh||Hordern, Peter|
|Benyon, W. (Buckingham)||Eden, Rt Hon Sir John||Howell, Rt Hon David (Guildford)|
|Best, Keith||Edwards, Rt Hon N. (Pembroke)||Howell, Ralph (North Norfolk)|
|Bevan, David Gilroy||Eggar, Timothy||Hunt, David (Wirral)|
|Biffen, Rt Hon John||Elliott, Sir William||Hunt, John (Ravensbourne)|
|Biggs-Davison, John||Emery, Peter||Hurd, Hon Douglas|
|Blackburn, John||Eyre, Reginald||Irving, Charles (Cheltenham)|
|Body, Richard||Fairbalrn, Nicholas||Jenkin, Rt Hon Patrick|
|Bonsor, Sir Nicholas||Fairgrieve, Russell||Johnson Smith, Geoffrey|
|Boscawen, Hon Robert||Faith, Mrs Sheila||jopling, Rt Hon Michael|
|Bottomley, Peter (Woolwich West)||Farr, John||Joseph, Rt Hon Sir Keith|
|Bowden, Andrew||Fell, Anthony||Kaberry, Sir Donald|
|Boyson, Dr Rhodes||Fenner, Mrs Peggy||Kershaw, Anthony|
|Braine, Sir Bernard||Finsberg, Geoffrey||Kimball, Marcus|
|Bright, Graham||Fisher, Sir Nigel||King, Rt Hon Tom|
|Brinton, Tim||Fletcher, Alexander (Edinburgh N)||Knight, Mrs Jill|
|Brittan, Leon||Fletcher-Cooke, Charles||Knox, David|
|Brocklebank-Fowler, Christopher||Fookes, Miss Janet||Lamont, Norman|
|Brooke, Hon Peter||Forman, Nigel||Lang, Ian|
|Brotherton, Michael||Fowler, Rt Hon Norman||Langford-Holt, Sir John|
|Brown, Michael (Brigg & Sc'thorpe)||Fox, Marcus||Latham, Michael|
|Browne, John (Winchester)||Fraser, Rt Hon H. (Stafford & St)||Lawrence, Ivan|
|Bruce-Gardyne, John||Fraser, Peter (South Angus)||Lawson, Nigel|
|Bryan, Sir Paul||Fry, Peter||Lee, John|
|Buchanan-Smith, Hon Alick||Galbraith, Hon T. G. D.||Lennox-Boyd, Hon Mark|
|Buck, Antony||Gardiner, George (Reigate)||Lester, Jim (Beeston)|
|Budgen, Nick||Gardner, Edward (South Fylde)||Lewis, Kenneth (Rutland)|
|Bulmer, Esmond||Garel-Jones, Tristan||Lloyd, Ian (Havant & Waterloo)|
|Burden, F. A.||Glyn, Dr Alan||Lloyd, Peter (Fareham)|
|Butcher, John||Goodhart, Philip||Loveridge, John|
|Butler, Hon Adam||Goodhew, Victor||Luce, Richard|
|Cadbury, Jocelyn||Goodlad, Alastair||Lyell, Nicholas|
|Carlisle, John (Luton West)||Gorst, John||McCrindle, Robert|
|Carlisle, Kenneth (Lincoln)||Gow, Ian||Macfarlane, Neil|
|Carlisle, Rt Hon Mark (Runcorn)||Gower, Sir Raymond||MacGregor, John|
|Chalker, Mrs. Lynda||Grant, Anthony (Harrow C)||MacKay, John (Argyll)|
|Channon, Paul||Gray, Hamish||Macmillan, Rt Hon M. (Farnham)|
|Chapman, Sydney||Greenway, Harry||McNair-Wilson, Michael (Newbury)|
|Churchill, W. S.||Grieve, Percy||McNair-Wilson, Patrick (New Forest)|
|Clark, Hon Alan (Plymouth, Sutton)||Griffiths, Eldon (Bury St Edmunds)||McQuarrie, Albert|
|Clark, Sir William (Croydon South)||Griffiths, Peter (Portsmouth N)||Madel, David|
|Clarke, Kenneth (Rushcliffe)||Grist, Ian||Major, John|
|Clegg, Sir Walter||Grylls, Michael||Marland, Paul|
|Cockeram, Eric||Hamilton, Hon Archie (Eps'm & Ew'll)||Marlow, Tony|
|Marshall, Michael (Arundel)||Pink, R. Bonner||Stewart, Ian (Hitchin)|
|Mates, Michael||Pollock, Alexander||Stewart, John (East Renfrewshire)|
|Mather, Carol||Porter, George||Stokes, John|
|Mawby, Ray||Prentice, Rt Hon Reg||Stradling Thomas, J.|
|Mawhinney, Dr Brian||Price, David (Eastleigh)||Tapsell, Peter|
|Maxwell-Hyslop, Robin||Prior, Rt Hon James||Tebbit, Norman|
|Mayhew, Patrick||Proctor, K. Harvey||Temple-Morris, Peter|
|Mellor, David||Pym, Rt Hon Francis||Thatcher, Rt Hon Mrs Margaret|
|Meyer Sir Anthony||Raison, Timothy||Thomas, Rt Hon Peter (Hendon S)|
|Miller, Hal (Bromsgrove & Redditch)||Rathbone, Tim||Thompson, Donald|
|Mills, Iain (Meriden)||Rees, Peter (Dover and Deal)||Thome, Neil (Ilford South)|
|Mills, Peter (West Devon)||Rees-Davies, W. R.||Thornton, Malcolm|
|Miscampbell, Norman||Renton, Tim||Townend, John (Bridlington)|
|Mitchell, David (Basingstoke)||Rhodes James, Robert||Townsend, Cyril D. (Bexleyheath)|
|Moate, Roger||Rhys Williams, Sir Brandon||Trippier, David|
|Monro, Hector||Ridsdale, Julian||Trotter, Neville|
|Montgomery, Fergus||Rifkind, Malcolm||van Straubenzee, W. R.|
|Moore, John||Roberts, Michael (Cardiff NW)||Vaughan, Dr Gerard|
|Morgan, Geraint||Roberts, Wyn (Conway)||Viggers, Peter|
|Morris, Michael (Northampton, Sth)||Robinson, Peter (Belfast East)||Waddington, David|
|Morrison, Hon Charles (Devizes)||Rost, Peter||Wakeham, John|
|Morrison, Hon Peter (City of Chester)||Royle, Sir Anthony||Waldegrave, Hon William|
|Murphy, Christopher||Sainsbury, Hon Timothy||Walker, Rt Hon Peter (Worcester)|
|Myles, David||St. John-Stevas, Rt Hon Norman||Walker, Bill (Perth & E Perthshire)|
|Neale, Gerrard||Scott, Nicholas||Walker-Smith, Rt Hon Sir Derek|
|Needham, Richard||Shaw, Michael (Scarborough)||Waller, Gary|
|Nelson, Anthony||Shelton, William (Streatham)||Walters, Dennis|
|Neubert, Michael||Shepherd, Colin (Hereford)||Ward, John|
|Newton, Tony||Shepherd, Richard (Aldridge-Br'hills)||Watson, John|
|Normanton, Tom||Shersby, Michael||Wells, John (Maidstone)|
|Nott, Rt Hon John||Silvester, Fred||Wheeler, John|
|Onslow, Cranley||Sims, Roger||Whitelaw, Rt Hon William|
|Oppenheim, Rt Hon Mrs Sally||Skeet, T. H. H.||Whitney, Raymond|
|Osborn, John||Smith, Dudley (War. and Leam'ton)||Wickenden, Keith|
|Page, John (Harrow West)||Speed, Keith||Wiggin, Jerry|
|Page, Rt Hon Sir R. Graham||Speller, Tony||Wilkinson, John|
|Page, Richard (SW Hertfordshire)||Spence, John||Williams, Delwyn (Montgomery)|
|Paisley, Rev Ian||Spicer, Jim (West Dorset)||Winterton, Nicholas|
|Parkinson, Cecil||Spicer, Michael (S Worcestershire)||Wolfson, Mark|
|Parris, Matthew||Sproat, Iain||Young, Sir George (Acton)|
|Patten, Christopher (Bath)||Squire, Robin||Younger, Rt Hon George|
|Patten, John (Oxford)||Stanbrook, Ivor|
|Pattie, Geoffrey||Stanley, John||TELLERS FOR THE NOES:|
|Pawsey, James||Steen, Anthony||Mr. Spencer Le Marchant and|
|Percival, Sir Ian||Stevens, Martin||Mr. Anthony Berry.|
|Peyton, Rt Hon John|
|Question accordingly negatived.|
|BUSINESS OF THE HOUSE|
|That the Motion relating to Standing Order No. 5 (Friday Sittings) may be proceeded with at this day's sitting, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Cope.]|