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Steel Industry

Volume 978: debated on Monday 11 February 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

With permission, Mr. Speaker, I will make a statement on the position of pay negotiations in the steel industry. First of all, however, I extend to the House the apologies of my right hon. Friend the Secretary of State for not making this statement himself. He is carrying out engagements in South Wales—a visit that has already been postponed twice—and, in view of the special problems of South Wales, he judged that he should not put off his visit for the third time.

The House will know that following private exchanges between the BSC management and union leaders the full negotiating bodies of the Iron and Steel Trades Confederation and National Union of Blastfurnacemen met the British Steel Corporation on Friday. It was soon plain that a misunderstanding between the two parties existed and that there was an important difference between what the BSC had offered in the private discussions and what the union side thought had been offered. The union side promptly withdrew from the meeting.

Following this breakdown, ACAS, the independent conciliation service, immediately tried to get in touch with both sides. It had discussions with the BSC on Friday afternoon and again this morning. I am told that the ISTC and the NUB have not yet been able to give a positive response to ACAS's invitation for an early meeting.

On Sunday, negotiators from the BSC and the craft and general unions met and agreed a pay formula, which is to be recommended for acceptance. The formula provides for a 10 per cent. pay increase in respect of a central agreement, with provisions for improved productivity, plus 4 per cent. in respect of locally negotiated productivity schemes. The 4 per cent. is a minimum; there is every opportunity to earn more from local productivity schemes.

The BSC's negotiations with the ISTC and the NUB broke down because of failure to agree on the all-important question of productivity improvements. The Government have made it clear from the beginning, and I repeat it again today, that they are not prepared to put more taxpayers' money into the BSC to finance a pay settlement. Therefore, the money has to come from the BSC's own resources. It is there to be earned, and productivity improvements are essential if the BSC is to compete and survive.

This strike is in its sixth week and has already cost the average BSC worker about £650 in gross pay. Unless a settlement is found soon, there will be permanent loss of jobs and permanent damage to our steel industry, and—without question—the risk extends to many other jobs in the rest of British industry.

I hope that all the parties concerned will display a real sense of urgency in trying to reach the settlement that this situation demands.

With due respect to the Minister, the absence of the Secretary of State is rather like Hamlet without the first grave digger. [Interruption.] Conservative Members seem to prefer the Secretary of State to keep away—I quite understand that—but that is not our view. Our view is that the Secretary of State must make a statement to the House this week, and we shall expect him to do so.

Leaving aside the general damage to the industry—the Minister of State has again pointed that out—what effect has the cost of this dispute so far had on the Government's cash limits? I think that there are three constituent elements to the cash limits—investment capital, working capital and operating losses. Which of these will suffer as a result of the dispute so far?

Secondly, the hon. Gentleman said:
"It was soon plain that a misunderstanding between the two parties existed".
Has there not been a misunderstanding between the Government and the steel industry right from the beginning? The Opposition warned the Government well before Christmas of the effect of this dispute. The Government have shown complacency. The Prime Minister in her television interview on 6 January talked about days, not weeks. That is the basis on which the Government have dealt with this problem.

The Minister ended by saying:
"I hope that all the parties concerned will display a real sense of urgency in trying to reach the settlement that this situation demands."
The one party not displaying a sense of urgency are the Government. Every person in this country—the press as well—knows perfectly well that the Government are intervening and have intervened all along the line. The time has come for the Government to intervene openly and honestly. They should call the parties together within the next couple of days.

I am sure that the majority of hon. Members appreciate the reasons why my right hon. Friend felt it necessary to go to South Wales today, where he will be meeting many local councils and the Welsh Development Agency.

The right hon. Gentleman asked about cash limits. He stated that cash limits were there for the purpose of meeting operating losses next year. We have tried to make plain on many occasions that that is exactly what the £450 million of taxpayers' money will not be doing. It will be meeting some capital investment and some redundancy costs, but not operating losses.

What the right hon. Gentleman still does not appreciate when he charges the Government with complacency and not intervening is that unlike the right hon.

Gentleman and his right hon. Friends, we see this primarily as a matter between the BSC management and the unions concerned. Therefore, it is not for the Government to become involved in negotiations. We have made that plain previously and I have made it plain again in my statement today. Of course, we are involved to the extent of the £450 million and, as custodians of the taxpayers' money, we have made it clear that we do not intend to put any further cash behind the industry.

The hon. Gentleman has made it perfectly clear that investment capital, redundancy payments and working capital are the three aspects. If so, and if there is only £450 million available—[HON. MEMBERS: "Only?"] only £450 million available, and, incidentally the hon. Gentleman has not told us what the dispute has cost so far—out of which section is the cost of the dispute so far to come: redundancy payments, investment capital or working capital?

The cost of the dispute has been given on a previous occasion. The estimate of the British Steel Corporation is that it is running at about £10 million a week. I am glad to say that production generally throughout the country is still only slightly affected. The right hon. Gentleman asks where the money comes from. If there is no more money forthcoming from the Government, the British Steel Corporation has to act like any private sector company. It has to find the money from within its own resources. There are a number of ways in which it can do that.

Does my hon. Friend not agree that events over the weekend, since the talks broke down on Friday, namely, the 14 per cent. settlement with the craftsmen and the return of the private steel workers today, mean that negotiations should be resumed immediaely and that it is up to Mr. Sirs and Mr. Smith to return to the negotiating table quickly? Does he not also agree that to ask for 20 per cent. without strings in the negotiations when the craftsmen have settled for 14 per cent. is totally unrealistic, bearing in mind that the British Steel Corporation is losing between £5 million and £10 million a week?

My hon. Friend is right to draw the attention of the House to the example of the craft and general unions. In reaching this settlement, which is substantially self-financing, I believe that they took the position of the industry into account. Further, the fact that a number of workers in the private sector have either stayed on at work or, in the case of Hadfields, have decided to go back, shows that there is a real desire among the membership of the ISTC to end this strike and to save their industry. I am hopeful that their example will be noted by the leadership.

How did so great a misunderstanding arise about the basis of the resumed discussions? Is there not a lesson there?

That is very difficult to answer. Private discussions were held. As far as the management was concerned, or so I am told, there was no question about what the offer was. But there was a misunderstanding. It led to a most regrettable breakdown of negotiations.

Will my hon. Friend make clear to the unions and to the country, when talking of new money, that there are only two places from where that money can come—either from the taxpayer paying yet more money to the British Steel Corporation or from improved productivity? That is the realkey. There can be substantially improved and better earnings through improved productivity. Will he press that point whenever possible?

I am glad that that voice should come from the Back Benches; it has come from the Dispatch Box on many occasions. There is plenty of scope for improved productivity within the BSC. The money can be earned through increased productivity and the consequence of getting improved productivity is that the industry will move towards a competitive state. Without being competitive, it does not have a future.

If there was a misunderstanding, as the Minister said, why did not the Government take steps to try to secure a return to work on an interim settlement in return for the setting up of some sort of inquiry?

The Advisory, Conciliation and Arbitration Service—ACAS—exists for the purpose of trying to help in these matters. As I have told the House, ACAS has had two discussions with the British Steel Corporation. For some reason, Mr. Sirs and Mr. Smith—this was my information when I left my office—have still not indicated when they are prepared to undertake talks with ACAS. It is the responsibility of ACAS. That is why it is there. It has to try to find a way forward.

:Will my hon. Friend assure the House that the Government have no intention whatever of setting up another inquiry into the steel industry? The industry was thoroughly investigated by a Commons Select Committee recently. Such an inquiry would merely delay the taking of vital decisions.

The Government agree with my hon. Friend. This is not the time for a court of inquiry. The time is for a settlement of this dispute. The way forward is there.

The Minister mentioned Hadfields, which is in my constituency. Will he accept that whatever differences may exist currently between Hadfields and the BSC workers in Sheffield, as I witnessed this morning, they are completely united in holding his right hon. Friend responsible for their present predicament and believe that only he can now break this deadlock? There is a widespread view in Sheffield and not only in this morning's issue of The Times, that this strike ought now to be settled. Even among lay people there is an instinctive feeling that some give on the Minister's part—no matter how moderate—on cash limits, or the intentions or purposes for which they were arranged, could help break the deadlock. Will the hon. Gentleman convey that to his right hon. Friend.

The hon. Gentleman speaks for his constituents. They have, surely, shown that they believe strongly that this strike should not have been spread to the private sector. The hon. Gentleman talks about my right hon. Friend. I believe that the hon. Gentleman, who, I know, wishes, like all of us, to see an end to the strike, could best help by explaining to his constituents that the Government are not prepared to put in more tax-money. The hon. Gentleman should explain that this amounts to £700 million in the current year and another £450 million next year. That is all that will be forthcoming. If the hon. Gentleman would explain that to them I believe that the Government's position would be understood.

Does not the experience of Hadfields show that local plant dealing is much more effective where management is close to the shop floor? Is not the British Steel Corporation hopelessly top heavy? Was not the negotiating committee of about 70 or 80 representatives of the Iron and Steel Trades Confederation imposing an impossible burden on smooth consultations? Will my hon. Friend explain what steps are being taken to break up the British Steel Corporation, bearing in mind the reports in the Financial Times about chemicals. bridge building and engineering?

Yes, I also saw the reports in the newspapers. I believe that there is considerable merit in decentralisation and local bargaining. One of the features of the agreement now reached with the craft and general unions is that local productivity schemes should prove an important part. I believe that will help for the future.

Does the Minister not accept that continual drift in relation to this strike is causing a crisis in the Government's credibility? Does he not think, in view of the non-statement made today—that is the only way to describe it—that the time has come for his right hon. Friend the Prime Minister to intervene?

I would have thought that the Government's credibility was standing up very well. If one thing was demonstrated by the otherwise regrettable breakdown of negotiations, it was that there is no question of U-turns, silent or otherwise.

Does the hon. Gentleman not realise that the Government's credibility in my area is nil? [HON. MEMBERS: "Nonsense."] It is not nonsense. I am being very serious in what I say. In my area, when pits are closed in similar incidents, miners are prepared to Say "Let them put the top on". On the picket lines at British Steel, due to the inactivity of the Government, they are saying "Let them close it. We have nothing to lose." Will the Minister not accept that there is need for an inquiry into British Steel after the dispute is over? Any industrial relations department that can announce a loss of 53,000 men and at the same time a nil increase in wages must be out of its cotton-picking mind. Does the hon. Gentleman not realise—[HON. MEMBERS: "Too long:"]

Order. Long questions will prevent my calling some hon. Members who want to be called.

I am now finishing. Does the hon. Gentleman not realise that the £450 million about which he talks is derisory against the £1½ billion given away to 6 per cent. of the population?

The hon. Gentleman will do best if he takes the view of all his constituents working in steel and not just those on the picket lines. I believe that he will find a different story and that he will find that they wish to return to work.

Was not an important question raised by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn)? In view of the fact that the British Steel Corporation has said throughout that the sort of money that the steel workers aspire to can be got through appropriate local productivity schemes, does my hon. Friend not agree that it would be more sensible to negotiate—where the area or plant is open—rather than nationally? As long as ACAS is asked to act nationally it can do little to help. Locally, it could play an important part in solving this wounding dispute.

At present ACAS must work nationally, because it has to bring the leaders of the ISTC and NUB together along with the BSC management. Of course the money can be earned. Indeed, it was a figure that my right hon. Friend gave early on in the strike, which showed that even the first BSC offer would allow the average steel worker to earn about £123 or £124 a week.

Does the Minister accept that many people such as myself are not normally in favour of the Government's intervening in industrial disputes, believing that these should be settled by management and trade unions? However, in this case the matter has gone well beyond that stage, in that the average steel worker in my constituency and throughout Scotland is frustrated and bitter because he believes that he is negotiating at second hand and that these directions are being given to the BSC by the Secretary of State. We have only to watch television, where the Secretary of State appears with monotonous regularity, to see that that is the case. A serious situation has now developed, and the Secretary of State and his Government colleagues will have to give just a little in order to settle the steel strike and so maintain a steel industry in this country.

Like many of his hon. Friends the right hon. Gentleman continues to ask for more taxpayers' money. Why should the steel workers ask for more taxpayers' money when the money is there to be earned? It is not as though the productivity cannot be gained; it can. That is the answer to that question.

Is there not general unrest and uncertainty in the steel industry at the fact that the productivity schemes proposed by the BSC are complicated, with the result that the details are not fully understood? Without in any way asking my hon. Friend to intervene, may I suggest that he should ask the BSC management to go out of its way to make the details of local productivity schemes known to all its employees?

I am sure that the BSC management will take note of all that has been said, including my hon. Friend's suggestion. I remind him that the craft and general unions have just settled for a proposal that was similar to that which was on the table on Friday. One part of it is to offer 4 per cent. against local productivity schemes being worked out and agreed to. In the case of the craft unions, it has been agreed that these agreements shall be worked out by the middle of May. I think that that will help to meet my hon. Friend's point.

Is the Minister aware that even the BSC makes no complaint of the co-operation that it has received from the two main production unions concerned, including my own—the National Union of Blastfurnacemen? On the other hand, the craftmen's unions have dragged their feet considerably. Therefore, they have more concessions to make and are able to receive benefits from productivity schemes. Does not the hon. Gentleman know that the Redcar complex, in my constituency, is fully competitive and can compete with the best foreign plants? Even at this late stage, will he take action to enable the two unions, which never wanted to strike and do not want to strike, to settle?

I hope that the hon. Gentleman will play his part in trying to achieve that. There is certainly scope for increased productivity in relation to the craft and general unions, but as far as I am aware there is comparable productivity to be gained by the two unions to which the hon. Gentleman referred.

Will my hon. Friend confirm that the latest BSC offer means that a steel worker would get an increase of about £14 a week if it were accepted? Does he further agree that most workers would regard that as a generous increase, particularly if they worked for an industry that was effectively bankrupt?

My hon. Friend confirms what I said a few minutes ago—that even BSC's first offer would have given £12 or £13 a week extra to the average steel worker.

If, as the Minister said, these men have lost an average of £650 each at a time when they urgently needed money, after Christmas, does he not realise that something must be seriously wrong, because without any strike pay they are now more determined than ever to go on? If at the end of this strike we are to have a viable steel industry for the whole of our community, does not the Minister realise that the community must sustain it? The Government must intervene and put more money on the table in order to get the workers back to work. That is the only way. There is no other.

If the steel workers decided to go on strike against an offer of 12 per cent. minimum, and have lost the sort of sums in gross pay to which I have just referred, why should the taxpayer, who generally earns less than a steel worker, now be asked to put his hand in his pocket in order to find more money for the steel workers?

Has my hon. Friend received, either from the right hon. Member for Deptford (Mr. Silkin) or the hon. Member for Sheffield, Hillborough (Mr Flannery), any indication that they would prefer more taxpayers' money to go as a greater subsidy to Britishsteel even though it is taken out of the same pocket as that which provides funds for child benefit, maternity grants, education, health and pensions?

It is true that the £450 million is greater than the gross cash limit on the capital side for the NHS in 1979–80.

Is it not the case that there are Ministers in the Cabinet who now favour intervention? Is not intervention the only way in which to save not only the industry but also the country?

If by "intervention" the hon. Gentleman still means providing more taxpayers' money, I can tell him that the Cabinet and the Government are united on that point and that it shall not be so.

Does my hon. Friend agree that steel workers, who in large measure did not want to go on strike and were not asked whether they wanted to go on strike, have a greater interest in a viable and productive steel industry than they have in the industrial virility of Mr. Bill Sirs and his executive?

I am sure that the membership is well aware that if the strike were to go on for much longer the damage would become very serious indeed, not only with regard to their own industry and job prospects but in relation to the whole of British industry. I am certain that the membership is aware of that, and I believe that pressure will start to build up on the leaders of the two unions concerned.

Is the Minister aware that as of Friday of last week, 500 of my constituents who work at the Metal Box Company were laid off? In spite of what he or the Government may say, my constituents believe that the Government are inextricably bound up in this dispute. Is it not now time that Ministers in the Department of Industry discharged their responsibilities to the taxpayers, who after all pay their ministerial salaries, and got this dispute settled quickly?

The hon. Gentleman's constituents at the Metal Box Company have been laid off because of the picketing that was carried out against their company. If one was to inquire of the constituents at Metal Box, and particularly at Neath, I believe that they would be full supporters of the Government's intention with regard to secondary picketing.

Will my hon. Friend drive home the fact that the largest support for Mr. Sirs at present, and for the continuation of the strike, comes from the Opposition in this House? The Opposition are leading the view that the Government should put more money on the table. So long as that view is put forward they are the strongest supporters of the continuation of the strike. That fact must be pushed home to the public at large.

If, despite what Ministers have said, there is a feeling that there is a prospect of more taxpayers' money coming forward, the blame for that lies fairly and squarely on the shoulders of Opposition spokesmen. However, I repeat what I have already said—there is no such prospect.

Does not the Minister understand that he is dealing with a trade union that has not had a national strike for 53 years? If it calls a strike at this stage, does it not occur to him that there must at least be some deep reason why? In the light of that, is it not the Government's duty to bring the parties together and to ensure that at least there is no misunderstanding in the Government's mind?

It is a matter of great regret that an industry with such a good strike-free record should now be on strike. The Advisory, Conciliation and Arbitration Service is in touch with the parties and is trying to bring them together. One hopes that the unions will respond more quickly than they did over the weekend to a meeting to see whether there is a way forward. In that way they will gain the respect of the public.

Is it not obvious that without putting in any extra money the Government could enable the strike to be settled tomorrow and that they could have prevented it by simply allowing part of the £450 million allocated for redundancies and closures to be used for wages? Is it not more sensible to get these men back making steel than to save that money for a few months in order to close down half the industry?

The hon. Gentleman does not realise that this money is liable to be paid out under statutory schemes. If that money were to be transferred further money would have to be found from the taxpayer. It is the same answer. More money will be required from the taxpayer.

If hon. Members will be very brief, I will call them all, but I cannot do so if there are long questions, which will cut out some of those who wish to speak.

The hon. Gentleman quoted the figure of £650 as representing the loss by sustained strikers. His chief information officers quoted something similar to the Sunday papers. What Tory Member would reject the return on investment that the strikers already have on their £650? At present rates of interest a return on £650 is £2 a week. The strikers have been offered more than that, since they were offered a 2 per cent. increase.

The hon. Gentleman is trying to perpetrate a myth. The initial offer was not 2 per cent. It has been made clear that the initial offer was 2 per cent. plus 10 per cent. The 10 per cent. was to be earned by productivity. That is still the message.

Will the hon. Gentleman take it from me, as one who met the general secretary of the ISTC last week, along with other Opposition Members, that there was no doubt that at that meeting calling together both sides would result in a conclusion to this serious problem? Will the Government recognise that the general council of the TUC has intervened and that ACAS has intervened on several occasions? Obviously they have not met with success. The only person who can possibly intervene with a reasonable chance of success is the Secretary of State for Industry? Will the hon. Gentleman give that message to the Secretary of State when he returns from Wales?

I shall certainly give that message to my right hon. Friend. His door is open, should Mr. Bill Sirs, Mr. Hector Smith or a member of the management of the British Steel Corporation wish to see him. However, such a meeting would be for information only. The Secretary of State will not enter into negotiations to settle this strike.

Will the Minister accept that the BSC productivity scheme is complicated? Will he also accept as my hon. Friend the Member for Redcar (Mr. Tinn) said, that there are greater opportunities for productivity among some groups of workers than among others? Will the hon. Gentleman further accept that many claims and counter-claims in this dispute have not been considered by the Select Committee? Because it was said to be the first step towards a settlement, does the hon. Gentleman agree that it is time that an inquiry into this dispute was set up?

I have already said that I do not believe that an inquiry would be beneficial in attempting to settle this dispute. A settlement can be reached round the table. I agree with the hon. Gentleman that if the details of the BSC offer are not known to the members of the two unions concerned, the BSC has a duty to make sure that the terms are absolutely clear. The unions themselves should also make it quite clear what the terms of the offer are.

Is the hon. Gentleman aware that many workers outside the steel industry believe that the Government wilfully precipitated the steel strike? What is more, those people are now becoming increasingly worried about the effects on their own jobs because of the shortage of steel. Will the hon. Gentleman tell me what is the level of steel stocks in the car industry, particularly in Swindon, where there is a car body pressing factory?

First of all, I deny absolutely the malicious suggestion—not made by the hon. Gentleman—from some quarters that the Government deliberately precipitated this strike. That is nonsense. The House knows that it is not true. Up to now, manufacturing production in this country has barely been affected by the strike, but clearly steel stocks have started to run down. If there is a specific example in the hon. Gentleman's constituency I suggest that he inquires about it. If stocks there are low, I suggest that he makes that clear to the workers so that they can put pressure on the steel unions to settle. That is what will save the jobs of his constituents.

Is the Minister aware that Bill Sirs originally said that the 2 per cent. offer to the trade union leaders at the start of the negotiations was an insult to the trade union movement? In view of that, will the Minister tell the House where the extra money, that the BSC has now offered to the trade unions will come from?

The hon. Gentleman knows that the original 2 per cent. was through consolidation. It was not a new offer. The British Steel Corporation has made it clear on every occasion that the money on offer—the 10 per cent. that has recently been increased, if one puts the two components together—is to be self-financing from improvements in productivity.

Having listened to the Minister's answers, it is quite clear that the Government have dug themselves into a deep trench on finance. It is also clear that the steel workers are extremely obdurate about this matter. So that the House and the country can begin to assess what is at stake here, will the Minister tell us what 1 per cent. on pay would cost the Government if they were to go over the £450 million? Are we talking about another £10 million or £20 million? I am not expressing a view about it. I want to see, and the country would want to see, what is the cost of the Government's present position.

I would have to let the right hon. Gentleman know the figure. I would not like to mislead the House. The right hon. Gentleman is talking of a hypothetical possibility. We have made it clear—it should be plain by now—that no more money is forthcoming for the pay settlement. What we are attempting to do, amongst other things, is to ensure that we have an efficient, competitive and viable steel industry. That will not come about by pursuing the policies that the right hon. Gentleman and his right hon. Friends pursued when they were in government. That policy was to put in more taxpayers' money on every occasion. That is not the way forward.

I recognise that there is a difference between the Minister and ourselves. However, I believe that we and the country are entitled to know what sum we are talking about. I am not espousing any claim, because it is not our responsibility. It is for the Government to negotiate the claim and bring the two sides together. That is the difference between us. I heard Mr. Sirs say on television that he believes that that 17·5 per cent. claim is right, because that is the level of the retail price index. How much extra money will be involved in such a claim? The Government are putting in £450 million. Are we talking about an extra £10 million or £20 million? What figure are we talking about, because in the end that figure has to be set against the damage being done to industrial relations and to industry as a whole?

I have told the right hon. Gentleman that I will let him have the figure. I cannot give it at the moment. I ask the right hon. Gentleman where the money is to come from. Would it come by reducing the moneys available to schools or the Health Service? Where would it come from? We have taken the view, looking at expenditure priorities, that the figure of £450 million—in itself equivalent to 1 per cent. on the rate of income tax is enough.

It is not for me to answer questions; therefore, I shallreply interrogatively. Is the Minister aware that the public sector borrowing requirement can be at least £1 billion out in its estimate in any one year? If the cost of settling the strike is to put another £20 million on the PSBR it would not matter a tuppenny damn.

If we were to take that line we would be dealing with real money from the taxpayer. It is because of such an imprudent attitude to the nationalised industries that we must try to rescue the economic situation from the mess in which we found it.