British Steel

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 13th January 1988.

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Photo of Mr Christopher Butler Mr Christopher Butler , Warrington South 12:00 am, 13th January 1988

To ask the Chancellor of the Duchy of Lancaster when he last met the chairman of British Steel; and what matters were discussed.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

To ask the Chancellor of the Duchy of Lancaster when he next intends to meet the chairman of British Steel to discuss the state of the industry.

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

I last met the chairman on 16 December. No date has yet been fixed for our next meeting. When we meet we discuss a wide range of issues relating to BSC and its prospects.

Photo of Mr Christopher Butler Mr Christopher Butler , Warrington South

Did my right hon. and learned Friend discuss the £190 million half-year profit that BSC has made? Is that not a wonderful tribute to the management and men, who have shown great sense in not standing in the way of privatisation of the steel industry?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

I congratulated Sir Robert Scholey and all his colleagues on their excellent half-yearly results. We are looking forward optimistically to the full-year results that will be announced in due course. I agree with my hon. Friend that the results are a tribute to everyone working in the corporation, including the work force, who have achieved remarkable changes in the competitive position of the industry over the past few years.

Photo of Edward Leigh Edward Leigh , Gainsborough and Horncastle

When my right hon. and learned Friend met the chairman of British Steel, did he discuss regional development grants? Did the chairman inform him that British Steel has often used regional development grants to rationalise and shed labour? Is it not a fact that regional development grants have often resulted in growing distortions in the economy and that the puny have been victimised to pay for the mighty? Is it not a disgrace that hon. Members cannot ask questions about the regional development grants because the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) was not present in the Chamber as the white smoke has not yet come out of Cowley street?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

Regional development grant was very useful in its time and no doubt British Steel made use of it. As I explained yesterday, the time has come to make better use of our money. I agree with my hon. Friend that it is a pity that I could not answer earlier questions tabled on the regional development grant. However, I understand that the Liberals and Social Democrats have taken an interest in policy. That is quite a novelty for them and they have not yet brought the results to the Floor of the House.

Photo of John Reid John Reid , Motherwell North

Is the Minister aware that, like the Liberals and Social Democrats, we in Lanarkshire have a major steel problem—[Interruption.]

Photo of John Reid John Reid , Motherwell North

I am sorry, Mr. Speaker. I will temper my remarks.

Is the Minister aware that the optimistic bleatings that have come forth about the British Steel Corporation are regarded with wide scepticism among many people in Lanarkshire?—[HON. MEMBERS: "Why?"] I will explain why. In particular, does the Minister realise that his supposed seven-year guarantee for Ravenscraig is seen by many as a timetable for execution over a seven-year period? In addition, why was there no mention in the Minister's statement or in other statements of the tubes division of the British Steel Corporation. There are threats and ambiguities over that division? Will he take the opportunity today to assure us that there is a strategic future for the tubes division and that any necessary investment to ensure that future at the Clydesdale plant at Bellshill will be provided?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

In response to the first part of the hon. Gentleman's question, I am responsible only for privatising the steel industry. I suspect that the other Steel is about to be privatised by his colleagues, but that is not a matter for me. With regard to the serious question about Lanarkshire, in my statement on the preparations for privatisation I was able to announce that the corporation in its commercial judgment had said that, subject to market conditions, there was a future for steelmaking on the Ravenscraig site for at least seven years. That should give considerable comfort to those in Lanarkshire. That is a tribute to the success that they have helped to achieve. The future of that plant will inevitably depend on those commercial judgments and the ability to compete in the market, regardless of who owns the industry.

There have been problems on Clydesdale with seamless tubes and there have been losses in that division of British Steel. However, I understand from my discussions with Sir Robert that the losses have now been reduced and there is no particular problem facing the future of Clydesdale at the moment.

Photo of Mr Timothy Devlin Mr Timothy Devlin , Stockton South

Is my right hon. and learned Friend aware that among the many letters that I have received from my constituents involved in the steel industry on Teesside there have been a number of messages of support for the Government's privatisation line and a widespread wish by the work force to be involved in the share issue and to take full advantage of an industry in which they believe and to which they are fully committed for the future?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

I am not surprised that my hon. Friend receives that reaction in his constituency, because the Redcar works are very successful and profitable. The workers can see the benefits of the greater commercial freedom that the Government have already given to the management in recent years. Therefore, they have no fears about a privatised company free of Government controls. At the moment we are preparing for privatisation, but the Government are committed to the policy of giving shareholding opportunities to workers in their own industry wherever that is remotely possible.

Photo of Margaret Ewing Margaret Ewing , Moray

As the Minister has now made it clear that he accepts responsibility for the privatisation of British Steel, will he ensure that all reports from his discussions with British Steel are brought back to the House for debate by hon. Members? Will he ensure at his next meeting with British Steel that he asks whether it has a strategy involving a move to a one-plate mill concept within the United Kingdom, which is of particular interest to the workers at Dalzell? Finally, will he ensure that the exact problems of Scotland are taken into consideration in any privatisation moves in order to ensure that Scotland does not continue to be seen as being on the periphery, as we need to have a Scottish steel headquarters to guarantee our jobs and futures because steel is so vital to our manufacturing base?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

The statement that I made before Christmas was a serious and considered report to the House of the Government's proposals and of the corporation's commercial judgment of where the business stood. I shall ensure that the House is kept up to date and informed.

Some serious investment decisions regarding the plate mills will be required in the next few years, but, again, British Steel's position is that no investment decisions are needed now, and it will be a matter for it to decide in due course, probably after it becomes a private company. The Scots should not continue to regard themselves as necessarily peripheral to all these matters. Quite the reverse is true in view of the statements that the corporation was able to make in its commercial judgment about the future of steel making in Ravenscraig for at least seven years.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

In view of the real advantages, not least to the people who work in British Steel, of bringing forward privatisation, when will my right hon. and learned Friend be able to present the Bill to the House to speed this up?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

The Bill should come before the House in the next month or two. There will be considerable other preparatory work, and I cannot see privatisation being practicable or possible before the second half of this year at the earliest.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

Will the Minister tell the House what investment proposals he has before him from the British Steel Corporation? If he has none, will he explain to the House whether that causes him any concern, as the last raft of investment proposals from the BSC were made just over two years ago and are coming to an end? If anyone in the City is contemplating investment in the industry, or if the workers themselves were to believe that one could have a steel industry that could rely on past investment and not have investment proposals for perhaps two or three years, to have a healthy-looking balance sheet with a nice-looking bottom line just for the period of privatisation, would he not agree that that would be a serious confidence trick to play on any investor in the steel industry?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

A continuous process of investment is required in the steel industry and investment is taking place in various plants, including Ravenscraig. I have no proposals before me requiring the Government's formal consent, but they are likely to come in the near future and we do not intend to stop investment in the run-up to privatisation. Any proposals for further investment in continuous casting in Wales, for example, would be considered favourably by the Government, provided that they satisfy the usual commercial tests that we have to apply.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

Would my right hon. and learned Friend care to note, when he next speaks to the chairman of British Steel, that the North Skelton brass band in my constituency, sponsored by British Steel, has just made a record with Mr. Acker Bilk and that some of the proceeds from the record will pay for schoolchildren from the Grangetown school in Redcar to go to Australia for the bicentenary celebrations? They will be the only musicians from this country. Well done, British Steel.

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

I am glad that British Steel scores success stories, other than just returns on capital. British Steel is an important part of the community in the north-east and I am glad that it is helping to take north-eastern music down under.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

In the light of the absence of major investment proposals, just how responsible is it to flog this major national asset back to the private sector, which has such a bad record on investment, particularly in steel? How irresponsible is it to do so when stock exchanges are falling?

Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry)

British Steel has an extremely good record of investment. The hon. Gentleman is mistaken if he assumes that, because there are no formal proposals requiring the Government's consent at present, British Steel has stemmed its investment effort. That is not the case. This is a continuous process and major schemes of investment must come forward for Government approval, which will be readily given, provided that they make commercial sense. That is something that we leave largely to British Steel in the first place.