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Orders Of The Day

Volume 887: debated on Friday 7 March 1975

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Industrial Democracy Bill

Read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 ( Committal of Bills).

Divorce Law Reform (Scotland) Bill

Order for Second Reading read.

Second Reading deferred till Friday 21st March.

Public Accounts


That, notwithstanding the Order of the House of 18th November relating to nomination of Members of the Public Accounts Committee, Mr. John MacGregor be discharged from the Committee and Mr. Robert Taylor be added to the Committee for the remainder of this Parliament:


That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]



That, notwithstanding the Order of the House of 18th November relating to nomination of Members of the Expenditure Committee, Mr. Michael Alison be discharged from the Committee and Mr. John MacGregor be added to the Committee for the remainder of this Parliament:


That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

Houses Of Parliament (Industrial Dispute)

4.1 p.m.

On a point of order, Mr. Deputy Speaker. I wish to raise with you, and, perhaps through you, with the Government, a question about the conduct of the proceedings of the House next week on which the Under-Secretary of State for the Environment may be able to help us. You, Mr. Deputy Speaker, will have seen the report in The Guardian today and perhaps elsewhere about the prospect of industrial action next week affecting the House. In addition, reports about what is likely to happen are circulating in the precincts.

I understand that a decision has been made by certain maintenance and power workers employed by the Department of the Environment, and perhaps by other shift workers, to take strike action from next Monday. I also understand that action is to be taken during Sunday night and Monday morning which will include the closing down of all boilers and heating and water valves and the throwing out of electrical switches affecting services in the premises with the apparent intention of making it difficult, if not impossible, for other technical and supervisory staff to resume normal working on Monday.

Beyond that, I understand that the entrances to the premises will be picketed and that some other employees have agreed not to cross the picket lines. Most disturbing of all, an hon. Member has reported hearing in the House of Commons Post Office considerable pressure being brought to bear on staff working there not to cross the picket lines which will be established. It has been reported that similar pressure has been brought to bear on other staff, not stopping short of threats to make life very difficult for them if they take action to mitigate the effects of the intended strike.

I understand, Mr. Deputy Speaker, that the direct consequences of what is intended could affect the water supply and the heating and cooking facilities in the premises and the air conditioning in the Chamber, in the underground car park and in Members' rooms. It is plain that indirect consequences could affect such services as the delivery of mail to Members and of other commodities to the building and the maintenance and, therefore, operation of telephones and annunciator services, lifts, Division bells and amplification facilities which enable the public and Press to hear and report our proceedings.

I have only one concern in raising the matter which has, and should have, nothing to do with our enthusiasm, or lack of it, for any items in next week's business. My concern is to secure from the Government a clear assurance that this Parliament, whose sovereignty, incidentally, we are due to debate next week, will be able to continue its work as it has done in all kinds of circumstances in the past.

I appreciate that a question of privilege could arise from what is stated at page 144 of Erskine May, that
"It is a breach of privilege to molest a Member of either House while attending such House or when coming to or going from it."
However, at this stage that is a hypothetical matter.

I also appreciate the statements to the effect that the authorities should do—and normally do—all that they can to see that our normal Sessional Order is complied with.

I have some questions to ask. Can we be told anything about the nature of the dispute and what is being done to resolve it? Can we, above all, have an assurance that all necessary action will be taken to ensure that not only members of both Houses but all those who wish to continue normal services to Parliament will have access to the premises unhindered and unmolested, and an assurance that Parliament will be able to continue with its normal business next week.

This may be a convenient moment for me to reply to the right hon. and learned Member on the question of privilege. The matter of privilege raised by him is, as I know he understands, hypothetical. He will appreciate that the Chair cannot rule on questions of privilege which might arise at some time in the future. I can only advise him to raise the matter, if the occasion should arise, on Monday next week at the usual time for raising matters of privilege, which is immediately before the commencement of public business.

That is my understanding. However, I wonder whether it is possible for the Under-Secretary of State to give us some indication of what other action is being taken to ensure normal service in the House next week.

4.7 p.m.

Perhaps I could make a short statement.

Industrial civil servants manning the works depots which look after the Houses of Parliament and buildings in Whitehall have intimated that from Monday onwards they will be taking unofficial strike action. This action arises out of their current claim for an interim pay settlement—which was one of the questions put to me by the right hon. and learned Member for Surrey, East (Sir G. Howe). This interim pay settlement is under consideration now by Ministers.

I have also seen certain speculative reports in The Guardian, but it is difficult at this stage to forecast the actual effects of any such official action.

A further statement will be made on Monday. However, I emphasise that at this stage, not knowing exactly how many are likely to be involved in the strike, it is difficult to say more.

Can the House receive an assurance of the kind for which I asked—that the normal sittings and services of Parliament will be continued next week?

Every endeavour will be made to continue the business of the House. As the right hon. and learned Gentleman said, the House has continued over the past few years in difficult circumstances. I should imagine that the House will be able to continue next week.


Motion made, and Question proposed, That this House do now adjourn.—[ Mr Thomas Cox.]

Steel Industry

4.8 p.m.

I am glad to have the opportunity of raising this subject this afternoon, and I express my appreciation to the Minister. I was glad to have the opportunity of informal discussion with him in recent weeks. In raising this matter I am reflecting a short discussion with the hon. Member for Sheffield, Attercliffe (Mr. Duffy), who wished to speak in this debate. I should have been glad to have accorded him a short time in which to do so, but at the last minute he had to leave the House because of a constituency commitment.

It has taken me almost a year since I first came to the House to get the opportunity of raising questions affecting not only the independent steel industry, to which I shall principally direct my attention, but the steel industry as a whole. I shall seek to show that the interdependence of the public and private sectors of the industry is indivisible. I say this not merely as the familiar complaint of backbenchers about the inability to raise matters at will, but it seems to me that there is something very seriously adrift in our system when it is impossible in the House of Commons in a period of 12 months to have a debate of any kind on the steel industry. We have had opportunities on the matter of closures and on various other occasions to raise questions but we have not had an opportunity for over 12 months to debate the problems of the steel industry.

Incidentally, I do not think this augurs well for some of the Government's current legislation on the National Enterprise Board, when the question of accountability is so clearly one on which we have so limited opportunities to get into the heart of the matter, as I hope I shall have the opportunity to do today.

Let me say why I ask for a clear statement from the Government on the political future of the independent steel industry. I must first sketch in what I regard as the problems and political uncertainties that face the industry. This leads me straight away into a brief consideration of the very intimate relationship between the independent industry and the British Steel Corporation.

What do we mean by the independent steel industry? We mean about 140 companies of varying sizes which embrace steel making, engineering and wire production interests. They range from giants such as Guest, Keen and Nettlefold, with its well-known engineering interests, to companies such as Duport whose activities range from steel making to the production of bed springs and mattresses, to the smallest steel companies producing steel tools, which in many cases have a substantial export business in steel tools throughout the world.

When we consider these parts of the steel industry we observe that the independent sector is one of the British Steel Corporation's major customers. On billets alone the independent sector consumes 3 million tons a year, which is roughly one-eighth of the British Steel Corporation's current production. In that sense the intimate relationship between the British Steel Corporation and the independent sector as a whole is not only an integral part of the problems that arise but is one to which we must pay continuing attention.

I should, therefore, like to quote a very interesting and helpful comment made by the Managing Director of the British Steel Corporation Special Division in a recent issue of the Dunford Hadfield magazine, Dunford Hadfield being one of the largest independent steelmakers. He outlined the inter-dependence of the public and private sector as customers and competitors, and said:
"These are clearly complex relationships, but they are not impossible ones for, if we compete—as indeed we must—we can also agree. Both the public and private sectors are united in wishing to see a thriving progressive and successful steel industry."
This interdependence is clearly recognised on all sides, both by managers of the British Steel Corporation and in the independent steel industry.

If there is this intimate relationship, we must ask what are the prospects for both sectors. This inevitably leads me to making comparisons of performance and prospects. Whichever way we look, there is no question that the independent sector leads the way. In output the British Steel Corporation is now producing less steel than the comparable part of the industry was producing prior to nationalisation. It is failing to meet the British domestic demand and is having to cut back on its export business.

In contrast, the independent sector has increased its output in every year over the same period, that is to say since 1967. On investment, the hiatus that has been such a feature of the British Steel Corporation is too well known to need repetition here today, but it is perhaps best summarised by a document published by the British Steel Corporation in the last few days which lists the 53 largest blast furnaces in the world. I regret to say that there is not a single British blast furnace listed among them, because there is not a British blast furnace in the top 50 in size and capacity in the world today. As the Minister knows, the corporation's problems stem directly from that lack of iron-making capacity, which in turn stems directly from the problems of investment hiatus and the reviews which have gone on, admittedly under Conservative as well as Labour Governments.

But it is that feature which brings clearly into focus the investment difference between the BSC and the independent sector, because by contrast in the independent sector one sees a higher average ratio of capital expenditure to capital employed in every year since nationalisation.

I turn now to the return on investment. Here again, I fear, the British Steel Corporation lags behind. The corporation has either failed to produce a return on its capital investment in each of the last six years since nationalisation or, in those years when it had a return, the figure varied between 2 per cent. and 6 per cent. In contrast, during the past five years the independent sector has had an average return on capital invested of between 10 per cent. and 15 per cent.

Next, employment prospects. As is only too well known, the British Steel Corporation has had to make 40,000 people redundant during its first seven years of life, and it has plans for further redundancies which, allowing for the so-called saving of about 13,500 jobs because of the postponement of some closures, will yield, on the corporation's estimates, about another 27,000 redundancies over the next five years. By contrast, the independent sector has had a net increase of employment over precisely the same period.

In short, therefore, whichever way we look, we see a healthy and thriving independent sector compared with a State sector with massive Government-imposed problems. I assure the House that I fully understand why the British Steel Corporation suffers in this comparison. Only a few days ago a colleague of the Minister said to me at an informal occasion "Why on earth is the British Steel Corporation unable to make as much steel now as the industry was making prior to nationalisation?" I had to tell him that he had already touched on the answer. In a word, it was nationalisation, and the need felt by Governments of both parties to impose their views on the industry, to review its affairs and finances and to create all the unfortunate inertia which comes with the present planning processes applied to the British Steel Corporation.

One cannot but remark in passing that the British Steel Corporation pioneered the whole basis of planning agreements. Currently it has annual and five-year agreements with the Department of Industry. However, despite this—or perhaps because of it—the corporation runs into the most appalling problems, being unable to carry through its investment programmes without constant reference to the Government and constant breakdown in the whole chain by which it would wish to build up its own production.

I therefore urge upon the Minister today—I think I can do this with equal fairness to both sides of the industry—that if he can show ways by which he and his colleagues could take the brakes off steel he would do a great service not only to the public sector but to the independent sector and in turn thereby to the industry as a whole and to the nation.

That brings me to my second principal comment on the political uncertainty threatening the independent sector. I refer to the threat of further nationalisation. There is no doubt about that threat. There has been ample evidence in recent months. The evidence is clear cut, and what I find disturbing is that we have had no reference to it on the Floor of the House because of our inability to have debates.

Last July it was made clear in the House and elsewhere that the Secretary of State had had discussions in Brussels in which he sought wider powers to set aside the provisions of the Treaty of Rome, particularly on their effect on matters such as investment and prices. That series of conversations has since been reinforced by the reference by the Prime Minister and others to steel as part of the renegotiation of the EEC terms and accession. They, too, I believe, show the Government's determination to move directly into this area of investment and pricing decisions.

There is also, of course, the threat posed by the Industry Bill. I will not go over that matter now. I am sure that the Minister and I will have many opportunities in the coming weeks—some of us may say months—to discuss these matters in Standing Committee. However, it is only reasonable to say that in the light of the renegotiations in the EEC and in the light of the conversations in Brussels there is an obvious threat from legislation which would give the Government power to buy into profitable companies in a way that at present they cannot.

If direct evidence were needed we have had it in the last few months in the case of the Johnson Firth Brown company in Sheffield. It is one of the largest of the independent steel makers and has considerable interests in Scotland, and Manchester and in the wire making and heavy forging sectors. For some five months that company has been actively involved in a market situation in which it seems that the principal contender for a takeover bid is the Government. What a strange mish-mash of misplaced activity comes out of that story.

The fact that the British Steel Corporation was unable to mount a total takeover because of monopoly restraints in the Treaty of Paris is only a preamble to that story. The Press correspondents and anyone who had any ear in the City knew that the Department of Industry made it clear that it was willing to pay a premium, to pay over the market rate, for shares in that company. Although the outcome for this particular set of negotiations, which have dragged on for so long, is in the best interests of all concerned in that the shares were finally placed widely in the market, the question still remains why the Govern- ment were so determined to take a stake in this company.

On this point I must quote from yesterday's Sheffield Morning Telegraph in which a leading article very reasonably pointed out that in these circumstances few companies would have been strong enough to withstand five months of uncertainty. It said that this was not anti-State prejudice, just bewilderment about the identity of the power behind the throne, and that this particular situation could not continue indefinitely without a serious loss of confidence among customers. It said that among the few companies which would have been able to stand up to all this pressure was Johnson Firth Brown, yet it concludes:
"Yet it is the NEB's clear intention to befriend ailing companies who could be crippled permanently by a similar saga of uncertainties. With friends like these, they won't need enemies."
This company is highly profitable and has a bulging order book and excellent labour relations. What made the Department of Industry so anxious to proceed in this way despite the failure of the BSC's takeover arrangements for moving into the market place? Was this just a prelude to a further programme of nationalisation? It is somewhat disquieting, if not disturbing, that this kind of activity should go on in a way about which the House has not been officially informed. I do not see the rôle of the Government as being involved in market transactions in operations of this kind, operations which the Minister might from time to time join in condemning when an entrepreneur carries out the activity.

The time has come for the Government to come clean on this matter. If they have plans for a further extension of State ownership, let them say so. Let them come before the House and justify their intentions. Let them say why they are now intending to break the pledge by the previous Labour Government upon which this industry has coexisted happily—and in the case of the independent sector, successfully—since 1967. In that year, the time of nationalisation, Mr. Richard Marsh, the Minister then responsible for nationalising the steel industry, said:
"The Government has taken a conscious decision not to (nationalise the remaining firms). This means a considered decision that the private sector is as important as the public sector to the economy of the nation. I make the point because … there is a fear that the Government, consciously or unconsciously, would allow the private sector to be destroyed. This fear is completely misplaced. The private sector of the industry is essential to the effectiveness of the industry as a whole."
If the Minister has no plans to bring forward further proposals for nationalisation, let him say so clearly. If the Government seek to extend State ownership of steel, they must face the consequences. They must face a further investment hiatus as investment dries up, as has been the case with the British Steel Corporation both before nationalisation and in all the inevitable delays when Government action has impeded investment thereafter.

Multi-purpose steel companies with engineering interests will begin to consider whether they should relinquish their steel interests and simply buy in the market place. Overseas customers are bound to consider whether they can afford to continue business with what would be a future monopoly supplier. The United States car industry is a prime example of those who have made that clear to the independent sector. The Minister may well recall the Volvo situation, when the action of my own Government in imposing limits on exports led to the threat of total cancellations. Those are but some of the ways in which the uncertainty, when carried into the practice of ultimate nationalisation, would begin to affect all the commercial viability of the independent sector.

Most important of all, one cannot escape the view that this would lead to the possibility of further redundancies within the independent sector, as nationalisation and rationalisation have been shown typically in manufacturing industry to mean fewer jobs.

Do the Minister or the Government have a firm intention to pursue a policy of nationalisation or State ownship within the independent sector? We do not rule out co-operative ventures or the necessary dialogue. But because of the activities I have described it is vital that the hon. Gentleman should make the Government's decision clear. If he says that the Government have no intention of proceeding in this matter well and good. If not, he must justify the activities in Brussels, Sheffield, and the City, above all in the unsuccessful takeover bid.

While to the hon. Gentleman this may be simply one debate, I have in recent months put this question to the Secretary of State, who referred me to his White Paper on the regeneration of British industry, to the Minister of State, who did not answer in the Consolidated Fund Bill debate and to the other Under-Secretary in the debate on small businesses. I look to the hon. Gentleman, as an enlightened Minister, to give me the answer today.

4.28 p.m.

The hon. Member for Arundel (Mr. Marshall) has raised the important issue of relations between the public and private sectors in the steel industry. I shall do my best to answer his questions in the 10 minutes remaining.

The problems to which the hon. Gentleman referred at the beginning of his speech result not from nationalisation per se but from the problems between bulk steelmaking and special steels. They do not result from nationalisation. The problems of the British Steel Corporation strategy result from years of under-investment in the decades before nationalisation. This is strongly suggested by the fact that the BSC in its special steel sector is more than an equal competitor with the best in the private sector.

In the latter part of his speech the hon. Gentleman drew attention to the Government's intentions on the future development of the private sector. First, I would say that the Government do not accept that the boundary between the public and private sectors is at present in any sense ideal or immutable. The previous Conservative Government divested the British Steel Corporation of substantial assets, partly by complete transfer, partly by exchange, and partly by a reduction in the interests or shareholdings held by BSC.

The present Government, as we have made clear in our manifesto, have never accepted that this pattern of disbandment represented the proper balance between the two sectors. My right hon. Friend has stated explicitly in regard to the nationalised industries for which he is responsible that he will consider sympathetically proposals for their expansion and diversification.

In this context, in February 1974 BSC put forward a proposal to take control of a steel stockholding company, Lye Trading Company Limited. This was a new venture for the corporation, which saw it as part of a strategy to acquire an appreciable share of the United Kingdom stockholding business. Another instance of the same policy was the buying out by the BSC in June last year of the 55 per cent. private shareholding interests in Sheffield Rolling Mills, which had been set up as a joint public-private sector company in 1969.

It was in this light, too, that the Government explored the possibilities of a public sector acquisition of Jessel Securities' holding in Johnson and Firth Brown. I shall pay particular attention to this aspect of the matter as the hon. Gentleman emphasised it. We recognised the importance of the special steels sector as represented by JFB, and we also recognised the need for restructuring and modernisation in this sector, a need that is hardly disputed by anyone, and certainly not by the hon. Gentleman. The corporation had the particular motive of trying to undo the damage inflicted on the River Don works by the Conservative Party when it was in office.

As hon. Members know, the BSC secured the prior authorisation of the European Commission under Article 66 of the Treaty of Paris to acquire the whole of JFB, subject to the conditions on competition grounds that it divested itself within a year of Beardmore's—the JFB forging affiliate in Glasgow, employing some 1,000 men—and of the JFB Rod Mill in Manchester. Observance of these conditions would damage the JFB group and Beardmore's might not survive without the support of a larger group. Understandably, therefore, these conditions produced acute employment anxieties in Beardmore's. They were also likely to undermine the viability of JFB's operations in the wire field, which were absorbed with the acquisition of Richard Johnson and Nephew.

JFB appealed in the European Court to have the Commission's authorisation declared void and Ministers would never have acquiesced in BSC acquiring JFB so long as the divestment conditions stood. With the lapse of the BSC's conditional offer, my noble Friend the Minister of State decided to acquire from Jessel Securities 29·9 per cent. of JFB for eventual transfer to the National Enterprise Board. Rightly or wrongly, we believed at that time that we were proceeding with the acquiescence of the JFB board.

The Government's motives—and the hon. Gentleman asked about this—for acquiring a holding in JFB were to forestall others who appeared to have little to offer in the way of industrial benefit, to secure a firm base for promoting and monitoring restructuring, which everyone agrees needs to be done, and to secure a genuine partnership with a private sector company on lines, put to it in principle, that would enable us to support its development plans with financial assistance.

The JFB Board then made it clear that it would oppose a Government purchase of the Jessel shareholding. Indeed, it went further. It appealed to the European Commission for an injunction to forbid the Government from buying the Jessel shares. It also alleged to the Takeover Panel that the Government were seeking to evade the 30 per cent. rule of the Takeover Panel by acting in concert with Dunford and Elliott. Of that, I can assure the House, there is not one shred of truth. Meanwhile, of course, as is known the shares were disposed of privately.

There are a number of morals to draw from this episode that are relevant to Government policy towards the private sector. First, the whole affair demonstrates the consequences of interpreting agreement by a company as meaning agreement only by the board, irrespective of the wishes and intentions of other interested parties. Further, it shows the dangers of a private boardroom, where its agreement is regarded as a decisive factor, talking itself into a self-damaging situation out of political suspicions that are simply not justified and thus frustrating the interests of wider industrial policy.

The second lesson of this affair is that the difficulties also derived in part originally from the use of the European Commission's powers under Article 66 of the Treaty of Paris to impose conditions unacceptable on social grounds for the BSC acquisition.

It has been suggested that these unacceptable conditions might have been modified, but even if that were so it does not alter the point that the Commission, under the supranational Treaty of Paris, was able to lay down a condition which caused great concern about job security in Beardmore's. This was one of the matters as a result of which the Foreign Secretary informed the other member States on 3rd March in Brussels of the Government's concern.

The third issue raised by this JFB episode is that the board was able to override the wider public interest in a manner which pre-empted the decision in the case not only of many shareholders but of its own work force. The workers' representatives had produced a constructive and authoritative document in favour of the Government's wish to see a reorganisation of the special steels sector in Sheffield. They proposed that JFB should become the nucleus of a State-owned extra-special steel industry under either NEB ownership or that of a reconstituted BSC. We therefore regret that the decision to oppose the Government's purchase was taken without consultation with the workers directly involved.

On the other hand, I see no reason why the placing of these shares should lead to any problems over jobs. There have been some reports which suggested that. The company has always stressed that it is profitable and trading successfully and that the financial troubles affecting Jessel Securities do not impinge on its trading operations.

I am sorry about the time element. I was thrown by points of order. The morals being drawn by the hon. Gentleman are important. Surely all the objections from the EEC point of view were predictable. Therefore, we are concerned why the BSC and the Department of Industry got themselves into this minefield. The hon. Gentleman said that the wishes of the work force were not being considered. I believe that he is accepting a partial version of the story. Is he aware that earlier this week Sir David Davies said in a radio interview that the only way to do this was through the BSC and that to do otherwise would be a vote of no confidence in BSC? Therefore, there is no agreement within the work force and the various trade unions. I think that in his remarks the hon. Gentleman was being totally unfair to the board of JFB.

I think that the workers should be allowed to express their opinion. I do not accept that that is the general view of the work force. I believe that they would have accepted a purchase of the Jessel shareholding by the Government.

For the future, I assure the House that the Government retain their objective of reorganising extra-special steels in accordance with the wider industrial interest. If the Industry Bill is approved by Parliament, we will retain the NEB option as a means—

The Question having been proposed after Four o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-two minutes to Five o'clock.