I thank the Minister for the careful way in which he has taken us through the order. As he rightly said, it writes off £1,000 million of capital debt. That was provided for in the Act that we debated at some length in Committee.
The Opposition will not oppose the order. In general terms it makes sense to bring BSC's capital more into line with the revaluation of the assets. We also welcome the Government's decision not to reduce BSC's borrowing by a similar amount, because in the present financial climate that would have been a mistake.
The Minister said that this was not the time to discuss the wider situation facing the corporation. We understand that he should make that comment, but there is no hope at all that my hon. Friends and I will allow the Government to get away with it. We have chosen to debate the order, even at this late hour, to give the House as a whole the opportunity to discuss the new crisis facing the corporation.
Ironically, less than a year ago this major capital reconstruction was finally agreed by the House, and it involved sums in the order of £5,000 million. We welcomed that because we had believed for some time that such a a capital reconstruction was necessary to put the corporation on a sounder financial basis. However, in a short space of time and despite the optimism expressed by the Secretary of State for Industry in the spring of this year, the corporation once again tragically finds itself in crisis.
Why has this new financial crisis arisen in the corporation's affairs? At a hearing of the Select Committee for Industry and Trade in the 1980·81 Session, shortly after Mr. MacGregor was appointed, he set out his views about his plan which took into account the coming financial reconstruction, as it was then. In his evidence in volume II, page 44, of the report, Mr. MacGregor highlighted what he regarded as five important points on which the success of his plan depended. It depended, first, on the volume of steel production for a proper utilisation of the plant that would be available: secondly, on a sensible level of prices; thirdly, on the exchange rate; fourthly, on inflation; and fifthly, on what were called cost reduction programmes. Those were all important matters, and directly relevant to the future viability of the corporation.
Unfortunately, in almost every respect, the position faced by the corporation has deteriorated, with the admitted exception of the rate of inflation. Mr. MacGregor's present view, as I understand it, is that continuing decline in capital investment by manufacturing industry in Britain and throughout the western industrial nations as a whole is preventing the corporation from getting anywhere near to the success it had hoped for at the time the evidence was given.
The view expressed by Mr. MacGregor is shared by the Confederation of British Industry, by the Trades Union Congress, by the Labour Party and by my hon. Friends on the Opposition Benches. As demand declines further, as it has done this year, there is in reality little hope of the corporation utilising effectively and efficiently even its existing capacity. We have seen the collapse of prices within the EC and, despite major redundancies and closures, the corporation has returned to financial crisis. It is no surprise that industrial output in the United Kingdom, as we learnt yesterday, is now at its lowest level for 15 years. Manufacturing output is almost 19 per cent. below the level of June 1979. Against the background of falling demand and the catastrophic decline in capital investment which is also well documented, it is not surprising that demand for steel—one of the basic ingredients in any developing industrial economy—has plummeted. Steel output has fallen by almost 31·3 per cent. since December 1981. Those figures are issued by the steel industry itself.
For the first 11 months of this year, steel output was almost 8 per cent. below the level in the corresponding period in 1981. We know that orders have fallen sharply and continue to decline. That decline has been accelerating since March 1982. In addition, imports have undermined our steel industry's position in the home market. Although imports are and will continue to be important, the appalling collapse in demand for steel is the root cause of the corporation's problems.
We now know that the European Commission plans to impose tough new controls on the Community steel industry in an effort to halt the wave of price cutting. According to the Financial Times, it proposes to stamp out discounts that have reached 30 per cent. in some sectors. In Sheffield, Rotherham and so on, we have seen how that discounting, price cutting and cheating on the quota and price agreement have undermined our steel industry in both the public and private sectors. Unless it is stopped, there will be no hope of the corporation surviving the new crisis.
There is no escaping the fact that the Government's policies, together with the world recession, have brought about that devastating new problem for Mr. MacGregor and the corporation. The Minister has told us before that in addition, structural changes are taking place in the economy. That is true. However, change in the use of materials, set beside what The Daily Telegraph today called the plummet to a new 15-year low in output, is a secondary cause of the corporation's problems.
The Government's policies offer no chance of a recovery in the corporation's fortunes. There is no prospect that the corporation will recover if such policies continue. It is almost laughable to read what the Chancellor of the Exchequer said when introducing the Budget a few months ago. He said that he was introducing a Budget for industry and jobs. In reality, the misery has simply increased. We have seen efficient, modern steel-making capacity—much more efficient than exists and is being maintained in many competing countries—go to the wall. We have seen that at Round Oak in the West Midlands, in South Wales, on Teesside and at Scunthorpe.
It would be a calamity if there were further major closures, particularly at Ravenscraig in Scotland. It would be a catastrophe for Teesside if the Redcar plant were to close. Hon. Members may think that "catastrophe" is too strong a word, but I refer them to the recently published state of the region report, produced by the North of England county councils association. Just as people in Scotland have pointed out how central Ravenscraig is to the Scottish economy, so one can make out the same case for Redcar, Llanwern, Port Talbot, and the plant at Scunthorpe.
I shall mention deliberately, in the presence of the hon. Member for Islington, Central (Mr. Grant), the recent strange behaviour of some of his colleagues from Teesside when they spoke about the steel industry and introduced suddenly as new ideas proposals that had been made weeks earlier by the northern group of Labour Members. They said that Teesside should stay open on the same day that their hon. Friend the Member for Wrexham (Mr. Ellis) wrote in the Liverpool Daily Post:
Two of Britain's five major steel plants must close.
At the same time as the right hon. Member for Stockton (Mr. Rodgers) and his hon. Friend the Member for Thornaby (Mr. Wrigglesworth) were saying that plants must stay open, their hon. Friend the Member for Wrexham was saying that two plants must close. I find that not just incomprehensible, but when I say hypocritical—I am careful not to use unparliamentary language—