Steel Industry

Oral Answers to Questions — Scotland – in the House of Commons at 12:00 am on 14th January 1987.

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Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Motherwell North 12:00 am, 14th January 1987

asked the Secretary of State for Scotland when he will next meet the chairman of British Steel Corporation to discuss the steel industry in Scotland.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I meet the chairman of the British Steel Corporation on a regular basis. No date for the next meeting has been arranged.

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Motherwell North

When the Minister next meets the British Steel Corporation chairman, will he discuss with him the steel users, many of whom are going out of business? As the Minister is aware, it has been announced today that the Caterpillar Tractor Company in my constituency will be closing within 15 to 18 months, with a loss of 1,121 jobs. As he is also aware, an announcement was made in September, when he was present, of a £62 million investment. Of that investment, £3·1 million of public money has been spent. Is he going to tell 113 now that he can do nothing about it? If so, what do the Government intend to do about it, because this is a diabolical scandal? This will mean unemployment in Lanarkshire on a 20 per cent. basis. The Secretary of State for Scotland and and the Government have a responsibility to do something about it.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I very much share the concern expressed by the hon. Gentleman over today's announcement affecting the plant at Uddingston. I regret and deplore the decision announced today. It is a decision which is all the more extraordinary because, as the hon. Gentleman has just said, as recently as four months ago the company announced a £62·5 million investment programme to secure the future of the plant. Substantial financial assistance for the project was offered by the Government and accepted by the company. The decision arises from a worldwide review of the company's manufacturing capacity. No consultation with the Government took place prior to today's announcement.

I shall be holding urgent discussions with the company. I understand that the closure will be phased over at least the next year. This gives us the opportunity to explore with the company what can be done to retain operations and employment at the Uddingston facility.

Photo of Mr Michael Forsyth Mr Michael Forsyth , Stirling

Will my right hon. and learned Friend take the opportunity to remind the chairman of British Steel of the importance of getting across to the people of Scotland the fact that unless steel costs are kept within competitive levels steel users in the United Kingdom, particularly in Scotland, will find themselves uncompetitive and unable to compete?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I agree with my hon. Friend. It is very encouraging that British Steel recently announced half-yearly profits of about £68 million, compared with the vast losses that it was making a few years ago. Clearly, the prospects for the steel industry in Scotland and elsewhere in the United Kingdom can only be seen to be substantially improved now that the British Steel Corporation is profitable.

Photo of Mr George Robertson Mr George Robertson , Hamilton

When the Secretary of State meets the chairman of British Steel, will he bear in mind the industrial wasteland being created in Lanarkshire as a result of steel industry and steel-using industry job losses and the fact that the closure of Caterpillar is yet another sickening blow for this area, which has suffered so much? Will the right hon. and learned Gentleman recall Lord Young's speech at the Scottish Conservative party conference last year, when he held up the glowing example of the Garnock valley initiative in the creation of jobs where jobs in the steel industry had been lost? If the scale of help given to the Garnock valley is to be an example for Lanarkshire, the amount that will be required for Lanarkshire is more than £500 million. Are the Government willing to give that sort of help to unemployment-hit Lanarkshire?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I am well aware of the serious employment problems faced by Lanarkshire. As the hon. Gentleman will know, not only does Lanarkshire come within the special development area category, but the Scottish Development Agency is particularly involved in a number of projects with employment implications in the area. Of course, we are always willing to look at any ideas that may be forthcoming to ensure the improvement of employment prospects in Lanarkshire. It is not the only locality with such problems, but I fully appreciate the difficulties faced by the community in that part of Scotland.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

Does the commitment given by the right hon. Member for Ayr (Mr. Younger) to Ravenscraig still stand? If so, would it not be a good idea for the Minister to go to Ravenscraig to talk to the shop stewards there about the balance between low value-added slab and high-quality strip steel and the fact that, in the view of many people, this may well mean that Ravenscraig's future and profitability are gravely at risk?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I visited Ravenscraig not long ago and my hon. Friend the Under-Secretary of State for Scotland with responsibility for industry—the hon. Member for Galloway and Upper Nithsdale (Mr. Lang)—intends to make a similar visit in the relatively near future. We have had the opportunity to discuss matters with the trade unions and management at Ravenscraig. That useful source of information reveals the developments affecting Ravenscraig. I believe that the plant is in a far stronger position than it was some years ago because of the general improvement in the productivity of the individual plant and the increased profitability of the British Steel Corporation.

Photo of Mr John Corrie Mr John Corrie , Cunninghame North

When my right hon. and learned Friend speaks again to the chairman of the British Steel Corporation, will he tell him of the disappointment of some steel workers in my constituency who have been made redundant and have not yet been given help with retraining or received their redundancy money, although it is well over a year since the plant closed? Can my right hon. and learned Friend speed things up a bit?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I shall certainly ensure that the matter is drawn to the BSC's attention, to ascertain whether some progress of the kind to which my hon. Friend has referred can be made.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South

Is the Secretary of State aware that Eurofer, the European steel producers association, has undertaken to propose to the European Commission by the end of March the closure of some 5 million tonnes of flat product capacity in Europe? Is the right hon. and learned Gentleman aware that the chairman of Eurofer is also the chairman of the British Steel Corporation? Will the right hon. and learned Gentleman give an undertaking that those proposed closures will not include any reduction in capacity at the Ravenscraig or Dalzell works?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

With regard to the Eurofer proposals, decisions on the future of any BSC works are subject to the strategy agreed in 1985. It would be for the Steel Corporation to consider in the light of that stategy what part it might play in the development of Eurofer's proposals for Europe as a whole?

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

Will my right hon. and learned Friend take this opportunity to remind the House and the people of Scotland of the very welcome news recently that BSC intends to spend a further £30 million on new investment at Ravenscraig? Will he reiterate the importance of the corporation being in profit in order to find these funds for new investment?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The proposed £30 million investment must be good news, as one cannot seriously contemplate the closure of a plant if one is simultaneously proposing investment of that kind. I am aware that the trade unions have called for further investment in the coke ovens at Ravenscraig. I should point out that half the coke ovens should last until the turn of the century. There is good reason to believe that others will last well into the 1990s. Even the trade unions at Ravenscraig now recognise that limited reconstruction of existing ovens should overcome any shortfall in coke supplies during that period.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

Will the right hon. and learned Gentleman recognise that on this side of the House we feel that the decision announced today by Caterpillar is either the result of monumental incompetence by management or soulless cynicism? There cannot be any other explanation of this astonishing turnabout in the last few months. Will he also note our sympathy, which I am sure he shares, for the 1,200 or so people and their families who are so suddenly and unexpectedly facing the dole queue? It is all the more bitter because it is so unexpected after the recent false optimism of the proposed £62 million investment. programme. Can the Secretary of State say whether any public money has been put into the firm since the announcement was made, that is, whether there is a public sector debit as a result of the announcement of that investment? If so, can he guarantee that there will be full recovery of that public money?

Can the Secretary of State also say something about what can be done to safeguard this country against such a disgraceful scuttle operation by a firm which seemed to be so firmly established—and I do not mean this in any knocking sense—that it figured in his new year message only a week ago as a firm which was becoming more profitable and competitive, so helping to make employment more secure? It is an appalling condemnation of the firm. What has happened to face us with this about-turn? Can the Secretary of State also say something more about the moratorium on regional development plans, because it seems extraordinary that this should be announced on the day when we have suffered such a hammer blow from Caterpillar? Does it make sense to delay by even a few months much-needed funds when we are desperately trying to save jobs and build on what is left of Scotland's manufacturing base?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

On his final point, the hon. Gentleman should realise that the proposed two-month period is half that which has been insisted on with regard to RDG 1 until now. With regard to his broader question on Caterpillar, I am not aware of any public funds that have yet been given to the company since the decision in September. Of course, we would take steps to ensure the recovery of public funds if that had happened.

I very much share the sentiments that he expressed, for the simple reason that the decision announced in September of a proposed £62 million investment was itself the result of a very extensive review that the company had carried out into its international operations. It is difficult, if not impossible, to understand any development that might have taken place in the relatively short period since September which would justify such a major change in its outlook. I have indicated to the House that I intend to have early discussions with representatives of the company. Fortunately, a significant period will elapse before the proposed closure would come into effect. Therefore, one naturally hopes that that opportunity can be used to ensure some continuation of the plant and indeed of the employment of those who depend on it.