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British Steel Corporation

Volume 975: debated on Monday 10 December 1979

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15.

asked the Secretary of State for Industry what account of official or national support given to the steel industries in other countries he takes in his own consideration of the position of the British Steel Corporation.

In setting the corporation the target of operating at a profit in 1980–81 my right hon. Friend had very much in mind the efforts being made by steel industries in other countries also to operate profitably.

Is the Minister aware that British Steel Corporation's losses per ton are dissimilar and that, indeed, the position may be better than in other countries where the steel industries enjoy sustained support from their Governments, who are busily engaged in exporting their unemployment to this country? Will he not, in the national interest, ensure that his right hon. Friend curbs his excessive concern to slaughter British Steel Corporation's capacity, which is required and should be sustained for the longer term?

First, comparisons are very difficult to make. However, if the hon. Gentleman considers them, he will see that British Steel, in terms of losses per ton, is very much at the bottom of the European table. Nowhere, as far as I am aware, will he find any European Government or taxpayers who have put £3 billion into their industry over the past four years, as we have. Second, if he looks at the comparisons, he will see that, for the greater part, either the European steel industries are operating profitably, or are showing a break-even, or are expecting profits in the near future.

Will my hon. Friend discuss with Sir Charles Villiers his statistics released in the press last week showing that United States and European engineering and steel production increased over the past five years and that there was a dramatic decrease in Britain? Does he not agree that this trend in Britain must now be reversed after a disastrous five years?

One of the problems in the European situation, as my hon. Friend probably knows better than I do, has been the increase in capacity in some countries. The result today is, I believe, that the European steel industry as a whole operates at about 70 per cent. of capacity. That is one of our problems. The chairman of BSC made some thorough assessments. It is his view that the United Kingdom industry must bring capacity down in line with demand, which will mean a reduction of the order of 5 million tons per annum.

Will the Minister acknowledge that the steel industry is not working in a textbook world of perfect competition? The Secretary of State should know what a Utopian world of perfect competition is. Is he aware that, by insisting on rigid cash limits, he will cause catastrophic losses in many regions at a time when, by his industrial policy, he is removing the very weapons that can provide jobs?

The hon. Gentleman must realise that the reasons for the plans that the British Steel Corporation has announced in outline and is discussing with the unions are lack of demand and a weak market. Those matters are not directly related to the cash position.

Does my hon. Friend agree that there is a great paradox on this issue displayed in the attitude of the right hon. Member for Deptford (Mr. Silkin), in that while he is tremendously opposed to the Common Market, the greatest support for European industry in the past two years has come from an EEC initiative—the Davignon plan?

Indeed. The purpose of Ministers is to try to ensure the continuation of the Davignon proposals into next year.

Does the Minister agree that the successive destruction of Scunthorpe, Llanwern and Port Talbot will destroy capacity in this country which can be replaced in future only by imports, which will do even more ferocious damage to the balance of payments than the Government have done so far?

Without commenting on the particular plants, I can only repeat that the assessment of BSC management is that there is no market for the steel. Unlike the Labour Party, I think that the British Steel Corporation tries to live in the land of reality. Because the market is weak, it sees the need to bring down capacity to meet it.

Did my hon. Friend gather from the recent debate on the steel industry that the salient feature was that sales equal production which equals employment? In view of the thousands of jobs lost in my constituency, can we convey to people how important sales are?

Sales will come about only through the British Steel Corporation being competitive, getting its manning in line with European manning and getting its product up to the quality of its competitors. Then it will sell steel.

Does the Minister of State deny that European steel producers are receiving larger subsidies than the British Steel Corporation—perhaps hidden in the coking coal subsidy? Does he also deny that the British Steel Corporation's losses per ton are smaller than many European steel producers? Will he confirm that we are likely to see the closure of steel-making capacity in this country which is more modern and efficient than that which is likely to remain open in the rest of Europe?

Certainly. I think that I have already acknowledged that some European companies and industries are subsidised. I am not aware that, over recent years and at present, they are subsidised to the extent of BSC. If the hon. Gentleman will table a question I shall be happy to send him the loss figures of European companies. I have the list here. British Steel Corporation's loss in the last year is higher than that of any other company in this list.