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Gartcosh Steel Mill

Part of Opposition Day – in the House of Commons at 6:42 pm on 23rd January 1986.

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Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South 6:42 pm, 23rd January 1986

It is not worth answering the misinformed bigotry of the hon. Member for Stirling (Mr. Forsyth). I find it difficult to speak of the social consequences of the closure of Gartcosh and the threat of closure to Ravenscraig in my constituency, which would destroy the community. It would cause misery to many good friends.

The financial objective of the British Steel Corporation, which is required by the Government and by the European Commission, has been accepted by the corporation. The financial objective is that the BSC should be viable—that profits should be at a level which give a reasonable rate of return on the capital employed after depreciation and interest. The BSC has adopted a milestone on the "road to viability", so called by the corporation. The corporation calls it "financial self-sufficiency", that is, sufficient profits to cover interest costs, capital expenditure roughly equivalent to depreciation, and increases in working capital, but giving no return on equity.

This milestone of financial self-sufficiency is not sufficient to achieve the viability that the Government are demanding. It is, as BSC has said in its additional memorandum—which the Secretary of State has still not digested— only a step on the road to viability". As the hon. Member for Hastings and Rye (Mr. Warren) said, further milestones and higher profits will be needed.

In the BSC's memorandum, under a paragraph headed, Why a cold mill closure is sufficient to meet current objectives and should not be deferred it says: the required profit for self-sufficiency".— that is the first milestone— can just be reached provided all actions identified".— that is including the closure of Gartcosh— are vigorously pursued.

There will be further milestones, and to reach them further action will be required. This points to the inevitability, in the BSC's view, of the closure of Ravenscraig. The Government have not had the courage to spell that out.

I put forward three propositions of increasing seriousness for Ravenscraig. On the BSC's forecasts, the profits of the BSC will be higher without Ravenscraig. The arguments which the BSC has put forward for the closure of Gartcosh would also justify the closure of Ravenscraig. On the BSC's forecasts, not only could Gartcosh be closed without physically reducing finished steel deliveries, but Ravenscraig could also be closed when current investments at Llanwern and Port Talbot are complete.

The first two propositions depend upon the BSC's forecasts, but the third does not. Without Gartcosh there is no level of demand at which Ravenscraig could be viable, since the finishing mill capacity of the BSC could be almost fully loaded without Ravenscraig. What the Secretary of State said, put at its kindest, is that the BSC will be able to afford the charity of keeping Ravenscraig open. Steel workers know better than to rely on BSC charity.

If Ravenscraig has a future—as I firmly believe it has—it must be by the BSC winning a bigger share of a bigger United Kingdom market, and a bigger share of the European market for finished steel. With Gartcosh, Port Talbot and Llanwern fully loaded, 60 per cent. of Ravenscraig's output could go to the BSC finishing mills. Without Gartcosh, only 20 per cent. can go to the BSC finishing mills. On the BSC's criteria there is no way in which that can be sufficient to make Ravenscraig viable, whatever the level of demand. If the BSC were honest it would say that that is true, but it is irrelevant. It says that Ravenscraig has no future, with or without Gartcosh, because there will not be sufficient demand.

The BSC's abject surrender in the European Community—accepting an increase from only 65·4 per cent. to only 68·4 per cent. of the United Kingdom cold strip market, when the United Kingdom motor industry is only supplying 30 per cent. of the value added in United Kingdom car registrations—is pathetic. It amounts to an acceptance of no recovery in British manufacturing despite the prospect of falling north sea oil revenues.

The sheer incompetence of the Department of Trade and Industry's Ministers and officials, and of the BSC, in representing British steel interests in the European Community is unbelievable. At the suggestion of Mr. Scholey, who expected their commendation, I saw Mr.. Cadieux, the chairman of the EC steel task force at the Commission, and his officials. I made sure that Mr. Denham, the BSC head of corporate planning and market forecasting, accompanied me.

The critical question is British cost competitiveness. EC officials talked of the sterling-deutschmark exchange rate as an irrelevance. The EC officials were talking like second-rate Chicago undergraduates who would never make the graduate school. They were like the Chancellor at his most porcine in 1980–81, when he was pursuing monetary targets regardless of the exchange rate, which he said had no relevance to Britain's underlying competitiveness. MM. Cadieux, the gentlemen who the Secretary of State has been quoting this afternoon, and who had the responsibility for testing the BSC's future viability, had not asked the Directorate-Generals II, he did not ask Dr. André Louis Dramais, who prepared the economic forecast on which the EC strategic document was based, for an assessment of the effect of a shift in the deutschmark-sterling exchange rate in favour of the United Kingdom. Dr. Dramais confirmed the obvious to me—that it would increase United Kingdom exports and industrial production, and so United Kingdom steel production.

Neither the BSC nor the DTI Ministers and their officials have sought any exploration in the EC of the effects of a restored industrial competitiveness in the United Kingdom. The Minister of State, when I saw him with his officials, was not able to produce a shred of evidence in that direction, whether as a result of falling North sea oil revenue, changed monetary objectives, or improved industrial efficiency.

Hon. Members who saw the magnificent presentation by Austin Rover today of new technology cannot doubt that things are happening in the British steel-consuming industries. The Government, however, have accepted the failure of their own economic and industrial policy. An industrial recovery with proper co-ordination between economic and industrial policy, never mind the further benefits of a degree of international co-operation if it can be achieved, would produce substantial increases in demand for steel which this Government do not bother to investigate.

I believe that the possibility of recovery justifies the rentention of Ravenscraig. If it does it justifies still more the retention of Gartcosh, because without Gartcosh it is difficult to see how Ravenscraig can be retained whatever the level of demand. The incompetence and the scabrous evasions of the BSC, of Ministers at the Department of Trade and Industry and the Scottish office, have been highlighted by contrast with the remarkable campaign fought for the retention of Gartcosh by Gartcosh and Ravenscraig shop stewards. For the BSC and Ministers to throw away such quality of leadership, wantonly and carelessly by their managerial and political evasions and incompetence, is outrageous.