British Steel Corporation (Chairman)

– in the House of Commons at 7:08 pm on 15th May 1980.

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Question again proposed, That this House do now adjourn.

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford 7:33 pm, 15th May 1980

In another place yesterday, my noble Friend Lord Bruce of Donnington raised the question which we are debating now. He asked a number of searching questions, which the Minister of State, Lord Trenchard, did not attempt to answer. Instead, Viscount Trenchard gave a blanket reply. He said of the Secretary of State: he sometimes follows a complicated path with very great clarity, and it sometimes takes time for the rest of us to absorb the process of his actions and his reasoning; so we fail, initially at least, to understand his correct conclusions, and they are very often correct.In this case our minds were perhaps too encrusted in the framework of Britain, and perhaps in the perennial sickness of some of our nationalised industries. Perhaps we were too unimaginative to grasp the world dimension in which his mind had been working."—[Official Report, House of Lords, 14 May 1980; Vol. 409, c. 310–11.] I understand that the text of that speech had been approved by the Secretary of State and, presumably, by the Prime Minister. Therefore, it represents definitive Government policy. If the Secretary of State reaches a decision, we must never challenge it—he is grasping the world dimension. It may be that we mere mortals are not able to exist in the rarefied atmosphere in which the Secretary of State exists. Unfortunately, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out, the House has the right and the duty to vote the money that is concerned in this matter. It is to that question that we must direct ourselves, and not to the grasp of the Secretary of State on world dimensions.

The Economist claimed that the final details of this somewhat complex arrangement were agreed over lunch in an Italian restaurant near Whitehall. To us mere mortals a meeting in such a venue would have been rather difficult—but not for the right hon. Gentleman. In between the minestrone and the zabaglione, the right hon. Gentleman satisfied himself that he had picked the right man, and on the right terms. Nevertheless, having listened to the right hon. Gentleman's speech this afternoon, and having read the speech of Viscount Trenchard yesterday, I find that none of the real questions has been answered. We are entitle to ask whether the Secretary of State asked those questions of himself during that pleasant Italian lunch, or at any time before.

The Secretary of State has kindly said that he will answer every question that we ask him. I have six questions. Perhaps a note can be taken of them. It is necessary to divide the somewhat complex arrangement into the three payments that are under consideration. The first payment will be £48,500—the normal terms for a chairman of a nationalised industry. The second payment works out at £225,000 a year over a three-year period, and will be paid to Lazard Freres. The third payment is a performance payment of up to £1·15 million.

My first question is: will the £225,000 a year, which is to be paid to Lazard Freres, be subject to United Kingdom tax, or is it free of tax? There is a rather important distinction between the two. If it is subject to United Kingdom tax, the net payment would amount to £122,588 a year—a considerable sum in any event, as I think the House would agree. If that payment is grossed up, it is equivalent to a figure of £546,575 a year.

Secondly, will the performance payment of £1·15 million be subject to United Kingdom tax, or is it free of tax? If it is subject to United Kingdom tax it is equivalent to a sum of £223,388 a year—a considerable sum indeed. If it is free of tax it is equivalent to a gross payment of £941,575 a year. The Secretary of State can work out those figures on his own computer.

All three payments together, if they are subject to tax amount to £369,765 a year. If they are free of tax, they are equivalent to a grossed-up payment of £1,577,075. When such sums of money are considered it is irrelevant whether the money is paid direct to an individual or to his partnership. His interest in that partnership, whether it be direct or indirect, still exists. Such sums of money as are received by the partnership must inevitably increase the goodwill of that partnership and, therefore, increase his stake in it. We heard from the Secretary of State that Mr. MacGregor sank his life savings into Lazard Freres. That is up to him. Inevitably, the value of those savings must grow if such payments are made. [HON. MEMBERS: " There is nothing wrong with that."] Conservative Members may not think that there is anything wrong with it, but I can assure them that that is not the view that will be taken throughout the country.

Thirdly, Mr. MacGregor is 67 years old. I make no point about that, except to say—[Interruption.]—I shall only detain the House longer if Conservative Members keep on. I am trying to put a rather important question to the Secretary of State, who said that he will answer my questions. Therefore, if Conservative Members will permit me, I shall ask the question. Mr. MacGregor is 67. Therefore, he is too old to participate in the normal pension plan. Has a special pension plan been arranged for him? If so, is it additional to the payments that have already been quoted? If so, what is the cost to the long-suffering taxpayer, if I may use a Homeric epithet which the right hon. Gentleman so often uses?

Fourthly, Mr. MacGregor starts his term of duty as chairman of BSC on 1 July. If, say, after one day, on 2 July, he should unfortunately die, or suppose he should chuck the job, will that £225,000 be immediately forfeit to Lazard Freres? It is not a financial impossibility that, at any rate, he may decide to chuck the job. Other nationalised industry chairmen who have had to deal with the right hon. Gentleman have not been slow in doing so. Therefore, will that sum be forfeit immediately?

Fifthly, we have heard about some of the criteria which the right hon. Gentleman hopes to agree with the performance review committee, when the time comes. As the right hon. Gentleman spoke a little quickly, I may have miscounted, but I counted about 10. However, I assume that Mr. MacGregor would get a mark for each. Therefore, it would seem that he would get £110,000 or so for every mark which he earned. That would seem to be the basis. But suppose there is disagreement. That is not fanciful either, because there are two Lazard Freres people on the committee, two Government people and an independent chairman—a committee of five —which as any lawyer knows is a recipe for disagreement. Can Lazard Freres sue the Government if they resist any claim, just as Mr. Hoppe, who was appointed by a previous Conservative Government to Harland and Wolff, did in his time?

My sixth question relates to Messrs. Russell Reynolds, the celebrated head-hunters. I noticed that Lord Trenchard, having been asked the question direct, did not reply to it. There seems to be some confusion as to what its remuneration is. This is a matter of which the House should be aware. I understand that Russell Reynolds is being remunerated according to a percentage of Mr. Mac-Gregor's salary. Perhaps we could be told what that percentage is. Will Russell Reynolds also be entitled to a percentage of Lazard Freres' fee, either of £675,000 or of the figure of up to £1·15 million? It might be of use if the House were informed. If the fee is not payable by the British Government, will it be paid by Lazard Freres, because that situation sometimes arises when agents are employed?

The arrangement itself seems to be a very strange compensation for loss of services. The right hon. Member for Orkney and Shetland (Mr. Grimond) perceptively and effectively pointed that out when the Secretary of State made his statement the other day. After all, loss of services means just that. Those services are lost whether Mr. MacGregor performs well or badly. I know very little about Lazard Freres, but I do not believe that its altruism is such that it would say "We are prepared to lose £1·15 million if MacGregor does not fit your criteria ". Therefore, this remains a very odd agreement indeed.

I turn again to Messrs Russell Reynolds. They are paid on a percentage of salary. I make no complaint about that; it must be so. Russell Reynolds are good businessmen, and the right hon. Gentleman is rightly interested in the question of profit. It must be in the company's interest to produce the more highly-paid candidates. That brings me to something which has bedevilled Governments of all sorts—the question of how people are chosen or appointed in respect of the chairmanship of quangos or nationalised industries.

As I think every hon. Member knows, they come by a list of the great and the good which the Civil Service Department—it used to be the Treasury—produces. The great and the good are rather rare in number, because in order to be great or good one must have existed in the favour of the Establishment for a rather long time, and there are not many of them. In addition, they get a bit aged as time goes by.

What happens to head-hunters? They also go immediately for their list of the great and the good. Indeed, I assume that some of the names are supplied by the Civil Service Department. They do what is called " a trawl ". In answer to a question from one of my hon. Friends, the right hon. Gentleman said that Russell Reynolds had considered 31 people—not much of a trawl; more a fish farm when one thinks of it. [HON. MEMBERS: " Did they ask you? "] No, and I would have had to consider the position carefully, because my ideas of shaping the BSC are, first, the right ones, and, secondly, very different from those of the Secretary of State. Therefore, 31 represents a very small section of those who perhaps would have been capable of doing the job, myself included.

I notice that Mr. MacGregor was quoted in the Financial Times as saying that he felt it was an honour to be asked to help to bring about a reverse of the decline in industrial Britain. Good for him. I make no cheap point about it. But others have felt the same. There must be more than 31 people in this country who have also felt the same thing. There is the example of Mr. Atkinson, the new chairman of British Shipbuilders. In his opening remarks, the right hon. Gentleman pointed out how similar the two industries were. Both are in a position of difficulty, both are facing monumental world competition and so on. Mr. Atkinson said: As far as I am concerned I am and always have been an intensely patriotic person. I have always said and always will say ' I will serve my country wherever and whenever required'. Mr. Atkinson did not say " I am terribly sorry, but someone else ought to be paid for my loss of services." He accepted a salary cut of £7,000 a year in order to do the job.

Again I do not make a party point. But I think that here is an opportunity for a change. It is time that we got rid of the short trawl, paying head-hunters vast sums of money and taking the list from the great and the good. A number of my hon. Friends have come more and more to the conclusion—

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford

No, I shall not give way. A number of my hon. Friends have come more and more to the conclusion that these posts should be publicly advertised. That seems to be the right way of doing it.

In this case, a distinguished man has been brought across the water to take over British Steel, an industry about which he knows absolutely nothing.

What do people in middle management feel? What do people in that industry feel? During the general election campaign we heard a lot from the Conservative Members about the lack of incentive for middle management. All this was supposed to be cured the moment a Conservative Government came to power. What kind of an incentive is it that says " You may strive as hard as you will, but it does not matter because we shall bring in someone else over your head to the chair—someone who knows nothing about the business. Furthermore, just to rub it in, we shall pay the equivalent of £1,577,075 "—if I am right about it being tax-free—" for the privilege of doing so "? If this is intended to raise the morale of those in middle management, it will have exactly the opposite effect. British industry should be self-seeding, and it should give all those with ability within the industry the opportunity to rise from the shop floor or from management to the chairman's chair. That should be the basis on which we should work.

The damage has been done, subject to a vote of the House. Mr. MacGregor has been appointed, but he faces some rather critical judges in the job ahead. First, he will be judged by the work force. That is the same work force as the Secretary of State, in stark contrast to what he has offered Mr. MacGregor and his friends, thinks is worth only an additional 2 per cent., despite inflation at 21 per cent. I have heard it said—indeed the Minister of State said it yesterday—that we must not judge these payments by British standards, because they are very common in the United States. If such payments to chief executives are commonplace in the United States, perhaps it is about time the steel workers began to get United States wages too, because the United States steel industry is also in great difficulties.

Mr. MacGregor will also be judged by middle management, because it has the knowledge, the industry and the expertise. Middle management will know whether Mr. MacGregor is taking advantage of the opportunities that have been offered to him as chairman.

Finally, Mr. MacGregor will be judged by this House. I wish to re-echo the final words of the Secretary of State. Of course we wish Mr. MacGregor well in his job, provided that he does that job well. The truth of the matter is that Mr MacGregor will be in a position of great strength if he cares to use it. The Secretary of State has paid so much for him that he really cannot afford to treat him like Sir William Barlow or Sir Leslie Murphy of the NEB. He dare not do it. The Secretary of State is the prisoner of the new chair man and not the other way around. The question is, has the new chairman the courage, imagination and wisdom—

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford

Yes, he has the money, but does he have the other qualities which are much more important? Has he the courage, wisdom and imagination to reverse the trend in the industry under the Secretary of State? Will he reverse the policy on redundancies? We shall all judge him by that. Will he tell the Secretary of State that he must cast aside his rigid and absurd timetable that was originally imposed upon the industry and from which it still suffers? Will he see that steel does not suffer from lack of investment? We do not know. We must suspend our judgment until we see what happens. We hope that Mr. MacGregor has that wisdom and courage. If he does not have it he will find that he has critics enough and that he must tread a thorny path. If he takes up the challenge, we shall wish him all the luck in the world. But in the meantime this staggering arrangement, entered into by the Secretary of State, who obviously has not the faintest idea of the sort of people with whom he is dealing, without the authority of the House, is something that we shall protest about in the Lobbies tonight.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam 7:55 pm, 15th May 1980

I speak as one who has been in the steel industry. I confess that I do not know Mr. MacGregor. When I was in the industry in 1950, and then again when I was in the House in 1970 I found that Conservative Ministers had to take responsibility for managing the corporate State, State Socialism, and the Socialist machine. I find that now, too. The very fact that we are having this debate today has made my right hon. Friend's task more difficult. He is in danger of being drawn into being a good Socialist caretaker of a Socialist legacy. The British Steel Corporation could be a monument to Socialist dogma if we do not look after it. There is a great temptation for my right hon. Friend to fall into a trap. He has resisted it so far, but I am conscious that he is having a difficult time in putting his case.

The right hon. Member for Deptford (Mr. Silkin) made one or two other suggestions. He said that we should publicly advertise these posts and publish the curricula vitae of the candidates. That would put many people off. Most appointments are made by selection from within, whether the company is from this country or anywhere else. The fact that we had a special form of selection for the new head of the BSC presented any person offering himself as a candidate with a challenge. Mr. MacGregor put his name forward and was chosen.

Before I entered the House in 1958 I took the view that politics were too all-embracing and the less that Governments took on the better. My right hon. Friend the Prime Minister has also said this time and time again. In 1958–59, I added the rider that the less politicians concerned themselves with, the better. This might have ruined my chances of the Conservative candidature for the Hallam constituency, but I felt that if my political opponents thought that the road to power was political, I, too, was prepared to go along it with a view to ensuring the maximum decentralisation and flexibility.

I regret that basic steel is still a State monopoly. In the debates that we had during the strike, I claimed that the corporation was inevitably a dinosaur and that unless it lost its imponderous characteristics it would destroy the jobs of many of its workers. The strike of the last three months has been expensive—expensive, too, to everyone who is not in the industry. It has been a bonanza for our competitors and it will take a long time and a lot of courage to overcome the dangers to job opportunities in a city such as mine.

Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley

The hon. Member is talking nonsense when he mentions dinosaurs. He knows perfectly well that in Sheffield we have the finest stainless steel complex in Europe, and nearby we have the best rolling and bar mills, which are producing up to Japanese standards. The hon. Member is talking rubbish.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

We must consider the fact that the British Steel Corporation has been losing almost £1 million a day. This is a great challenge to everyone in the industry.

In another place Lord Trenchard had to explain the virtues of Mr. MacGregor, after Lord Bruce of Donington had ridiculed the appointment. The right hon. Member for Deptford asked who had been approached and who had been turned down. I think that this is the most deplorable example of the difficulties of running any State industry. We have mentioned that the British Steel Corporation loses £1 million a day. In his statements on 1 May and subsequently the Secretary of State gave the terms of the appointment. Of course, there is the figure of £1,150,000. Depending on the outcome, one could call this a bonus payment for success, part of which is a transfer fee. Against that, hon. Members must look to the future of British Steel bulk steel, and to what is happening in the world.

There has been much press comment on my right hon. Friend's decision. In The Times on 12 May, Catherine Gunn pointed out that top industrial salaries in the United Kingdom could be £100,000 a year. The United States list of companies paying high salaries included Metro-Goldwyn-Mayer, Mobil, McGraw-Edison, Revlon and Hughes Tool. They all provide good salaries, with the chance of top directors participating in the capital structure of the companies.

Reference has been made to Mr. Robert Atkinson, who took a pay cut to become the head of a nationalised industry. Many people have claimed that my right hon. Friend's appointment of Mr. MacGregor was an extraordinary political decision, but a decision had to be made. I was in Sheffield when my right hon. Friend made his decision. It stunned those in both the public and the private sectors, because it was an unusual if not extraordinary decision. I found it difficult to defend the decision, but we have to bear in mind that the total sum involved is only two days' losses of the BSC. I do not resent reward, because whoever takes the job under my right hon. Friend will have a difficult and unenviable task.

I have spent two days this week at the annual meeting of the Metals Society, at a conference of metallurgists, managers and leaders of steel industries throughout the world. I spent more time there than usual because I wanted to sense what is going on in other countries. Last year's president was a Dutchman. The current president, an Australian, was a professor at Sheffield University and is Goldsmith Professor at the Department of Metallurgy, Cambridge, which is where I gained my degree. The department course at the metallurgical department taught me to look out for the sources of materials for all metal industries, including the steel industry, and I could well have gone into mining.

At the Metals Society I had conversations with the heads of steel industries in Japan, Hungary and Yugoslavia, and even with a delegation from China which visited Sheffield this week. There is a company called Climax Molybdenum, one of the biggest suppliers of molybdenum to British Steel. It is part of AMAX. Mr. MacGregor has done much to bring together Climax Molybdenum and the American Metals Company.

I took the precaution of speaking to those in the BSC, mainly the technological management. They realised that a decision had been made and I sensed that they wanted it to work and rather resented the fact that I, for example, had a right to question the decision. The message that I received was " The decision has been made, give it a chance." If hon. Members spoke to the managements in the steel factories in their constituencies they would find the same reaction.

If my right hon. Friend and Ian MacGregor can pull the BSC round and bring in some of the changes that are necessary, a sore for our country could become something of which we are proud.

The right hon. Member for Deptford spoke about the world-wide dimension and referred to Lord Trenchard's speech in another place. In the past two days I have learnt of new steel plants going up in Yugoslavia, Algeria, Mexico, Venezuela and Brazil. The iron ore and the cheap materials are to be found in some of the Latin American countries. I remember making a speech, as a Conservative candidate, saying " Wealth is where wealth is." I could go into the history of why the steel industry moved to Sheffield. The raw materials were there a century and a half ago, but that is not so true now.

I have been concerned with materials through the parliamentary and scientific committee. A number of members of that committee attended a meeting in November, organised by the Metals Society and the Institute of Mining Metallurgy to take a look at the resources for the metal and engineering industries, including the steel industry.

What could the future of the BSC be? It could be that more of the industry, particularly in Sheffield, will, as the hon. Member for Sheffield, Heeley (Mr. Hooley) suggested, move into stainless steel and special steel, but one of the great difficulties of the steel industry has been to secure supplies of raw materials. We have discussed cobalt. That has been dealt with by AMAX, as have molybdenum and tungsten.

There are huge operations throughout the world. I see that AMAX is even the owner of the Selibi-Phikwe mine in Botswana, which I, with one or two Labour Members, have visited.

Therefore, the perspective of the British steel industry and the individual units within it is to be aware of where the materials come from. Mr. MacGregor is one of those who have lived with that perspective.

The cost may be high and the reward for Mr. MacGregor, if he succeeds, may be heavy, but, in spite of criticism from many of my friends outside, I congratulate my right hon. Friend the Secretary of State for being courageous and taking a chance. I wish to back it.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland 8:06 pm, 15th May 1980

The Government justify the conditions of Mr. MacGregor's appointment by arguing that British Steel is a commercial company and must, therefore, pay international commercial rates for top management. But British Steel is not a commercial company. It is a public institution supported by the taxpayer, as the Secretary of State is constantly pointing out. The BSC does not have to raise its own money or satisfy shareholders, its directors stand in no fear of bankruptcy and it has a Minister of the Crown looking over its shoulder all the time.

The pretence that nationalised industries are ordinary commercial undertakings lies at the root of many of our troubles. We are in danger of having the worst of all worlds. They are not ordinary commercial undertakings and are subject to none of the disciplines of such undertakings. On the other hand, we are in danger of killing any spirit of public service in those undertakings that are genuine public service undertakings. The only valid reason for putting any business directly under State control is that it should not be run solely on commercial motives, but, like the Armed Forces and the Post Office, should be run as a public service answerable to Parliament.

Governments are in the process of wrecking some of those services, including the Post Office, by trying to make them into bogus commercial businesses and are, in the process, throwing away all the esprit de corps that such organisations once enjoyed. Years ago, Mr. W. R. Williams used to sit near me on this Bench. He spent much of his life in the Post Office and was as proud of it as old General Jeffreys was of the Brigade of Guards. Why? Because he had a genuine sense of public service.

What would the Army think if the Government said that they were not pleased with the performance of the Brigade of Guards and had hired an excellent German mercenary and were paying him a lot of money to smarten up the Brigade? I do not think that the Army would respond well to that.

Of course, nationalised industries are not treated as commercial undertakings. The British Gas Corporation is ordered by the Government to put up its prices and is treated as a tax collector rather than as a commercial undertaking.

Steel making should never have been nationalised. It was not an appropriate industry for nationalisation. Does Mr. MacGregor's appointment mean that the Government have decided to keep British Steel as a large nationalised undertaking run very much as at present? Is that the significance of the appointment? If so, I believe that the Government are wrong. It will not work. If the Government do not intend to keep British Steel essentially as it is—perhaps pared down—has Mr. MacGregor been given a remit to suggest different forms of organisation? For example, are the Government contemplating splitting up the steel industry into smaller units?

Can we be told exactly what Mr. MacGregor's job will be? I have listened to the Secretary of State and I have read the speech of the noble Lord, but I remain confused as to the nature of his job. It is inconceivable that in three short years he will manage the unmanageable so brilliantly that it will be all right for all time. I do not believe that that is possible. During those three years he might suggest totally different methods. What will he do? How much independence will he be given? What directions will the Secretary of State give him? The terms of the contract would be peculiar even in football circles. Presumably the £225,000 a year is free of tax. Who will pay the head-hunters? How much? Why are they necessary?

We have been assured that Mr. MacGregor is known all over the world. The Prime Minister said that everyone recognised that Mr. MacGregor was one of the most outstanding industrialists, not only in America or Japan but in the world. Presumably the Secretary of State knew him. In that case, why did he have to go to Russell Reynolds and be told something that he already knew? I do not understand why the Government had to employ such people. The extraordinary arrangement involving £1·15 million appears to be a wager. The terms of the wager are that if Mr. MacGregor does well, Lazard Freres will win. If he does badly, it will not lose. Why was the bet made? Lazard Freres is being paid for the loss of Mr. MacGregor's services. Has British Leyland been paid for the loss of his services? He was deputy chairman of British Leyland. Is British Leyland being given a cut? What services did he perform at Lazard Freres? After all, he had 50 other directorships. He could not have worked full-time for Lazard Freres. If he did, he must have been working double time, because he was working part-time for 50 other firms as well as British Leyland.

This is not a direct incentive payment. In some ways I wish that it was. Part of the reason behind this method of payment was to get round taxation. If a direct incentive payment had been made, it would have been taxable. However, if a payment is made to Lazard Freres, it is not taxable. Mr. MacGregor is a partner in Lazard Freres, and presumably he will gain considerably. Lazard Freres will avoid paying tax. I can see no other reason for entering into that strange arrangement.

If Mr. MacGregor were to put his own money into British Steel and if he were to take a risk, it would be appropriate for him to receive a share of the profits if the firm did well. He is not doing that. Neither he nor Lazard Freres is putting money into British Steel. They would not dream of doing so. He is not an entrepreneur. He is risking neither his reputation nor his capital. He is as old as, or older than I am. At my age, one's reputation is finished.

Mr. MacGregor is a public servant. Other public servants should be treated in the same way. What is being done to Sir Michael Edwardes? He is doing a good job at British Leyland. What extra payments will he receive? If this example is set, what will happen to the other heads of nationalised industries? The arrangement will have a bad effect on wage restraint in the public sector. In a recent debate I pointed out that the fundamental cause of inflation was the repeated demands for more money by institutions and unions, regardless of output. Such demands must be stopped at the top. We cannot go on chasing our own inflationary tails. We must cut that vicious circle at the top. An American President is said to have had a notice on his desk saying, " The buck stops here ". Ministers and top public servants should have notices on their desks saying " Inflationary drive is reversed here. No more money at the top until inflation is under control."

I regard Mr. MacGregor's appointment as an affront to those in public service. Nurses do a skilled job. Public service jobs are often more boring than running a big firm such as Lazard Freres. I suspect that that firm has its interesting moments. Some public servants are badly paid. The Government are presuming on their dedication and patriotism. They are expected to go on struggling. A wealthy man is to be paid the going rate.

If one spends one million pounds here, and another million pounds there, what is that in the affairs of the BSC? It is a mere bagatelle. How does that rate appear to nurses and to those who work hard, with a sense of public dedication?

To quote a phrase once used in reply to a question that I asked, this is indeed the unacceptable face of socialist capitalism.

I wish Mr. MacGregor well. I accept that the nationalised industries pose great difficulties for the Secretary of State. I have every sympathy with him, but I believe that the terms of Mr. MacGregor's appointment are a mistake.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Scunthorpe 8:15 pm, 15th May 1980

Having listened to hollow and bogus speeches from the Opposition, I must unreservedly congratulate my right hon. Friend on this inspired appointment. I represent a constituency in which 16,000 of British Steel's employees work. Their future welfare will depend upon the success of the man who leads the BSC. They have a vested interest in his success.

I place on record how impressed everyone at that plant in Scunthorpe was when Mr. MacGregor made a private visit to the constituency on Monday and Tuesday. He was received with enthusiasm by senior managers, middle managers and union representatives. I have since spoken to a cross-section of all three sectors, and I can assure my right hon. Friend that Mr. MacGregor very much impressed those who work in the BSC.

We had a knockabout turn from the right hon. Member for Deprford (Mr. Silkin). We have heard a lot of bogus questions about pension rights and other questions on similar side issues. However, no Opposition Member can question Mr. MacGregor's clear ability to take on this difficult appointment. He has an international track record, and is known throughout the world. Indeed, if Opposition Members had done their homework on Lazard Freres they would have known of that reputation. His reputation is clear and beyond all doubt. Those steel managers who will have to work with the gentleman have no doubt about his ability. They have no doubt that he is the best man available for the job. No one has questioned that fact.

My right hon. Friend is to be congratulated on having spared no effort to secure the services of Mr. MacGregor. It was an unenviable task. Not many people want the job. My right hon. Friend went to great pains to stress that he approached others, but that none of them wanted the job. One can understand why they do not want the chairmanship of the BSC.

We should pay tribute to the sense of public duty that Sir Charles Villiers has displayed. What thanks has he received? All hon. Members have criticised him. He has had to bear the brunt of a tremendous amount of criticism. Any man who took on such an appointment would have to bear such criticism. It is a thankless task, and we should be grateful to anyone who takes it on. However, we do not want just anyone to take on the job. It is important to get the right man for the job. The livelihood and welfare of many of my constituents depend on Mr. MacGregor's success.

I do not begrudge him his appointment. He is receiving only £48,500. It is the transfer fee that seems to cause Opposition Members the greatest unease. If that is the price that we have to pay, I say unreservedly that it is time that we started to get off our high-horses about the chairmanships of nationalised industries and to recognise that the type of person that we want to run nationalised industries is the best, and has to be the best. It may be that in future we shall have to pay for the best.

In the past we have always regarded the chairmanship of a nationalised industry as, in a sense, a reward. There was sometimes the prospect of a knighthood, or a peerage in another place. However, the nature of the job has changed in recent years. We should start to take a more realistic and twentieth-century approach to the chairman of our top nationalised industries.

We should not be spending three hours of parliamentary time merely talking about the pension arrangements and one or two other issues raised by the right hon. Member for Deptford (Mr. Silkin). The steel industry has recently been through a most damaging and self-inflicted dispute. It has little time if it is to survive in the increasingly tougher international world of surplus capacity, declining demand and increasing imports into Britain. If we have to pay the price for the best man, so be it.

If Mr. MacGregor is successful, it will mean relief and encouragement for steel workers, who need reassurance for the future. I understand that Mr. MacGregor has accepted the disciplines that the Government, as guardians of the taxpayer, have rightly imposed on the corporation. These are the same disciplines as those that were imposed by the right hon. Member for Chesterfield (Mr. Varley) when he was Secretary of State.

No man can wave a magic wand when he sits in the hot seat in Grosvenor Place. Mr. MacGregor will rely on the skills of the unions, of management and of the steel workers to assist him. No one imagines that the mere replacement of one man by another solves the problem. We are all alive to the realities. However, Mr. MacGregor's job immediately is to restore morale and confidence in a flagging industry. Within days of coming to the corporation he took the trouble to make a purely private visit to my constituency. He was received enthusiastically and he was most impressive in the way in which he acquitted himself before those who have been in the industry for a lifetime.

The managing director of the Scunthorpe division of the BSC, Mr. Don Ford, has been in the industry virtually since leaving school. He recognised immediately the skills of Mr. MacGregor. One is a metallurgist and the other is an international manager. From what I have read, Mr. MacGregor recognises that we must make full use of modern technology. In Scunthorpe and elsewhere we have some of the most modern plants in the steel industry.

Technology changes constantly. I hope that Mr. MacGregor will recognise that once manpower productivity is dealt with we shall have to continue with modern technology. For example, we shall have to continue to introduce continuous casting. I hope that my right hon. Friend will recognise that it is important for a man of Mr. MacGregor's managerial ability to have freedom within the corporation to invest as much as possible in new technology. In the first instance, it is essential that we deal with manpower requirements.

Scunthorpe has agreed the rationalisation programme. I pay an unreserved tribute to the local unions that have agreed to a rationalisation programme involving the loss of 2,800 jobs. It was a difficult decision for Scunthorpe. It is a problem that has been recognised by the unions during the past two or three months. I think that reality dawned on them during the steel strike. They have recognised that it is essential that the manpower issue should be settled as quickly as possible.

There was a difficult climate in the steel industry, but towards the end of the strike I noticed a healthy realism overtaking union leaders. That realism has been present among steel workers for many months. The appointment of Mr. MacGregor, coupled with the sense of realism, is a hint of distinct optimism. There is a hint that my right hon. Friend has taken a courageous decision.

People like to be led, and they like firm leadership. That is what has impressed the ordinary steel worker in my constituency. My right hon. Friend may rest assured that there is no opposition from management, unions and the work force on the shop floor. I suggest to Labour Members that they are misleading the House if they suggest that Mr. MacGregor's appointment will be opposed.

It is important for us all to recognise that the steel industry needs a fresh approach. Nevertheless, it needs to recognise the basic reality that my right hon. Friend recognised from the moment he took on his own position. I do not underestimate the difficulties before Mr. MacGregor. I believe that his appointment is now being recognised as inspired. I wish him success. Upon that success will depend the success of the BSC and the industrial success and future of my constituency. I congratulate my right hon. Friend upon this appointment, and I give it my enthusiastic endorsement.

Photo of Sir John Morris Sir John Morris Shadow Attorney General 8:26 pm, 15th May 1980

I hope that what I have to say will not be seen as an attack on an individual in the person of Mr. MacGregor. It must be acknowledged that there was not a word of that vein in the speech of my right hon. Friend the Member for Deptford (Mr. Silkin).

Mr. MacGregor has had to carry the stigma of the Secretary of State's peculiar and idiosyncratic approach to the steel industry. For us mere mortals it is difficult to follow the Secretary of State's byzantine thought processes. A peculiar arrangement has been adopted whereby Mr. MacGregor's performance is to be judged. A super-quango is to adjudge a quango chairman. We are baffled. We know not how the arrangement will work. What weight will be given to the quantitative factors? What weight will be given to the qualitative factors? All that we know is that when Mr. MacGregor is about 73 years of age in 1985 the final evaluation will be made.

The Minister has tried as best he can to explain this peculiar arrangement. We shall judge Mr. MacGregor in due course. I wish Mr. MacGregor well. I hope that he will read the report of the debate when he has the opportunity to do so.

Although Mr. MacGregor is of British origin, he has spent 35 years mainly in American industry. That does not mean that he has a close awareness of the real problems of the great British steel industry. I believe that its financial problems can be resolved reasonably. The real problem of leadership of BSC in the next few years is that of human management and personal relationships. These are the problems that Alf Robens had to face in the coal industry many years ago. It is necessary for there to be a deep awareness if we are to ensure that this great industry comes through its present problems.

There is nothing necessarily wrong in appointing someone from abroad to a key job. Different people have different but honestly held views on who is the best man for the job. However, given the Minister's track record and general approach, what weight can we put on his judgment? I hope, therefore, that it was not the right hon. Gentleman's decision but was considered widely within the Government. For the sake of the industry, I hope that there has been wide discussion. The industry demands and deserves the best man, whoever he is.

We are concerned about the future. Mr. MacGregor is reported to have said that he wanted to " add 2,000 yards to the runway ". If that means that he wants to get rid of more jobs than the present management intends, that is serious. However, I read Lord Trenchard's speech in the Lords yesterday when he said that Mr. MacGregor had done nothing yet to request a change in the general course. In South Wales we are deeply dissatisfied with the general course and our share of the market. We should like a change. Deep injustice is felt throughout the industry, from top management in South Wales downwards.

We fear that under this peculiar byzantine performance arrangement devised by the Minister and his advisers the measurement of performance will lie basically in short-term profitability. We shall fight bitterly and deeply to the end if that involves more job losses. However, if Mr. MacGregor's remarks about 2,000 yards more runway mean that he wants more room to manoeuvre and leap out of the straitjacket imposed on the industry by the Government, he will have our support. The present time scale of cash limits cannot be achieved. The Minister has given Mr. MacGregor, or whoever is to be chairman, an unfair start.

The new chairman should look at certain problems immediately. First, he should press the Government for urgent capital reconstruction. Why should the workers have the albatross of previous investment decisions by Governments of both parties hang round their necks after this year? Why should they bear that burden alone? A considerable part of BSC's losses is due to servicing existing capital. We have experience of the grandiose plans for industry of the present Minister of Agriculture, Fisheries and Food in a previous Tory Government. I confess that I welcomed with open arms those that concerned my constituencies, although we are left without a new hot mill that is badly needed. However, in their totality those plans have proved wholly wrong, having regard to the share of the market that BSC professes that it can win.

Secondly, I hope that the new chairman will turn his beady eye on the forecasters in BSC, who have been proved to be wrong time after time. Incidentally, he might immediately give a golden handshake to the bright boy who conceived the idea of making steel at Port Talbot and sending it to Llanwern to be finished, which would have been the longest production line in the world. The best possible investment would be to give that man a large handshake to ensure that his services did not again militate against BSC's fortunes.

Thirdly, the new chairman should inquire into the entire management structure of BSC, starting at board level. There are too few independent board members, able, with adequate resources and research support, to give their independent views to the board, if necessary, through direct access to the Minister, as I experienced when I was a Minister at the Ministry of Power a long time ago. Where grave decisions of national importance have to be taken, no major national industry, whether publicly or privately owned, can afford industrially incestuous arrangements.

The next question that the new chairman should ask is whether he needs a chief executive at present. If so, should there be a chief executive's committee or whatever it is called to present uniform monolithic views before each board meeting? Another important question is what opportunity there is within the board to ensure that members of management are able to dissent and provide the board with alternative plans, as opposed to the present monolithic arrangement.

There is great concern about the prodigality in numbers of former United Steel men in BSC. In South Wales and other parts of the country they are known as " United Steel's mafia ". The arrangement is odd. Why are about a dozen former United Steel executives in key positions in BSC? They may be the best available. I know some of them very well and hold them in the highest regard. However, it is extremely odd that so many former executives of one firm are at one time in major positions right across the whole of BSC. Is it any wonder, therefore, that there is no uniformity of view in BSC? In contrast to this, there is no one from the Welsh steel industry in the top echelons of BSC. The same goes for many other parts of the country. Therefore I hope that very soon the chairman will examine—I can give him the names; they are well-known—the 10 or 12 people, right across industry, who are in high positions. If they are the best, certainly they should be kept and, if necessary, promoted and given wider responsibilities. However, it is odd that at one time there should be so many people from one stable. I know that that feeling is not confined to Wales.

The next matter that the chairman should examine is the over-centralised commercial structure of the board. I raised this matter in the December debate. It is not possible for this great industry to sell its products through one highly centralised commercial arrangement. There are six or seven businesses in the board. The centralised machinery should be broken up and tied much closer to the individual plants. The customer would then be able to complain directly to the plant. If there is any problem of double sourcing, if one buys Port Talbot or Llanwern steel, one may double source either for industrial or any other reason in any other part of BSC. That will be welcomed by the work force and the management. The Minister should consider that point rapidly.

A retrograde step was taken by transferring the Welsh tinplate industry from the sheet steel division to Sheffield. The Secretary of State for Wales lost another battle in that context—if he fought it at all, and I suspect that he did not. If that decision was taken ambiguously in the tinplate industry, may I warn him now that the greater the distance from those who provide supplies, the greater will be the jeopardy of the industry when problems of new investment arise in the future. Therefore, I hope that this matter can be examined speedily to ensure that the Government go back on the step taken only a few months ago, as they had to do in the past with so many of the other plants.

I wish the new chairman well. He has a very difficult task indeed. I hope that he has the room for manoeuvre that is necessary, that he is not kept in a straitjacket and that he is given the necessary capital reconstruction. I hope that he will speedily consider the board structure, and the structure immediately below it, because this industry, which provides the livelihood for the overwhelming number of my constituents, and of those of many of my right hon. and hon. Friends, should be given the chance to play a formidable and important part as a major part of British manufacturing industry.

Photo of Sir Archie Hamilton Sir Archie Hamilton , Epsom and Ewell 8:39 pm, 15th May 1980

One of the Government's tasks is to educate the British people in economic realities—realities which the previous Labour Government, all too often, pretended did not exist. One of those realities is that many of our nationalised industries are overmanned, unproductive and badly managed. It therefore follows that they need the best management that money can buy.

Another economic reality is that top managerial talent does not work for peanuts, I am afraid. It follows that we must match international rates if we are to persuade top people to work in the nationalised industries.

Another economic reality is that the nationalised industries are unattractive to international top managers, because they are always at risk from non-commercial pressures from Ministers and other politicians. Most nationalised industries are monopolies. Therefore, management must negotiate with monopoly unions. That encourages trade union irresponsibility, to put it mildly.

At the same time, the industries rely on the Government for funds and therefore their investment plans are liable to be affected by whether the Government wish to expand the economy or otherwise, rather than by the market forces affecting the industry.

It follows that it is not sufficient to match the top rates in the private sector. We must exceed them if we are to attract people into the nationalised industries.

A further economic reality is that, of all the nationalised industries, the British Steel Corporation is the least attractive to anyone who wants to work in them. First, it is bankrupt. Secondly, its markets have completely collapsed, and the chairman will inherit the problem of enormous redundancies, which will dog industrial relations for many years.

That suggests to me that the chairman must be paid even more than any other nationalised industry chairman. The point has been clearly made that the pay intended for Mr. MacGregor is negligible compared with the vast losses incurred by the corporation.

I should like to ask three questions about Mr. MacGregor's terms of reference. First, are they perhaps too narrow? They seem to me to be confined to managing the corporation and working within the existing structure. But another economic reality is that the steel workers who earn the best wages and have the highest productivity and the greatest job security are those in the private sector. It follows that the best thing that Mr. MacGregor can do in managing BSC—indeed, the best thing that he can do for the British steel industry as a whole—is to move as many steel workers as possible into the private sector.

Secondly, is Mr. MacGregor expected to work within the cash limits? I understand that he has ideas about financing expansion and going into different areas, moving towards finished products and so on. Will he be in a position to return to the House for new money to finance those developments; or will he be expected to do so by disposals within the corporation?

My third question is about the future of Shotton. Will Mr. MacGregor be free, and encouraged by the Government, to sell the whole complex there to the private sector? It is far more important that we worry about job security in the area than about whether selling the whole of Shotton fits in with a corporation master plan.

I believe that the British steel industry has a great future but that that future largely lies in the private sector.

Photo of Mr Patrick Duffy Mr Patrick Duffy , Sheffield, Attercliffe 8:43 pm, 15th May 1980

Because of the time, I shall not take up the point raised by the hon. Member for Epsom and Ewell (Mr. Hamilton). I recall the earlier remarks of the hon. Member for Sheffield, Hallam (Mr. Osborn), who referred to the condition in which British Steel emerged from the recent dreadful strike. He knows, as I and some of my hon. Friends who are so close to the Sheffield scene know, the impact that the strike had on steel locally. We are all too well aware that as a result the industry is now weaker, that many of its foreign and home markets have been lost. The trade unions have, unhappily, little to show for that strike. They are expected to negotiate collectively in future—and that is a gain—but they are embittered, divided and weakened.

The chairman, if anybody, can pick up the pieces. That is why we are so concerned about the appointment of a new chairman, apart from the controversial circumstances of the present appointment.

Despite the assurances of the Secretary of State, I wonder whether he will be equal to this challenge. I am sceptical about his possessing the requisite qualities. I cannot see, given his record, impressive though it is, but in a different context and in a different scene, how he can have an understanding of trade union attitudes in Britain, especially in steel. He could not have got off to a worse start. The manner of his appointment has undone all the impression of non-intervention that the Government were so concerned to create during the steel strike.

As recently as February the Prime Minister told the House that she had total confidence in Sir Charles Villiers, the outgoing chairman. The events of the past week, with Sir Charles going three months before the end of his contract and the evidence that the Secretary of State, the Prime Minister and, presumably, a Cabinet Committee had long been acting as executive head-hunters, must have considerably undermined that public posture of the earlier weeks of this year.

All the more regrettable is the manner in which the appointment of Mr. MacGregor was arrived at, and then presented. The Secretary of State must surely agree. The right hon. Gentleman cannot be proud of the way in which the appointment has been presented, not merely to the House but also to the public. He must surely recognise that it has destroyed any lingering, positive impact that he might have been concerned to bring about as a result of the steel strike and his role in it.

It was insensitive in the extreme, especially at a time when the industry is striving to climb out of the wreckage of the strike, to announce a payment of this size, upon which the Secretary of State has again dwelt today, for the services of just one man. After the strike and the disappointment of workers in the steel industry, I do not know how the hon. Member for Brigg and Scunthorpe (Mr. Brown) could have been so uncritical of the Secretary of State's appointment and could so unreservedly have expressed approval of it, informing the House that this approval had the endorsement of many, though perhaps not most, of those who work in the Scunthorpe steel industry.

I am staggered that the hon. Gentleman could have made such a claim, if I understood his remarks correctly. I can only say that steel workers in Sheffield, a few miles away, take precisely the opposite view. As recently as yesterday, as well as last week, many have drawn to my attention the comparison of their pay with the cut that is to go to Lazards. The hon. Member for Hallam, who has now left the Chamber, said that those with whom he has contact in Sheffield had expressed themselves as stunned by the appointment. The impression of the hon. Member for Brigg and Scunthorpe of the reaction of steel workers in his constituency does not seem to make sense.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Scunthorpe

The point that I made was that the reputation of Mr. MacGregor was enhanced as a result of his visit and the meeting that he held on Tuesday. I hope that the hon. Gentleman will judge differently after he and his colleagues have met Mr. MacGregor.

Mr. Daffy:

The hon. Member might judge differently when he checks the text of his speech in Hansard later tonight or in the morning.

I was interested in the Secretary of State's reference to a gesture—although he did not use that word—of public service in the appointment. There is little evidence of that to people in Sheffield with whom I have discussed the appointment. It is regrettable that there is not more place for public service in such an appointment. Mr. MacGregor's appointment has got off to a resoundingly bad start. The overriding need of the industry is leadership in which the workers have confidence. The repercussions of the appointment will not be confined to steel, given the simultaneous appointment of Mr. Robert Atkinson to British Shipbuilders. Since the terms of the appointments are different, neither the Secretary of State nor the Prime Minister can claim that he is pursuing a coherent policy towards nationalised industries.

That is why we must now consider different ways of making such appointments. It is suggested that they should be advertised publicly. Of course they should. However, the decision will still rest with the Secretary of State and his successors. Select Committees are being developed in a positive and meaningful direction. Perhaps such appointments can be vetted by the appropriate Select Committee before confirmation. I have in mind the United States model.

Such a procedure would enable hon. Members from both sides of the House to question Mr. MacGregor on his attitude, in the late 1940s, towards steel nationalisation. He was antagonistic to that notion. Examination by a Select Committee would enable hon. Members to question him on his free enterprise views as well as on his scepticism about certain aspects of the Welfare State. Such a procedure would enable hon. Members to ask Mr. MacGregor how, if he still holds such views, he can reconcile them with his acceptance of such an appointment.

Such a procedure could also be employed by hon. Members to question the timetable for viabliity. It is not enough for questions to be asked of the Secretary of State, because we know that they will have no effect. We should be able to ask about the financial support that is necessary in the meantime. The Secretary of State has already affirmed the existing cash limit. It is right to anticipate an early capital reconstruction. The vetting of appointments by hon. Members would enable us to raise the all-important question of pricing policy. The BSC's recent experience has resulted in its reluctance to raise prices during 1980. We can understand why.

I speak on behalf of the east end of Sheffield. The BSC is the price leader for both the public and private sectors. That is always crucial. I understand why the BSC is reluctant to raise its prices. However, I hope that it appreciates that private steel companies are in danger of being forced out of business because increases in the prices of raw materials and public utilities due to inflation can no longer be absorbed by increased efficiency. In Sheffield the BSC's prices policy is of grave concern. The condition of some parts of private steel is near-desperate. The BSC will survive only by teamwork and co-operation.

We must therefore wish the chairman-elect well for the future. His future is obviously of vital importance, not only to the future of steel. His failure could only damage the national interest. If he merely acts as a trouble-shooter on a tough short-term assignment, that will only accelerate the move towards a nation divided into affluent Tories in the South-East, and the rest. It is significant that the hon. Member for Epsom and Ewell (Mr. Hamilton), who preceded me in the debate, comes from the South-East. My remarks have nothing to do with him personally.

I am concerned that if Mr. MacGregor does not approach his new assignment with the utmost care the present increasing division of our nation into an affluent South-East and millions of embittered have-nots elsewhere will be accelerated.

On the other hand, if Mr. MacGregor consults fully and regularly with the work force and draws up a programme that gives management the chance to steer the corporation through the present crisis, if he develops a longer-term strategy for steel to enable BSC to use its modern iron and steel-making facilities in an increasingly up-market direction, he will give BSC a much-needed boost in morale, and its workers may yet come to regard him as worthy of his hire.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , New Forest 8:58 pm, 15th May 1980

I come from a south of England constituency, but I have spent much of my working life in the steel industry. I am in a part of the world which is a big steel user.

This debate has shown that there is common ground between both sides of the House in wanting to see the steel industry become successful. I believe that my right hon. Friend has taken a sensible gamble by trying to break out of the management straitjacket which the steel industry has experienced since it was nationalised.

The story of British Steel in the last 12 years has been an unhappy one and I hope that we do not fall into the trap into which the Opposition fell, of appointing chairmen and subsequently attacking them.

I pay personal tribute to Sir Charles Villiers. He is, perhaps, one of the most undervalued men in British industry. He picked up the legacy left by all the glowing over-optimistic forecasts which were made for the industry. He has had to do much of the dirty work which was essential if we were to get the industry into viable shape and I think that he has been, wrongly, much vilified.

The particular problem facing Mr MacGregor is a simple one in three main tasks. His first job is to sell British steel. Therefore, he must be a man with a strong market base. Following the steel strike it is now clear that the forecasts of a 10 per cent. loss in our markets are probably, and unfortunately, optimistic. We may be concerned with something a good deal worse. We know that many customers have now decided to buy abroad and in so doing they have had to enter into long contracts.

The historic problem is that many of the stockholding firms are, of course, in foreign hands. That being so, Mr. MacGregor has a major problem in seeking to sell the Corporation's products. The problem is to some extent less serious for him than for others because he is a metallurgist. He will be able to cure the significant shortcoming—which customers of BSC, unfortunately, identify—of poor quality. We have to face that problem.

That is not in any way a reflection on individuals in the industry; but the quality control has not been good enough. I think that Mr. MacGregor will be able to bring a refreshing new look to this particular sales problem.

Mr. MacGregor's second task is to be able to stand up to politicians. Coming from a different environment, and from the other side of the Atlantic, he is less likely to be browbeaten by politicians than some others who have commanded nationalised industries. I am delighted that we have a Secretary of State who keeps out of the day-to-day running of these industries and who showed in the steel strike that he was prepared to let the corporation and its employees work out their own agreement. But even with respect to my right hon. Friend, there is a temptation for Secretaries of State to take perhaps rather too much detailed interest in the affairs of the Department over which they have some authority. I hope, therefore, that Mr. MacGregor will be resolute in putting the interests of the British steel industry first and the concern of politicians second.

The third and last task which Mr. MacGregor has to face, as I see it, is that of restoring morale to an industry which, under the previous Government and under the present Government, has seen its market getting smaller and smaller and has had to face massive closure programmes, which are now available for us to study. Because Mr. MacGregor is coming fresh to the job, I hope that he will realise that the closure programmes could do with a second look. I should like him very much to take another look at Consett. I mean that. I see that the hon. Member for Consett (Mr. Watkins) is present this evening. I should like Mr. MacGregor to take another look at Hunterston and the direct reduction plant, because if the gas under the North Sea is going to be as plentiful as it appears, that reduction plant is a world beater. I understand that Mr. MacGregor is a Scot and has a home not too far away from Hunterston. I hope that he will take a serious look at that plant.

What we do not want is a man who goes back and studies the books all the time. We have done that. They have been examined ad nauseam. Indeed, I was delighted to see that Mr. MacGregor was reported on one occasion as saying " I do not care about the balance sheet."

In my estimation, Mr. MacGregor wants to get right the three priorities which I have described—sales, standing up to politicians, and building up the morale. But more important than any of those is that he has to recognise that this industry of ours, which just over 12 years ago was 14 separate companies, has had a miserably unhappy past. It is making a fraction of the steel it made at the time it was nationalised. I believe that the lowest ebb is the turn of the tide—and very good luck to Mr. MacGregor.

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen 9:03 pm, 15th May 1980

I make only one comment on the speech of the hon. Member for New Forest (Mr. McNair-Wilson). That is to say to him that if he believes that his right hon. Friend the Secretary of State for Industry does not interfere in a broad general way with the operation of the British steel industry, he would believe anything. I am not surprised, therefore, that he will be supporting his right hon. Friend in the Lobby tonight.

I realise that one of the most difficult tasks of the Secretary of State for Industry is in the making of appointments. I believe that the right hon. Gentleman is convinced that Mr. MacGregor is the right man for the job, but I believe that he has misjudged the attitude of the House of Commons and of the British steel industry. He has surprised and annoyed a great many people involved in it by this appointment.

The hon. Member for Brigg and Scunthorpe (Mr. Brown) said that there were few of us who really took exception to the appointment in itself. That surprised me, because this debate is taking place because we do take exception to Mr. MacGregor's appointment. I certainly do, and I take exception to the manner in which the appointment was made and to the financial conditions attached to it.

Having said that, I must say that I do not know Mr. MacGregor. I do not really know anything about him other than what I have read in the press and in his entry in the Directory of Directors. Therefore, it is difficult to make a judgment. However, I find it difficult to accept that the only man whom the Secretary of State can produce to do the job is a 67-year-old American—albeit Scots born. To do that following a difficult steel strike is to put a burden of responsibility on that gentleman—and it is a heavy burden indeed.

I do not take exception to the appointment of a 67-year-old man to industry. I do not take exception to the appointment of a 67-year-old man in politics. Many men of that age bring considerable experience and wisdom to our deliberations and to the process of industry. By the same token, I do not take exception to American management in Britain. It is good to intermingle American and British management. The Americans often bring new skills and innovation to our management.

However, the appointment reflects very badly on what the Government think about British management. What is the Secretary of State doing? He is saying that of the 100 or more professional managers in the public and private sectors of the steel industry, there is no one who can do that job. The hon. Member for Sheffield, Hallam (Mr. Osborn) has been in and around the steel industry for many years. Yet he was not able to suggest anybody for the job. That surprised me. I have an old-fashioned view, in that I believe in the adage that every soldier carries a field marshal's baton in his knapsack. It is good for young managers in the steel industry to know that one day, by doing a useful job, they may reach the top of the tree. It was a poor reflection on the management of the BSC and on private sector management when the Secretary of State indicated, in reply to a question from my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray), that of all the hundreds of professional managers within industry he had not thought fit to approach any one of them to take on that important task.

I become cross with the Secretary of State when he goes even further, and says to the 55 million who live in these islands—many of whom make their living out of managing industry—" I do not think that any of you are good enough for the job". He, and many of his right hon. and hon. Friends, pay a great deal of lip service to the bright young men in British industry. But today he gave them a massive kick in the teeth. He said " We regret the brain drain, but perhaps there is something in it after all. Go to America, stay there for 25 years, come back when you are drawing your old age pension at 67, and we will find you a nice, comfortable, well-paid job in the BSC."

If there were ever any encouragement to anyone to join in the brain drain, it is the appointment of Mr. MacGregor.

The appointment is remarkable. The terms of the appointment are bizarre. I shall not go over the details, but I wish to mention the transfer fee, which is massive. The contribution that Mr. MacGregor will receive is also massive. We all wish to know whether we will get back our money if Mr. MacGregor does not succeed.

My last concern is simple. I understand from the Secretary of State's statement that the chairman-designate will be allowed to continue to operate—albeit in a non-executive capacity—in a considerable number of other companies. Many hon. Members—I suspect on both sides—take exception to that. The task of the chairmanship of the BSC is massive. There is no doubt about that. It appears to be a 24-hours-a-day, seven days a week job. I cannot understand why the Secretary of State—anxious though he is to obtain Mr. MacGregor's services—should not only give him a masive transfer fee but allow him to continue to operate as a non-executive director, which will take him away from the headquarters of BSC on many occasions during the year.

If Mr. MacGregor succeeds in raising the productivity of the BSC, and if he succeeds in creating more jobs for the people whom I am privileged to represent in this House, I apologise for the speech that I have just made. On the other hand, if he indulges in one of these axe-swinging exercises, and if there are more closures and fewer jobs in the industry, the people of this country are entitled to get their money back.

Photo of Mr Kenneth Baker Mr Kenneth Baker , St Marylebone 9:10 pm, 15th May 1980

The right hon. Member for Rutherglen (Mr. MacKenzie), who has had responsibility for the appointment of senior officials, recognised the difficulty faced by successive Governments in finding people of calibre to fill these posts. That was also a point which the right hon. Member for Deptford (Mr. Silkin) raised. We rather expected a devastating and trenchant attack on my right hon. Friend by the right hon. Member for Deptford. We were rather surprised by the low-key nature of his speech. We thought that he had an open goal but that he muffed it.

So far as I can recall, this is the first debate in which the appointment of the chairman of a nationalised industry has engaged the attention of the House. I remember a debate several years ago when the sacking of the chairman of a nationalised industry was the subject of a motion of censure on Christopher Chat-away, who sacked Lord Hall. That motion fully vindicated Christopher Chat-away's decision in that matter. However, this is the first occassion on which I can remember the House debating the appointment of the chairman of a nationalised industry, and I believe that it is valuable for the House to focus its attention upon the appointment of these important people.

As has been said, we do not have the right in our constitution—as the United States Senate does—to advise upon the appointment of Ministers or senior public officials and to consent. So far as I can see, we restrict our activities to attacking them as soon as they are appointed. I believe that the right hon. Member for Bristol, South-East (Mr. Benn) is at this moment making a speech in which he is advocating that the House of Commons, through Select Committees, should vet the appointment of the chairmen of nationalised industries and certain other important appointments. I think that we are some way away from that system. I hope that the Select Committees which shadow the Departments turn their attention to the rather humdrum, but in my view more important, task of examining the Estimates of those Departments before dealing with the rather glamorous task of vetting the appointment of the chairmen of the nationalised industries.

I think that Ministers in the previous Government and Ministers in this Government all recognise the fact that it is exceedingly difficult to get people of high calibre to accept these posts. That is because under successive Governments chairmen of nationalised industries are subject to ministerial interference of one sort or another. Back in the 1960s, I well remember the right hon. Member for Huyton (Sir H. Wilson), when Prime Minister, interfering incessantly in the activities of the Post Office in order to prevent the price of the postage stamp from going up from 2½p to 3p, and that seemed to be the touchstone of prime ministerial success. That particular goal is not now considered to be so important. None the less, Ministers interfere because they feel that in one way or another public policy is involved. That makes it exceedingly difficult for great industrialists to take on these tasks. Governments interfere with both pricing and investment policies. It is to the credit of my right hon. Friend that in respect of the nationalised industries for which he has ministerial responsibility, he has deliberately taken a back seat and has said that it is the job of the managers to manage after he has appointed them, as in this case.

The other interference comes from us as Members of Parliament. We are constantly badgering the chairmen of the nationalised industries to change their policies. There is always a lobby saying that this or that must be subsidised and the cries do not only come from the Labour Benches. One only has to attend a debate on rail policy to realise that considerable pressures are placed upon Conservative Ministers by Conservative Members—for example, in respect of suburban rail fares. There is pressure from hon. Members when the question of closures comes up, and that is right. Labour Members who represent steel towns have been vociferous in defence of the employment opportunities in their constituencies. These are the difficulties facing the chairmen of our nationalised industries.

I do not believe that the chairmen face unique trade union pressures. The chairman of any large organisation will have that sort of problem. Nor do I believe that chairmen should complain that they are in the goldfish bowl. They must accept that they are operating in a public arena, and that their decisions will be questioned in this House and by a wider audience.

There are real difficulties in finding people of calibre. It was a credit to the previous Government that they found people of the calibre of Peter Parker and Michael Edwardes to run parts of our great public sector. The case for the Government, in a nutshell, is that if they want a person with exceptional qualities they must be prepared to offer exceptional terms. The proof of the pudding is in the eating. If Mr. MacGregor succeeds in his task, the terms that the Secretary of State has agreed will be very modest.

Mr. MacGregor has been attacked for being an expatriate Scot. He has also been attacked for being 67 years old. I believe that the contribution of older people to national affairs grows greater every day. It does not lie in the mouths of the Opposition Front Bench to attack Mr. MacGregor for being 67, because the Leader of the Opposition and the Deputy Leader of the Opposition are both within spitting distance of that age. I wish them well for many years in their respective posts.

If this debate focuses attention on the real problem of making appointments of this nature, it has been worth while. I hope that Ministers will accept that they should have greater discretion, particularly as to the salaries that are offered. The salaries for these chairmanships seem to range from £40,000 to £50,000. Although this seems to be a large amount, everyone knows that it is exceptionally difficult to get people of first-class calibre to take these jobs. Perhaps we should look at comparable salaries. The chairman of BP, which is part State-owned, gets £120,000 a year. The chairman of ICI gets £124,000 a year. If one looks at the salaries paid to the executives of American steel companies, one realises the extent of the gap. A comparable company is Bethlehem Steel, which has an output of about 17·5 million tons a year—similar to the BSC—and the salary of that chairman is seven times what is being offered to Mr. MacGregor.

Photo of Peter Viggers Peter Viggers , Gosport

Is my hon. Friend aware that the previous Labour Government set up an arrangement with Inmos whereby the three founders of that company will receive £6 million each on the investment of £15,000, if the company succeeds?

Photo of Mr Kenneth Baker Mr Kenneth Baker , St Marylebone

I believe that the previous Government recognised that if they wanted to attract people into these important posts and to take risks, they would have to make the rewards commensurate.

My right hon. Friend will soon make an appointment to the chairmanship of British Telecommunications. I feel that it will be very difficult for him to find someone suitable within the salary range that he has talked about.

Finally, I wish to say a few words about my right hon. Friend's involvement in this episode. The Opposition will continue—quite understandably—to attack the economic and industrial policy and philosophy of my right hon. Friend, and the decisions and judgments that derive from that. There have been some attacks outside this place indicating that some underhand deal has been done in this case. Innuendoes have been made by people who are more willing to wound than to strike. But those of us who have known my right hon. Friend over the years have no doubt about his personal honesty and integrity, which are beyond reproach.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham 9:19 pm, 15th May 1980

It is difficult to decide whether this bizarre incident is comedy, tragedy or farce. I find elements of all three in it. Certainly the Secretary of State has been behaving strangely for some time now and he has clearly moved into some fantasy world of his own. He is not living in the real world that my hon. Friends and I live in.

I do not intend to attack Mr. MacGregor. For all I know, he may be a splendid fellow, but it is clear that he knows nothing about the industry over which he is to preside. However, even that sort of ignorance has not been a bar to the chairmanship of nationalised industries, so the Secretary of State is following precedent in that respect. We feel it important that the chairman of a nationalised industry ought to have some sense of the ethos of public ownership. I know that that is foreign to Conservative Members.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham

I understand why Conservative Members do not appreciate the ethos of public ownership. My hon. Friends and I have a different political philosophy from them.

There are far too many chairmen of nationalised industries to whom public accountability is irksome. They do not like what they call interference, but what I regard as proper accountability to the public. Mr. MacGregor's business career gives me no confidence that we shall get a different attitude from him, There is nothing to suggest that he will have that sense of the ethos to which I referred.

Photo of Sir Archie Hamilton Sir Archie Hamilton , Epsom and Ewell

How much money does the hon. Gentleman feel that a nationalised industry should lose to fit in with his ethos?

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham

I have not been discussing money. I shall come to that. I should like to think that Mr. MacGregor will understand that the industry over which he is to preside belongs to us, the public, and not to him, his board or the Secretary of State. That needs to be understood by those who run publicly-owned industries on our behalf. They are answerable to us, whether Conservative Membesr think so or not.

Mr. MacGregor will have a duty to act in the national interest.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham

The national interest requires that the steel industry should be expanded and not contracted.

The weirdest aspect of the affair has been adequately described by my right hon. Friend the Member for Deptford (Mr. Silkin). We are told that huge amounts may be paid, depending on whether Mr. MacGregor is successful. Even after the Secretary of State's speech, it is not clear how success is to be measured, but I suspect that the right hon. Gentleman has already made clear to Mr. MacGregor that the Government's policy is to wipe out a large part of the industry and to sell what little remains to private enterprise. That has come out time and again in steel debates.

I do not know why it should be necessary to pay £2 million for a gentleman of 67 to come from America to do the job. The Secretary of State has told us that no one in Britain was willing and able to take on the chairmanship at the price offered, though he assured us that the salary had nothing to do with it.

The recently retired chairman of Rolls-Royce told Now! magazine: I do not accept that there are not good younger men in Britain who would have been prepared to do the job for £100,000 to £150,000 a year. What decent patriotic chaps they are who are willing to work for such a paltry salary! Those who speak in such terms are making comparisons between the chairmanship of a nationalised industry and a chairmanship in the private sector. What is wrong is not that we are paying too little to nationalised industry chairmen, but that some of those with whom they are being compared are getting far too much.

At a time when trade unionists are being urged to use all possible restraint and when thousands in the public sector are being put out of work because of the Government's cash limits, some of the salary levels of private sector chairmanships are a scandal. The greatest scandal is the farce that we are discussing. My right hon. Friend the Member for Deptford said that the most important job in the industry is to rebuild morale, which is at a low ebb—not just because of the strike, but because of the widespread belief, substantiated by a good deal of evidence, that the Government are putting considerable pressure on the BSC board to hive off some of its most important assets. I do not know how this appointment will improve morale. I do not believe the stuff that we heard from the hon. Member for Brigg and Scunthorpe (Mr. Brown). I think that most of my hon. Friends do not believe it.

Many of us suspect that Mr. MacGregor is being brought in as a hatchet man to carry out a surgical operation on the industry. I hope that that suspicion turns out to be misplaced. However, many of us feel that the corporation will be reduced to a tuppenny-ha'penny concern that will make a profit but not very much steel. I hope that he will do a decent job on the industry, but I have strong reservations.

Several Hon. Members:

Several Hon. Members rose

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I call the hon. Member for Rutland and Stamford (Mr. Lewis). I advise the hon. Gentleman that it is hoped to begin the Front Bench speeches at 9.30 pm.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford 9:26 pm, 15th May 1980

I appreciate, Mr. Speaker, that what I have to say has to be compressed somewhat, and I shall endeavour to do so. I regret that I cannot be as enthusiastic about the appointment and the terms of it as my right hon. Friend the Secretary of State. I consider the terms of the arrangement and the fact that we have had to import from abroad to be mistaken in their conception.

My right hon. Friend and the right hon. Member for Deptford (Mr. Silkin) have related the appointment to a football transfer fee. When All Souls and Trinity College, Cambridge try to be earthy in discussing football there is a tendency to get things wrong. There is no relationship between the fee that is being paid to Lazard Freres and a head-hunter, and the transfer fee.

I think that the highest transfer fee paid by a football club is between £1¼ million and £1½ million. A football club spending that sort of money usually buys a player in mid-career, so that it can sell him and get back half the transfer fee. My right hon. Friend will not get back any of the transfer fee from Mr. MacGregor. At the end of three years he will put him on a free transfer. He will be able to return to America to collect some of the transfer fee that has already been paid. The arrangement is not to be commended as a precedent for the appointment of anyone in a nationalised industry.

The Prince of Wales was hurt in a polo accident a few days before Mr. MacGregor's appointment. The Prince insisted on making a speech in the City. He said " I must go to make this speech because it is about buying British." Two days later my right hon. Friend bought an import from America. I refuse to believe that throughout the wide stretches of British industry no business man could be found to undertake the job.

If my right hon. Friend insists that no British business man was prepared or able to do the job, there is something wrong with his Ministry. If that is so, there is something wrong with the narrowness of the net of selection within the establishment of his Department. That can be afforded in the Foreign Office and in other Departments, but not in the Department of Industry, which is the Department by which Britain is made successful or otherwise. If the Department cannot find in Britain someone to take on this type of job, what is wrong? Are British business men short of patriotism or short of ability, or short of both?

My right hon. Friend should tell his departmental officials to look at their own head-hunting activities. We are told that the Minister had appointed head-hunters for this position. They came up with the name of someone who was already working for the British Government. Mr. MacGregor was already vice-chairman of a nationalised company—British Leyland. Why were head-hunters necessary at all? The Department of Industry should realise that it has a job to motivate those who work in the private sector, as well as to make them realise that they should assist the public sector. They should be prepared to use their talents in the public sector from a sense of patriotic duty.

If the Secretary of State felt that he must employ Mr. MacGregor, he should have appointed him as chairman only of British Steel. He could then have kept all his other jobs. There would have been no need to pay out such an enormous amount of money, a large proportion of which will finish up in Mr. MacGregor's pocket. The posts of chairman and executive managing directors should be separated. When Lord Melchett was chairman of British Steel he decided that he could not do the two jobs. He separated the post of chairman from that of chief executive. An article in this week's edition of the journal of the Institute of Directors states: To combine the duties of Chairman and Chief Executive is like asking a man to argue with himself.

Photo of Mr Michael Foot Mr Michael Foot , Ebbw Vale 9:32 pm, 15th May 1980

I shall concentrate my brief remarks on the future of British Steel. That industry is of paramount importance to the future of our country. I accept the point made by the hon. Member for Rutland and Stamford (Mr. Lewis), when he referred to patriotism and the public service. The Prime Minister makes many speeches on the subject of patriotism. Some Opposition Members, including the right hon. Member for Orkney and Shetland (Mr. Grimond), have referred to the public service. Conservative Members sometimes seem to sneer at it. They talk as if such issues could be settled only by money. As a result of that spirit and approach, the Government have committed a grave mistake.

During the past week or two we have seen a contrast. My right hon. Friend the Member for Deptford (Mr. Silkin) referred to Mr. Robert Atkinson's appointment in the shipbuilding industry, and the way in which he took it up. Some of us may have seen the statement that he made on television. It was a remarkable statement. He underlined that he had been guided by a spirit of public service. There is a sharp contrast between the way in which he took up his appointment and the way in which Mr. MacGregor is taking up his.

It is partly Mr. MacGregor's fault. He cannot be absolved from responsibility. However, the Secretary of State is primarily responsible. What type of leadership will be given to the steel industry?

Let the market rate prevail. Grab all one can. Squeeze as much from the orange as possible, even hire special experts to do it for one. Ensure that one has the last penny out of the British Government or taxpayer. No one can deny that that has happened on a scale never before seen. As for the performance review, that is the greatest quango of all. By the way, will the chairman of the quango be paid; or will he step forward and do the job as a service to the public? Let us have the details.

The quango has been hedged round with arrangements which have not been properly explained to the House. I can hardly believe that that arrangement is advantageous to a new chairman of the British Steel Corporation. It is a form of productivity deal. I doubt whether it is convenient for the new chairman of BSC in the circumstances in which he will have to operate to have to act under the most bogus productivity agreement reached in the history of collective bargaining. That is the situation. None of the terms is known. None of the agreements is made. It is all settled later. Bill Sirs would never be allowed a productivity deal of that nature if he were arguing on behalf of his members. It would have to be much more cut and dried, and there would have to be a strike to get such agreement.

The right hon. Gentleman has altered the form in which appointments are made to the public service. The new chairman, Mr. MacGregor, has used his industrial clout to knock the right hon. Gentleman sideways and make him look not ridiculous but less of the philosopher-statesman, as the right hon. Lady sometimes thinks that he should be described. Mr. MacGregor has used his industrial clout to get every penny, pound, pension and arrangement for himself. If it is right for go-ahead men to do that, why not everyone else? The example has been set. No one will be able to complain, least of all the right hon. Gentleman, if steel workers and other sections of the community fight for their rights and pay in exactly the same way. If it is right for Mr. MacGregor to have such adulation and encomiums poured on his enterprise and skill in negotiating that deal with the Government, why should not everyone else do the same?

By that form of appointment the Government have helped undermine the credit of the public service in this country. Most people working in other great public industries, such as coal and the Post Office, will draw that deduction, especially those in the Steel Corporation. They are informed by the right hon. Gentleman that not only was it necessary to make that appointment but that the Government had searched for months, and doubtless gone through the entire Steel Corporation, to try to discover a person fit for the job. They could not find anyone. That is a fine way to treat the public service, not only the steel industry. The right hon. Gentleman—not even Mr. MacGregor—must bear the responsibility for degrading the rights and claims of our public service.

I come to what was said by Mr. MacGregor the day after his appointment. One would imagine that such a superman, such a world beater, would be careful about what he said within a day or two of his appointment. Having such knowledge of these matters, he must know of the sensitivity in the industry; but not at all. Mr. MacGregor made a statement on some of the matters that we have debated. He added that bulk steel did not bring big profits and that the corporation should look to exotic materials, saying he hoped that this was one of the areas in which to become pre-eminent.

One does not need Mr. MacGregor's high salary and the payments that he will receive over the coming decade to know that one can make bigger profits on special steels than on bulk steels. Everyone has known that for a long time. The question for the workers in the industry and for this country—the defence reason, if I can put it in such terms—is this: will we preserve a bulk steel industry in this country? That is the great question. The Opposition have made up their minds about it. However, according to the economics of the Minister there is no certainty that we shall preserve a bulk steel industry. According to the declarations of Mr. MacGregor, he is not, apparently, committed to it. Therefore, I hope that very soon there will be declarations by Mr. MacGregor and the Government repudiating the whole idea that we shall allow the British steel industry to be run down. It is bad enough to run it down to the 15 million tonnes that the Government talk about, but they will run it down even further, if the statement by Mr. MacGregor is to mean anything at all.

I do not claim or ask that the Government should consider these matters on grounds of public service to the community. We know that they do not care about that. But what about defence? I am no great military strategist—[HON. MEMBERS: " Oh."]—I thought that that would raise a cheer from Government supporters. I suggest to the Government—especially the right hon. Lady—that it might be better, for the defence of this country, for the bulk steel to be produced at Port Talbot and Llanwern rather than in Brazil. However, that is the policy.

Indeed, that may be said about the steel policy of the previous Tory Government—the Finniston-Peter Walker policy. It had many mistakes about it, but at least it was a patriotic policy. At least it enabled us to look to a future for the steel industry. I know that Government supporters do not like to stand up for it now. One member of that Government—the present Minister of State, Foreign and Commonwealth Office—at the time when the Finniston-Walker plan was before the House and the country, agreed to put it into operation on a great scale at that time. I forget whether the Minister of State was in the Government or out of it at that time. He said " Do not worry about the steel industry. If it does not make a profit, let it go. If bingo makes a profit, have the bingo rather than the steel."

Of course, the Secretary of State's policies are exactly the same. We may discover that the steel industry cannot make a profit on that basis and that it will be allowed to run down. We do not accept that argument. The Opposition have never accepted the 15 million tonne target or the drop to that figure. We say that that means devastation for Wales and for great parts of the country, mass unemployment and the destruction of parts of our coal industry. It is essential for this country to maintain an expanded steel industry.

Now we are told " Perhaps the brilliant Mr. MacGregor will come to the same conclusion as the Government." Let us suppose that he comes to the conclusion that they reached, on grounds of defence, of public interest and the requirements of the rest of our industry and trade over the next 10 years. What will be the position if in August, September, or whenever, Mr. MacGregor says " The policy laid down by the Government, the £450 million cash limit, in these circumstances means death for the steel industry? It means disaster for us "? What will Ministers say then? One of them will have to resign. I must say that that makes the picture more attractive.

If the right hon. Gentleman will give me an undertaking that he will waive the cash limit, and that if Mr. MacGregor wishes we can put forward a programme for a 20 million tonnes target for our steel industry which could sustain the jobs that would be lost otherwise, a different state of affairs would reign.

If Mr. MacGregor really wanted to serve the public he could tear up the agreement and say " I shall work for the people of this country that I left in 1945. I do not need the pension arrangements, the paying off of Lazard Freres and all the rest. I prefer to show that I am a patriot". If only Mr. Macgregor would say " I shall serve this country in the same spirit as Robert Atkinson will", it would be a benefit for the whole industry.

What the right hon. Gentleman has done is to ensure that Mr. MacGregor will start on his career in the worst possible circumstances. The right hon. Gentleman has done grave injury to the public service. He has insulted everyone working in the management of the steel industry, as well as the workers. He has refused to discuss the appointment with those who work in the industry.

That is why we move this vote of censure on the right hon. Gentleman. We ask the House to support it.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East 9:47 pm, 15th May 1980

With the leave of the House, I should like to try to answer the questions that have been raised in this debate, which I remind the House is on a motion for the Adjournment.

Mr. MacGregor will find some most instructive comments in a number of speeches, particularly those of the right hon. and learned Member for Aberavon (Mr. Morris) and my hon. Friends the Members for Sheffield, Hallam (Mr. Osborn), for New Forest (Mr. McNair-Wilson) and for St. Marylebone (Mr. Baker).

Now I shall try to answer as many questions as I can in the time available. The right hon. Members for Deptford (Mr. Silkin) and for Orkney and Shetland (Mr. Grimond) asked me about tax. I am assured by the Inland Revenue that the normal tax rules are of course being applied in relation to both Lazard Freres and Mr. MacGregor. I must remind the House—if there is any dissatisfaction with the confidentiality that this Government must maintain about the tax affairs of those with whom the Inland Revenue has to deal—of what my hon. Friend the Member for Gosport (Mr. Viggers) interjected in the speech of my hon. Friend the Member for St. Marylebone. He said that when the last Government took the Inmos initiative—I commend them for their political courage in encouraging entrepreneurship—they absolutely refused to discuss the tax treatment of the two American citizens, who, under favourable circumstances, stood to gain large fortunes, and. say I, " Good luck to them ".

I come now to questions of structure raised by the right hon. Member for Orkney and Shetland, the right hon. and learned Member for Aberavon and my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton). Mr MacGregor will be free to make or, where statutory obligations require my consent or other consultation, to propose whatever changes in the structure of the BSC he considers best suited to secure the enduring profitability and viability of the British steel industry. If he wishes to propose or to introduce more devolution of responsibility to the regions, or to introduce partnership with the private sector in certain plants or, indeed, to sell certain plants to the private sector —as my right hon. Friend the Prime Minister has already said we would welcome in the case of the sale of Consett—he is free so to act, subject to the statutory requirements to which I have referred. He is free to try to sell Shotton as a going concern to the private sector, but I cannot give him any encouragement that there would be a dowry from the taxpayer.

I come to the question of Mr. MacGregor's own equipment for carrying out this task. The hon. Member for Sheffield, Attercliffe (Mr. Duffy) and the right hon. Member for Rutherglen (Mr. MacKenzie) asked what he could possibly know about trade unions and labour relations in this country. He was considered good enough by the previous Labour Government to be made, first, a director and then deputy chairman of British Leyland. As for his relevant knowledge, he has been a director for some years of a great American metals and natural resources firm and of a great American steel company.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

Mr. Eric G. Varley (Chesterfield) rose

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Member for Ebbw Vale (Mr. Foot) did not give way.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I think that the Minister is not giving way.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I would like, as a courtesy, to give way to the right hon. Gentleman, but the right hon. Member for Ebbw Vale who wound up left me only 14 minutes and did not give way himself. I shall not give way after this one occasion.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The right hon. Gentleman should not misrepresent the policy of the previous Government. He said that Mr. MacGregor was appointed as deputy chairman of Leyland by the last Government. He was not. He was appointed by the National Enterprise Board. [HON. MEMBERS: "Oh."] That National Enterprise Board was the same National Enterprise Board that the right hon. Gentleman sacked.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

In answer to the right hon. Member for Deptford, there is no pension provision for Mr. MacGregor's service. The right hon. Gentleman is correct in assuming that if Mr. MacGregor does not serve for the whole of the first year, the first payment of £225,000 is forfeit, even after one day, subject to his obligation to give notice.

I should like to point out, in answer to a number of comments by hon. Members, that there seems to be an emerging pattern that those people who have met Mr. MacGregor personally are far less critical of him, if they are critical at all, than those who have not met him.

The hon. Member for Attercliffe and the right hon. Member for Orkney and Shetland referred to the reactions of steel workers, on the one hand, and nurses, on the other, to the compensation to be paid. I must point out that the future of the steel workers depends a great deal on the competence and drive of the chairman of British Steel. It will be no comfort to them to have less than the best appointed to this vacancy.

Do nurses want to be taxed in order to meet the losses of British Steel? It is very much in their interests that the losses should cease. The right hon. Member for Orkney and Shetland asked why, when we knew of Ian MacGregor, we had needed to appoint head-hunters. We did not know, when we started, who would take this job. We needed to consider all the possible names. There was a joint recruiting effort by us and the head-hunters. The head-hunters will be paid the proper, but not excessive, fee. The details are subject to contractual confidentiality.

The right hon. Member for Deptford asked whether we were creating likely litigation in appointing a five-man committee. No, we have specifically provided that the committee's decision will be based on a simple majority in order to avoid deadlock. The answer to my hon. Friend the Member for Epsom and Ewell and the right hon. Member for Ebbw Vale is that the cash limit position remains unchanged.

I must answer three remaining and important points. A number of hon. Members, including the hon. Member for Attercliffe, my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) and the right hon. Member for Ebbw Vale laid emphasis on public service. They asked why we could not count on people coming forward to do these daunting tasks from a sense of patriotism and public duty. I must make some comments. A number of the people whom we considered suitable did not feel free to accept or even to go into detail about the post because they had existing commitments to jobs which they felt that they had to honour. Some people found the task to difficult to contemplate.

Mr. Atkinson, for whom I have great respect, and who has sacrificed some income to take on the chairmanship of British Shipbuilders, has so far as I know, no obligations to partners, as has Mr. MacGregor.

The bulk of the payments that will be made—and two-thirds will depend upon performance—will go not to Mr. MacGregor but to the partnership to which he has obligations and in which he has invested the bulk of his life savings. I emphasise that Mr. MacGregor has accepted, as far as I can tell, a very steep fall in his personal earnings in order to take on a desperately challenging job and to subject himself to the criticism of the media, the newspapers and hon. Members in tackling a job that is in the national interest. The reason why he has done that is that, among other things, he feels a sense of obligation to the country in which he was born and brought up.

The right hon. Member for Ebbw Vale said that the performance payment was a bogus productivity deal. Seldom can there have been a productivity deal more monitored and policed than this.

I turn to a criticism that has been repeated time and again by the right hon. Members for Deptford, Ebbw Vale and Rutherglen. The criticism is of bringing in an outsider to chair a great British industry. Before I answer that criticism I must emphasise that I have heard from Mr. MacGregor that he regards it as his duty to identify and promote promising young managers in the British Steel Corporation. His performance in his previous jobs shows that he takes that task intensely seriously. Are we really to accept criticism for finding the best person that we can, even from outside the industry, from hon. Members whose Government did not—I make no criticism of the people that I shall mention—promote a manager from British Steel when they had to fill a vacancy? I make no criticism of Sir Charles Villiers, who served his country well in a difficult task. He was not drawn from inside the management and yet the Labour Government, after long search, promoted him to chairman.

What did the Labour Government do about British Rail? Did they promote a manager from inside British Rail? No; they sought Sir Peter Parker. I make no criticism of that choice. What about Cable and Wireless? [HON. MEMBERS:

" Yes, what about it?"] What about British Aerospace? Did the Labour Government seek to promote a manager from within British Aerospace? I do not criticise them for appointing Lord Beswick.

I believe that [have answered the questions put during the debate and I make no apology for appointing the man I think best suited to the task. I hope that, whatever the vote, the whole House can unite in wishing Mr. MacGregor and British Steel well.

Question put. That this House do now adjourn:—

The House divided: Ayes 243, Noes 303.

Division No. 310]AYES[10.00 pm
Abse, LeoDouglas-Mann, BruceJohn, Brynmor
Adams, AllenDubs, AlfredJohnson, James (Hull West)
Allaun, FrankDuffy, A. E. P.Johnson, Walter (Derby South)
Anderson, DonaldDunn, James A. (Liverpool, Kirkdale)Johnston, Russell (Inverness)
Archer, Rt Hon PeterDunnett, JackJones, Rt Hon Alec (Rhondda)
Armstrong, Rt Hon ErnestDunwoody, Mrs. GwynethJones, Barry (East Flint)
Ashley, Rt Hon JackEastham, KenJones, Dan (Burnley)
Ashton, JoeEllis, Raymond (NE Derbyshire)Kaufman, Rt Hon Gerald
Bagier, Gordon A. T.Ellis, Tom (Wrexham)Kerr, Russell
Barnett, Guy (Greenwich)English, MichaelKilfedder, James A.
Barnett, Rt Hon Joel (Heywood)Ennals, Rt Hon DavidKilroy-Silk, Robert
Beith, A. J.Evans, John (Newton)Kinnock, Neil
Benn, Rt Hon Anthony WedgwoodEwing, HarryLambie, David
Bennett, Andrew (Stockport N)Faulds, AndrewLamborn, Harry
Booth, Rt Hon AlbertField, FrankLamond, James
Bottomley, Rt Hon Arthur (M'brough)Flannery, MartinLeadbitter, Ted
Bradley, TomFletcher, L. R. (Ilkeston)Leighton, Ronald
Bray, Dr JeremyFletcher, Ted (Darlington)Lestor, Miss Joan (Eton & Slough)
Brown, Hugh D. (Provan)Foot, Rt Hon MichaelLewis, Arthur (Newham North West)
Brown, Robert C. (Newcastle W)Forrester, JohnLewis, Ron (Carlisle)
Brown, Ronald W. (Hackney S)Foster, DerekLitherland, Robert
Brown, Ron (Edinburgh, Leith)Foulkes, GeorgeLyon, Alexander (York)
Buchan, NormanFraser, John (Lambeth, Norwood)Lyons, Edward (Bradford West)
Callaghan, Jim (Middleton & P)Freeson Rt Hon ReginaldMcCartney, Hugh
Campbell, IanGarrett, John (Norwich S)McDonald, Dr Oonagh
Campbell-Savours, DaleGeorge, BruceMcElhone, Frank
Canavan, DennisGilbert, Rt Hon Dr JohnMcGuire, Michael (Ince)
Cant, R. B.Ginsburg, DavidMcKay, Allen (Penistone)
Carmichael, NeilGolding, JohnMcKelvey, William
Carter-Jones, LewisGourlay, HarryMacKenzie, Rt Hon Gregor
Cartwright, JohnGraham, TedMaclennan, Robert
Clark, Dr David (South Shields)Grant, John (Islington C)McNamara, Kevin
Cocks, Rt Hon Michael (Bristol S)Grimond, Rt Hon J,McWilliam, John
Cohen, StanleyHamilton, James (Bothwell)Magee, Bryan
Conlan, BernardHamilton, W. W. (Central Fife)Marks, Kenneth
Cowans, HarryHardy, PeterMarshall, David (Gl'sgow, Shettles'n)
Craigen, J. M. (Glasgow, Maryhill)Harrison, Rt Hon WalterMarshall, Dr Edmund (Goole)
Crowther, J. S.Hart, Rt Hon Dame JudithMarshall, Jim (Leicester South)
Cryer, BobHattersley, Rt Hon RoyMason, Rt Hon Roy
Cunliffe, LawrenceHaynes, FrankMaxton, John
Cunningham, George (Islington S)Heffer, Eric S.Meacher, Michael
Cunningham, Dr John (Whitehaven)Hogg, Norman (E Dunbartonshire)Mellish, Rt Hon Robert
Dalyell, TamHolland, Stuart (L'beth, Vauxhall)Mikardo, Ian
Davidson, ArthurHome Robertson, JohnMillan, Rt Hon Bruce
Davies, Rt Hon Denzil (Llanelli)Homewood, WilliamMiller, Dr M. S. (East Kilbride)
Davies, Ifor (Gower)Hooley, FrankMitchell, Austin (Grimsby)
Davis, Clinton, (Hackney Central)Horam, JohnMitchell, R. C. (Solon, lichen)
Davis, Terry (B'rm'ham, Stechford)Howell, Rt Hon Denis (B'ham, Sm H)Morris, Rt Hon Alfred (Wythenshawe)
Deakins, EricHowells, GeraintMorris, Rt Hon Charles (Openshaw)
Dean, Joseph (Leeds West)Huckfield, LesMorris, Rt Hon John (Aberavon)
Dempsey, JamesHudson, Davies, Gwilym EdnyfedMoyle, Rt Hon Roland
Dewar, DonaldHughes, Mark (Durham)Newens, Stanley
Dixon, DonaldHughes, Robert (Aberdeen North)Oakes, Rt Hon Gordon
Dobson, FrankHughes, Roy (Newport)Ogden, Eric
Dormand, JackJanner, Hon GrevilleO'Halloran, Michael
Douglas, DickJay, Rt Hon DouglasO'Neill, Martin
Orme, Rt Hon StanleySandelson, NevilleUrwin, Rt Hon Tom
Owen, Rt Hon Dr DavidSever, JohnVarley, Rt Hon Eric G.
Palmer, ArthurSheerman, BarryWainwright, Edwin (Dearne Valley)
Park, GeorgeSheldon, Rt Hon Robert (A'ton-u-L)Walker, Rt Hon Harold (Doncaster)
Parker, JohnShore, Rt Hon Peter (Step and Pop)Watkins, David
Parry, RobertShort, Mrs RenéeWeetch, Ken
Pavitt, LaurieSilkin, Rt Hon John (Deptford)Wellbeloved, James
Pendry, TomSilkin, Rt Hon S. C. (Dulwich)Welsh, Michael
Penhaligon, DavidSilverman, JuliusWhite, Frank R. (Bury & Radcliffe)
Powell, Raymond (Ogmore)Skinner, DennisWhite, James (Glasgow, Pollok)
Price, Christopher (Lewisham West)Smith, Rt Hon J. (North Lanarkshire)Whitehead, Phillip
Race, RegSnape, PeterWhitlock, William
Radice, GilesSoley, CliveWilliams, Rt Hon Alan (Swansea W)
Richardson, JoSpearing, NigelWilliams, Sir Thomas (Warrington)
Roberts, Albert (Normanton)Spriggs, LeslieWilson, Gordon (Dundee East)
Roberts, Allan (Bootle)Stallard, A. W.Wilson, Rt Hon Sir Harold (Huyton)
Roberts, Ernest (Hackney North)Steel, Rt Hon DavidWilson, William (Coventry SE)
Roberts, Gwilym (Cannock)Stoddart, DavidWinnick, David
Robertson, GeorgeStrang, GavinWoodall, Alec
Robinson, Geoffrey (Coventry NW)Summerskill, Hon Dr ShirleyWoolmer, Kenneth
Rodgers, Rt Hon WilliamTaylor, Mrs Ann (Bolton West)Wrigglesworth, Ian
Rooker, J. W,Thomas, Jeffrey (Abertillery)Wright, Sheila
Roper, JohnTaylor, Teddy (Southend East)
Ross, Ernest (Dundee West)Thorne, Stan (Preston South)TELLERS FOR THE AYES:
Ross, Stephen (Isle of Wight)Tilley, John
Rowlands, TedTorney, TomMr. George Morton and Mr. James Tinn.
Ryman, John
NOES
Alexander, RichardCockeram, EricGrylls, Michael
Alison, MichaelColvin, MichaelGummer, John Selwyn
Amery, Rt Hon JulianCope, JohnHamilton, Hon Archie (Eps'm&Ew'll)
Ancram, MichaelCormack, PatrickHamilton, Michael (Salisbury)
Arnold, TomCorrie, JohnHampson, Dr Keith
Aspinwall, JackCostain, A. P.Hannam, John
Atkins, Rt Hon H. (Spelthorne)Crouch, DavidHaselhurst, Alan
Atkins, Robert (Preston North)Dean, Paul (North Somerset)Hastings, Stephen
Atkinson, David (B'mouth, East)Dickens, GeoffreyHavers, Rt Hon Sir Michael
Baker, Kenneth (St. Marylebone)Dorrell, StephenHawkins, Paul
Baker, Nicholas (North Dorset)du Cann, Rt Hon EdwardHawksley, Warren
Beaumont-Dark, AnthonyDunn, Robert (Dartford)Heddle, John
Bendall, VivienDurant, TonyHenderson, Barry
Bennett, Sir Frederic (Torbay)Dykes, HughHeseltine, Rt Hon Michael
Benyon, Thomas (Abingdon)Eden, Rt Hon Sir JohnHicks, Robert
Benyon, W. (Buckingham)Edwards, Rt Hon N. (Pembroke)Higgins, Rt Hon Terence L.
Best, KeithEggar, TimothyHill, James
Bevan, David GilroyElliott, Sir WilliamHogg, Hon Douglas (Grantham)
Biffen, Rt Hon JohnEmery, PeterHolland, Philip (Carlton)
Biggs-Davison, JohnEyre, ReginaldHooson, Tom
Blackburn, JohnFairbairn, NicholasHordern, Peter
Blaker, PeterFairgrieve, RussellHowe, Rt Hon Sir Geoffrey
Body, RichardFaith, Mrs SheilaHowell, Rt Hon David (Guildford)
Bonsor, Sir NicholasFarr, JohnHowell, Ralph (North Norfolk)
Boscawen, Hon RobertFell, AnthonyHunt, David (Wirral)
Bottomley, Peter (Woolwich West)Fenner, Mrs PeggyHunt, John (Ravensbourne)
Bowden, AndrewFinsberg, GeoffreyHurd, Hon Douglas
Bright, GrahamFisher, Sir NigelIrving, Charles (Cheltenham)
Brinton, TimFletcher, Alexander (Edinburgh N)Jenkin, Rt Hon Patrick
Brittan, LeonFletcher-Cooke, CharlesJessel, Toby
Brocklebank-Fowler, ChristopherFookes, Miss JanetJohnson Smith, Geoffrey
Brooke, Hon PeterForman NigelJopling, Rt Hon Michael
Brown, Michael (Brigg & Sc'thorpe)Fowler, Rt Hon NormanJoseph, Rt Hon Sir Keith
Browne, John (Winchester)Fox, MarcusKaberry, Sir Donald
Bruce-Gardyne, JohnFraser, Rt Hon H. (Stafford & St)Kellett-Bowman, Mrs Elaine
Bryan, Sir PaulFraser, Peter (South Angus)Kershaw, Anthony
Buchanan-Smith, Hon AlickFry, PeterKing, Rt Hon Tom
Buck, AntonyGalbraith, Hon T. G. D.Knight, Mrs Jill
Budgen, NickGardiner, George (Reigate)Knox, David
Bulmer, EsmondGardner, Edward (South Fylde)Lamont, Norman
Burden, F. A.Garel-Jones, TristanLang, Ian
Butcher, JohnGilmour, Rt Hon Sir IanLangford-Holt, Sir John
Butler, Hon AdamGlyn, Dr AlanLatham, Michael
Cadbury, JocelynGoodhart, PhilipLawrence, Ivan
Carlisle, John (Luton West)Goodhew, VictorLawson, Nigel
Carlisle, Kenneth (Lincoln)Goodlad, AlastairLee, John
Carlisle, Rt Hon Mark (Runcorn)Gow, IanLennox-Boyd, Hon Mark
Chalker, Mrs. LyndaGower, Sir RaymondLester, Jim (Beeston)
Channon, PaulGrant, Anthony (Harrow C)Lloyd, Ian (Havant & Waterloo)
Chapman, SydneyGray, HamishLloyd, Peter (Fareham)
Churchill, W. S.Greenway, HarryLoveridge, John
Clark, Hon Alan (Plymouth, Sutton)Grieve, PercyLyell, Nicholas
Clark, Sir William (Croydon South)Griffiths, Eldon (Bury St Edmunds)McCrindle, Robert
Clarke, Kenneth (Rushcliffe)Griffiths, Peter (Portsmouth N)Macfarlane, Neil
Clegg, Sir WalterGrist, IanMacGregor, John
MacKay, John (Argyll)Pawsey, JamesStewart, John (East Renfrewshire)
Macmillan, Rt Hon M. (Farnham)Percival, Sir IanStokes, John
McNair-Wilson, Michael (Newbury)Peyton, Rt Hon JohnStradling Thomas, J.
McNair-Wilson, Patrick (New Forest)Pink, R. BonnerTapsell, Peter
McQuarrie, AlbertPollock, AlexanderTaylor, Robert (Croydon NW)
Madel, DavidPorter, GeorgeTaylor, Teddy (Southend East)
Major, JohnPrentice, Rt Hon RegTebbit, Norman
Marland, PaulPrice, David (Eastleigh)Temple-Morris, Peter
Marlow, TonyProctor, K. HarveyThatcher, Rt Hon Mrs Margaret
Marshall, Michael (Arundel)Pym, Rt Hon FrancisThomas, Rt Hon Peter (Hendon S)
Marten, Neil (Banbury)Rathbone, TimThompson, Donald
Mates, MichaelRees, Peter (Dover and Deal)Thorne, Neil (llford South)
Mather, CarolRees-Davies, W. R.Thornton, Malcolm
Maude, Rt Hon AngusRenton, TimTownend, John (Bridlington)
Mawby RayRhodes James, RobertTrippier, David
Mawhinney, Dr BrianRhys Williams, Sir BrandonTrotter, Neville
Maxwell-Hyslop, RobinRidley, Hon Nicholasvan Straubenzee, W. R.
Mayhew, PatrickRidsdale, JulianVaughan, Dr Gerard
Mellor, DavidRifkind, MalcolmViggers, Peter
Miller, Hal (Bromsgrove & Redditch)Rippon, Rt Hon GeoffreyWaddington, David
Mills, lain (Meriden)Roberts, Michael (Cardiff NW)Wakeham, John
Mills, Peter (West Devon)Roberts, Wyn (Conway)Waldegrave, Hon William
Miscampbell, NormanRossi, HughWalker, Rt Hon Peter (Worcester)
Mitchell, David (Basingstoke)Rost, PeterWalker, Bill (Perth & E Perthshire)
Moate, RogerRoyle, Sir AnthonyWalker-Smith, Rt Hon Sir Derek
Monro, HectorSainsbury, Hon TimothyWaller, Gary
Moore, JohnSt. John-Stevas, Rt Hon NormanWalters, Dennis
Morgan, GeraintScott, NicholasWard, John
Morris, Michael (Northampton, Sth)Shaw, Michael (Scarborough)Warren, Kenneth
Morrison, Hon Charles (Devizes)Shelton, William (Streatham)Watson, John
Morrison, Hon Peter (City of Chester)Shepherd, Colin (Hereford)Wells, John (Maidstone)
Mudd, DavidShersby, MichaelWells, Bowen (Hert'rd & Stev'nage)
Murphy, ChristopherSkeet, T. H. H,Wheeler, John
Myles, DavidSmith, Dudley (War. and Leam'ton)Whitelaw, Rt Hon William
Needham, RichardSpeed, KeithWhitney, Raymond
Nelson, AnthonySpeller, TonyWickenden, Keith
Neubert, MichaelSpence, JohnWiggin, Jerry
Newton, TonySpicer, Jim (West Dorset)Wilkinson, John
Normanton, TomSpicer, Michael (S Worcestershire)Williams, Delwyn (Montgomery)
Onslow, CranleySproat, lainWinterton, Nicholas
Oppenheim, Rt Hon Mrs SallySquire, RobinWolfson, Mark
Osborn, JohnStainton, KeithYoung, Sir George (Acton)
Page, John (Harrow, West)Stanbrook, IvorYounger, Rt Hon George
Page, Richard (SW Hertfordshire)Stanley, John
Parkinson, CecilSteen, AnthonyTELLERS FOR THE NOES.
Parris, MatthewStevens, Martin
Patten, Christopher (Bath)Stewart, Ian (Hitchin)Mr. Spencer Le Marchant and Mr. Anthony Berry.
Pattie, Geoffrey

Question accordingly negatived.