Orders of the Day — Steel Industry

Part of the debate – in the House of Commons at 12:50 am on 28 July 1981.

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Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham 12:50, 28 July 1981

Indeed it could. This is not merely an attack on the steel industry but an attack on the whole concept of regional policy.

Perhaps the British steel industry could learn to live with that if the phasing out of State aids were being done even-handedly. The Select Committee on Industry and Trade drew attention to that matter in its report on the BSC corporate plan. We said of the phasing out of State aids: This policy if carried through completely would be advantageous to the United Kingdom steel industry and probably to the advantage of the industries of the other Community members also. But the great danger is that, while direct subsidies may be abolished, indirect subsidies (eg cheap coking coal, transport) may be allowed to continue. We strongly recommend that in any negotiations for a new regime HMG, mindful of this danger, should press for the total elimination of all subsidies, indirect as well as direct. That has been disregarded by the Minister of State and, presumably, by his colleagues in the Council of Ministers. We were told in Brussels that indirect subsidies would not be phased out. The danger to which the Committee drew attention is upon us. It would be wrong to suggest that the indirect subsidies are anything but significant. The British Iron and Steel Consumers Council quoted in evidence to the Select Committee the Commission's estimate that the value of coking coal subsidies to the West German steel industry in 1979 was £386 million and that the figure for the United Kingdom was £8 million.

Another memorandum of evidence that the Committee received from an authoritative body suggested that the value to the German steel industry of State support to the railways in 1978 was £360 million—equal to £9 per tonne of crude steel. The corresponding figures for Belgium were £50 million, equal to £4 per tonne, and for France £70 million, equal to £3 per tonne. There is no corresponding figure for the United Kingdom, because there is no subsidy for rail freight transport. The British Iron and Steel Consumers Council evidence concluded: Whether. one looks at rail freight, coking coal, electricity, gas or oil, it appears that United Kingdom steel producers have been at a cost competitive disadvantage against Continental producers as a result of differing Government policies. Yet the Commissioner has made it clear that these indirect subsidies are not to be phased out, so the result of all this must be that the British steel industry, both public and private, will be placed at a serious disadvantage in relation to the competitors in the other parts of Europe under arrangements to which our Minister has agreed.

I have one other short quotation to make from the report of the Select Committee on Industry and Trade. We said: Whatever happens within the Community, Her Majesty's Government and the Community must ensure that the steel industry in Europe is not at a disadvantage in any markets because subsidies appear in other countries outside the Community. I should like to know what the Minister has done about that, because the European steel industries are in competition throughout the world with Japan, Korea, Brazil and the United States and many other steel producing countries, some of which will still be receiving subsidies after 1985.

The question of energy costs is extremely important. The British steel industry is already at a severe disadvantage because our Government charge a high tax on fuel oil injected into the blast furnaces—twice as high as the next highest in Europe. Yet in Holland and Germany, although the tax in any case is very much lower, it is rebated in the case of blast furnaces because it is regarded as a chemical feedstock.

The NEDC task force report on energy costs earlier this year—I am sure that the Minister is familiar with it—shows that the energy-intensive industries in Britain, of which steel is one, are operating at a considerable disadvantage. But the Commissioner made it clear to us in Brussels that any steps that may be taken to allow the energy-intensive industries to receive their energy at prices lower than those charged to the generality of industry would not be permitted by the Commission in the case of the steel industry. In the case of other industries that would be all right, but not for steel.

It is patently obvious from all these things that the measures to which the Minister of State agreed at the Brussels meeting on 24 June can only have a disastrous effect on the British steel industry, both public and private. It is now clear that the Minister understood what he was voting for, and I can only say that he has grossly betrayed a vital British industry.